EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
WP PRISM LLC,
WP PRISM MERGER SUB INC.
AND
BAUSCH & LOMB INCORPORATED
Dated as of May 16, 2007
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
SECTION 1.01. The Merger; Effects of the Merger..............................2
SECTION 1.02. Consummation of the Merger.....................................2
SECTION 1.03. Certificate of Incorporation and Bylaws........................3
SECTION 1.04. Directors and Officers.........................................3
SECTION 1.05. Conversion of Shares...........................................3
SECTION 1.06. Conversion of Common Stock of Merger Sub.......................3
SECTION 1.07. Withholding Taxes..............................................3
SECTION 1.08. Subsequent Actions.............................................4
ARTICLE II
PAYMENT FOR SHARES; EQUITY AWARDS
SECTION 2.01. Payment for Shares.............................................4
SECTION 2.02. Closing of the Company's Transfer Books........................6
SECTION 2.03. Treatment of Equity-Based Awards & Deferred Compensation.......6
SECTION 2.04. Convertible Securities.........................................7
SECTION 2.05. Adjustments....................................................7
SECTION 2.06. Dissenting Shares..............................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification.................................8
SECTION 3.02. Capitalization.................................................9
SECTION 3.03. Authority for this Agreement; Board Action....................11
SECTION 3.04. Consents and Approvals; No Violation..........................11
SECTION 3.05. Reports; Financial Statements.................................12
SECTION 3.06. Absence of Certain Changes....................................14
SECTION 3.07. Proxy Statement; Other Filings................................14
SECTION 3.08. Brokers; Certain Expenses.....................................14
SECTION 3.09. Employee Matters..............................................15
SECTION 3.10. Employees.....................................................17
SECTION 3.11. Litigation....................................................17
SECTION 3.12. Tax Matters...................................................18
SECTION 3.13. Compliance with Law; Permits..................................19
SECTION 3.14. Environmental Matters.........................................20
SECTION 3.15. Intellectual Property.........................................22
SECTION 3.16. Real Property.................................................23
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TABLE OF CONTENTS
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SECTION 3.17. Material Contracts............................................24
SECTION 3.18. Insurance.....................................................25
SECTION 3.19. Related Party Transactions....................................26
SECTION 3.20. Opinion.......................................................26
SECTION 3.21. Required Vote of Company Shareholders.........................26
SECTION 3.22. Takeover Laws, etc............................................27
SECTION 3.23 No Other Representations or Warranties........................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01. Organization and Qualification................................27
SECTION 4.02 Certificate of Incorporation and By-laws......................28
SECTION 4.03 Capitalization of Parent and Merger Sub.......................28
SECTION 4.04. Authority for this Agreement..................................28
SECTION 4.05. Consents and Approvals; No Violation..........................28
SECTION 4.06. Proxy Statement; Other Filings................................29
SECTION 4.07 Absence of Litigation.........................................29
SECTION 4.08. Financing.....................................................29
SECTION 4.09. Brokers; Certain Expenses.....................................30
SECTION 4.10. Operations of Parent and Merger Sub...........................30
SECTION 4.11. Solvency......................................................31
SECTION 4.12. Guarantee.....................................................31
SECTION 4.13 Ownership of Shares...........................................31
SECTION 4.14 No Other Representations or Warranties........................31
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business of the Company............................32
SECTION 5.02. Solicitation..................................................35
SECTION 5.03. Proxy Statement; Other Filings................................40
SECTION 5.04. Shareholder Approval..........................................40
SECTION 5.05. Access to Information.........................................41
SECTION 5.06. Reasonable Best Efforts; Consents and Governmental Approvals..42
SECTION 5.07. Indemnification and Insurance.................................44
SECTION 5.08. Employee Matters..............................................45
SECTION 5.09. Takeover Laws.................................................46
SECTION 5.10. Notification of Certain Matters...............................46
SECTION 5.11. Financing.....................................................47
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TABLE OF CONTENTS
PAGE
SECTION 5.12. Subsequent Filings............................................50
SECTION 5.13. Press Releases................................................51
SECTION 5.14. Stock Exchange Listing; De-Registration.......................51
SECTION 5.15. Convertible Securities........................................51
SECTION 5.16. Treatment of Certain Notes....................................52
SECTION 5.17. Termination of Certain Other Indebtedness.....................54
SECTION 5.20 No Control of Other Party's Business..........................55
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger....55
SECTION 6.02. Conditions to Obligations of Parent and Merger Sub............56
SECTION 6.03. Conditions to Obligations of the Company......................56
SECTION 6.04. Frustration of Closing Conditions.............................57
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.01. Termination...................................................57
SECTION 7.02. Effect of Termination.........................................59
SECTION 7.03. Fees and Expenses.............................................59
SECTION 7.04. Maximum Recovery..............................................61
SECTION 7.05. Amendment.....................................................62
SECTION 7.06. Extension; Waiver; Remedies...................................62
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Representations and Warranties................................62
SECTION 8.02. Entire Agreement Assignment...................................62
SECTION 8.03. Jurisdiction; Venue...........................................63
SECTION 8.04. Validity; Specific Performance................................63
SECTION 8.05. Notices.......................................................63
SECTION 8.06. Governing Law.................................................64
SECTION 8.07. Descriptive Headings..........................................64
SECTION 8.08. Parties in Interest...........................................65
SECTION 8.09. Rules of Construction.........................................65
SECTION 8.10. Counterparts..................................................65
SECTION 8.11. Certain Definitions...........................................65
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GLOSSARY OF DEFINED TERMS
PAGE
1990 Plan.....................................................................6
2001 Plan.....................................................................6
2003 Convertible Securities...................................................7
2003 Plan.....................................................................6
2004 Convertible Securities...................................................7
2005 10-K....................................................................13
2006 10-K....................................................................13
4% Preferred Shares...........................................................9
Acceptable Confidentiality Agreement.........................................65
Affiliate....................................................................65
Agreement.....................................................................1
Alternative Acquisition Agreement............................................38
Antitrust Law................................................................43
Associate....................................................................65
Balance Sheet Date...........................................................13
beneficial ownership.........................................................65
Book-Entry Shares.............................................................5
Business Day.................................................................65
Bylaws........................................................................9
Capitalization Date...........................................................9
Certificate of Incorporation..................................................9
Certificate of Merger.........................................................2
Certificates..................................................................5
Change of Board Recommendation...............................................38
Class A Preferred Shares......................................................9
Class B Share.................................................................3
Closing.......................................................................2
Closing Date..................................................................2
Code..........................................................................4
Common Share..................................................................3
Company.......................................................................1
Company Board Recommendation.................................................11
Company Disclosure Letter.....................................................8
Company Intellectual Property................................................22
Company Owned Intellectual Property..........................................22
Company SEC Reports..........................................................12
Company Securities...........................................................10
Confidentiality Agreement....................................................65
Contract.....................................................................12
Controlled Group Liability...................................................65
Convertible Securities........................................................7
Current Employees............................................................45
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Debt Financing...............................................................30
Debt Financing Commitments...................................................29
Debt Offers..................................................................52
Debt Redemption..............................................................52
Delayed Filings..............................................................66
Dissenting Share.............................................................66
Effective Date................................................................2
EMCR.........................................................................12
Environment..................................................................21
Environmental Claim..........................................................21
Environmental Law............................................................21
Environmental Permits........................................................20
Equity Financing.............................................................30
Equity Financing Commitments.................................................30
ERISA........................................................................15
ERISA Affiliate..............................................................16
ESPP..........................................................................7
ESPP Termination Date.........................................................7
Exchange Act.................................................................10
Excluded Party...............................................................36
Excluded Party Termination Fee...............................................61
Excluded Shares...............................................................3
Expenses.....................................................................60
FDA..........................................................................19
Filed SEC Documents...........................................................8
Financing....................................................................30
Financing Commitments........................................................30
Food and Drug Laws...........................................................19
Foreign Antitrust Laws.......................................................12
GAAP.........................................................................13
Governmental Entity..........................................................12
Guarantee.....................................................................1
Guarantor.....................................................................1
Hazardous Materials..........................................................21
hereby.......................................................................65
herein.......................................................................65
hereinafter..................................................................65
HSR Act......................................................................12
including....................................................................65
Indemnified Persons..........................................................44
Initiation Date..............................................................50
Intellectual Property Rights.................................................22
knowledge....................................................................66
Law..........................................................................11
Lien.........................................................................66
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Marketing Period.............................................................48
Material Adverse Effect......................................................66
Material Contract............................................................25
Medical Device...............................................................19
Merger........................................................................2
Merger Consideration..........................................................3
Merger Sub....................................................................1
Morgan Stanley...............................................................14
Notes........................................................................52
Notice Period................................................................38
NYBCL.........................................................................1
NYSE.........................................................................12
Offer Documents..............................................................52
Option........................................................................6
Other Filings................................................................14
Owned Real Property..........................................................23
Parent........................................................................1
Parent Disclosure Letter.....................................................27
Paying Agent..................................................................4
Payment Fund..................................................................4
Permits......................................................................19
Permitted Liens..............................................................67
Person.......................................................................68
Plan.........................................................................68
plan of merger...............................................................68
Preferred Shares..............................................................9
Proceeding...................................................................17
Proxy Statement..............................................................14
Real Property Leases.........................................................23
Related Party Transaction....................................................26
Release......................................................................22
Representatives..............................................................68
Required Information.........................................................49
Requisite Shareholder Approval...............................................27
Restricted Shares.............................................................6
Restricted Stock Units........................................................6
Reverse Breakup Fee..........................................................61
Sarbanes-Oxley Act...........................................................12
SEC...........................................................................8
Secretary of State............................................................2
Securities Act...............................................................12
Share.........................................................................3
Shares........................................................................3
Significant Subsidiary Securities............................................10
Social Security Act..........................................................20
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Solicitation Period End-Time.................................................35
Solvent......................................................................31
Special Committee.............................................................1
Special Meeting..............................................................41
Subsidiary...................................................................68
Surviving Corporation.........................................................2
Takeover Laws................................................................27
Tax..........................................................................18
Termination Fee..............................................................61
Treasury Regulations.........................................................68
WARN.........................................................................17
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May 16,
2007, by and among WP PRISM LLC, a Delaware limited liability company
("PARENT"), WP PRISM MERGER SUB INC., a New York corporation and a wholly owned
subsidiary of Parent ("MERGER SUB"), and BAUSCH & LOMB INCORPORATED, a New York
corporation (the "COMPANY").
RECITALS
WHEREAS, the Board of Directors of the Company, acting upon the
recommendation of a special committee of non-management directors (the "SPECIAL
COMMITTEE") thereof has determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and fair to, and in the
best interests of, the Company and its shareholders (other than shareholders (if
any) who invest in Parent or Merger Sub, as to whom the Special Committee has
not made any such determination);
WHEREAS, the Board of Directors of the Company, acting upon the
recommendation of the Special Committee, unanimously has approved (1) the
acquisition of the Company by Parent, the execution of this Agreement and the
consummation of the transactions contemplated hereby, and unanimously has
adopted and resolved to recommend that the Company's shareholders adopt the plan
of merger contained in this Agreement in accordance with the requirements of the
New York Business Corporation Law (the "NYBCL") and (2) the transactions
contemplated by this Agreement, including the acquisition of the Company and
shares of the capital stock of the Company by Parent, for purposes of Section
912 of the NYBCL and for purposes of Sections 13 and 14 of the Certificate of
Incorporation;
WHEREAS, the Board of Directors of Parent has approved the execution
of this Agreement and the consummation of the transactions contemplated hereby,
and the Board of Directors of Merger Sub has approved and declared advisable the
execution of this Agreement and the consummation of the transactions
contemplated hereby, and has unanimously adopted the plan of merger contained in
this Agreement in accordance with the requirements of the NYBCL;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition of the willingness of the Company to enter into this Agreement,
Warburg Pincus Private Equity IX, L.P. (together with any entity to which the
Guarantee is assigned in accordance with the terms thereof, the "GUARANTOR") is
entering into a guarantee in favor of the Company (the "GUARANTEE") pursuant to
which the Guarantor is guaranteeing certain obligations of Parent and Merger Sub
in connection with this Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER; EFFECTS OF THE MERGER. Upon the terms and
subject to the conditions hereof, and in accordance with the relevant provisions
of the NYBCL, on the Effective Date, Merger Sub shall be merged with and into
the Company (the "MERGER"). As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall be the surviving
corporation in the Merger (the "SURVIVING CORPORATION") under the name "Bausch &
Lomb Incorporated" and shall continue its existence under the Laws of the State
of New York. The Merger shall have the effects set forth herein and in Section
906 of the NYBCL. Without limiting the generality of the foregoing and subject
thereto, on the Effective Date, the Surviving Corporation shall possess all the
rights, privileges, immunities, powers and franchises of the Company and Merger
Sub, all the assets of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.02. CONSUMMATION OF THE MERGER. (a) Subject to the terms
and conditions of this Agreement, the closing of the transactions contemplated
hereby (the "CLOSING," and the date on which the Closing actually occurs, the
"CLOSING DATE") will take place at 10:00 a.m., local time, as promptly as
practicable, but in no event later than the third Business Day, after the
satisfaction or waiver (by the party entitled to grant such waiver) of the
conditions set forth in ARTICLE VI (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions at the Closing), at the offices of Cleary Gottlieb
Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006 or at such
other place or on such other date as Parent and the Company may mutually agree;
PROVIDED, HOWEVER, that, notwithstanding the satisfaction or waiver of the
conditions set forth in ARTICLE VI as of any date, Parent and Merger Sub shall
not be required to effect the Closing until the earlier of (i) a date during the
Marketing Period specified by Parent on no less than three Business Days' notice
to the Company and (ii) the final day of the Marketing Period (subject in each
case to the satisfaction or waiver (by the party entitled to grant such waiver)
of all of the conditions set forth in ARTICLE VI as of the date determined
pursuant to this proviso); PROVIDED, FURTHER, that notwithstanding the
satisfaction or waiver of the conditions set forth in ARTICLE VI, this Agreement
may be terminated pursuant to and in accordance with SECTION 7.01 hereof such
that the parties shall not be required to effect the Closing, regardless of
whether the final day of the Marketing Period shall have occurred before such
termination.
(b) On the Closing Date and subject to the terms and conditions
hereof, Merger Sub and the Company shall cause the Merger to be consummated by
filing with the Secretary of State of the State of New York (the "SECRETARY OF
STATE") a duly executed certificate of merger (the "CERTIFICATE OF MERGER"), as
required by the NYBCL, and shall take all such further actions as may be
required by Law to make the Merger effective. The date of the filing of the
Certificate of Merger by the Secretary of State (or such later date as shall be
agreed to by the parties hereto and is specified in the Certificate of Merger)
is referred to as the "EFFECTIVE DATE."
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SECTION 1.03. CERTIFICATE OF INCORPORATION AND BYLAWS. On the
Effective Date, the certificate of incorporation of the Company shall, by virtue
of the Merger, be amended and restated in its entirety to read as the
certificate of incorporation of Merger Sub in effect immediately prior to the
Effective Date, except that ARTICLE I thereof shall read as follows: "The name
of the Corporation is Bausch & Lomb Incorporated" and subject to the inclusion
of the provisions required by SECTION 5.07 hereof, and as so amended, shall be
the certificate of incorporation of the Surviving Corporation until thereafter
amended as permitted by Law. The bylaws of Merger Sub, as in effect immediately
prior to the Effective Date, shall be the bylaws of the Surviving Corporation
until thereafter amended as permitted by Law and the certificate of
incorporation of the Surviving Corporation.
SECTION 1.04. DIRECTORS AND OFFICERS. The directors of the Company
immediately prior to the Effective Date shall submit their resignations to be
effective as of the Effective Date. Immediately after the Effective Date, Parent
shall take the necessary action to cause the directors of Merger Sub immediately
prior to the Effective Date to be the directors of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation. The officers of the Company immediately
prior to the Effective Date shall be the initial officers of the Surviving
Corporation, and such officers shall hold office in accordance with and subject
to the certificate of incorporation and bylaws of the Surviving Corporation.
SECTION 1.05. CONVERSION OF SHARES. Each (a) share of common stock of
the Company, $0.40 par value (each, a "COMMON SHARE") and (b) share of Class B
stock of the Company, $0.08 par value (each, a "CLASS B SHARE" and each Common
Share or Class B Share being referred to herein individually as a "SHARE" and
collectively as the "SHARES"), issued and outstanding immediately prior to the
Effective Date (other than Dissenting Shares, if any, Shares owned by Parent,
Merger Sub or any Subsidiary of Parent or the Company or held in the treasury of
the Company (collectively, "EXCLUDED SHARES"), all of which shall be canceled
without any consideration being exchanged therefor) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted on
the Effective Date into the right to receive in cash an amount per Share equal
to $65.00, without interest (the "MERGER CONSIDERATION"), subject to any
applicable withholding Tax pursuant to SECTION 1.07, upon the surrender of the
certificate representing such Shares as provided in SECTION 2.01. On the
Effective Date all such Shares shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each holder of any such
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration as provided herein.
SECTION 1.06. CONVERSION OF COMMON STOCK OF MERGER SUB. Each share of
common stock, $0.01 par value, of Merger Sub issued and outstanding immediately
prior to the Effective Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one share
of common stock of the Surviving Corporation.
SECTION 1.07. WITHHOLDING TAXES. Parent and the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable to a holder of Shares, Options, or Restricted Stock Units pursuant to
the Merger or this Agreement any such amounts as are required to be deducted and
withheld with respect to the making of such payment
3
under the Internal Revenue Code of 1986, as amended (the "CODE"), or any
applicable provision of state, local or foreign Tax Law. To the extent that
amounts are so deducted and withheld and paid over to the applicable
Governmental Entity, such deducted or withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Shares,
Options, or Restricted Stock Units in respect of which such deduction and
withholding was made. Parent shall pay, or shall cause to be paid, all amounts
so withheld to the appropriate Governmental Entity for the account of the former
holder within the period required under applicable Law.
SECTION 1.08. SUBSEQUENT ACTIONS. If at any time after the Effective
Date the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to continue, vest, perfect or confirm of record or
otherwise the Surviving Corporation's right, title or interest in, to or under
any of the rights, properties, privileges, franchises or assets of the Company
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, all such deeds, bills of sale, assignments and assurances
and to take and do, in the name and on behalf of the Company or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties, privileges, franchises or assets in the Surviving Corporation or
otherwise to carry out the intent of this Agreement.
ARTICLE II
PAYMENT FOR SHARES; EQUITY AWARDS
SECTION 2.01. PAYMENT FOR SHARES. (a) Prior to the Effective Date,
Parent and Merger Sub shall enter into an agreement with the Company's transfer
agent (or another entity that is engaged in the paying agency or similar
business and that is reasonably acceptable to the Company) to act as agent for
the shareholders of the Company in connection with the Merger (the "PAYING
AGENT") and to receive the Merger Consideration to which the shareholders of the
Company shall become entitled pursuant to this Agreement. On the Effective Date,
Parent will make available to the Paying Agent cash in amounts necessary to make
the payments due pursuant to SECTION 1.05 to holders of Shares that are issued
and outstanding immediately prior to the Effective Date (such amounts being
hereinafter referred to as the "PAYMENT FUND"). The Payment Fund shall be
invested in such manner as Parent shall direct; PROVIDED that (1) no such
investment or losses thereon shall affect the Merger Consideration payable to
the holders of Shares and, following any losses, to the extent necessary to pay
the Merger Consideration, Parent shall promptly provide additional funds to the
Paying Agent for the benefit of the shareholders of the Company and (2) such
investments shall be in short-term obligations of the United States of America
with maturities of no more than 30 days or guaranteed by the United States of
America and backed by the full faith and credit of the United States of America
or in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively. The
Payment Fund shall not be used for any purpose other than to fund payments due
pursuant to SECTION 1.05, except as expressly provided in this Agreement.
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(b) As soon as reasonably practicable after the Effective Date, the
Surviving Corporation shall cause the Paying Agent to mail to each record
holder, as of the Effective Date, of (i) a certificate or certificates which
immediately prior to the Effective Date represented outstanding Shares (the
"CERTIFICATES") or (ii) Shares represented by book-entry ("BOOK-ENTRY SHARES"),
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent or, in the case of
Book-Entry Shares, upon adherence to the procedures set forth in the letter of
transmittal) and instructions for use in effecting the surrender of the
Certificates, or in the case of Book-Entry Shares the surrender of such Shares,
and receiving payment of the Merger Consideration therefor. Following surrender
to the Paying Agent of a Certificate or Book-Entry Share, together with such
letter of transmittal duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate or Book-Entry Share shall be
paid in exchange therefor cash in an amount (subject to any applicable
withholding Tax pursuant to SECTION 1.07) equal to the product of the number of
Shares represented by such Certificate multiplied by the Merger Consideration,
and such Certificate or book-entry shall forthwith be canceled. No interest will
be paid or accrued on the cash payable upon the surrender of the Certificates or
Book-Entry Shares. If payment is to be made to a Person other than the Person in
whose name the Certificate or Book-Entry Share surrendered is registered, it
shall be a condition of payment that the Certificate or Book-Entry Share so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the Person requesting such payment pay any transfer or other Taxes
required by reason of the payment to a Person other than the registered holder
of the Certificate or Book-Entry Share surrendered or establish to the
satisfaction of the Surviving Corporation that such Tax has been paid or is not
applicable. From and after the Effective Date and until surrendered in
accordance with the provisions of this SECTION 2.01, each Certificate and each
Book-Entry Share shall represent for all purposes solely the right to receive,
in accordance with the terms hereof, the Merger Consideration in cash multiplied
by the number of Shares evidenced by such Certificate or book-entry, without any
interest thereon and subject to any applicable withholding Tax pursuant to
SECTION 1.07.
(c) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by the Surviving Corporation,
the posting by such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent will deliver in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration (without
any interest thereon and subject to any applicable withholding Tax pursuant to
SECTION 1.07) with respect to the Shares formerly represented thereby.
(d) Any portion of the Payment Fund (including the proceeds of any
investments thereof) that remains unclaimed by the former shareholders of the
Company for one year after the Effective Date shall be repaid to the Surviving
Corporation. Any former shareholder of the Company that has not complied with
this SECTION 2.01 prior to the end of such one-year period shall thereafter look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar Laws) but only as a general creditor thereof for
5
payment of its claim for the Merger Consideration, without any interest thereon.
The Surviving Corporation shall pay all charges and expenses, including those of
the Paying Agent, in connection with the exchange of Shares for the Merger
Consideration. Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of Shares for any monies delivered from the Payment
Fund or otherwise to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Certificates or Book-Entry Shares shall
not have been surrendered immediately prior to the date that such unclaimed
funds would otherwise become subject to any abandoned property, escheat or
similar Law, any unclaimed funds payable with respect to such Certificates and
Book-Entry Shares shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
SECTION 2.02. CLOSING OF THE COMPANY'S TRANSFER BOOKS. On the
Effective Date, the stock transfer books of the Company shall be closed and no
transfer of Shares that were outstanding prior to the Effective Date shall
thereafter be made. If, after the Effective Date, Certificates or Book-Entry
Shares that were outstanding prior to the Effective Date are presented to the
Surviving Corporation for transfer, they shall be canceled and exchanged for the
Merger Consideration as provided in this ARTICLE II.
SECTION 2.03. TREATMENT OF EQUITY-BASED AWARDS & DEFERRED
COMPENSATION. (a) The Company shall take such actions as are necessary such
that, immediately prior to the Effective Date, each option to purchase Shares
(an "OPTION") granted under the Company's 2003 Long-Term Incentive Plan (the
"2003 PLAN"), the 2001 Stock Incentive Plan for Non-Officers (the "2001 PLAN")
and the 1990 Stock Incentive Plan (the "1990 PLAN") or any other equity
incentive plan of the Company that is outstanding and unexercised immediately
prior to the Effective Date, whether vested or unvested, shall be canceled as of
the Effective Date, and the holder thereof shall receive on the Effective Date
from the Company, or as soon as practicable thereafter from the Surviving
Corporation, in consideration for such cancellation, an amount in cash, without
interest, equal to the product of (A) the number of Shares previously subject to
such Option and (B) the excess, if any, of the Merger Consideration over the
purchase price per Share previously subject to such Option, less any required
withholding Taxes (with the aggregate amount of such payment rounded up to the
nearest whole cent). Except as set forth in Section 2.03 of the Company
Disclosure Letter, each Share granted subject to vesting or other lapse
restrictions pursuant to any Plan (collectively, "RESTRICTED SHARES") which is
outstanding immediately prior to the Effective Date shall vest and become free
of such restrictions as of the Effective Date, and on the Effective Date the
holder thereof shall, subject to this ARTICLE II, be entitled to receive the
Merger Consideration in cash pursuant to SECTION 1.05.
(b) All Restricted Stock Units that are outstanding as of the
Effective Date, whether vested or unvested, shall be canceled as of the
Effective Date and the holder thereof shall receive on the Effective Date from
the Company, or as soon as practicable thereafter from the Surviving
Corporation, in consideration for such cancellation, an amount in cash equal to
the product of (A) the number of Shares previously subject to such Restricted
Stock Unit and (B) the Merger Consideration, subject to any applicable
withholding Taxes pursuant to SECTION 1.07.
6
(c) On the Effective Date, each right of any kind, contingent or
accrued, granted under any Plan including any deferred compensation plan (other
than Options, and Restricted Shares and Restricted Stock Units) of the Company
and its Subsidiaries, to receive Shares or benefits measured in whole or in part
by the value of a number of Shares, which is outstanding immediately prior to
the Effective Date shall cease to represent a right or award with respect to
Shares, and shall be converted into a cash-based right or award equal in amount
to the Merger Consideration in respect of each Share underlying such right and
shall be distributed in accordance with the applicable Plan.
(d) The Company shall take such actions with respect to the Company's
Employee Stock Purchase Plan (the "ESPP") as are necessary to provide that the
ESPP will terminate, effective immediately as of the Effective Date (the "ESPP
TERMINATION DATE"), except that all administrative and other rights and
authorities granted under the ESPP to the Company, the Board of Directors of the
Company or any committee or designee thereof shall remain in effect and reside
with the Surviving Corporation following the Effective Date.
(e) Subject to SECTION 2.03 of the Company Disclosure Letter, the
Company shall take any actions reasonably necessary to effectuate the foregoing
provisions of this SECTION 2.03; it being understood that the intention of the
parties is that following the Effective Date no holder of an Option, Restricted
Share or Restricted Stock Unit or any participant in the ESPP or any other Plan
or other employee benefit arrangement of the Company shall have any right
thereunder to acquire any Shares or other capital stock (including any "phantom"
stock or stock appreciation rights) of the Company, or the Surviving Corporation
or any of their Subsidiaries.
SECTION 2.04. CONVERTIBLE SECURITIES. The terms of the supplemental
indenture entered into by the Company as provided in SECTION 5.15 hereof shall
be effective, such that the holders of the Company's outstanding 2004 Senior
Convertible Securities due August 1, 2023 (the "2004 CONVERTIBLE SECURITIES")
and the Company's outstanding Floating Rate Convertible Senior Notes due August
1, 2023 (the "2003 CONVERTIBLE SECURITIES" and, together with the 2004
Convertible Securities, the "CONVERTIBLE SECURITIES") shall thereafter have the
right to convert such Convertible Securities only into an amount in cash equal
to the amount that such holders of Convertible Securities would be entitled to
receive in the Merger if such holders had validly converted their Convertible
Securities into Shares (and, in the case of the 2004 Convertible Securities,
cash) in accordance with their terms immediately prior to the Effective Date.
SECTION 2.05. ADJUSTMENTS. If at any time during the period between
the date of this Agreement and the Effective Date, any change in the outstanding
shares of capital stock of the Company, or securities convertible or
exchangeable into or exercisable for shares of capital stock, shall occur as a
result of any reclassification, recapitalization, stock split (including a
reverse stock split) or subdivision or combination, exchange or readjustment of
shares, or any stock dividend or stock distribution with a record date during
such period merger or other similar transaction, the Merger Consideration (and
any amounts payable hereunder to the holders of Options and Restricted Stock
Units that are determined based on the Merger Consideration) shall be equitably
adjusted, without duplication, to reflect such change; PROVIDED that nothing in
this
7
SECTION 2.05 shall be construed to permit the Company to take any action with
respect to its securities that is prohibited or not expressly permitted by the
terms of this Agreement.
SECTION 2.06. DISSENTING SHARES. Dissenting Shares (if any) shall not
be converted into or be exchangeable for the right to receive the Merger
Consideration, unless and until the holders shall have failed to perfect or
shall have effectively withdrawn or lost their rights to appraisal (if any)
under the NYBCL. The Company shall give Parent and Merger Sub (a) prompt written
notice of any demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the NYBCL and received by
the Company relating to rights to be paid the "fair value" of Dissenting Shares,
as provided in Section 910 of the NYBCL, and (b) the opportunity to participate
in negotiations and proceedings with respect to demands for appraisal under the
NYBCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make or agree to make any material payment with respect to any
demands for appraisals of capital stock of the Company, or offer to settle or
settle any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as disclosed in the correspondingly numbered section of the
disclosure letter dated the date of this Agreement and delivered by the Company
to Parent with respect to this Agreement immediately prior to the execution of
this Agreement (the "COMPANY DISCLOSURE LETTER") (PROVIDED, HOWEVER, that a
matter disclosed with respect to one representation or warranty shall also be
deemed to disclosed with respect to each other representation or warranty to
which the matter disclosed reasonably relates, to the extent such relationship
is reasonably apparent on the face of the disclosure contained in the Company
Disclosure Letter with respect to such matter) or (b) as disclosed in, and
reasonably apparent on the face of the disclosure contained in, any report,
schedule, form or other document filed with, or furnished to, the Securities and
Exchange Commission (the "SEC") and publicly available after December 27, 2003
and prior to the date of this Agreement (collectively, the "FILED SEC
DOCUMENTS") and only as and to the extent disclosed therein (excluding any
disclosures included therein to the extent they do not relate to historical or
existing facts, events, changes, effects, developments, conditions or
occurrences and are cautionary and forward-looking in nature) and, for the
avoidance of doubt, without giving effect to any event occurring subsequent to
the date any such Filed SEC Document was filed (PROVIDED that in no event shall
any disclosure in any Filed SEC Documents qualify or limit the representations
and warranties of the Company set forth in SECTION 3.02, SECTION 3.03, SECTION
3.05(A), SECTION 3.05(C) or SECTION 3.06(B) of this Agreement), the Company
represents and warrants to each of Parent and Merger Sub as follows:
SECTION 3.01. ORGANIZATION AND QUALIFICATION. (a) The Company is a
duly organized and validly existing entity in good standing under the Laws of
its jurisdiction of organization, with all requisite entity power and authority
to own its properties and conduct its business as currently conducted. Each
Subsidiary of the Company is a duly organized and validly existing entity in
good standing (where applicable) under the Laws of its jurisdiction of
organization, with all requisite entity power and authority to own its
properties and conduct its
8
business as currently conducted, except as would not have, individually or in
the aggregate, a Material Adverse Effect. The Company and each Subsidiary is
duly qualified and in good standing as a foreign corporation or entity
authorized to do business in each of the jurisdictions in which the character of
the properties owned or held under lease by it or the nature of the business
transactied by it makes such qualification necessary, except as would not have,
individually or in the aggregate, a Material Adverse Effect.
(b) The Company has heretofore made available to Parent true, correct
and complete copies of the restated certificate of incorporation and bylaws of
the Company as currently in effect, including all amendments thereto
(respectively, the "CERTIFICATE OF INCORPORATION" and "BYLAWS").
SECTION 3.02. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of (A) 200,000,000 Common Shares, (B) 15,000,000 Class B
Shares, (C) 10,000 shares of 4% cumulative preferred stock, par value $100.00
per share (the "4% PREFERRED Shares"), and (D) 25,000,000 shares of Class A
preferred stock, par value $1.00 per share (the "CLASS A PREFERRED SHARES" and,
together with the 4% Preferred Shares, the "PREFERRED SHARES"), of which 350,000
of such Class A Preferred Shares are designated as "Class A Preferred Stock
Series A." As of the close of business on May 15, 2007 (the "CAPITALIZATION
DATE"), (i) 54,349,438 Common Shares, 29,180 Class B Shares, and no Preferred
Shares were issued and outstanding, (ii) 6,104,836 Common Shares, 158,514 Class
B Shares and no Preferred Shares were held in the Company's treasury, (iii)
1,520,130 Common Shares, no Class B Shares, and no Preferred Shares were
issuable under the Plans (excluding the Options), and (iv) there were
outstanding Options to purchase an aggregate of 2,385,477 Common Shares,
3,194,911 Class B Shares, and no Preferred Shares. All of the outstanding
Shares, including Restricted Shares, have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights.
(b) Section 3.02(b) of the Company Disclosure Letter contains a true,
correct and complete list, as of the date specified thereon, of each outstanding
Option, Restricted Share, Restricted Stock Unit, and other equity-based award
(including under any deferred compensation plan or arrangement) outstanding, the
number of Shares issuable thereunder or to which such award pertains, the
expiration date, and the exercise or conversion price, if applicable, related
thereto and, if applicable, the Plan pursuant to which each such Option,
Restricted Stock Unit, equity-based deferred compensation arrangement or other
equity-based award was granted. Since the Capitalization Date, the Company has
not issued any Shares or Preferred Shares other than the issuance of Shares upon
the exercise of Options or other equity-based awards outstanding on such date in
accordance with their terms and the issuance of Shares upon the conversion of
Convertible Securities outstanding on such date in accordance with their terms,
has not granted any other Company Securities or entered into any other
agreements or commitments to issue any Company Securities, and has not split,
combined or reclassified any shares of its capital stock.
(c) Except for (i) the Options and Restricted Stock Units, in each
case as set forth in SECTION 3.02(A) and SECTION 3.02(B), respectively, of the
Company Disclosure Letter and (ii) the Convertible Securities, there are no
outstanding (A) securities of the Company or any of its Subsidiaries convertible
into or exchangeable for shares of capital stock, voting
9
securities or other ownership interests in the Company, (B) options, restricted
stock warrants, rights or other agreements or commitments to acquire from the
Company or any of its Subsidiaries, or obligations of the Company or any of its
Subsidiaries to issue, any capital stock, voting securities or other ownership
interests in (or securities convertible into or exchangeable for capital stock,
voting securities or other ownership interests in) the Company, (C) obligations
of the Company or any of its Subsidiaries to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock, voting securities
or other ownership interests in the Company (the items in clauses (A), (B) and
(C), together with the capital stock of the Company, being referred to
collectively as "COMPANY SECURITIES"), or (D) obligations of the Company or any
of its Subsidiaries to make any payments directly or indirectly based (in whole
or in part) on the price or value of any Company Securities. There are no
outstanding obligations, commitments or arrangements, contingent or otherwise,
of the Company or any of its Subsidiaries to purchase, redeem or otherwise
acquire any Company Securities. There are no voting trusts or other agreements
or understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting of capital stock or other voting securities of the
Company.
(d) The Company, alone or together with one or more of its
Subsidiaries, is the record and beneficial owner of (x) all the equity interests
of each Significant Subsidiary (as defined in Rule 1,02(w) of Regulation S-X
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of
the Company, (y) 60% of the equity interests of Beijing Bausch & Lomb Eyecare
Company, Ltd., 70% of the equity interests of Shandong B&L Freda Pharmaceutical
Co. Ltd., 70% of the equity interests of Shandong B&L Freda New Packaging
Resource Co. Ltd and 80% of the equity interests of Bausch & Lomb Korea Co. Ltd.
in each case free and clear of any Lien, including any limitation or restriction
on the right to vote, pledge or sell or otherwise dispose of such equity
interests. With respect to each Significant Subsidiary only, there are no
outstanding (i) securities of the Company or any of its Subsidiaries convertible
into or exchangeable for shares of capital stock, voting securities or other
ownership interests in any Significant Subsidiary of the Company, (ii) options,
restricted stock, warrants, rights or other agreements or commitments to acquire
from the Company or any of its Subsidiaries, or obligations of the Company or
any of its Subsidiaries to issue, any capital stock, voting securities or other
ownership interests in (or securities convertible into or exchangeable for
capital stock, voting securities or other ownership interests in) any
Significant Subsidiary of the Company, (iii) obligations of the Company or any
of its Subsidiaries to grant, extend or enter into any subscription, warrant,
right, convertible or exchangeable security or other similar agreement or
commitment relating to any capital stock, voting securities or other ownership
interests in any Significant Subsidiary of the Company (the items in clauses
(i), (ii) and (iii), together with the capital stock or other equity interests
of such Significant Subsidiaries, being referred to collectively as "SIGNIFICANT
SUBSIDIARY SECURITIES"), or (iv) obligations of the Company or any of its
Subsidiaries to make any payment directly or indirectly based (in whole or in
part) on the price or value of any Significant Subsidiary Securities. There are
no outstanding obligations of the Company or any of its Significant Subsidiaries
to purchase, redeem or otherwise acquire any outstanding Significant Subsidiary
Securities. There are no voting trusts or other agreements or understandings to
which the
10
Company or any of its Subsidiaries is a party with respect to the voting of
capital stock or other voting securities of any Significant Subsidiary of the
Company.
SECTION 3.03. AUTHORITY FOR THIS AGREEMENT; BOARD ACTION. (a) The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby to which
the Company is a party. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of the
Company, acting upon the recommendation of the Special Committee, including the
adoption by the Board of Directors, acting upon the recommendation of the
Special Committee, of the plan of merger contained in this Agreement, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
other than, with respect to completion of the Merger, the adoption of the plan
of merger contained in this Agreement by the Requisite Shareholder Approval
prior to the consummation of the Merger and the filing with the Department of
State for the State of New York of the Certificate of Merger as required by the
NYBCL. This Agreement has been duly and validly executed and delivered by the
Company and, assuming due authorization, execution and delivery by each of
Parent and Merger Sub, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(b) The Company's Board of Directors (at a meeting or meetings duly
called and held), acting upon the recommendation of the Special Committee,
unanimously has (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and fair to and in the
best interests of, the Company and its shareholders (other than shareholders (if
any) who invest in Parent or Merger Sub, as to whom the Special Committee has
not made any such determination), (ii) adopted and approved this Agreement and
the transactions contemplated hereby, including the plan of merger contained in
this Agreement and (iii) directed that this Agreement be submitted to the
shareholders of the Company for their approval and (iv) subject to SECTION 5.02,
resolved to recommend the adoption of the plan of merger contained in this
Agreement by the shareholders of the Company (the "COMPANY BOARD
RECOMMENDATION").
SECTION 3.04. CONSENTS AND APPROVALS; NO VIOLATION. (a) Neither the
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (i) violate or conflict with or result
in any breach of any provision of the Certificate of Incorporation or Bylaws of
the Company, (ii) assuming all consents, approvals and authorizations
contemplated by clauses (i) through (iii) of subsection (b) below have been
obtained, and all filings described in such clauses have been made, conflict
with or violate any order, writ, injunction, decree, judgment, determination,
requirement, award, stipulation, statute, rule or regulation of any Governmental
Entity ("LAW") applicable to the Company or any of its Subsidiaries or by which
any of their respective assets are bound, (iii) violate, conflict with or result
in a breach of, or require any consent, waiver or approval under, or result in a
default or give rise to any right of termination, cancellation, modification or
11
acceleration (or an event that, with the giving of notice, the passage of time
or otherwise, would constitute a default or give rise to any such right) under,
any of the terms, conditions or provisions of any note, bond, mortgage, lease,
license, agreement, contract, indenture or other instrument or obligation
("CONTRACT") to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
are bound, or (iv) result (or, with the giving of notice, the passage of time or
otherwise, would result) in the creation or imposition of any Lien on any asset
of the Company or any of its Subsidiaries, except in case of clauses (ii), (iii)
and (iv), as would not have, individually or in the aggregate, a Material
Adverse Effect.
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby do not and
will not require any consent, approval, authorization or permit of, or filing
with or notification to, any foreign, federal, state or local government or
subdivision thereof, or governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or body (a
"GOVERNMENTAL ENTITY"), except (i) the pre-merger notification requirements
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), under Council Regulation (EC) No 139/2004 (the "EMCR") or under the
applicable requirements of antitrust or other competition laws, or investment
laws relating to foreign ownership, of jurisdictions other than the United
States ("FOREIGN ANTITRUST LAWS"), (ii) the applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder or the rules
and regulations of the New York Stock Exchange ("NYSE"), (iii) the filing of
the Certificate of Merger with the Secretary of State required by the NYBCL, and
(iv) any such consent, approval, authorization, permit, filing, or notification
the failure of which to make or obtain would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.05. REPORTS; FINANCIAL STATEMENTS. (a) The Company has
timely filed or furnished (as applicable) (i) all quarterly reports on Form 10-Q
and annual reports on Form 10-K required to be filed by it with or to the SEC
since December 25, 2004 and before November 11, 2005 and (ii) all other forms,
reports, statements and certifications (excluding reports on Form 10-Q or Form
10-K and any proxy statement with respect to an annual meeting that was not
held) required to be filed or furnished by it with or to the SEC since December
25, 2004. The forms, reports, statements and certifications referred to in the
previous sentence, collectively, together with all forms, reports, statements
and certifications filed or furnished by the Company with or to the SEC on or
after November 11, 2005, as amended (including the 2005 10-K and the 2006 10-K
(each as defined below)) are referred to herein as the "COMPANY SEC REPORTS." As
of their respective filing dates (or, if amended or superseded by a subsequent
filing, as of the date of the last such amendment or superseding filing prior to
the date hereof), the Company SEC Reports complied as to form in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the Exchange Act and the Sarbanes-Oxley Act of
2002 (the "SARBANES-OXLEY ACT") and, in each case, the rules and regulations of
the SEC promulgated thereunder. None of the Company SEC Reports, including any
financial statements or schedules included or incorporated by reference therein,
at the time filed or furnished (or, if amended or superseded by a subsequent
filing, as of the date of the last such amendment or superseding filing prior to
the date hereof), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
12
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. No executive officer of the Company has failed
in any respect to make the certifications required of him or her under Section
302 or 906 of the Sarbanes-Oxley Act with respect to any Company SEC Report.
True, correct and complete copies of all Company SEC Reports filed or furnished
prior to the date of this Agreement, whether or not required under applicable
Law, have been furnished to Parent or are publicly available in the Electronic
Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC.
(b) None of the Company's Subsidiaries is required to file periodic
reports with the SEC pursuant to the Exchange Act. As of the date of this
Agreement, (i) the Common Shares are listed for trading on the New York Stock
Exchange, and (ii) to the knowledge of the Company, there is no fact, event or
circumstance which would reasonably be expected, individually or in the
aggregate, to cause the Common Shares to be de-listed from trading on the New
York Stock Exchange prior to the Effective Date.
(c) All of the Company's Significant Subsidiaries (as defined below)
are consolidated for accounting purposes. The audited and unaudited consolidated
financial statements (including the related notes thereto) of the Company
included (or incorporated by reference) (i) in the Company's Annual Report on
Form 10-K for its fiscal year ended December 31, 2005 (the "2005 10-K") and the
Company's Annual Report on Form 10-K for its fiscal year ended December 30, 2006
(the "2006 10-K"), in each case, filed with the SEC prior to the date of this
Agreement, as amended or supplemented by filings with the SEC made prior to the
date of this Agreement, or (ii) in Company SEC Reports filed or furnished with
or to the SEC after the date of this Agreement related to periods ending after
December 30, 2006 (the "BALANCE SHEET DATE"), have been prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of their
respective dates, and the consolidated income, shareholders equity, results of
operations and changes in consolidated financial position or cash flows for the
periods presented therein; PROVIDED that unaudited interim financial statements
may not contain footnotes required by GAAP and are subject to normal year-end
adjustments.
(d) Except as set forth in the 2005 10-K and the 2006 10-K, the
Company and its Subsidiaries have implemented and maintain a system of internal
accounting controls over financial reporting (as required by Rule 13a-15(a)
under the Exchange Act) that are sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with GAAP. The Company (i) has implemented
and maintains disclosure controls and procedures (as required by Rule 13a-15(a)
or 15d-15 under the Exchange Act) reasonably sufficient to ensure that
information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time frames specified by the SEC's rules and forms, and (ii) has
disclosed, based on its most recent regular quarterly evaluation prior to the
date of this Agreement, to the Company's outside auditors and the audit
committee of the Company's Board of Directors (A) any significant deficiencies
and material weaknesses in the design or operation of its internal controls over
financial reporting (as defined in Rule
13
13a-15(f) under the Exchange Act) that would reasonably be expected to
materially and adversely affect the Company's ability to record, process,
summarize and report financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls over financial reporting.
(e) Neither the Company nor any of its Subsidiaries has any
liabilities of any nature, whether accrued, absolute, fixed, contingent or
otherwise, known or unknown, whether due or to become due, required by generally
accepted accounting principles to be reflected in a consolidated balance sheet
or the notes thereto, other than such liabilities (i) as and to the extent
reflected or reserved against on the consolidated balance sheet of the Company
dated as of the Balance Sheet Date included in the 2006 10-K or the notes
thereto, (ii) incurred in the ordinary course of business consistent with past
practice since the Balance Sheet Date that would not have, individually or in
the aggregate, a Material Adverse Effect, (iii) that have been discharged or
paid in full prior to the date of this Agreement in the ordinary course of
business or (iv) that would not have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 3.06. ABSENCE OF CERTAIN CHANGES. (a) Since the Balance Sheet
Date, the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice in all
material respects.
(b) Since the Balance Sheet Date, the Company has not suffered any
Material Adverse Effect, and there has not been any change, condition, event or
development that would have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.07. PROXY STATEMENT; OTHER FILINGS. The letter to
shareholders, notice of meeting, final proxy statement and form of proxy that
will be provided to shareholders of the Company in connection with the Merger
(including any amendments or supplements) (collectively, the "PROXY STATEMENT"),
at the time the Proxy Statement is first mailed to shareholders and at the time
of the Special Meeting, and any other report required to be filed by the Company
or any of its Subsidiaries with the SEC in connection with the Merger (the
"OTHER FILINGS"), at the time of its filing with the SEC, each will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation or warranty is made by the Company with respect to
information supplied or to be supplied in writing by Parent, Merger Sub or any
Affiliate of Parent or Merger Sub expressly for inclusion therein. At the time
of its respective filing with the SEC and at the time any amendment or
supplement thereto is filed with the SEC, the Proxy Statement and the Other
Filings will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations of the SEC promulgated
thereunder.
SECTION 3.08. BROKERS; CERTAIN EXPENSES. No agent, broker, financial
advisor or other Person is or will be entitled, as a result of any action,
agreement or commitment of the Company or any of its Affiliates, to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with any of the transactions contemplated by this Agreement, except
Morgan Stanley & Co. Incorporated ("MORGAN STANLEY"), whose fees and expenses
shall
14
be paid by the Company. A true and correct copy of the engagement letter with
Morgan Stanley entered into in connection with the transactions contemplated
hereby has been delivered to Parent prior to the date hereof, and such
engagement letter has not been amended or modified in any respect.
SECTION 3.09. EMPLOYEE MATTERS. (a) Section 3.09(a) of the Company
Disclosure Letter contains a true, correct and complete list of all material
Plans in effect on the date hereof. Prior to the date of this Agreement, the
Company has provided to Parent true, correct and complete copies as in effect on
the date hereof in all material respects of each of the following, as
applicable, with respect to each material Plan maintained in the United States:
(i) the plan document or agreement or, with respect to any Plan that is not in
writing, a description of the material terms thereof; (ii) any summary plan
description required to be furnished to participants pursuant to ERISA; (iii)
the most recent annual report, actuarial report and/or financial report, if any
(other than for Plans maintained outside of the United States); (iv) all
amendments or modifications to any such documents; (v) the most recent
determination letter received from the Internal Revenue Service with respect to
each Plan that is intended to be a "qualified plan" under Section 401 of the
Code; and (vi) the most recent required Internal Revenue Service Form 5500,
including all schedules thereto. Notwithstanding the foregoing, Section 3.09(a)
of the Company Disclosure Letter does not list Plans maintained outside of the
United States, and the Company's obligations pursuant to this paragraph in
respect of Plans maintained outside of the United States may be satisfied by the
Company making reasonable efforts to provide Parent, no later than 20 business
days following the date hereof, with: (i) a list of such Plans that are
material, (ii) a copy or a summary of such material Plans; and (iii) a copy of
actuarial reports or summary financial information of such material Plans to the
extent applicable.
(b) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, with respect to each Plan, (i) all expenses,
contributions, premiums or payments required to be made to, under or with
respect to such Plan have been timely made and all amounts properly accrued to
date or as of the Effective Date as liabilities of the Company or any of its
Subsidiaries which are not yet due have been properly recorded on the books of
the Company and, to the extent required by GAAP, adequate reserves are reflected
on the financial statements of the Company, (ii) each such Plan which is an
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and intended to
qualify under Section 401 of the Code has received a favorable determination
letter from the Internal Revenue Service with respect to such qualification,
and, to the knowledge of the Company, nothing has occurred since the date of
such letter that has affected, or would adversely affect, such qualification,
(iii) with respect to any Plan maintained outside the United States, all
applicable foreign qualifications or registration requirements have been
satisfied in all material respects, except where any failure to comply would not
result in any material liability to the Company or its Subsidiaries, (iv) there
are no actions, suits or claims pending (other than routine claims for benefits)
or, to the knowledge of the Company, threatened or anticipated with respect to
such Plan, any fiduciaries of such Plan with respect to their duties to any
Plan, or against the assets of such Plan or any trust maintained in connection
with such Plan, (v) it has been operated and administered in compliance in all
material respects with its terms and all applicable Laws and regulations,
including ERISA and the Code, and (vi)
15
there is not now, and to the knowledge of the Company there are no existing
circumstances that would reasonably be expected to give rise to, any requirement
for the posting of security with respect to a Plan or the imposition of any
pledge, lien, security interest or encumbrance on the assets of the Company or
any of its Subsidiaries or any of their respective ERISA Affiliates (as defined
below) under ERISA or the Code, or similar Laws of foreign jurisdictions.
(c) Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, neither the Company nor any of
its Subsidiaries nor any trade or business, whether or not incorporated (an
"ERISA AFFILIATE"), that, together with the Company or any of its Subsidiaries
would be deemed to be a "single employer" within the meaning of Section 4001(b)
of ERISA, (i) maintains or contributes to (A) any "employee benefit plan" within
the meaning of Section 3(3) of ERISA that is subject to Section 302 or Title IV
of ERISA or Section 412 of the Code or (B) a "multiemployer plan" within the
meaning of Section 3(37) and 4001(a)(3) of ERISA or a "multiple employer plan"
within the meaning of Sections 4063/4064 of ERISA or Section 413(c) of the Code,
or (ii) has incurred or reasonably expects to incur any material liability
pursuant to Title IV of ERISA (including any Controlled Group Liability), other
than for premium payments to the Pension Benefit Guaranty Corporation. No Plan
of the Company, any of its Subsidiaries or any of their respective ERISA
Affiliates has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA. With
respect to each Plan that is a "multiemployer plan," no complete or partial
withdrawal from such plan has been made by the Company or any of its
Subsidiaries that would reasonably be expected to result in any liability to the
Company or any of its Subsidiaries which would have, individually or in the
aggregate, a Material Adverse Effect.
(d) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, to the knowledge of the Company, no Plan is under audit
or is the subject of an investigation in each case by the Internal Revenue
Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation,
the SEC or any other Governmental Entity, nor is any such audit or investigation
pending or threatened.
(e) Neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, either
alone or in conjunction with any other event (whether contingent or otherwise),
(i) result in any payment or benefit becoming due or payable, or required to be
provided, to any director, employee or independent contractor of the Company or
any of its Subsidiaries, (ii) increase the amount or value of any benefit or
compensation otherwise payable or required to be provided to any such director,
employee or independent contractor, (iii) result in the acceleration of the time
of payment, vesting or funding of any such benefit or compensation, or (iv)
result in any amount failing to be deductible by reason of Section 280G of the
Code.
(f) To the knowledge of the Company, all options have been granted in
compliance with the terms of the applicable Plans, with applicable Law, and with
the applicable provisions of the Certificate of Incorporation and Bylaws as in
effect at the applicable time, and all such Options are accurately disclosed as
required under applicable Law in the Company SEC Reports, including the
financial statements contained therein or attached thereto (if
16
amended or superceded by a filing with the SEC made prior to the date of this
Agreement, as so amended or superceded). To the knowledge of the Company, the
Company has not issued any Options or any other similar equity awards pertaining
to Shares under any Plan with an exercise price that is less than the "fair
market value" of the underlying Shares on the date of grant, as determined for
financial accounting purposes under GAAP.
SECTION 3.10. EMPLOYEES. (a) Neither the Company nor any of its
Subsidiaries is a party to or bound by any collective bargaining agreement or
any labor union contract with respect to employees in the United States. At the
date of this Agreement, there are no pending, or, to the knowledge of the
Company, threatened, labor strikes, disputes, walkouts, work stoppages,
slowdowns, or lockouts with respect to employees of the Company or any of its
Subsidiaries, except for any such strikes, disputes, walkouts, work stoppages,
slowdowns, or lockouts that would not have, individually or in the aggregate, a
Material Adverse Effect. No labor grievance or arbitration demand or proceeding,
or unfair labor practice charge or proceeding, whether or not filed pursuant to
a collective bargaining agreement, has been filed, is pending or, to the
knowledge of the Company, has been threatened against the Company or its
Subsidiaries, except for any such demands, charges or proceedings that would not
have, individually or in the aggregate, a Material Adverse Effect.
(b) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, to the knowledge of the Company, the Company and each
of its Subsidiaries are in compliance in all material respects with all
applicable local, state, federal and foreign Laws relating to labor and
employment, including but not limited to Laws relating to discrimination,
disability, labor relations, hours of work, payment of wages and overtime wages,
pay equity, immigration, workers compensation, working conditions, employee
scheduling, occupational safety and health, family and medical leave, and
employee terminations. Except as would not have, individually or in the
aggregate, a Material Adverse Effect, to the knowledge of the Company, there are
no complaints, lawsuits, arbitrations, administrative proceedings, or other
Proceedings pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries brought by or on behalf of any applicant for
employment, any current or former employee, any person alleging to be a current
or former employee, any class of the foregoing, or any Governmental Entity,
relating to any such Law or regulation, or alleging breach of any express or
implied contract of employment, wrongful termination of employment, or alleging
any other discriminatory, wrongful or tortuous conduct in connection with the
employment relationship.
(c) Within the last six months, neither the Company nor any of its
Subsidiaries has incurred any liability or obligation which remains unsatisfied
under the Worker Adjustment and Retraining Notification Act ("WARN" ) or any
state or local Laws regarding the termination or layoff of employees.
SECTION 3.11. LITIGATION. As of the date hereof, there is no claim,
action, suit, proceeding, arbitration, mediation or investigation by or before
any Governmental Entity (each, a "PROCEEDING") pending or, to the knowledge of
the Company, threatened against or relating to the Company or any of its
Subsidiaries or any properties or assets of the Company or any Subsidiaries of
the Company, other than any such Proceeding that would not have, individually
17
or in the aggregate, a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries nor any of their respective properties or assets is subject to
any outstanding order, writ, injunction or decree of any Governmental Entity
having jurisdiction which would have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 3.12. TAX MATTERS. (a) Except as would not have, individually
or in the aggregate, a Material Adverse Effect, (i) the Company and each of its
Subsidiaries has timely filed (taking into account extensions validly obtained)
all returns and reports relating to Taxes required to be filed by applicable Law
with respect to the Company and each of its Subsidiaries , (ii) all such returns
are true, correct and complete, (iii) the Company and each of its Subsidiaries
have timely paid all Taxes attributable to the Company or any of its
Subsidiaries that were due and payable, except, in the case of clauses (ii) and
(iii) hereof, with respect to Taxes that are being contested in good faith or
have been adequately provided for in accordance with GAAP, (iv) the Company has
made adequate provision, in accordance with GAAP, in the consolidated financial
statements included in the Company SEC Reports for the payment of all Taxes for
which the Company or any of its Subsidiaries may be liable for the periods
covered thereby, (v) there is no audit, investigation, claim or assessment in
respect of Taxes pending or, to the knowledge of the Company, threatened in
writing against the Company or any of its Subsidiaries, (vi) there are no
Contracts in effect to extend the period of limitations for the assessment or
collection of any Tax for which the Company or any of its Subsidiaries may be
liable, and there is no currently effective "closing agreement" pursuant to
Section 7121 of the Code (or any similar provision of foreign, state or local
Law), (vii) there is no obligation of the Company or any of its Subsidiaries to
contribute to the payment of any Tax liability (or any amount calculated with
reference thereto) of any Person (other than the Company or its Subsidiaries),
including under Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local or foreign law), as transferee or successor, by Contract or
otherwise (other than pursuant to customary agreements to indemnify lenders or
indemnity provisions in agreements relating to the acquisition or disposition of
assets), (viii) no claim has been made within the last three years by any
Governmental Entity in a jurisdiction where either the Company or any of its
Subsidiaries has not filed income Tax returns that the Company or any Subsidiary
is or may be subject to income taxation by that jurisdiction, (ix) neither the
Company nor any of its Subsidiaries has engaged in a "listed transaction" (as
defined in Treasury Regulation Section 1.6011-4), and (x) the Company and each
of its Subsidiaries have withheld from payments to their employees, independent
contractors, creditors, shareholders and any other applicable person (and timely
paid to the appropriate Governmental Entity) proper and accurate amounts in
compliance with all applicable Tax withholding provisions of any Governmental
Entity for all periods through the date of this Agreement, except with respect
to amounts that are being contested in good faith or have been adequately
provided for in accordance with GAAP.
(b) For purposes of this Agreement, "TAX" shall mean all taxes,
charges, levies, imposts, duties, and other like assessments, including any
income, gross receipts, sales, use, transfer, intangibles, value-added,
franchise, title, license, capital, withholding, employee withholding, payroll,
worker's compensation, unemployment insurance, social security, employment,
excise, severance, stamp, transfer, premium, recording, real property, personal
property, commercial rent, environmental or other tax imposed by a Governmental
Entity, together with any interest, penalties, fines or additions to tax.
18
SECTION 3.13. COMPLIANCE WITH LAW; PERMITS. (a) Except as would not
have, individually or in the aggregate, a Material Adverse Effect, the Company
and each of its Subsidiaries is and has been in compliance with all Laws
applicable to the conduct of the business of the Company or any of its
Subsidiaries or by which any assets of the Company or any of its Subsidiaries
are bound or affected, including all statutes, rules and regulations enforced by
the United States Food and Drug Administration (the "FDA") or comparable
Governmental Entities of any other jurisdiction in which the Company or any of
its Subsidiaries conducts business (the "FOOD AND DRUG LAWS").
(b) The Company and its Subsidiaries have all registrations,
applications, licenses, requests for exemptions, clearances approvals, permits
and other regulatory authorizations, in each instance, from Governmental
Entities having jurisdiction ("PERMITS") required (i) to own and/or lease their
current real properties (as the case may be), (ii) to conduct their businesses
as now being conducted, or (iii) for each product of the Company or any of its
Subsidiaries that is currently in commercial distribution, and each such Permit
is in full force and effect and, to the knowledge of the Company and its
Subsidiaries, no suspension, revocation, cancellation or withdrawal by a
Governmental Entity of such Permit is pending or threatened, except for any such
Permits the absence of which, or the failure of which to be in full force and
effect, or the suspension, revocation, cancellation or withdrawal of which,
would not have, individually or in the aggregate, a Material Adverse Effect.
Except as would not have, individually or in the aggregate, a Material Adverse
Effect, the Company and each of its Subsidiaries is and has been in compliance
with such Permits.
(c) Neither the Company nor any of its Subsidiaries is subject to any
obligation arising under any consent decree, notice of violation letter, FDA
Form 483, clinical hold, consent agreement, Official Action Indicated status,
warning letter or other notice, response or commitment made to or with the FDA
or any comparable Governmental Entity having jurisdiction, except for any such
obligation that would not have, individually or in the aggregate, a Material
Adverse Effect. The Company and its Subsidiaries have made all notifications,
submissions and reports required by any such obligation, except for any such
notifications, submissions and reports the failure of which to be made would not
have, individually or in the aggregate, a Material Adverse Effect.
(d) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, each product in current commercial distribution that is
subject to any Food and Drug Law and has been developed, manufactured, tested,
packaged, labeled, stored, distributed or marketed by or on behalf of the
Company or any of its Subsidiaries (a "MEDICAL DEVICE"), has been and is
currently being developed, manufactured, tested, packaged, labeled, promoted,
advertised, stored, distributed and marketed in compliance with (i) all Permits
from the FDA or any comparable Governmental Entity having jurisdiction and (ii)
all applicable requirements under the Food and Drug Laws.
(e) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, the Company's and its Subsidiaries' facilities are
registered with the FDA (if the business that is currently conducted within such
facility requires such registration), and each product of the Company or any of
its Subsidiaries approved for sale pursuant to any Food and
19
Drug Law enforced by the FDA is listed with the FDA under the applicable FDA
registration and listing regulations for Medical Devices.
(f) Neither the Company nor any of its Subsidiaries has received any
written notice or communication from the FDA alleging noncompliance with any
applicable Food and Drug Law, except for any such alleged noncompliance that
would not have, individually or in the aggregate, a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is subject to any Proceeding
relating to or arising under any Food and Drug Law, the Social Security Act of
1935 (the "SOCIAL SECURITY ACT") or the regulations of the Office of the
Inspector General of the Department of Health and Human Services, and, to the
knowledge of the Company, no such Proceedings are threatened, except for any
such Proceedings that would not have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 3.14. ENVIRONMENTAL MATTERS. (a) Except as would not have,
individually or in the aggregate, a Material Adverse Effect, each of the Company
and its Subsidiaries (i) is and has been in compliance with applicable
Environmental Laws and (ii) holds and is and has been in compliance with all
Permits required under Environmental Laws for the conduct of its business and
activities ("ENVIRONMENTAL PERMITS"). Except as would not have, individually or
in the aggregate, a Material Adverse Effect, such Environmental Permits were
validly issued and are in full force and effect, and all applications, notices
or other documents have been timely filed to effect timely renewal, issuance or
reissuance of such Environmental Permits. To the knowledge of the Company, all
material Environmental Permits are expected to be issued or reissued on a timely
basis on such terms and conditions as are reasonably expected to enable the
Company and its Subsidiaries to continue to conduct their operations in a manner
substantially similar to the manner in which such operations are presently
conducted, except for any such Environmental Permits the failure of which to be
issued or reissued on a timely basis and on such terms and conditions as
described would not have, individually or in the aggregate, a Material Adverse
Effect.
(b) Neither the Company nor any of its Subsidiaries has been or is
presently the subject of any Environmental Claim, and no Environmental Claim is
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or against any Person whose liability for the
Environmental Claim was or may have been retained or assumed by Contract or by
operation of Law or pursuant to any Order by the Company or any of its
Subsidiaries, except for any such Environmental Claims that would not have,
individually or in the aggregate, a Material Adverse Effect.
(c) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, no Hazardous Materials are present at any properties
currently leased, operated or used or previously owned, leased, operated or
used, in circumstances that would reasonably be expected to form the basis for
an Environmental Claim against the Company or any of its Subsidiaries.
(d) To the knowledge of the Company, no property presently owned,
leased or operated by the Company or any of its Subsidiaries contains any
landfills, surface impoundments, disposal areas, underground storage tanks,
aboveground storage tanks, asbestos
20
or asbestos-containing material, polychlorinated biphenyls, radioactive
materials or other Hazardous Materials that would reasonably be expected,
individually or in the aggregate, to give rise to remediation, removal or
retirement costs which would result in a Material Adverse Effect.
(e) No Lien imposed by any Governmental Entity having jurisdiction
pursuant to any Environmental Law is currently outstanding and no financial
assurance obligation is in force as to any property owned, leased or operated by
the Company or any of its Subsidiaries, except for any such Liens or obligations
that would not have, individually or in the aggregate, a Material Adverse
Effect.
(f) The Company and its Subsidiaries have no obligation or liability
by Contract relating to or arising under Environmental Law, except for any such
obligations or liabilities that would not have, individually or in the
aggregate, a Material Adverse Effect.
(g) For purposes of the Agreement:
(i) "ENVIRONMENT" means any ambient, workplace or indoor air, surface
water, drinking water, groundwater, land surface (whether below or above
water), subsurface strata, sediment, plant or animal life, natural
resources, and the sewer, septic and waste treatment, storage and disposal
systems servicing real property or physical buildings or structures.
(ii) "ENVIRONMENTAL CLAIM" means any claim, cause of action,
investigation or notice by any Person, including any Governmental Entity
having jurisdiction, alleging potential liability (including potential
liability for investigatory costs, cleanup or remediation costs,
governmental or third party response costs, natural resource damages,
property damage, personal injuries, or fines or penalties) based on or
resulting from (A) the presence or Release of any Hazardous Materials at
any location, whether or not owned or operated by the Company or any of its
Subsidiaries, or (B) any violation of any Environmental Law.
(iii) "ENVIRONMENTAL LAW" means any Law (including common law) or any
binding Contract, memorandum of understanding or commitment letter issued
or entered by or with any Governmental Entity or Person relating to: (A)
the Environment, including pollution, contamination, cleanup, preservation,
protection and reclamation of the Environment, (B) exposure of employees
or third parties to any Hazardous Materials, (C) any Release or threatened
Release of any Hazardous Materials, including investigation, assessment,
testing, monitoring, containment, removal, remediation and cleanup of any
such Release or threatened Release, (D) the management of any Hazardous
Materials, including the use, labeling, processing, disposal, storage,
treatment, transport, or recycling of any Hazardous Materials, or (E) the
presence of Hazardous Materials in any building, physical structure,
product or fixture.
(iv) "HAZARDOUS MATERIALS" means any pollutant, contaminant,
constituent, chemical, raw material, product or by-product, mold, petroleum
or any fraction thereof,
21
asbestos or asbestos-containing material, polychlorinated biphenyls, lead
paint, insecticide, fungicide, rodenticide, pesticide, any hazardous,
industrial or solid waste, and any toxic, radioactive, infectious or
hazardous substance, material, or agent, including all substances,
materials or wastes which are identified by or subject to regulation or
give rise to liability under any Environmental Law.
(v) "RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor Environment, or into or out of any property,
including movement through air, soil, surface water, groundwater or
property.
SECTION 3.15. INTELLECTUAL PROPERTY. (a) Except as would not have,
individually or in the aggregate, a Material Adverse Effect, the Company and its
Subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, inventions and discoveries (whether or not
patentable or reduced to practice), trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, copyrights, trade secrets and all other confidential or
proprietary information and know-how, whether or not reduced to writing or any
other tangible form, and other proprietary intellectual property rights arising
under the Laws of the United States (including any state or territory), any
other country or group of countries or any political subdivision of any of the
foregoing, whether registered or unregistered (collectively, "INTELLECTUAL
PROPERTY RIGHTS") used in or reasonably necessary for the conduct of the
business of the Company or any of its Subsidiaries as of the date of this
Agreement, including Intellectual Property Rights reasonably necessary for the
development and commercialization of products currently marketed by the Company
and its Subsidiaries (such subset of Intellectual Property Rights, the "COMPANY
INTELLECTUAL PROPERTY").
(b) Except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, (i) Company has received no
third-party written claim of invalidity or conflicting ownership rights with
respect to any Company Intellectual Property owned by the Company or by a
Subsidiary of the Company ("COMPANY OWNED INTELLECTUAL PROPERTY") and no such
Company Owned Intellectual Property is the subject of any pending or, to the
Company's knowledge, threatened interference, opposition or other Proceeding,
(ii) no Person has given written notice to the Company or any Subsidiary of the
Company that the use of any Company Intellectual Property, including the
manufacture, importation, sale or offer for sale of any product of the Company
or any of its Subsidiaries currently in commercial distribution, by the Company,
any Subsidiary of the Company or any licensee is infringing or has infringed any
domestic or foreign registered patent, trademark, service mark, trade name, or
copyright or design right, or that the Company, any Subsidiary of the Company or
any licensee has misappropriated or improperly used or disclosed any trade
secret, confidential information or know-how, (iii) to the knowledge of the
Company, the manufacture, importation, sale or offer for sale of any product of
the Company or any of its Subsidiaries currently in commercial distribution,
does not infringe any valid domestic or foreign registered patent, trademark,
service mark, trade name, copyright or other Intellectual Property Right of any
third party, and does not involve the misappropriation or improper use or
disclosure of any trade secrets, confidential information or know-how of any
third party of which the Company has knowledge,
22
(iv) to the Knowledge of the Company, neither the Company nor
any Subsidiary of the Company has performed prior acts or is engaged
in current conduct or use, (and to the knowledge of the Company, there
exists no prior act or current use by any third party) that would void or
invalidate any Company Owned Intellectual Property, and (v) the execution,
delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby will not cause the
forfeiture or termination or give rise to a right of forfeiture or
termination of any of the Company Intellectual Property, impair the right
of the Company to make, use, sell, license or dispose of, or to bring any
action for the infringement of, any Company Owned Intellectual Property,
or impair the right of Company or any of its Subsidiaries to the
manufacture, importation, sale or offer for sale of any of their products
currently in commercial distribution.
(c) Notwithstanding any other representations and warranties in this
Agreement, the representations and warranties in this SECTION 3.15 are the only
representations and warranties in this Agreement with respect to Intellectual
Property Rights.
SECTION 3.16. REAL PROPERTY. (a) Section 3.16(a) of the Company
Disclosure Letter sets forth a true, correct and complete list of all material
real property owned by the Company or any of its Subsidiaries (the "OWNED REAL
PROPERTY"). With respect to each Owned Real Property, (i) either the Company or
a Subsidiary of the Company has good and marketable title in fee simple to such
Owned Real Property, free and clear of all Liens other than Permitted Liens,
(ii) there are no outstanding purchase options, rights of first refusal or
similar rights in favor of any other Person to purchase such Owned Real Property
or any portion thereof or interest therein, and (iii) there are no leases,
subleases, licenses, options, rights, concessions or other Contracts affecting
the ownership, possession or use of any portion of such Owned Real Property,
other than, in the case of clause (ii) or (iii) above, as would not have,
individually or in the aggregate, a Material Adverse Effect. There are no
physical conditions or defects at any of the Owned Real Properties that impair
or would impair the continued use of such Owned Real Property in the ordinary
course of business as presently conducted at each such Owned Real Property,
except for any such conditions or defects that would not have, individually or
in the aggregate, a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received notice of any pending, and to the knowledge of the
Company, there is no threatened, condemnation with respect to any of the Owned
Real Properties, except for any such condemnations that would not have,
individually or in the aggregate, a Material Adverse Effect.
(b) Section 3.16(b) of the Company Disclosure Letter sets forth a
true, correct and complete list of all leases, subleases and other Contracts
under which the Company or any of its Subsidiaries uses or occupies or has the
right to use or occupy, now or in the future, any material real property (the
"REAL PROPERTY LEASES"). Except as would not have, individually or in the
aggregate, a Material Adverse Effect, (i) to the knowledge of the Company, each
Real Property Lease is valid, binding and in full force and effect, and (ii) no
termination event or condition or uncured default on the part of the Company or
any of its Subsidiaries or, to the knowledge of the Company, the landlord
thereunder exists under any Real Property Lease. Except as would not have,
individually or in the aggregate, a Material Adverse Effect, the Company and
each of its Subsidiaries has a good and valid leasehold interest in each parcel
of real property leased by it, free and clear of all Liens except for
23
Permitted Liens. Neither the Company nor any of its Subsidiaries has received
notice of any pending, and to the knowledge of the Company there is no
threatened, condemnation with respect to any real property leased pursuant to
any of the Real Property Leases, except for any such condemnations that would
not have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.17. MATERIAL CONTRACTS. (a) Section 3.17(a) of the Company
Disclosure Letter lists, and the Company has made available to Parent prior to
the date of this Agreement, true, correct and complete copies of, any of the
following Contracts to which the Company or any of its Subsidiaries is a party
or by which the Company, any of its Subsidiaries or any of their respective
assets is bound, as of the date hereof:
(i) that would be required to be filed by the Company as a "material
contract" pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act or disclosed by the Company on a Current Report on
Form 8-K;
(ii) that contains covenants that limit the ability of the Company or
any of its Subsidiaries (or which, following the consummation of
the Merger, could restrict the ability of the Surviving
Corporation or any of its Affiliates) to compete in any business
or with any person or in any geographic area or distribution or
sales channel, or to sell, supply or distribute any service or
product, in each case, that could reasonably be expected to be
material to the business of the Company and its Subsidiaries,
taken as a whole, except for any such Contract that may be
canceled without any penalty or other liability to the Company or
any of its Subsidiaries upon notice of 60 calendar days or less;
(iii) that relates to a joint venture, partnership, limited liability
or other similar agreement or arrangement relating to the
formation, creation, operation or control of any partnership or
joint venture or similar entity or arrangement that is material
to the business of the Company and its Subsidiaries, taken as a
whole, or pursuant to which the Company or any of its
Subsidiaries has an obligation (contingent or otherwise) to make
a material investment in or material extension of credit to any
Person;
(iv) that involves any exchange traded, over-the-counter or other
swap, cap, floor, collar, futures contract, forward contract,
option or any other derivative financial instrument or contract,
based on any commodity, security, instrument, asset, rate or
index of any kind or nature whatsoever, whether tangible or
intangible, including commodities, emissions allowances,
renewable energy credits, currencies, interest rates foreign
currency and indices;
(v) that relates to (A) indebtedness for borrowed money or the
deferred purchase price of property and having an outstanding
principal amount in excess of $50 million or (B) conditional or
similar sale arrangements in
24
connection with which the aggregate actual or contingent
obligations of the Company and its Subsidiaries under such
Contract are greater than $50 million;
(vi) entered into after December 31, 2005 or not yet consummated, and
that involves the acquisition or disposition, directly or
indirectly (by merger or otherwise), of rights, assets or equity
interests of another Person for aggregate consideration in excess
of $100 million other than acquisitions or dispositions of
inventory, raw materials and equipment in the ordinary course of
business consistent with past practice;
(vii) other than the Material Contracts described in SECTION
3.17(A)(IV), under which the aggregate amounts to be paid to or
received by the Company and its Subsidiaries over the remaining
term of such Contract would reasonably be expected to exceed $75
million in any twelve-month period or more than $100 million in
the aggregate (other than purchase orders for the purchase of
inventory in the ordinary course of business);
(viii) that relates to a Related Party Transaction; or
(ix) that would prevent or materially delay the Company's ability to
consummate the Merger or the other transactions contemplated by
this Agreement.
Each Contract of the type described in clauses (i) through (xi) is referred to
herein as a "MATERIAL CONTRACT."
(b) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, each Material Contract is valid and binding on the
Company and any Subsidiary of the Company that is a party thereto and, to the
knowledge of the Company, each other party thereto and is in full force and
effect. There is no default under any Material Contract by the Company or any of
its Subsidiaries or, to the knowledge of the Company, by any other party, and no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder by the Company or any of its Subsidiaries,
or to the knowledge of the Company, by any other party, in each case except as
would not have, individually or in the aggregate, a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is party to any Contract that
prohibits the Company from providing to Parent the information described in
SECTION 5.02(D).
SECTION 3.18. INSURANCE. Except as would not have, individually or in
the aggregate, a Material Adverse Effect, the Company and each of its
Subsidiaries is covered by valid and currently effective insurance policies
issued in favor of the Company or one or more of its Subsidiaries that are
customary for companies of similar size in the industries and locales in which
the Company and its Subsidiaries operate. Section 3.18 of the Company Disclosure
Letter sets forth a true, correct and complete list of all material insurance
policies issued since January 1, 2003 in favor of the Company or any of its
Subsidiaries, or pursuant to which the Company or
25
any of its Subsidiaries is a named insured or otherwise a beneficiary, as well
as any material historic occurrence-based policies still in force. With respect
to each such insurance policy, except as would not have, individually or in the
aggregate, a Material Adverse Effect, (i) the policy is in full force and effect
and all premiums due thereon have been paid, (ii) neither the Company nor any of
its Subsidiaries is in breach or default, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action which, with
notice or the lapse of time, would constitute such a breach or default in any
material respect with respect to their respective obligations under such
policies, or permit termination or modification of, any such policy, and (iii)
to the knowledge of the Company, no insurer on any such policy has been declared
insolvent or placed in receivership, conservatorship or liquidation, and no
notice of cancellation or termination has been received with respect to any such
policy.
SECTION 3.19. RELATED PARTY TRANSACTIONS. Except for
employment-related Contracts, forms of which are filed or incorporated by
reference as an exhibit to a Company SEC Report filed prior to the date hereof
or Plans and except as described in Items 11 and 15 (note 8 - Related Party
Transaction) of the 2006 10-K, Section 3.19 of the Company Disclosure Letter
sets forth a correct and complete list in all material respects of the Contracts
(that are in existence as of the date of this Agreement and under which the
Company or any of its Subsidiaries has any existing or future material
liabilities) between the Company or any of its Subsidiaries, on the one hand,
and, on the other hand, any (a) executive officer or director of the Company or
any of such executive officer's or director's immediate family members, (b)
owner of more than 5% of the Shares as of the date hereof, or (c) to the
knowledge of the Company, any "related person" (within the meaning of Item 404
of Regulation S-K under the Securities Act) of any such officer, director or
owner (other than the Company or any of its Subsidiaries) entered into within
the last twelve months and, in each case, that is of the type that would be
required to be disclosed under Item 404 of Regulation S-K under the Securities
Act (a "RELATED PARTY TRANSACTION"). The Company has provided to Parent copies
of each Contract or other relevant documentation (including any amendments or
modifications thereto) providing for each Related Party Transaction.
SECTION 3.20. OPINION. Prior to the execution of this Agreement,
Morgan Stanley has delivered to the Special Committee and the Board of Directors
of the Company its written opinion (or oral opinion to be confirmed in writing),
dated as of the date hereof, to the effect that, as of such date and based upon
and subject to the matters set forth therein, the Merger Consideration is fair,
from a financial point of view, to the holders of Shares other than Merger Sub
and its affiliates and the shareholders (if any) who invest in Parent or Merger
Sub. The Company has obtained or will obtain prior to the filing of the Proxy
Statement with the SEC, the authorization of the Company Financial Advisor to
include a copy of its opinion in the Proxy Statement.
SECTION 3.21. REQUIRED VOTE OF COMPANY SHAREHOLDERS. The only vote of
the holders of securities of the Company required by the Certificate of
Incorporation or bylaws, by Law or otherwise to complete the Merger is the
adoption of the plan of merger contained in this Agreement by the affirmative
vote of the holders of not less than 66-2/3% of the outstanding Shares, voting
together as a single class. The adoption of the plan of merger contained in this
26
Agreement by the vote required by the previous sentence is referred to as the
"REQUISITE SHAREHOLDER APPROVAL."
SECTION 3.22. TAKEOVER LAWS, ETC. The Board of Directors of the
Company, acting upon the recommendation of the Special Committee, has taken all
actions necessary so that the restrictions contained in Section 912 of the NYBCL
and the restrictions contained in Sections 13 and 14 of the Certificate of
Incorporation shall be inapplicable to Parent and Merger Sub and their
Affiliates, the execution, delivery or performance of this Agreement, and the
consummation of the Merger and the other transactions contemplated by this
Agreement, including the acquisition of the Company and the capital stock of the
Company by Parent and its Affiliates, and (b) resolved to elect, to the extent
permitted by Law, for the Company not to be subject to any "moratorium,"
"control share acquisition," "business combination," "fair price" or other form
of anti-takeover Laws (collectively, "TAKEOVER LAWS") of any jurisdiction that
may purport to be applicable to this Agreement or the transactions contemplated
hereby.
SECTION 3.23. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties of the Company contained in this ARTICLE III,
neither the Company nor any other Person on behalf of the Company makes any
other express or implied representation or warranty with respect to the Company
or any of its Subsidiaries or with respect to any other information provided by
the Company. Neither the Company nor any other Person will have or be subject to
any liability or indemnification obligation to Parent, Merger Sub or any other
person resulting from the making available or failing to make available to
Parent or Merger Sub, or Parent's or Merger Sub's use of, any such information,
including any information, documents, projections, forecasts or other material
made available to Parent or Merger Sub in certain "data rooms" or management
presentations in expectation of the transactions contemplated by this Agreement,
except to the extent any such information is expressly included in a
representation or warranty contained in this ARTICLE III or in the corresponding
section of the Company Disclosure Letter.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the correspondingly numbered section of the
disclosure letter dated the date of this Agreement and delivered by the Company
to Parent with respect to this Agreement immediately prior to the execution of
this Agreement (the "PARENT DISCLOSURE LETTER") (PROVIDED, HOWEVER, that a
matter disclosed with respect to one representation or warranty shall also be
deemed to disclosed with respect to each other representation or warranty to
which the matter disclosed reasonably relates, to the extent such relationship
is reasonably apparent on the face of the disclosure contained in the Parent
Disclosure Letter with respect to such matter), Parent and Merger Sub represent
and warrant to the Company as follows:
SECTION 4.01. ORGANIZATION AND QUALIFICATION. Each of Parent and
Merger Sub is a duly organized and validly existing entity in good standing
under the Laws of the jurisdiction of its organization, with all entity power
and authority to own its properties and conduct its business as currently
conducted and is duly qualified and in good standing as a
27
foreign corporation or entity authorized to do business in each of the
jurisdictions in which the character of the properties owned or held under lease
by it or the nature of the business transacted by it makes such qualification
necessary, except as would not reasonably be expected, individually or in the
aggregate, to prevent or materially delay the consummation of the transactions
contemplated by this Agreement. All of the issued and outstanding capital stock
of Merger Sub is directly or indirectly owned, beneficially and of record, by
Parent, free and clear of all Liens (other than any Liens created pursuant to
the Financing).
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent and
Merger Sub have heretofore furnished or otherwise made available to the Company
a complete and correct copy of the certificate of incorporation and by-laws or
other organizational documents of each of Parent and Merger Sub, in each case as
currently in effect. Each of Parent and Merger Sub is not in violation of any
provisions of its certificate of incorporation or by-laws.
SECTION 4.03. CAPITALIZATION OF PARENT AND MERGER SUB. The authorized
capital stock of Merger Sub consists solely of 900 shares of common stock, par
value $0.01, 100 shares of which are issued and outstanding, and 100 shares of
preferred stock, par value $0.01 per share, none of which is issued and
outstanding. All of the issued and outstanding capital stock of Merger Sub is
owned by Parent. As of the date hereof, all of the equity interests in Parent
are, and on the Effective Date a majority of the voting equity interests in
Parent will be, owned by Warburg Pincus Private Equity IX, L.P. and its
affiliates.
SECTION 4.04. AUTHORITY FOR THIS AGREEMENT. Each of Parent and Merger
Sub has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary entity proceedings on the part of Parent and Merger Sub, and no other
entity proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Merger Sub and, assuming due authorization, execution and delivery by
the Company, constitutes a legal, valid and binding obligation of each of Parent
and Merger Sub enforceable against each of Parent and Merger Sub in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
SECTION 4.05. CONSENTS AND APPROVALS; NO VIOLATION. (a) Neither the
execution and delivery of this Agreement by Parent or Merger Sub nor the
consummation of the transactions contemplated hereby will (i) violate or
conflict with or result in any breach of any provision of the certificate of
incorporation or bylaws or similar governing documents of Parent or Merger Sub,
(ii) assuming all consents, approvals and authorizations contemplated by clauses
(i) through (iii) of subsection (b) below have been obtained and all filings
described in such clauses have been made, conflict with or violate any Law
applicable to Parent or Merger Sub or by which any of their respective assets
are bound, or (iii) violate or conflict with, or result in a breach of, or
require any consent, waiver or approval under or result in a default or give
rise to
28
any right of termination, cancellation, modification or acceleration (or an
event that, with the giving of notice, the passage of time or otherwise, would
constitute a default or give rise to any such right) under any of the terms,
conditions or provisions of any Contract to which Parent or Merger Sub is a
party or by which Parent or Merger Sub or any of their respective assets are
bound, except in the case of clauses (ii) and (iii), as would not reasonably be
expected, individually or in the aggregate, to prevent or materially delay the
consummation of the transactions contemplated hereby.
(b) The execution, delivery and performance of this Agreement by each
of Parent and Merger Sub and the consummation of the transactions contemplated
hereby do not and will not require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
(i) the pre-merger notification requirements under the HSR Act, under the EMCR
or under the applicable requirements of Foreign Antitrust Laws, (ii) the
applicable requirements of the Exchange Act and the rules and regulations
promulgated thereunder and the rules and regulations of the NYSE, (iii) the
filing of the Certificate of Merger with the Secretary of State required by the
NYBCL, and (iv) any such consent, approval, authorization, permit, filing, or
notification the failure of which to make or obtain would not reasonably be
expected, individually or in the aggregate, to prevent or materially delay the
consummation of the transactions contemplated hereby.
SECTION 4.06. PROXY STATEMENT; OTHER FILINGS. None of the information
supplied or to be supplied in writing by Parent, Merger Sub or any Affiliate of
Parent or Merger Sub for inclusion in the Proxy Statement will, at the date of
filing with the SEC, at the time the Proxy Statement is mailed and at the time
of the Special Meeting, and none of the information supplied or to be supplied
in writing by Parent, Merger Sub or any Affiliate of Parent or Merger Sub for
inclusion in Other Filings, will, at the date of filing with the SEC, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied or to be supplied by the
Company or any Affiliate of the Company that is contained in any of the
foregoing documents.
SECTION 4.07. ABSENCE OF LITIGATION. As of the date hereof, there are
no suits, claims, actions, proceedings, arbitrations, mediations or
investigations pending or, to the knowledge of Parent, threatened against Parent
or any of its Affiliates, other than any such suit, claim, action, proceeding or
investigation that would or would not, reasonably be expected to, prevent or
delay the consummation of, or otherwise adversely affect the ability of Parent
or Merger Sub to consummate, the transactions contemplated hereby. As of the
date hereof, neither Parent nor any of its Subsidiaries nor any of their
respective properties is or are subject to any order, writ, judgment,
injunction, decree or award that would, or would reasonably be expected to,
prevent or delay the consummation of, or otherwise adversely affect the ability
of Parent or Merger Sub to consummate, the transactions contemplated hereby.
SECTION 4.08. FINANCING. Parent has delivered to the Company true and
complete copies of (i) executed commitment letter(s) (as the same may be amended
pursuant to SECTION 5.11(A), the "DEBT FINANCING COMMITMENTS"), pursuant to
which the lenders party thereto
29
have agreed, subject to the terms and conditions set forth therein, to provide
or cause to be provided the financing described therein (the "DEBT FINANCING"),
and (ii) executed equity commitment letters (as the same may be amended in
accordance with the terms thereof, the "EQUITY FINANCING COMMITMENTS," and
together with the Debt Financing Commitments, the "FINANCING COMMITMENTS"),
pursuant to which the Guarantor, J.P. Morgan Ventures Corporation, BAS Capital
Funding Corporation, Citigroup Global Markets Inc. and Credit Suisse Management
LLC have committed, subject to the terms and conditions set forth therein, to
make the investments described therein (the "EQUITY FINANCING," and together
with the Debt Financing, the "FINANCING"). As of the date of this Agreement,
except as permitted by SECTION 5.11 or this SECTION 4.08, none of the Financing
Commitments has been amended or modified, no such amendment or modification is
contemplated (except as described in the Debt Financing Commitments, including
to effect the appointments and allocations contemplated by the third paragraph
of the Debt Financing Commitments), and the respective commitments contained in
the Financing Commitments have not been withdrawn or rescinded in any respect.
Parent has fully paid any and all commitment fees or other fees in connection
with the Financing Commitments that are payable on or prior to the execution
hereof. The Financing Commitments are in full force and effect and are the
legal, valid and binding obligations of Parent and, to the knowledge of Parent,
of the other parties thereto. There are no conditions precedent or other
contingencies related to the funding of the full amount of the Financing other
than as expressly set forth in the Financing Commitments. Subject to the terms
and conditions of the Financing Commitments, and subject to the terms and
conditions of this Agreement, including compliance by the Company in all
material respects with its obligations under SECTION 5.11 and SECTION 5.18, the
aggregate proceeds contemplated by the Financing Commitments, together with the
available and unrestricted cash of the Company on the Closing Date, will be
sufficient for Parent and Merger Sub (or, if applicable, the Surviving
Corporation) to (i) consummate the Merger upon the terms contemplated by this
Agreement (including the payment of the aggregate Merger Consideration), (ii)
effect any other repayment or refinancing of debt contemplated herein in
connection with the Merger or contemplated by the Financing Commitments, and
(iii) pay all related fees and expenses. As of the date of this Agreement,
Parent does not have any reason to believe that any of the conditions to the
Financing will not be satisfied or that the Financing will not be available to
Parent or Merger Sub on the Closing Date.
SECTION 4.09. BROKERS; CERTAIN EXPENSES. No agent, broker, financial
advisor or other Person is or will be entitled, as a result of any action,
agreement or commitment of Parent or any of its Affiliates, to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with any of the transactions contemplated by this Agreement, except J.P. Morgan
Ventures Corporation, BAS Capital Funding Corporation, Citigroup Global Markets
Inc. and Credit Suisse Management LLC, whose fees and expenses shall be paid by
Parent (except as provided in SECTION 7.03(F)).
SECTION 4.10. OPERATIONS OF PARENT AND MERGER SUB. Each of Parent and
Merger Sub has been formed solely for the purpose of engaging in the
transactions contemplated hereby and has, and prior to the Effective Date will
have, engaged in no other business activities and incurred no liabilities or
obligations other than as contemplated herein or in the Financing Commitments or
incident to the transactions contemplated hereby and thereby.
30
SECTION 4.11. SOLVENCY. Assuming (i) that the Company is Solvent
immediately prior to the Effective Date, (ii) satisfaction of the conditions to
Parent's and Merger Sub's obligation to consummate the Merger, or waiver of such
conditions, (iii) the accuracy of the representations and warranties of the
Company set forth in ARTICLE III hereof, and (iv) that the estimates,
projections or forecasts provided by the Company to Parent prior to the date
hereof have been prepared in good faith on assumptions that were and continue to
be reasonable, and after giving effect to the transactions contemplated by this
Agreement (including the Financing, the payment of the aggregate Merger
Consideration, any other repayment or refinancing of existing indebtedness
contemplated in this Agreement or the Financing Commitments, payment of all
amounts required to be paid in connection with the consummation of the
transactions contemplated hereby, and payment of all related fees and expenses),
each of Parent and the Surviving Corporation will be Solvent as of the Effective
Date and immediately after the consummation of the transactions contemplated
hereby. For the purposes of this Agreement, the term "SOLVENT" when used with
respect to Parent and the Surviving Corporation, means that, as of any date of
determination, (A) the amount of the "fair saleable value" of the assets of
Parent and the Surviving Corporation will, as of such date, exceed (1) the value
of all "liabilities of Parent and the Surviving Corporation, including
contingent and other liabilities," as of such date, as such quoted terms are
generally determined in accordance with applicable U.S. federal Laws governing
determinations of the insolvency of debtors, and (2) the amount that will be
required to pay the probable liabilities of Parent and the Surviving Corporation
on their existing debts (including contingent and other liabilities) as such
debts become absolute and mature, (B) Parent and the Surviving Corporation will
not have, as of such date, an unreasonably small amount of capital for the
operation of the businesses in which they intend to engage or propose to be
engaged following the Closing Date, and (C) Parent and the Surviving Corporation
will be able to pay their liabilities, including contingent and other
liabilities, as they mature. For purposes of this definition, "not have an
unreasonably small amount of capital for the operation of the businesses in
which it is engaged or proposed to be engaged" and "able to pay its liabilities,
including contingent and other liabilities, as they mature" means that Parent
and the Surviving Corporation will be able to generate enough cash from
operations, asset dispositions or refinancing, or a combination thereof, to meet
its obligations as they become due.
SECTION 4.12. GUARANTEE. Concurrently with the execution of this
Agreement, Parent has caused the Guarantor to deliver to the Company the duly
executed Guarantee. The Guarantee is in full force and effect and is the valid,
binding and enforceable obligation of the Guarantor, and no event has occurred
which, with or without notice, lapse of time or both, would constitute a default
on the part of the Guarantor under the Guarantee.
SECTION 4.13. OWNERSHIP OF SHARES. None of Parent, Merger Sub or their
respective controlled affiliates owns, directly or indirectly, beneficially or
of record, any Shares and none of Parent, Merger Sub or their respective
controlled affiliates holds any rights to acquire any Shares except pursuant to
this Agreement.
SECTION 4.14. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties of Parent and Merger Sub contained in this
Article IV, none of Parent, Merger Sub or any other Person on behalf of Parent
or Merger Sub makes any other express or implied representation or warranty with
respect to Parent, Merger Sub or any of their
31
Affiliates or with respect to any other information provided by Parent or Merger
Sub or any of their Affiliates.
ARTICLE V
COVENANTS
SECTION 5.01. CONDUCT OF BUSINESS OF THE COMPANY. Except as expressly
provided in this Agreement, as required by Law, or as set forth in Section 5.01
of the Company Disclosure Letter, during the period from the date of this
Agreement to the Effective Date the Company will, and will cause each of its
Subsidiaries to, conduct its operations according to its ordinary and usual
course of business consistent with past practice, and the Company will, and will
cause each of its Subsidiaries to, use its reasonable best efforts to preserve
intact its business organization, to keep available the services of its current
officers and employees, to preserve the goodwill of and maintain satisfactory
relationships with those Persons having business relationships with the Company
or any of its Subsidiaries and keep in force its insurance policies (or obtain
replacement or revised policies). Without limiting the generality of the
foregoing and except as otherwise expressly provided or permitted by in this
Agreement, during the period from the date of this Agreement to the Effective
Date, without the prior written consent of Parent, which consent not to be
unreasonably withheld, conditioned or delayed, the Company will not and will not
permit any of its Subsidiaries to:
(a) issue, sell, grant options or rights to acquire, pledge, or
authorize or propose the issuance, sale, grant of options or rights to acquire
or pledge of, any Company Securities or securities of any Subsidiary of the
Company, other than the issuance of Common Shares pursuant to the exercise of
Options that are outstanding as of the date of this Agreement and in accordance
with the existing terms of such Options, the issuance of Shares upon conversion
of Convertible Securities, the issuance of shares or other equity interests or
rights by a wholly owned Subsidiary of the Company to the Company or another
wholly owned Subsidiary or the exchange of Class B Shares for Common Shares, or
grant any awards or bonuses that may be settled in, or the value of which is
linked directly or indirectly to the price or value of, any Company Securities
or securities of any Subsidiary of the Company, except to the extent required
under any Plan;
(b) except (i) as permitted pursuant to clause (e) of this Section
5.01 and (ii) any merger or business combination of any wholly-owned Subsidiary
of the Company into or with any other wholly-owned Subsidiary of the Company,
effect any merger or other business combination between the Company or any of
its Subsidiaries and any other Person, or propose or adopt any amendments to its
Certificate of Incorporation or Bylaws or its respective articles of
incorporation, bylaws or other governing documents;
(c) split, combine or reclassify its capital stock or other equity
interests or declare, set aside, make or pay any dividend or distribution
(whether in cash, stock or property) in respect of its capital stock or other
equity interests (other than regular quarterly cash dividends in an amount per
quarter not in excess of $0.13 per share, and other than cash dividends paid to
the Company or one of its wholly owned Subsidiaries by a wholly owned Subsidiary
of the
32
Company), or acquire or redeem, directly or indirectly, or amend the rights or
terms of any Company Securities or Subsidiary Securities other than the
acceptance of Convertible Securities surrendered by their holders for conversion
and the acquisition of Shares tendered by employees or former employees in
connection with a cashless exercise of Options, or in order to pay Taxes in
connection with the exercise of Options or the lapse of restrictions in respect
of Restricted Stock, in each case, pursuant to the terms of a Company Plan;
(d) adopt a plan of complete or partial liquidation or resolutions
providing for a complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than the Merger);
(e) make or offer to make any acquisition, by means of a merger or
otherwise, of any business, assets or securities, or any sale, lease,
encumbrance or other disposition of any business, assets or securities,
involving payments of consideration in excess of $20 million for all such
acquisitions in the aggregate or receipt of consideration in excess of $20
million for all such sales, leases, encumbrances and other dispositions in the
aggregate), except for purchases or sales or dispositions, respectively, of
inventory and other assets in the ordinary course of business consistent with
past practice or as required by existing Contracts;
(f) make any loans, advances or capital contributions to, or
investments in, any other Person or Persons in excess of $20 million in the
aggregate, in each case, other than (i) loans, advances, capital contributions
or investments that are, in the aggregate, immaterial to the Company and its
Subsidiaries, taken as a whole, and are made in the ordinary course of business
consistent with past practice or (ii) any transaction solely between the Company
and a wholly owned Subsidiary of the Company or between wholly owned
Subsidiaries of the Company;
(g) enter into, amend (other than amendments made in the ordinary
course of business consistent with past practice) in any material respect,
renew, terminate, or grant any release or relinquishment of rights under any
Material Contract (or Contract that would be a Material Contract if entered into
prior to the date hereof), except, with respect to any collective bargaining or
labor agreements, as required by Law;
(h) incur, create, assume or otherwise become liable for, or repay or
prepay, any indebtedness for borrowed money (including the issuance of any debt
security), or amend, modify or refinance any existing indebtedness for borrowed
money, in each case except for (i) the incurrence of indebtedness for borrowed
money that is (A) (x) incurred in the ordinary course of business under
agreements or instruments listed in Section 5.01(h) of the Company Disclosure
Letter, (y) repayable within 30 days without premium or penalty, and (z) in an
aggregate amount at any time outstanding not to exceed $20 million, (B) in the
form of a letter of credit entered into in the ordinary course of business
consistent with past practice for an amount less than $50 million individually
or in the aggregate or (C) solely between the Company and a wholly-owned
Subsidiary of the Company or between wholly owned Subsidiaries of the Company or
(ii) obtaining any necessary waivers or consents relating to Delayed Filings to
the extent obtainable by paying consent or waiver fees in amounts consistent
with past practice;
33
(i) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person except wholly owned Subsidiaries of the Company, in each case,
other than (i) in the ordinary course of business consistent with past practice
or (ii) any transaction solely between the Company and a wholly owned Subsidiary
of the Company or between wholly owned Subsidiaries of the Company;
(j) mortgage, pledge or otherwise encumber any of its material assets
(tangible or intangible), or create, assume or suffer to exist any Liens
thereupon other than Permitted Liens;
(k) materially change any of the financial accounting methods,
principles or practices used by it, except as may be appropriate to conform to
changes in statutory or regulatory accounting rules, GAAP or regulatory
requirements with respect thereto;
(l) (i) except in the ordinary course consistent with past practice,
make or change any material Tax election, or (ii) settle or compromise any
material federal, state, local or foreign income Tax liability for an amount
that materially exceeds the amount reserved therefor in the Company's financial
statements included in the 2006 10-K;
(m) except as contemplated by this Agreement or to the extent required
under any Plan, required by applicable Law or as deemed advisable to prevent an
inclusion of income or imposition of penalties under Section 409A of the Code or
as deemed advisable to amend Plans in order to facilitate compliance with such
Section 409A, (i) enter into any new, or amend, terminate or renew any existing,
employment, severance, change of control, indemnification, termination,
severance, consulting or salary continuation agreements or arrangements with or
for the benefit of any present or former executive officers, directors or
employees, except in the ordinary course of business consistent with past
practice; (ii) grant any increases in the compensation, perquisites or benefits
to officers, directors, employees or consultants, except in the ordinary course
of business consistent with past practice to individuals who are not directors
or executive officers; (iii) accelerate the vesting or payment of the
compensation payable or the benefits provided or to become payable or provided
to any of its current or former directors, officers or employees, or otherwise
pay any amounts not due to any such individual under applicable Law or the terms
of any Plan, including with respect to severance; (iv) fund or make any
contribution to any Plan or trust not required to be funded or contributed to,
except in the ordinary course of business consistent with past practice; (v)
forgive any loans to employees, officers or directors or any of their respective
Affiliates or Associates; (vi) establish, adopt, enter into, amend in any
material respect to increase costs, or terminate any Plan (including any
employment, severance, consulting or other individual agreement), or adopt or
enter into any other employee benefit plan or arrangement that would be
considered a Plan if it were in existence on the date of this Agreement, except
in the ordinary course of business consistent with past practice;
(n) make or agree to make any capital expenditure or expenditures, or
enter into any agreements or arrangements providing for capital expenditures,
that are, in the aggregate, in excess of 110% of the capital expenditure budget
set forth on Section 5.01(n) of the
34
Company Disclosure Letter or (ii) enter into any new line of business outside of
its existing business segments;
(o) compromise, settle or agree to settle any Proceeding (including
any Proceeding relating to this Agreement or the transactions contemplated
hereby but excluding any Proceeding relating to Taxes, which shall be covered by
SECTION 5.01(L)) other than compromises, settlements or agreements in the
ordinary course of business consistent with past practice that involve only the
payment of monetary damages not in excess of $5 million individually or $50
million in the aggregate, in any case without the imposition of material
equitable relief on, or the admission of wrongdoing by, the Company or any of
its Subsidiaries which would prohibit or materially restrict the Company and its
Subsidiaries from operating their business as they have historically; PROVIDED
that, notwithstanding Section 5.01(l) or the parenthetical in this sentence,
with respect to any of the matters set forth in Section 5.01(o) of the Company
Disclosure Letter, the Company shall consult with Parent concerning, and keep
Parent reasonably apprised of the status of, and all other material matters
relating to, such matters, and shall give written notice to Parent of any
proposed final settlement or other final resolution of such matters at least
five (5) Business Days prior to entering into any such settlement or resolution,
which notice shall include a reasonably detailed description of all material
terms and conditions of such settlement or resolution;
(p) except as required by applicable Law, court order, the rules of
the NYSE or the Certificate of Incorporation or Bylaws, convene any regular or
special meeting (or any adjournment thereof) of the shareholders of the Company
other than the Special Meeting, or enter into any Contract or understanding or
arrangement with respect to the voting or registration of Company Securities or
Subsidiary Securities; or
(q) authorize, commit or agree to take any of the foregoing actions.
SECTION 5.02. SOLICITATION. (a) Notwithstanding any other provision of
this Agreement to the contrary, during the period beginning on the date of this
Agreement and continuing until 11 :59 p.m. New York City time on July 5, 2007
(the "SOLICITATION PERIOD END-TIME"), the Company and its Representatives shall
have the right (acting under the direction of the Special Committee, if in
existence, and otherwise under the direction of the Board of Directors of the
Company) to directly or indirectly: (i) initiate, solicit and encourage
Acquisition Proposals, including by way of providing access to non-public
information (but only pursuant to one or more Acceptable Confidentiality
Agreements); PROVIDED that the Company shall promptly provide to Parent any
material non-public information concerning the Company or its Subsidiaries that
is provided to any Person given such access which was not previously provided to
Parent or Merger Sub; and (ii) enter into and maintain or continue discussions
or negotiations with respect to Acquisition Proposals or otherwise cooperate
with or assist or participate in, or facilitate any such discussions or
negotiations.
(b) Subject to SECTION 5.02(C) and SECTION 5.02(E):
(i) The Company shall not, and shall cause its Subsidiaries and
Representatives not to, directly or indirectly, from the date hereof until the
Effective Time,
35
approve or recommend, or publicly propose to approve or recommend, an
Acquisition Proposal, or effect a Change of Board Recommendation, or enter into
any merger agreement, letter of intent, agreement in principle, purchase
agreement, option agreement or other similar agreement relating to an
Acquisition Proposal, or enter into any agreement or agreement in principle
requiring the Company to abandon, terminate or fail to consummate the
transactions contemplated hereby or to breach its obligations hereunder or
resolve, propose or agree to do any of the foregoing.
(ii) Except with respect to any written Acquisition Proposal received
after the date hereof and prior to the Solicitation Period End-Time with respect
to which the requirements of SECTIONS 5.02(C)(I) and 5.02(C)(III) have been
satisfied as of the Solicitation Period End-Time and thereafter (as such
Acquisition Proposal may be revised during the course of ongoing negotiations,
in which event it may temporarily cease to be an Acquisition Proposal with
respect to which the requirements of SECTIONS 5.02(C)(I) and 5.02(C)(III) have
been satisfied, so long as such negotiations are active and ongoing and such
Acquisition Proposal subsequently satisfies the requirements of SECTIONS
5.02(C)(I) and 5.02(C)(III)) (any Person so submitting such an Acquisition
Proposal and any group that includes any such Person, so long as such Person and
the other members of such group, if any, who were members of such group
immediately prior to the Solicitation Period End-Time constitute at least 50% of
the equity financing of such group at all times following the Solicitation
Period End-Time, an "EXCLUDED PARTY"), the Company shall not and shall cause its
Subsidiaries and Representatives not to, directly or indirectly, from the
Solicitation Period End-Time until the Effective Date, initiate, solicit or
encourage (including by way of providing information) the submission of any
inquiries, proposals or offers that constitute or may reasonably be expected to
lead to, any Acquisition Proposal, or engage in any discussions or negotiations
with respect thereto, or otherwise cooperate with or assist or participate in,
or facilitate any such inquiries, proposals, offers, discussions or
negotiations. Notwithstanding anything contained in this SECTION 5.02 to the
contrary, any Excluded Party shall cease to be an Excluded Party for all
purposes under this Agreement at such time as the Acquisition Proposal (as such
Acquisition Proposal may be revised during the course of ongoing negotiations,
in which event it may temporarily cease to be an Acquisition Proposal with
respect to which the requirements of SECTIONS 5.02(C)(I) and 5.02(C)(III) have
been satisfied, so long as such negotiations are active and ongoing and such
Acquisition Proposal subsequently satisfies the requirements of SECTIONS
5.02(C)(I) and 5.02(C)(III)) made by such Person fails to satisfy the
requirements of SECTIONS 5.02(C)(I) or 5.02(C)(III).
(iii) Except as permitted with respect to an Excluded Party pursuant
to SECTION 5.02(A) or Section 5.02(B)(II), upon the Solicitation Period
End-Time, the Company shall immediately cease and cause to be terminated any
solicitation, encouragement, discussion or negotiation with any Person conducted
theretofore by the Company, its Subsidiaries or any of their respective
Representatives with respect to any actual or potential Acquisition Proposal and
cause to be returned or destroyed all confidential information provided by or on
behalf of the Company or any of its Subsidiaries to such Person.
(c) Notwithstanding anything to the contrary contained in SECTION
5.02(B), but subject to SECTION 5.02(A) and the last sentence of this paragraph,
if at any time following the date of this Agreement and prior to obtaining the
Requisite Shareholder Approval, (i) the
36
Company has received a written Acquisition Proposal from a third party that the
Board of Directors of the Company (acting through the Special Committee, if in
existence) determines in good faith to be bona fide, (ii) the Company has not
breached this SECTION 5.02, (iii) the Board of Directors of the Company (acting
through the Special Committee, if in existence) determines in good faith, after
consultation with its financial advisors and outside counsel, that such
Acquisition Proposal constitutes or is reasonably likely to result in a Superior
Proposal, and (iv) after consultation with its outside counsel, the Board of
Directors of the Company (acting through the Special Committee, if in existence)
determines in good faith that the failure to take such action would be
inconsistent with its fiduciary duties to the shareholders of the Company under
applicable Law, then the Company may (A) furnish information with respect to the
Company and its Subsidiaries to the Person making such Acquisition Proposal and
(B) engage in discussions or negotiations with the Person making such
Acquisition Proposal regarding such Acquisition Proposal; PROVIDED that the
Company (x) will not, and will not allow its Subsidiaries or its or their
Representatives to, disclose any non-public information to such Person without
first entering into an Acceptable Confidentiality Agreement and (y) will
promptly provide to Parent any material non-public information concerning the
Company or its Subsidiaries provided to such other Person which was not
previously provided to Parent. Notwithstanding anything to the contrary
contained in SECTION 5.02(B) (other than the definition of "Excluded Party") or
this SECTION 5.02(C), prior to obtaining the Requisite Shareholder Approval, the
Company shall be permitted to take the actions described in SECTION 5.02(A) and
clauses (A) and (B) above with respect to any Excluded Party so long as it
remains an Excluded Party, including with respect to any amended proposal
submitted by such Excluded Party following the Solicitation Period End-Time, and
the restrictions in this SECTION 5.02(C) shall not apply with respect thereto.
(d) Within 24 hours after the Solicitation Period End Time, the
Company shall provide Parent a description of the material terms and conditions
of each Acquisition Proposal received from an Excluded Party, and the Company
shall keep Parent reasonably informed (orally and in writing) on a prompt basis
of the status of any such Acquisition Proposal (including the material terms and
conditions thereof and of any modification thereto); PROVIDED, HOWEVER, that
except as required pursuant to SECTION 5.02(E), the Company shall not be
required to inform Parent of the identity of any Excluded Party. From and after
the Solicitation Period End-Time, the Company shall promptly (and in any event
within 48 hours) notify Parent in the event that the Company or any of its
Subsidiaries or Representatives receives other than from any Excluded Party: (i)
any Acquisition Proposal or indication by any Person that it is considering
making an Acquisition Proposal or proposals or offers with respect to an
Acquisition Proposal, (ii) any request for non-public information relating to
the Company or any of its Subsidiaries other than requests for information in
the ordinary course of business and unrelated to an Acquisition Proposal, or
(iii) any inquiry or request for discussions or negotiations regarding any
Acquisition Proposal. The Company shall promptly (and in any event within 48
hours) notify Parent of the identity of such Person and provide Parent with the
material terms of such Acquisition Proposal, indication, inquiry or request. The
Company shall keep Parent reasonably informed (orally and in writing) on a
prompt basis of the status of any such Acquisition Proposal, indication, inquiry
or request (including the material terms and conditions thereof and of any
modification thereto). Without limiting the foregoing, from and
37
after the Solicitation Period End-Time, the Company shall promptly (and in any
event within 48 hours) notify Parent orally and in writing if it determines to
begin providing information or to engage in discussions or negotiations
concerning an Acquisition Proposal pursuant to SECTION 5.02(C) (other than with
an Excluded Party). The Company shall not, and shall cause its Subsidiaries not
to, enter into any confidentiality agreement with any Person subsequent to the
date of this Agreement that would restrict the Company's ability to provide
information to Parent as described in SECTION 5.02(A) or this SECTION 5.02(D).
(e) Notwithstanding anything in SECTION 5.02(B)(I) to the contrary, if
prior to the receipt of the Requisite Shareholder Approval, the Board of
Directors of the Company (acting through the Special Committee, if in existence)
concludes in good faith, after consultation with outside counsel and its
financial advisors (and after complying with, and giving effect to all proposed
adjustments to this Agreement offered by Parent pursuant to clause (B) below),
that (i) (x) a bona fide written Acquisition Proposal received by the Company
constitutes a Superior Proposal and (y) failing to take such action would be
inconsistent with the fiduciary duties of the Board of Directors of the Company
under the NYBCL, or (ii) in the absence of an Acquisition Proposal, failing to
take such action would be inconsistent with the fiduciary duties of the Board of
Directors of the Company under the NYBCL, the Board of Directors of the Company
(acting through the Special Committee, if still in existence) may (I) withdraw,
modify or qualify, or propose publicly to withdraw, modify or qualify, in a
manner adverse to Parent or Merger Sub, the Company Board Recommendation (a
"CHANGE OF BOARD RECOMMENDATION") and/or (II) in the case of clause (i) above,
terminate this Agreement to enter into a definitive agreement with respect to
such Superior Proposal; PROVIDED, HOWEVER, that the Company shall not terminate
this Agreement pursuant to the foregoing clause (II), and any purported
termination pursuant to the foregoing clause (II) shall be void and of no force
or effect, unless in advance of or concurrently with such termination the
Company (1) pays the Termination Fee or the Excluded Party Termination Fee, as
required by SECTION 7.03(C), (2) simultaneously with such termination enters
into an acquisition agreement, merger agreement or similar definitive agreement
(the "ALTERNATIVE ACQUISITION AGREEMENT") and terminates this Agreement in
compliance with SECTION 7.01(H), and (3) otherwise complies with the provisions
of SECTION 7.03; and PROVIDED, FURTHER, that the Company Board may not effect a
Change of Board Recommendation pursuant to the foregoing clause (I) or terminate
this Agreement pursuant to the foregoing clause (II) unless (A) the Company
shall have provided prior written notice to Parent, at least five calendar days
in advance (the "NOTICE PERIOD"), of its intention to take such action with
respect to such Superior Proposal or otherwise make a Change of Board
Recommendation, which notice shall specify the material terms and conditions of
any such Superior Proposal (including the identity of the party making such
Superior Proposal) or the reasons for such Change of Board Recommendation in the
absence of a Superior Proposal, as the case may be, and (B) prior to effecting
such Change of Board Recommendation or terminating this Agreement to enter into
a an Alternative Acquisition Agreement with respect to such Superior Proposal,
the Company shall, and shall cause its financial and legal advisors to, during
the Notice Period, negotiate with Parent in good faith (to the extent Parent
desires to negotiate) to make such adjustments in the terms and conditions of
this Agreement so that such Acquisition Proposal ceases to constitute a Superior
Proposal or such Change of Board Recommendation is no longer required. In the
event of any material revisions to the Superior
38
Proposal or material changes to the facts and circumstances necessitating such
Change of Board Recommendation after the start of the Notice Period, the Company
shall be required to deliver a new written notice to Parent and to comply with
the requirements of this SECTION 5.02(E) with respect to such new written
notice, and the Notice Period shall be deemed to have re-commenced on the date
of such new notice.
(f) Nothing contained in this SECTION 5.02 shall prohibit the Board of
Directors of the Company (acting through the Special Committee, if in existence)
from (1) complying with its disclosure obligations under U.S. federal or state
Law with regard to an Acquisition Proposal, including taking and disclosing to
the shareholders of the Company a position contemplated by Rule 14e-2(a) and
Rule 14d-9 promulgated under the Exchange Act (or any similar communication to
shareholders); PROVIDED that any disclosure other than a "stop, look and listen"
or similar communication of the type contemplated by Rule 14d-9(f) under the
Exchange Act shall be deemed to be a Change in Board Recommendation unless
accompanied or promptly followed by an express rejection of any applicable
Acquisition Proposal or an express reaffirmation of the Board of Directors'
recommendation to the Company's shareholders in favor of the Merger or (2)
making any "stop, look and listen" communication or similar communication of the
type contemplated by Rule 14d-9(f) under the Exchange Act.
(g) The Company shall not take any action, except with respect to
Parent, Merger Sub and their respective Affiliates, to (i) exempt any Person
from or otherwise render inapplicable the restrictions on "business
combinations" contained in Section 912 of the NYBCL or the provisions of any
other Takeover Laws, or (ii) exempt any Person from or otherwise render
inapplicable the restrictions contained in Sections 13 and 14 of the Certificate
of Incorporation, in each case unless such actions are taken simultaneously with
a termination of this Agreement pursuant to SECTION 7.01(H).
(h) For purposes of this Agreement:
(i) "ACQUISITION PROPOSAL" means any offer or proposal, or any
indication of interest in making an offer or proposal, made by a Person or group
at any time which is structured to permit such Person or group to acquire
beneficial ownership of at least 25% of the assets of, equity interest in, or
businesses of, the Company and its Subsidiaries (whether pursuant to a merger,
consolidation or other business combination, sale of shares of capital stock,
sale of assets, tender offer or exchange offer or otherwise, including any
single or multi-step transaction or series of related transactions), in each
case other than the Merger.
(ii) "SUPERIOR PROPOSAL" means any bona fide Acquisition Proposal
(except the references therein to "25%" shall be replaced by "50%") made in
writing that (x) is on terms that the Board of Directors of the Company (acting
through the Special Committee, if in existence) has determined in its good faith
judgment (after consultation with its financial advisor and outside counsel) is
more favorable from a financial point of view to the holders of Shares than the
Merger, taking into account all the terms and conditions of such Acquisition
Proposal and this Agreement, and (y) which the Board of Directors of the Company
(acting through the Special Committee, if in existence) has determined in good
faith (after consultation with its financial advisor and outside counsel and
after taking into account all legal, financial, regulatory
39
and other aspects of the proposal, including the financing terms thereof) is
reasonably capable of being consummated.
SECTION 5.03. PROXY STATEMENT; OTHER FILINGS. (a) The Company shall
prepare and file with the SEC as promptly as practicable after the date of this
Agreement (subject to the prior review and approval of Parent, which shall not
be unreasonably withheld), the Proxy Statement in preliminary form. At the
request or with the consent of Parent, the Company may file with the SEC the
Proxy Statement in preliminary form prior to the time of filing of the First
Quarter 2007 10-Q. Each of the Company and Parent shall obtain and furnish the
information concerning itself and its Affiliates required to be included in the
Proxy Statement. Each of the Company and Parent shall use its reasonable best
efforts to respond as promptly as reasonably practicable to any comments
received from the SEC or its staff with respect to the Proxy Statement, and the
Company shall cause the definitive Proxy Statement to be mailed to the Company's
shareholders at the earliest reasonably practicable date; PROVIDED that the
Company shall not be required to mail the Proxy Statement to shareholders prior
to the Solicitation Period End-Time.
(b) Each party shall promptly notify the other party upon the receipt
of any comments from the SEC or its staff or any request from the SEC or its
staff for amendments or supplements to the Proxy Statement and shall provide the
other party with copies of all correspondence between it, on the one hand, and
the SEC and its staff, on the other hand, relating to the Proxy Statement. If at
any time prior to the Special Meeting, any information relating to the Company,
Parent, Merger Sub or any of their respective Affiliates, directors or officers
should be discovered by the Company or Parent, which should be set forth in an
amendment or supplement to the Proxy Statement so that the Proxy Statement shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, the party that discovers such information shall promptly notify the
other party, and an appropriate amendment or supplement describing such
information shall be filed with the SEC and, to the extent required by
applicable Law, disseminated to the shareholders of the Company. Notwithstanding
anything to the contrary stated above, prior to filing or mailing the Proxy
Statement (or any amendment or supplement thereto) or responding to any comments
of the SEC or its staff with respect thereto, the Company shall provide Parent
an opportunity to review and comment on such document or response and shall
consider reasonably in good faith including in such document or response
comments reasonably proposed by Parent.
(c) The Company shall use reasonable efforts to file with the SEC its
Quarterly Report on Form 10-Q for the quarter ended March 26, 2007 (the "2007
FIRST QUARTER 10-Q") no later than the fifth Business Day prior to the Special
Meeting, and such 2007 First Quarter 10-Q, as so filed, shall comply as to form
with the rules and regulations of the SEC applicable to quarterly reports on
Form 10-Q (including with respect to the financial statements required to be
filed therewith).
SECTION 5.04. SHAREHOLDER APPROVAL. The Company shall, in accordance
with applicable Law and the Certificate of Incorporation and Bylaws, call a
meeting of its
40
shareholders (the "SPECIAL MEETING") to be held as soon as reasonably
practicable after the mailing of the Proxy Statement to the Company's
shareholders, for the purpose of obtaining the Requisite Shareholder Approval in
connection with this Agreement and the Merger, and shall use its reasonable best
efforts to cause such meeting to occur as promptly as reasonably practicable
after the mailing of the Proxy Statement. Except in the event of a Change of
Board Recommendation specifically permitted by SECTION 5.02(E), (a) the Proxy
Statement shall include the recommendation of the Board of Directors of the
Company (acting through the Special Committee, if in existence) of this
Agreement and the transactions contemplated hereby, including the Merger, and
(b) subject to SECTION 5.02, the Company shall use its reasonable best efforts
to obtain from its shareholders the adoption of the plan of merger contained in
this Agreement as required to consummate the transactions contemplated by this
Agreement. Unless this Agreement is validly terminated in accordance with its
terms pursuant to ARTICLE VII prior to the date of the Special Meeting, the
Company shall submit this Agreement to its shareholders at the Special Meeting
even if its Board of Directors shall have withdrawn, modified or qualified its
recommendation thereof or otherwise effected a Change of Board Recommendation or
proposed or announced any intention to do so.
SECTION 5.05. ACCESS TO INFORMATION. (a) Subject to the restrictions
imposed by the HSR Act and Foreign Antitrust Laws, from and after the date of
this Agreement to the Effective Date or the earlier termination of this
Agreement, the Company will (i) give Parent and Merger Sub and their respective
Representatives involved in the Financing (and their counsel and advisors)
reasonable access (during regular business hours upon reasonable notice),
consistent with applicable Law, to all employees, plants, offices, warehouses
and other facilities and to all books, contracts, commitments and records
(including Tax returns) of the Company and its Subsidiaries and cause the
Company's and its Subsidiaries' respective Representatives to provide access to
their work papers and such other information as Parent or Merger Sub may
reasonably request, (ii) permit Parent and Merger Sub to make such inspections
as they may require, (iii) cause its officers and those of its Subsidiaries to
furnish Parent and Merger Sub with such financial and operating data and other
information with respect to the business, properties and personnel of the
Company and its Subsidiaries as Parent or Merger Sub may from time to time
request, and (iv) furnish promptly to Parent and Merger Sub a copy of each
report, schedule and other document filed by the Company or any of its
Subsidiaries during such period pursuant to the requirements of the federal or
state securities Laws, to the extent not publicly available in the Electronic
Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC.
Notwithstanding the foregoing, Parent, Merger Sub and their respective
Representatives shall use all reasonable efforts to conduct any such
investigation or consultation in such a manner as not to interfere unreasonably
with the business or operations of the Company or its Subsidiaries or otherwise
interfere with the prompt and timely discharge by such employees of their normal
duties.
(b) Information obtained by Parent or Merger Sub pursuant to SECTION
5.05(A) shall be subject to the provisions of the Confidentiality Agreement
which Confidentiality Agreement shall remain in full force and effect in
accordance with its terms.
(c) Nothing in this SECTION 5.05 shall require the Company to permit
any inspection, or to disclose any information, that in the reasonable judgment
of the Company
41
would (i) waive or jeopardize the attorney-client privilege of the Company or
its Subsidiaries or violate any of their respective contractual obligations to
any third party, PROVIDED that the Company shall use its commercially reasonable
efforts to obtain the consent of such third party to such inspection or
disclosure of any Material Contract, or (ii) result in a violation of applicable
Law, including the HSR Act or Foreign Antitrust Laws. No investigation by or of
any party or its Representatives shall affect the representations, warranties,
covenants, agreements, rights or remedies of the parties set forth herein.
(d) The Company hereby consents to the disclosure of Evaluation
Material (as defined in the Confidentiality Agreement) to any Person in
connection with the syndication of all or a portion of the Equity Commitment
Letters provided by proposed investors in Parent other than the Guarantor;
PROVIDED that such Person agrees, for the benefit of the Company, to be bound by
the confidentiality provisions of the Confidentiality Agreement.
SECTION 5.06. REASONABLE BEST EFFORTS; CONSENTS AND GOVERNMENTAL
APPROVALS. (a) Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement. Without limiting the foregoing, each of the
Company, Parent and Merger Sub agrees to use its reasonable best efforts to (i)
obtain all waivers, consents and approvals from works councils, if applicable,
and other parties to Material Contracts to which the Company or any of its
Subsidiaries is a party necessary for the consummation of the transactions
contemplated hereby, (ii) obtain all consents, approvals, permits and
authorizations that are required to be obtained under any Federal, state, local
or foreign Law in connection with the transactions contemplated hereby, (iii)
prevent the entry, enactment or promulgation of any threatened or pending
injunction or order that could materially and adversely affect the ability of
the parties hereto to consummate the transactions under this Agreement, (iv)
lift or rescind any injunction or order that could materially and adversely
affect the ability of the parties hereto to consummate the transactions under
this Agreement, and (v) in the event that any Proceeding relating hereto or to
the transactions contemplated hereby is commenced, whether before or after the
date of this Agreement, cooperate to defend against it and respond thereto.
(b) Each of the Company, Parent and Merger Sub agrees (i) promptly
after the date hereof to file any and all Notification and Report Forms required
under the HSR Act with respect to the transactions contemplated hereby, (ii) to
make as promptly as reasonably practicable any required submissions under the
Foreign Antitrust Laws which the Company or Parent determines should be made
with respect to the transactions contemplated hereby, (iii) to supply as
promptly as reasonably practicable any additional information and documentary
material that may be requested pursuant to the HSR Act or Foreign Antitrust
Laws, and (iv) to use its reasonable best efforts to take or cause to be taken
all actions necessary, proper or advisable consistent with the other provisions
of this SECTION 5.06 to cause the expiration or termination of the applicable
waiting periods under the HSR Act or Foreign Antitrust Laws as soon as
practicable, including by requesting early termination thereof. Each of Parent
and Merger Sub, on the one hand, and the Company, on the other hand, shall, in
connection with the efforts referenced in SECTION 5.06(A) to obtain all
requisite approvals and authorizations for the
42
transactions contemplated by this Agreement under the HSR Act or any other
Antitrust Law, use all reasonable best efforts to (1) cooperate in all respects
with each other in connection with any filing or submission and in connection
with any investigation or other inquiry, including any proceeding initiated by a
private party; (2) keep the other party reasonably informed of any communication
received by such party from, or given by such party to, any U.S. or foreign
Governmental Entity and of any communication received or given in connection
with any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby; and (3) permit the other party to review any
communication given by it to, and consult with each other in advance of any
meeting or conference with, any Governmental Entity or, in connection with any
proceeding by a private party, with any other person, and to the extent
permitted by such applicable Governmental Entity or other person, give the other
party the opportunity to attend and participate in such meetings and
conferences. For purposes of this Agreement, "ANTITRUST LAW" means the Sherman
Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other Laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition through merger
or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in SECTIONS 5.06(A) and (B), if any objections are asserted
with respect to the transactions contemplated hereby under any Antitrust Law or
if any suit is instituted (or threatened to be instituted) by any Governmental
Entity or any private party challenging any of the transactions contemplated
hereby as violative of any Antitrust Law or which would otherwise prevent,
materially impede or materially delay the consummation of the transactions
contemplated hereby, each of Parent, Merger Sub and the Company shall use all
reasonable best efforts to resolve any such objections or suits so as to permit
consummation of the transactions contemplated by this Agreement, including in
order to resolve such objections or suits which, in any case if not resolved,
would reasonably be expected to prevent, materially impede or materially delay
the consummation of the Merger or the other transactions contemplated hereby,
including selling, holding separate or otherwise disposing of or conducting its
business in a manner which would resolve such objections or suits or agreeing to
sell, hold separate or otherwise dispose of or conduct its business in a manner
which would resolve such objections or suits or permitting the sale, holding
separate or other disposition of, any of its assets or the assets of its
Subsidiaries or the conducting of its business in a manner which would resolve
such objections or suits. Without excluding other possibilities, the
transactions contemplated by this Agreement shall be deemed to be materially
delayed if unresolved objections or suits delay or would reasonably be expected
to delay the consummation of the transactions contemplated hereby beyond the
Outside Date.
(d) Subject to the obligations under SECTION 5.06(C), in the event
that any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) by a Governmental Entity or private party
challenging the Merger or any other transaction contemplated by this Agreement,
or any other agreement contemplated hereby, each of Parent, Merger Sub and the
Company shall cooperate in all respects with each other and use its respective
reasonable best efforts to contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order,
43
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions contemplated
by this Agreement.
(e) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this SECTION 5.06 shall limit a party's right to terminate
this Agreement pursuant to SECTION 7.01(B) so long as such party has up to then
complied in all material respects with its obligations under this SECTION 5.06.
SECTION 5.07. INDEMNIFICATION AND INSURANCE. (a) Parent and Merger Sub
agree that all rights to indemnification existing in favor of the current or
former directors, officers and employees of the Company or any of its
Subsidiaries (the "INDEMNIFIED PERSONS") as provided in the Certificate of
Incorporation or Bylaws, or the certificate of incorporation, bylaws or similar
governing documents of any of the Company's Subsidiaries as in effect as of the
date of this Agreement with respect to matters occurring at or prior to the
Effective Date shall survive the Merger and shall continue in full force and
effect for a period of not less than six years after the Effective Date unless
otherwise required by Law.
(b) From and after the Effective Date, the Surviving Corporation
shall, and Parent shall cause the Surviving Corporation to, indemnify and hold
harmless, and provide advancement of expenses to, each present and former
director and officer of the Company and its Subsidiaries, to the fullest extent
the Company would have been permitted under applicable Law to do so prior to the
Effective Date, against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities incurred in
connection with any Proceeding, whether civil, criminal, administrative or
investigative, arising out of or related to such Person's service as a director
or officer of the Company or its Subsidiaries or services performed by such
Persons at the request of the Company or its Subsidiaries, in each case at or
prior to the Effective Date, whether asserted or claimed prior to, at or after
the Effective Date, including the transactions contemplated by this Agreement.
(c) The Company shall purchase by the Effective Date, and the
Surviving Corporation shall maintain, tail policies to the current directors'
and officers' liability insurance policies maintained on the date of this
Agreement by the Company and its Subsidiaries, which tail policies (i) shall not
have aggregate premiums in excess of 300% of the aggregate annual amounts
currently paid by the Company to maintain the existing policies (which amount
has been disclosed to Parent prior to the date of this Agreement), (ii) shall be
effective for a period from the Effective Date through and including the date
six years after the Closing Date with respect to claims arising from facts or
events that existed or occurred prior to or on the Effective Date, and (iii)
shall contain coverage that is at least as protective to such directors and
officers as the coverage provided by such existing policies (complete and
accurate copies of which has been made available to Parent prior to the date of
this Agreement); PROVIDED, HOWEVER, that, if equivalent coverage cannot be
obtained or can be obtained only by paying aggregate premiums in excess of 300%
of such amount, the Company shall only be required to obtain (and the Surviving
Corporation shall only be required to maintain) as much coverage as can be
obtained by paying aggregate premiums equal to 300% of such amount.
44
(d) This SECTION 5.07 shall survive the consummation of the Merger and
is intended to benefit, and shall be enforceable by each Indemnified Person
(notwithstanding that such Persons are not parties to this Agreement) and their
respective heirs and legal representatives. The indemnification provided for
herein shall not be deemed exclusive of any other rights to which an Indemnified
Person is entitled, whether pursuant to Law, Contract or otherwise.
Notwithstanding anything herein to the contrary, if any Proceeding (whether
arising before, at or after the Effective Date) is made against any Indemnified
Person on or prior to the sixth anniversary of the Closing Date, the provisions
of this SECTION 5.07 shall continue in effect until the final disposition of
such Proceeding. In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving Person of such consolidation or merger
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, proper provision shall be
made so that the successors and assigns of the Surviving Corporation shall
succeed to the obligations set forth in this SECTION 5.07.
SECTION 5.08. EMPLOYEE MATTERS. (a) From and after the Effective Date,
Parent will, and will cause the Surviving Corporation to, honor, in accordance
with their terms, all existing employment and severance agreements between the
Company or any of its Subsidiaries and any officer, director or employee of the
Company or any of its Subsidiaries and all other Plans, provided that, subject
to the requirements of SECTIONS 5.08(B), this sentence shall not be construed as
a limitation on the right of Parent to amend or terminate any such Plans to the
extent permitted by the terms of the Plan.
(b) Parent shall cause the Surviving Corporation and each of its
Subsidiaries, for the period commencing on the Effective Date and ending on the
later of the first anniversary thereof and December 31, 2008, to maintain for
each individual employed by the Company on the Effective Date other than
individuals covered by a collective bargaining agreement (the "CURRENT
EMPLOYEES") (other than Current Employees who have entered into or will enter
into at or prior to the Effective Date an individual employment agreement with
the Company or any of its Subsidiaries) base salary, incentive compensation
(including target cash bonus opportunities, and long-term incentives and
commissions, but excluding equity incentive compensation), and aggregate
employee benefits that are no less favorable than the base salary, incentive
compensation, and aggregate employee benefits, respectively, maintained for and
provided to such Current Employee immediately prior to the Effective Date;
PROVIDED, HOWEVER, that nothing in this SECTION 5.08 shall interfere with the
Surviving Corporation's right or obligation to make such changes as are
necessary to conform with applicable Law or prevent the amendment or termination
of any Plan. Parent shall cause the Surviving Corporation and each of its
Subsidiaries, for a period commencing on the Effective Date and ending on the
later of the first anniversary thereof and December 31, 2008, to maintain
without amendment adverse to participants, and to honor, the Company's Severance
Pay Plan (and Severance Policy 306). Nothing in this SECTION 5.08 shall limit
the right of Parent, the Surviving Corporation or any of their Subsidiaries to
terminate the employment of any Current Employee at any time.
(c) Parent will, and will cause the Surviving Corporation to, cause
service rendered by Current Employees of the Company and its Subsidiaries prior
to the Effective Date to be taken into account for all purposes (including,
without limitation, eligibility, vesting, and
45
benefit accrual) under employee benefit plans of Parent, the Surviving
Corporation and its Subsidiaries, to the same extent as such service was taken
into account under the corresponding Plans of the Company and its Subsidiaries
for those purposes, provided that such service need not be taken into account
for purposes of benefit accrual under final average pay defined benefit plans or
as would result in a duplication of benefits. For the avoidance of doubt,
nothing in this Section 5.08(c) shall limit the right of Parent, the Surviving
Corporation or any of their Subsidiaries to terminate existing Plans or adopt
new employee benefit plans. Each Current Employee will not be subject to any
pre-existing condition limitation under any health plan of Parent, the Surviving
Corporation or its Subsidiaries for any condition for which he or she would have
been entitled to coverage under the corresponding Plan of the Company or its
Subsidiaries in which he or she participated prior to the Effective Date. Parent
will, and will cause the Surviving Corporation and its Subsidiaries, to give
effect, for the fiscal year in which the Effective Date occurs, in determining
any deductible and maximum out-of-pocket limitations, to claims incurred and
amounts paid by, and amounts reimbursed to, Current Employees prior to the
Effective Date.
(d) In respect of the annual bonus payable to the Current Employees
for service rendered in fiscal year 2007, Parent shall ensure that the bonus of
(i) each such employee who remains employed through December 31, 2007 is no
lower than 100% of such employee's target bonus and (ii) each such employee
whose employment is terminated without Cause (as defined in the 2003 Plan)
following the Closing Date but prior to December 31, 2007 receives a bonus no
lower than that which would be determined under clause (i) of this sentence,
prorated to reflect the partial year of service. The amount set forth in the
previous sentence shall be offset, if applicable, by any amount required to be
paid (and actually paid) pursuant to the terms of the Company's Annual Incentive
Compensation Plan or the Management Incentive Compensation Plan, as applicable.
(e) This SECTION 5.08 shall be binding upon and inure solely to the
benefit of each of the parties to this Agreement, and nothing in this SECTION
5.08, express or implied, is intended to confer upon any other Person any rights
or remedies of any nature whatsoever under or by reason of this SECTION 5.08 or
is intended to be an amendment to any Plan.
SECTION 5.09. TAKEOVER LAWS. The Company shall, upon the request of
Parent or Merger Sub, (a) take all necessary steps to exclude the Merger and any
other transaction contemplated hereby from the applicability of any Takeover
Laws, and (b) assist in any challenge by Parent or Merger Sub to the validity,
or the applicability to the Merger or any other transaction contemplated by this
Agreement, of any Takeover Laws.
SECTION 5.10. NOTIFICATION OF CERTAIN MATTERS. (a) The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, upon obtaining knowledge of the occurrence or non-occurrence of any
event, that, individually or in the aggregate, would make the timely
satisfaction of any of the conditions set forth in SECTIONS 6.01, 6.02 and 6.03
impossible or unlikely. The delivery of any notice pursuant to this SECTION 5.10
shall not cure any breach of any representation or warranty requiring disclosure
of such matter or otherwise limit or otherwise affect the remedies available
hereunder to any party receiving such
46
notice. This SECTION 5.10 shall not constitute a covenant or agreement for
purposes of SECTION 6.02(B), 6.03(B), 7.01(E) or 7.01(F).
(b) The Company shall use its reasonable best efforts to keep Parent
informed, on a current basis, of any events, discussions, notices or changes
with respect to any material Proceeding involving the Company or any of its
Subsidiaries.
SECTION 5.11. FINANCING. (a) Parent shall use its reasonable best
efforts to arrange the Debt Financing on the terms and conditions described in
or comparable to the Debt Financing Commitments (PROVIDED that Parent and Merger
Sub may replace or amend the Debt Financing Commitments to add lenders, lead
arrangers, bookrunners, syndication agents or similar entities who had not
executed the Debt Financing Commitments as of the date of this Agreement, or
otherwise, so long as the terms are not materially less beneficial to the
ability of Parent and Merger Sub to consummate the transactions contemplated
hereby (including the Merger on the Effective Date), including with respect to
conditionality, than those in the Debt Financing Commitments as in effect on the
date of this Agreement) as promptly as practicable, on the terms and conditions
described in the Debt Financing Letter, including using reasonable best efforts
to (i) maintain in effect the Financing Commitments, (ii) satisfy on a timely
basis all conditions applicable to Parent and Merger Sub to obtaining the
Financing set forth therein (including by consummating the Equity Financing
pursuant to the terms of the Equity Financing Commitments), (iii) negotiate and
enter into definitive agreements with respect thereto on the terms and
conditions contained in the Debt Financing Commitments (including the flex
provisions) or on other terms not materially less beneficial to the ability of
Parent and Merger Sub to consummate the transactions contemplated hereby
(including the Merger on the Effective Date), including with respect to
conditionality, and not in violation of this SECTION 5.11 and (iv) consummate
the Financing at or prior to Closing. In the event any portion of the Debt
Financing becomes unavailable on the terms and conditions contemplated in the
Debt Financing Commitments, Parent shall use its reasonable best efforts to
arrange as promptly as practicable following the occurrence of such event of
unavailability to obtain alternative financing from alternative sources in an
amount sufficient to consummate the transactions contemplated by this Agreement
on terms no less favorable to Parent and Merger Sub as promptly as practicable
following the occurrence of such event. For the avoidance of doubt, in the event
that (A) all or any portion of the Debt Financing structured as high yield
financing has not been consummated, (B) all closing conditions contained in
Article VI shall have been satisfied or waived (other than those contained in
SECTIONS 6.02(C) and 6.03(C)) and (C) the bridge facilities contemplated by the
Debt Financing Commitments (or alternative bridge financing obtained in
accordance with this SECTION 5.11(A)) are available on the terms and conditions
described in the Debt Financing Commitments (or replacements thereof as
contemplated by this SECTION 5.11(A)), then Merger Sub shall use the proceeds of
such bridge financing to replace such high yield financing no later than the
last day of the Marketing Period. Parent shall give the Company prompt notice of
any material breach by any party of the Debt Financing Commitments of which
Parent or Merger Sub becomes aware or any termination of the Debt Financing
Commitments. Parent shall keep the Company informed on a reasonably current
basis in reasonable detail of the status of its efforts to arrange the Debt
Financing and provide to the Company copies of all documents related to the Debt
Financing.
47
For purposes of this Agreement, "MARKETING PERIOD" shall mean the first period
of 20 consecutive Business Days after the Initiation Date (A) throughout and at
the end of which (1) Parent and its Financing sources shall have the Required
Information and (2) nothing has occurred and no condition exists that would
cause any of the conditions set forth in SECTIONS 6.02(A) and (B) to fail to be
satisfied assuming the Closing were to be scheduled for any time during such
20-consecutive-Business-Day period, and (B) throughout and at the end of which
the conditions set forth in SECTION 6.01 shall be satisfied; PROVIDED that (i)
the Marketing Period shall end on any earlier date that is the date on which the
Debt Financing is consummated; (ii) the Marketing Period occurs either entirely
before or entirely after each of the periods (x) from and including August 17,
2007 through and including September 3, 2007, (y) from and including November
21, 2007 through and including November 25, 2007, and (z) from and including
December 14, 2007 through and including January 1, 2008; (iii) the Marketing
Period shall not be deemed to have commenced if, prior to the completion of the
Marketing Period, (A) the Company's independent registered accounting firm shall
have withdrawn its audit opinion with respect to any financial statements
contained in the Required Information, in which case the Marketing Period will
not be deemed to commence at the earliest unless and until a new unqualified
audit opinion is issued with respect to the consolidated financial statements
for the applicable periods by the Company's independent registered accounting
firm or another independent registered accounting firm reasonably acceptable to
Parent, (B) the Company shall have publicly announced any intention to restate
any of its financial information (other than as publicly announced prior to the
date of this Agreement), in which case the Marketing Period will not be deemed
to commence at the earliest unless and until such restatement has been completed
and the Company SEC Reports have been amended to reflect such restatement or the
Company has announced that it has concluded that no restatement shall be
required in accordance with GAAP, or (C) the Company shall have failed to file
any report (other than the Delayed Filings relating to periods ended prior to
January 1, 2007) with the SEC by the date required under the Exchange Act, in
which case the Marketing Period will not be deemed to commence at the earliest
unless and until all such reports have been filed; (iv) if the Company has
received any comments from the staff of the SEC on its public reports or filings
under the Exchange Act, including without limitation, the 2005 10-K and the 2006
10-K, the Marketing Period will be deemed not to commence at the earliest unless
and until all such comments that could reasonably be expected to affect the
ability of the Company to have a registration statement declared effective by
the SEC have been satisfactorily resolved with the SEC staff and any required
amended reports and/or filings have been made with the SEC; and (v) if the
financial statements included in the Required Information that is available to
Parent on the first day of any such 20-consecutive-Business-Day period would not
be sufficiently current on any day during such 20-consecutive-Business-Day
period to permit (I) a registration statement using such financial statements to
be declared effective by the SEC on the last day of the
20-consecutive-Business-Day period and (II) the Company's independent registered
accounting firm to issue a customary comfort letter (including "negative
assurance" comfort) to purchasers (in accordance with its normal practices and
procedures) on the last day of the 20-consecutive-Business-Day period, then a
new 20-consecutive-Business-Day period shall commence upon Parent's receiving
updated Required Information that would be sufficiently current to permit the
actions described in (I) and (II) on the last day of such
20-consecutive-Business-Day period.
48
(b) Prior to the Closing, the Company shall, and shall cause its
Subsidiaries to, and shall use its reasonable best efforts to cause its and
their respective Representatives to, provide to Parent and Merger Sub all
cooperation reasonably requested by Parent that is necessary, proper or
advisable in connection with the Debt Financing and the transactions
contemplated by this Agreement, PROVIDED that such requested cooperation does
not unreasonably interfere with the ongoing operations of the Company and its
Subsidiaries or require the Company to agree to pay any fees, reimburse any
expenses or give any indemnities prior to the Effective Date for which it is not
reimbursed or indemnified under this Agreement, including (i) furnishing Parent
and its Debt Financing sources with such financial and other information
regarding it and its Subsidiaries as Parent shall reasonably request in order to
consummate the Debt Financing, including all Company information, financial
statements and financial data of the type required by Regulation S-X and
Regulation S-K under the Securities Act and the other accounting rules and
regulations of the SEC, and of the type and in the form customarily included in
similar private placements made in reliance on Rule 144A under the Securities
Act (including, to the extent applicable to such financial statements, the
reports of the Company's auditor's thereon, which reports shall be unqualified,
and related management discussion and analysis of financial condition and
results of operations) (such information in this clause (i), the "REQUIRED
INFORMATION"), (ii) no later than the date of mailing of the Proxy Statement,
satisfying the conditions set forth in paragraphs c, d and e of Exhibit E to the
Debt Financing Commitments (to the extent the satisfaction of such conditions
requires actions by or cooperation of the Company), (iii) upon reasonable
advance notice by Parent, participating in meetings, presentations, road shows,
due diligence sessions and sessions with rating agencies, (iv) assisting with
the preparation of materials for rating agency presentations, offering
documents, private placement memoranda, bank information memoranda,
prospectuses, business projections and similar documents required in connection
with the Debt Financing, including execution and delivery of customary
representation letters in connection therewith, PROVIDED that any private
placement memoranda or prospectuses in relation to high yield debt securities
need not be issued by the Company, (v) issuing customary representation letters
to auditors and using reasonable best efforts to obtain accountants' comfort
letters and consents to the use of accountants' audit reports relating to the
Company, legal opinions, appraisals, surveys, engineering reports, title
insurance and other documentation and items relating to the Debt Financing as
reasonably requested by Parent and, if requested by Parent or Merger Sub, to
cooperate with and assist Parent or Merger Sub in obtaining such documentation
and items, (vi) using its reasonable best efforts to provide monthly financial
statements (excluding footnotes) in the form and within the time period
following the end of a month in which the Company customarily prepares such
financial statements, (vii) executing and delivering, as of the Effective Date,
any pledge and security documents, other definitive financing documents, or
other certificates, legal opinions or documents as may be reasonably requested
by Parent (including a certificate of the Chief Financial Officer of the Company
or one or more of its Subsidiaries with respect to solvency matters and consents
of accountants for use of their reports in any materials relating to the Debt
Financing) and otherwise reasonably facilitating the pledging of collateral
(including cooperation in connection with the pay-off of existing indebtedness
and the release of related Liens), and (viii) taking all corporate actions
necessary to permit the consummation of the Debt Financing and to permit the
proceeds thereof, together with the cash of the Company and its Subsidiaries, to
be made available to the Company on the
49
Closing Date to consummate the Merger. The Company will periodically update any
such Required Information to be included in an offering document to be used in
connection with such Debt Financing in order to ensure that such Required
Information does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
there in, in light of the circumstances in which they were made, not misleading.
The Company hereby consents to the use of its and its Subsidiaries' logos in
connection with the Debt Financing; PROVIDED that such logos are used solely in
a manner that is not intended to or reasonably likely to harm or disparage the
Company or any of its Subsidiaries or the reputation or goodwill of the Company
or any of its Subsidiaries. Except for fees and liabilities subject to
reimbursement or indemnification pursuant to the next sentence, no obligation of
the Company or any of its Subsidiaries under any such certificate, document or
instrument (other than the representation letters referred to above) shall be
effective until the Effective Date and, except for fees and liabilities subject
to reimbursement or indemnification pursuant to the next sentence, none of the
Company or any of its Subsidiaries shall be required to pay any commitment or
other similar fee or incur any other liability in connection with the Financing
prior to the Effective Date. Parent shall promptly, upon request by the Company,
reimburse the Company for all reasonable out-of-pocket costs, including
reasonable attorneys' fees, incurred by the Company or any of its Subsidiaries
in connection with the cooperation of the Company and its Subsidiaries
contemplated by this SECTION 5.11(B) and shall indemnify and hold harmless the
Company, its Subsidiaries and their respective Representatives from and against
any and all losses, damages, claims, costs or expenses, including reasonable
attorney's fees incurred in connection therewith or in connection with enforcing
the rights of the Company or its Subsidiaries hereunder, suffered or incurred by
any of them prior to the Effective Date in connection with the arrangement of
the Financing and any information used in connection therewith, except with
respect to losses, damages, claims, costs or expenses arising from any
information provided or statements made by the Company or any of its
Subsidiaries.
(c) For purposes of this Agreement, "INITIATION DATE" shall mean the
latest to occur of (i) the date Parent and its Financing sources have received
from the Company the Required Information and (ii) the later of (A) July 6, 2007
and (B) the Business Day after the date the Company files with the SEC the 2007
First Quarter 10-Q. Nothing contained in this Agreement shall prohibit Parent or
Merger Sub from entering into agreements relating to the Financing or the
operation of Parent, Merger Sub or the Surviving Corporation, including adding
other equity providers or operating partners.
SECTION 5.12. SUBSEQUENT FILINGS. Until the Effective Date, the
Company will use reasonable best efforts to timely file or furnish with or to
the SEC each form, report and other document required to be filed or furnished
(as applicable) by the Company under the Exchange Act (other than the Delayed
Filings, which the Company shall use reasonable best efforts to file with the
SEC as promptly as practicable after the date hereof). As of their respective
dates, no form, report or other document filed by the Company with the SEC after
the date hereof pursuant to the requirements of the Exchange Act, including the
Delayed Filings, shall contain any untrue statement of a material fact or 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. The audited consolidated financial statements and unaudited
interim financial statements of the Company included in such forms, reports and
other
50
documents, including the Delayed Filings, shall be prepared in accordance with
GAAP applied on a consistent basis (except as may be indicated in the notes
thereto) and shall fairly present, in all material respects, the financial
position of the Company and its consolidated Subsidiaries as at the dates
thereof and the results of their operations and changes in financial position
for the periods then ended.
SECTION 5.13. PRESS RELEASES. Each of the Company, Parent and Merger
Sub agrees that no public release or announcement concerning the transactions
contemplated hereby shall be issued by any party without the prior written
consent of the Company and Parent, which consent shall not be unreasonably
withheld or delayed, except as such release or announcement may be required by
Law, including the rules or regulations of any applicable United States
securities exchange or regulatory or governmental body to which the relevant
party is subject or submits, wherever situated, in which case the party required
to make the release or announcement shall use its reasonable best efforts to
allow each other party reasonable time to comment on such release or
announcement in advance of such issuance, it being understood that the final
form and content of any such release or announcement, to the extent so required,
shall be at the final discretion of the disclosing party. Notwithstanding the
foregoing, each of the Company, Parent and Merger Sub may make any disclosures
which are consistent with prior public releases or announcements made in
accordance with this SECTION 5.13.
SECTION 5.14. STOCK EXCHANGE LISTING; DE-REGISTRATION. Except as set
forth in Section 5.14 of the Company Disclosure Letter, prior to the Closing
Date, the Company shall use commercially reasonable efforts to take, or cause to
be taken, all actions, and do or cause to be done all things, reasonably
necessary, proper or advisable on its part under applicable Laws, including the
rules and regulations of the NYSE and the other exchanges on which the Common
Shares are listed, (a) to ensure that the Common Shares remain listed on the
NYSE at all times prior to the Effective Date and that the Company remains in
compliance in all material respects with the rules and regulations of the NYSE,
and (b) to enable the delisting by the Surviving Corporation of the Common
Shares from the NYSE and the other exchanges on which the Common Shares listed
and the deregistration of the Shares under the Exchange Act as promptly as
practicable after the Effective Date.
SECTION 5.15. CONVERTIBLE SECURITIES. The Company shall take all
necessary action pursuant to the terms of the Indenture, dated as of September
1, 1991 between Bausch & Lomb Incorporated and Citibank, N.A., as Trustee, as
amended, to enter into, prior to the Effective Date, a supplemental indenture
with Citibank, N.A., as Trustee under the Fifth Supplemental Indenture, dated as
of August 4, 2003, under which the 2003 Convertible Securities were issued, in
accordance with the terms of such Fifth Supplemental Indenture, and a
supplemental indenture with Citibank, N.A., as Trustee under the Sixth
Supplemental Indenture dated as of December 20, 2004, under which the 2004
Convertible Securities were issued, in accordance with the terms of such Sixth
Supplemental Indenture, in each case to provide, among other things, that on and
after the Effective Date the 2003 Convertible Securities and the 2004
Convertible Securities (as the case may be) will be convertible only into cash
in an amount equal to the amount that the holders of the 2003 Convertible
Securities or the 2004 Convertible Securities (as the case may be) would be
entitled to receive in the Merger if they had validly
51
converted their 2003 Convertible Securities or the 2004 Convertible Securities
(as the case may be) into Common Shares immediately prior to the Effective Date.
SECTION 5.16. TREATMENT OF CERTAIN NOTES. (a) Provided that the
provisions of SECTIONS 5.16(E) and 5.16(F) are satisfied, the Company shall, and
shall cause its Subsidiaries to, use their reasonable best efforts to commence,
as soon as reasonably practicable after the receipt of a written request from
Parent to do so, one or more offers to purchase, and related consent
solicitations with respect to, all of the outstanding aggregate principal amount
of the notes identified on Section 5.16 of the Parent Disclosure Letter
(collectively, the "NOTES") on the terms and conditions specified by Parent
(collectively, the "DEBT OFFERS"), it being understood that Parent may elect to
exclude one or more series of such Notes from the Debt Offers; PROVIDED that the
Company shall not be required to commence any Debt Offers until (i) the
Solicitation Period End-Time shall have occurred, and (ii) Parent shall have
provided the Company with the necessary offer to purchase, related letter of
transmittal, and other related documents (collectively, the "OFFER DOCUMENTS").
The terms and conditions specified by Parent for the Debt Offers shall be only
such terms and such conditions as are customarily included in offers to purchase
of debt securities similar to the Notes and otherwise in compliance with
applicable Laws. The closing of the Debt Offers shall be expressly conditioned
on the completion of the Merger and shall be conducted in compliance with
applicable Laws, including SEC rules and regulations. None of the Notes shall be
required to be purchased, whether or not such repurchase is at the option of the
Company or at the request of Parent, prior to the Effective Date. The Company
and Parent shall, and shall cause their respective Subsidiaries to, and shall
use their reasonable best efforts to cause their respective Representatives to,
provide cooperation and assistance reasonably requested by the other in
connection with the Debt Offers.
(b) Subject to SECTIONS 5.16(E) and 5.16(F), with respect to any
series of Notes, if requested by Parent in writing, in lieu of commencing a Debt
Offer for such series (or in addition thereto), the Company shall, to the extent
permitted by the indenture and officers' certificates or supplemental indenture
governing such series of Notes (i) issue a notice of optional redemption (the
"REDEMPTION NOTICE") for all of the outstanding principal amount of Notes of
such series pursuant to the requisite provisions of the indenture and officer's
certificate or supplemental indenture governing such series of Notes, or (ii)
take actions reasonably requested by Parent that are reasonably necessary for
the satisfaction, discharge or defeasance of such series pursuant to the
applicable provisions of the indenture and officer's certificate or supplemental
indenture governing such series of Notes, and shall redeem or satisfy, discharge
or defease, as applicable, such series in accordance with the terms of the
indenture and officer's certificate or supplemental indenture governing such
series of Notes on the Effective Date (the "DEBT REDEMPTION"); PROVIDED that (A)
to the extent that any action described in clause (i) or (ii) can be conditioned
on the occurrence of the Effective Date, it will be so conditioned, and (B)
prior to the Company being required to take any of the actions described in
clause (i) or (ii) above that cannot be conditioned on the occurrence of the
Effective Date, as of the Closing, Parent shall set aside, or shall cause to be
set aside sufficient funds to deliver to the Company to effect such redemption
or satisfaction or discharge. The Company and Parent shall, and shall cause
their respective Subsidiaries to, and shall use their reasonable best efforts to
cause their respective Representatives to, provide cooperation and assistance
reasonably requested by the other in connection with the Debt Redemption.
52
(c) Subject to SECTION 5.16(A), the Company shall, and shall cause its
Subsidiaries to, waive any of the conditions to the Debt Offers (other than that
the Merger shall have been consummated and that there shall be no Law,
injunction or other legal restraint prohibiting consummation of the Debt Offers)
as may be reasonably requested by Parent and shall not, without the written
consent of Parent, waive any condition to the Debt Offers or make any changes to
the Debt Offers other than as agreed in writing between Parent and the Company.
Notwithstanding the immediately preceding sentence, neither the Company nor any
of its Subsidiaries shall be required to make any change to the terms and
conditions of the Debt Offers requested by Parent that decreases the price per
Note payable in the Debt Offers or related consent solicitation as set forth in
Section 5.16(c) of the Parent Disclosure Letter or imposes conditions to the
Debt Offers or related consent solicitation in addition to those set forth in
Section 5.16(c) of the Parent Disclosure Letter that are adverse to the holders
of the Notes, unless such change is previously approved by the Company in
writing.
(d) The Company covenants and agrees that, promptly following the
consent solicitation expiration date, assuming the requisite consents are
received, each of the Company and its applicable Subsidiaries as is necessary
shall (and shall use their commercially reasonable efforts to cause the
applicable trustee to) execute supplemental indentures to the indentures
governing each series of Notes for which the requisite consent has been
received, which supplemental indentures shall implement the amendments described
in the Offer Documents and shall become operative only concurrently with the
Effective Date, subject to the terms and conditions of this Agreement (including
the conditions to the Debt Offers). Concurrently with the Effective Date, Parent
shall cause the Surviving Corporation to accept for payment and thereafter
promptly pay for the Notes that have been properly tendered and not properly
withdrawn pursuant to the Debt Offers and in accordance with the Debt Offers
using funds provided by or at the direction of Parent.
(e) Parent shall prepare all necessary and appropriate documentation
in connection with the Debt Offers and any Debt Redemptions, including the Offer
Documents and the Redemption Notice, as applicable. Parent and the Company
shall, and shall cause their respective Subsidiaries to, reasonably cooperate
with each other in the preparation of the Offer Documents and Redemption Notice.
The Offer Documents (including all amendments or supplements thereto) and all
mailings to the holders of the Notes in connection with the Debt Offers and
Redemption Notice shall be subject to the prior review of, and comment by, the
Company and Parent and shall be reasonably acceptable to each of them. If at any
time prior to the completion of the Debt Offers, any information should be
discovered by the Company or Parent which should be set forth in an amendment or
supplement to the Offer Documents, so that the Offer Documents shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of circumstances under which they are made, not misleading,
the party that discovers such information shall use commercially reasonable
efforts to promptly notify the other party, and an appropriate amendment or
supplement prepared by Parent describing such information shall be disseminated
by or on behalf of the Company to the holders of the applicable Notes (which
supplement or amendment and dissemination may, at the reasonable direction of
Parent, take the form of a filing of a Current Report on Form 8-K).
Notwithstanding anything to the contrary in this SECTION 5.16(E), the Company
shall and shall
53
cause its Subsidiaries to comply with the requirements of Rule 14e-l under the
Exchange Act and any other applicable Law to the extent such laws are applicable
in connection with the Debt Offers and such compliance will not be deemed a
breach hereof.
(f) In connection with the Debt Offers and any Debt Redemption, Parent
may select one or more dealer managers, information agents, depositaries and
other agents, in each case as shall be reasonably acceptable to the Company, to
provide assistance in connection therewith and the Company shall, and shall
cause its Subsidiaries to, enter into customary agreements (including
indemnities) with such parties so selected. Parent shall pay the fees and
out-of-pocket expenses of any dealer manager, information agent, depositary or
other agent retained in connection with the Debt Offers and any Debt Redemption
upon the incurrence of such fees and out-of-pocket expenses, and Parent further
agrees to reimburse the Company and their Subsidiaries for all of their
reasonable and documented out-of-pocket costs incurred in connection with the
Debt Offers and the Debt Redemption promptly following the incurrence thereof.
Parent shall indemnify and hold harmless the Company, its Subsidiaries and each
of their respective officers, directors and each Person that controls the
Company within the meaning of Section 20 of the Exchange Act (each a "COMPANY
PERSON") from and against any and all liabilities, losses, damages, claims,
costs, expenses, interest, awards, judgments and penalties (excluding the
out-of-pocket costs and expenses referred to in the immediately preceding
sentence) suffered or incurred by any Company Person, or to which any Company
Person may become subject, that arises out of, or in any way in connection with,
the Debt Offers, Debt Redemption, or any actions taken, or not taken by Company,
or at the direction of Company, pursuant to this SECTION 5.16 or at the request
of Parent.
SECTION 5.17. TERMINATION OF CERTAIN OTHER INDEBTEDNESS. (a) The
Company shall use commercially reasonable efforts to deliver to Parent at least
two Business Days prior to the Closing Date payoff letters from third-party
lenders and trustees, in form and substance reasonably satisfactory to Parent,
with respect to the indebtedness of the Company and its Subsidiaries identified
on Section 5.17(a) of the Parent Disclosure Letter and any other indebtedness
specified by Parent to the Company no later than 10 days prior to the Closing or
entered into after the date hereof.
(b) On the Closing Date, subject to Parent making available necessary
funds to do so, the Company shall and shall cause its Subsidiaries to
permanently (i) terminate the credit facilities requested by Parent to be so
terminated, if and to the extent such facilities are either identified on
Section 5.17(b) of the Parent Disclosure Letter or specified by Parent to the
Company no later than five days prior to Closing, and all related Contracts to
which the Company and its Subsidiaries is a party, and (ii) to the extent the
related facility is terminated pursuant to this SECTION 5.17, release any Liens
on its assets relating to those facilities.
SECTION 5.18. RESTRUCTURING. The Company shall, and shall cause its
Subsidiaries to, (a) use commercially reasonable efforts to effect transfers of
cash or cash equivalents of the Company and its Subsidiaries to a United States
bank account of the Company, in a tax- and cost-efficient manner, in amounts
specified and as directed by Parent in writing, such that the specified amounts
of cash or cash equivalents are available not less than two Business Days prior
to the Closing to fund the Merger Consideration in part; PROVIDED that
54
such transfers of cash or cash equivalents shall not unreasonably interfere with
the ability of the Company or its Subsidiaries to operate their respective
businesses, and (b) keep Parent reasonably informed on a current basis as to the
status of the proposed legal entity restructuring of its European operations.
For the avoidance of doubt, it is understood that the failure of the Company or
its Subsidiaries to make any such transfer of cash or cash equivalents shall not
consitute a breach of clause (a) of this Section 5.18 if the Company uses, and
causes its Subsidiaries to use, commercially reasonable efforts to effect such
transfer.
SECTION 5.19. SHAREHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate, subject to a customary joint defense agreement,
in, but not control, the defense or settlement of any shareholder litigation
against the Company or and of its directors or officers relating to the Merger
or any other transactions contemplated hereby, provided, however, that any such
settlement shall not be agreed to without Parent's consent, which consent shall
not be unreasonably withheld or delayed.
SECTION 5.20. NO CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained
in this Agreement shall give Parent, directly or indirectly, the right to
control or direct the Company's or its Subsidiaries' operations prior to the
Effective Date, and nothing contained in this Agreement shall give the Company,
directly or indirectly, the right to control or direct Parent's or its
Subsidiaries' operations prior to the Effective Date. Prior to the Effective
Date, each of the Company and Parent shall exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision over its and
its Subsidiaries' respective operations.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of the parties to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Date of the following
conditions:
(a) SHAREHOLDER APPROVAL. The Requisite Shareholder Approval shall
have been obtained.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction,
decree or other legal restraint issued by any Governmental Entity of competent
jurisdiction or other Law, rule or legal restraint shall be in effect
preventing, restraining or rendering illegal the consummation of any of the
transactions contemplated by this Agreement. No Governmental Entity shall have
commenced and not withdrawn any Proceeding seeking to enjoin, restrain or
otherwise prohibit any of the transactions contemplated by this Agreement.
(c) REGULATORY CONSENTS. (i) Any waiting period under the HSR Act
applicable to any of the transactions contemplated by this Agreement shall have
expired or early termination thereof shall have been granted; and (ii) the
European Commission shall have adopted a decision pursuant to the ECMR declaring
the Merger compatible with the common market and, in the event that any aspect
of any of the transactions contemplated by this
55
Agreement is referred to the competent authorities of any European Union member
state pursuant to Article 9 of the ECMR (or is deemed to be so referred pursuant
to Article 9 of the ECMR) and effecting such transactions prior to the granting
of approval by the relevant authorities of such European Union member state
would constitute a violation of the merger control laws applicable in that
state, approval of the aspect of the transaction contemplated by this Agreement
that was so referred (or deemed to be so referred) shall have been granted
pursuant to the merger control laws applicable in the relevant European Union
member state.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligation of Parent and Merger Sub to effect the Merger is also subject to the
satisfaction, or waiver by Parent, at or prior to the Effective Date, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties set forth in SECTIONS 3.02(A), 3.02(B), 3.02(C) and 3.03 shall be
true and correct in all respects (except in the case of SECTION 3.02 for de
minimis inaccuracies), in each case, both as of the date of this Agreement and
as of the Closing Date as though made on and as of such date, (ii) the
representations and warranties set forth in SECTIONS 3.06(B) (Absence of Certain
Changes) and 3.22 (Required Vote of Company Shareholders) shall be true and
correct in all respects, in each case both as of the date of this Agreement and
as of the Closing Date as though made on and as of such date, and (iii) the
other representations and warranties of the Company set forth in this Agreement
shall be true and correct (without giving effect to any limitation on any
representation or warranty indicated by the words "Material Adverse Effect," "in
all material respects", "material" or similar terms) as of the date of this
Agreement and as of the Closing Date as though made on and as of such date,
except to the extent any such representation or warranty is expressly made as of
an earlier date (in which case such representation or warranty shall be true and
correct on and as of such earlier date); PROVIDED that any such representation
or warranty shall be deemed to be untrue or incorrect only if the event, change,
effect, development, condition or occurrence that resulted in such untruth or
incorrectness, individually or when taken together with all other events,
changes, effects, developments, conditions and occurrences that result in any
and all other untruth or incorrectness in the representations and warranties of
the Company set forth in this Agreement has had or would have a Material Adverse
Effect (disregarding for this purpose any reference to materiality or Material
Adverse Effect contained in any such representation or warranty).
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Date.
(c) OFFICERS CERTIFICATE. Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer or Chief
Financial Officer certifying as to the matters set forth in SECTIONS 6.02(A) and
6.02(B).
SECTION 6.03. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Date of the following
conditions:
56
(a) REPRESENTATIONS AND WARRANTIES. Each representation or warranty of
Parent and Merger Sub set forth in this Agreement shall be true and correct in
all respects as of the date of this Agreement and as of the Closing Date as
though made on and as of such date, except to the extent any such representation
or warranty is expressly made as of an earlier date (in which case such
representation or warranty shall be true and correct on and as of such earlier
date); PROVIDED that any such representation or warranty shall be deemed to be
untrue or incorrect only if the event, change, effect, development, condition or
occurrence that resulted in such untruth or incorrectness, individually or when
taken together with all other events, changes, effects, developments, conditions
or occurrences that result in any and all other untruth or incorrectness in the
representations and warranties of Parent and Merger Sub set forth in this
Agreement would reasonably be expected, individually or in the aggregate, to
prevent or materially delay the consummation of the transactions contemplated by
this Agreement.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Effective Date.
(c) OFFICERS CERTIFICATE. The Company shall have received a
certificate signed on behalf of Parent by a duly authorized officer of Parent
certifying as to the matters set forth in SECTIONS 6.03(A) and 6.03(B).
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. Neither the Company
nor Parent may rely, either as a basis for not consummating the Merger or
terminating this Agreement and abandoning the Merger, on the failure of any
condition set forth in SECTION 6.01, 6.02 or 6.03, as the case may be, to be
satisfied if such failure was caused by such party's breach in any material
respect of any provision of this Agreement or failure to use all reasonable best
efforts to consummate the Merger and the other transactions contemplated hereby,
as required by and subject to SECTION 5.06.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time (notwithstanding that the Requisite
Shareholder Approval may have been obtained) prior to the Effective Date (with
any termination by Parent also being an effective termination by Merger Sub):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if any court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling, or taken any other action, restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable; PROVIDED that the party seeking to terminate this Agreement
pursuant to this SECTION 7.01(B) shall have complied with its obligations under
SECTION 5.06;
57
(c) by either the Company or Parent, if the Merger shall not have been
consummated on or before the Outside Date; PROVIDED, that the right to terminate
pursuant to this SECTION 7.01(C) shall not be available to any party whose
failure (or, in the case of Parent, Merger Sub's failure) to perform or comply
in all material respects with the covenants and agreements of such Person set
forth in this Agreement shall have resulted in the failure of the Closing to
occur by such date;
(d) by either the Company or Parent, if the Special Meeting shall have
been convened and a vote with respect to the adoption of the plan of merger
contained in this Agreement shall have been taken thereat (or at any adjournment
or postponement thereof) and the Requisite Shareholder Approval shall not have
been obtained;
(e) by the Company, if there shall have been a breach of any of the
covenants or agreements or any of the representations or warranties set forth in
this Agreement on the part of Parent or Merger Sub which breach, either
individually or in the aggregate, would result, if occurring or continuing on
the Effective Date, in the failure of the conditions set forth in SECTION
6.03(A) or 6.03(B), as the case may be, and which is not cured on or before the
earlier of the Outside Date and the 30th day following written notice to Parent,
or which by its nature cannot be cured within such time period; PROVIDED that
the Company shall not have the right to terminate this Agreement pursuant to
this SECTION 7.01(E) if the Company is then in material breach of any of its
covenants or agreements contained in this Agreement;
(f) by Parent, if there shall have been a breach of any of the
covenants or agreements or any of the representations or warranties set forth in
this Agreement on the part of the Company (except the covenants and agreements
in SECTIONS 5.02 and 5.04), which breach, either individually or in the
aggregate, would result, if occurring or continuing on the Effective Date, in
the failure of the conditions set forth in SECTION 6.02(A) or 6.02(B), as the
case may be, and which is not cured on or before the earlier of the Outside Date
and the 30th day following written notice to the Company, or which by its nature
cannot be cured within such time period; PROVIDED that Parent shall not have the
right to terminate this Agreement pursuant to this SECTION 7.01(F) if Parent or
Merger Sub is then in material breach of any of its covenants or agreements
contained in this Agreement;
(g) by Parent (i) if (A) a Change of Board Recommendation shall have
occurred, (B) the Company or its Board of Directors (or any committee thereof)
shall (1) approve, adopt or recommend any Acquisition Proposal or (2) approve or
recommend, or enter into or allow the Company or any of its Subsidiaries to
enter into, a letter of intent, agreement in principle or definitive agreement
with respect to an Acquisition Proposal (other than an Acceptable
Confidentiality Agreement), (C) within five Business Days after the date any
Acquisition Proposal or any material modification thereto is first published or
sent or given to the shareholders of the Company, the Company fails to issue a
press release that reaffirms the Company Board Recommendation, (D) the Company
shall have failed to include in the Proxy Statement distributed to shareholders
its recommendation that shareholders adopt the plan of merger contained in this
Agreement, or (E) the Company or its Board of Directors (or any committee
thereof) shall authorize or publicly propose any of the foregoing; or (ii) if
the Company shall have breached any of its obligations under SECTION 5.02 or
5.04;
58
(h) by the Company at any time prior to receipt of the Requisite
Shareholder Approval in accordance with, and subject to the terms and conditions
of, SECTION 5.02(E)(II); PROVIDED that the Company shall simultaneously with
such termination enter into the Alternative Acquisition Agreement; or
(i) by the Company if Parent has failed to consummate the Merger by
5:00 p.m. on the third Business Day after the final day of the Marketing Period
and all of the conditions set forth in SECTIONS 6.01 and 6.02 (other than the
delivery of the certificate described in SECTION 6.02(C)) would have been
satisfied if the Closing were to have occurred on such date.
The party desiring to terminate this Agreement pursuant to any of
clauses (b) through (i) of this SECTION 7.01 shall give written notice of such
termination to the other party in accordance with SECTION 8.05, specifying the
provision or provisions hereof pursuant to which such termination is effected.
SECTION 7.02. EFFECT OF TERMINATION. If this Agreement is terminated
and the Merger is abandoned pursuant to SECTION 7.01, this Agreement, except for
the provisions of SECTIONS 5.05(B), the reimbursement and indemnity obligations
in SECTION 5.11, the reimbursement and indemnity obligations in SECTION 5.16,
7.02, 7.03, 7.04, 7.05, 7.06 and ARTICLE VIII, shall forthwith become void and
have no effect, without any liability on the part of any party or its directors,
officers or shareholders. Notwithstanding the foregoing, except as set forth in
SECTION 7.04 and SECTION 8.04, no Party shall be relieved or released from any
liabilities or damages for any willful and material breach hereof.
SECTION 7.03. FEES AND EXPENSES. (a) Whether or not the Merger is
consummated, except as otherwise specifically provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such costs
and expenses.
(b) If (i) at any time after the date of this Agreement an Acquisition
Proposal shall have been made directly to the shareholders of the Company or
otherwise become publicly known or any Person shall have publicly announced or
made known an intention (whether or not conditional) to make an Acquisition
Proposal, and (ii) following the occurrence of an event described in the
preceding clause (i), this Agreement is terminated by Parent or the Company
pursuant to SECTION 7.01(C) or 7.01(D) or by Parent pursuant to Section 7.01(F),
and (iii) on or before the date that is 12 months after the date of such
termination, the Company enters into a definitive agreement in respect of any
Acquisition Proposal or consummates any Acquisition Proposal (which, for the
avoidance of doubt, need not be the same Acquisition Proposal described in
clause (i)) then, the Company shall pay to Parent the Termination Fee (MINUS any
amount of Expenses previously paid in accordance with SECTION 7.03(F)), on the
date of entry into the agreement in respect of the Acquisition Proposal, or, if
earlier, consummation of the transaction in respect of the Acquisition Proposal,
as applicable; PROVIDED that for purposes of this SECTION 7.03(B), (x) the term
"ACQUISITION PROPOSAL" shall have the meaning assigned to such term in SECTION
5.02(I), except that the references therein to "25%" shall be deemed to be
references to "50%".
59
(c) If (i) Parent terminates this Agreement pursuant to SECTION
7.01(G) or (ii) the Company terminates this Agreement pursuant to SECTION
7.01(H), then the Company shall pay to Parent either simultaneously with (in the
case of termination by the Company pursuant to subclause (ii) of this section)
or as promptly as reasonably practicable (and in any event within five Business
Days) after (in the case of termination by Parent pursuant to subclause (i) of
this section) such termination, the Termination Fee, PROVIDED that if such
termination is either (A) by Parent pursuant to SECTION 7.01(G)(I) and the event
or circumstance giving rise to the right of termination is based on an
Acquisition Proposal by an Excluded Party that remained an Excluded Party at the
time of such event or circumstance or (B) by the Company pursuant to SECTION
7.01(H) in order to enter into a definitive agreement with respect to an
Acquisition Proposal with an Excluded Party that remained an Excluded Party at
the time of such termination, then, in each case, such payment shall instead be
for the Excluded Party Termination Fee.
(d) If the Company terminates this Agreement pursuant to SECTION
7.01(I), then Merger Sub shall pay the Reverse Breakup Fee to the Company or as
directed by the Company as promptly as reasonably practicable (and, in any
event, within five Business Days following such termination).
(e) If (i) either Parent or the Company terminates this Agreement
pursuant to SECTION 7.01(C), (ii) the final day of the Marketing Period occurred
on or prior to the Outside Date or the Agreement is otherwise terminable by the
Company pursuant to Section 7.01(e), and (iii) on the Outside Date all of the
conditions set forth in SECTIONS 6.01 and 6.02 (other than the delivery of the
certificate described in SECTION 6.02(C)) would have been satisfied if the
Closing were to have occurred on such date, then Merger Sub shall pay the
Reverse Breakup Fee to the Company or as directed by the Company as promptly as
reasonably practicable (and, in any event, within five Business Days following
such termination).
(f) If this Agreement is terminated by either Parent or the Company
pursuant to SECTION 7.01(D) (or by either Parent or the Company pursuant to
Section 7.01(b) or 7.01(c) at any time when this Agreement is terminable
pursuant to SECTION 7.01(D)), then the Company shall pay to Parent an amount
equal to the sum of Parent's and Merger Sub's reasonably documented Expenses
(not to exceed $35 million) by wire transfer of immediately available funds to
the account designated by Parent, within two Business Days after the date of
such termination; PROVIDED that the payment by the Company of such Expenses
pursuant to this SECTION 7.03(E) shall not relieve the Company of any obligation
to pay the Termination Fee or the Excluded Party Termination Fee pursuant to any
other provision of this SECTION 7.03.
(g) For purposes of this Agreement:
(i) "EXPENSES" means all reasonable out-of-pocket costs and expenses
(including all fees and expenses of financing sources, counsel,
accountants, investment bankers, experts and consultants to a party hereto
and its affiliates) incurred by a party or on its behalf in connection with
or related to the authorization, preparation, negotiation, execution and
performance of this Agreement.
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(ii) "EXCLUDED PARTY TERMINATION FEE" means an amount in cash equal to
$40 million, which Excluded Party Termination Fee shall be paid (when due
and owing) by the Company to Parent by wire transfer of immediately
available funds to the account designated by Parent.
(iii) "TERMINATION FEE" means an amount in cash equal to $120 million,
which Termination Fee shall be paid (when due and owing) by the Company to
Parent by wire transfer of immediately available funds to the account
designated by Parent.
(iv) "REVERSE BREAKUP FEE" means an amount in cash equal to $120
million, which Reverse Breakup Fee shall be paid (when due and owing) by
Merger Sub to the Company by wire transfer of immediately available funds
to the account designated by the Company.
(h) Each of the Company, Parent and Merger Sub acknowledges that the
agreements contained in this SECTION 7.03 are an integral part of the
transactions contemplated by this Agreement. In the event that the Company shall
fail to pay the Termination Fee or Excluded Party Termination Fee or Expenses
when due, or Parent or Merger Sub shall fail to pay the Reverse Breakup Fee when
due, the Company or Merger Sub and Parent, as the case may be, shall reimburse
the other party for all reasonable costs and expenses actually incurred or
accrued by such other party (including reasonable Expenses of counsel) in
connection with the collection under and enforcement of this SECTION 7.03,
together with interest on the amount of such amount or portion thereof at the
prime rate of Citibank N.A. in effect on the date such payment was required to
be made through the date of payment.
SECTION 7.04. MAXIMUM RECOVERY. (a) Notwithstanding anything to the
contrary in this Agreement, (i) the right to terminate this Agreement and (to
the extent provided by SECTION 7.03) receive payment of the Reverse Breakup Fee
shall be the sole and exclusive remedy of the Company and its Subsidiaries
against Parent, Merger Sub or the Guarantor for any loss or damage suffered as a
result of the breach of any representation, warranty, covenant or agreement
contained in this Agreement by Parent or Merger Sub and the failure of the
Merger to be consummated, and upon payment of the Reverse Breakup Fee in
accordance with SECTION 7.03, none of Parent, Merger Sub or the Guarantor shall
have any further liability or obligation relating to or arising out of this
Agreement or the transactions contemplated by this Agreement, and (ii) in no
event, whether or not this Agreement shall have been terminated, shall the
Company be entitled to monetary damages in excess of $120 million in the
aggregate, inclusive of the Reverse Breakup Fee, if applicable, for all losses
and damages arising from or in connection with breaches of this Agreement by
Parent or Merger Sub or otherwise relating to or arising out of this Agreement
or the transactions contemplated by this Agreement.
(b) The Company agrees that, notwithstanding anything herein to the
contrary, (i) to the extent it has incurred losses or damages in connection with
this Agreement, (A) the maximum aggregate liability of Parent and Merger Sub for
such losses or damages shall be limited to $120 million, (B) in no event shall
the Company seek to recover any money damages in excess of such amount from
Parent, Merger Sub or the Guarantor, and (C) the maximum liability of the
Guarantor, directly or indirectly, shall be limited to the express
61
obligations of the Guarantor under the Guarantee; and (ii) in no event shall any
"Non-Recourse Party" (as defined in the Guarantee) have any liability or
obligation relating to or arising out of this Agreement or the transactions
contemplated hereby.
SECTION 7.05. AMENDMENT. To the extent permitted by applicable Law,
this Agreement may be amended by the Company, Parent and Merger Sub, at any time
before or after the Requisite Shareholder Approval but, after such adoption by
the Requisite Shareholder Approval, no amendment shall be made which decreases
the Merger Consideration or which adversely affects the rights of the Company's
shareholders hereunder without the approval of the shareholders of the Company.
This Agreement may not be amended, changed, supplemented or otherwise modified
except by an instrument in writing signed on behalf of all of the parties.
SECTION 7.06. EXTENSION; WAIVER; REMEDIES. (a) At any time prior to
the Effective Date, each party hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party, or (iii) waive compliance by any other party
with any of the agreements or conditions contained herein. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party against which
such waiver or extension is to be enforced.
(b) The failure of any party hereto to exercise any rights, power or
remedy provided under this Agreement, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance. For purposes of this SECTION 7.06, Parent and Merger Sub
shall be deemed to constitute a single party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in ARTICLES III and IV or any instrument delivered pursuant to
this Agreement shall not survive beyond the Effective Date. Each covenant or
agreement of the parties in this Agreement shall not survive beyond the
Effective Date, other than any covenant or agreement that by its terms
contemplates performance after the Effective Date, including SECTIONS 5.07 and
5.08, which shall survive until fully performed.
SECTION 8.02. ENTIRE AGREEMENT ASSIGNMENT. This Agreement, together
with the Company Disclosure Letter, the Parent Disclosure Letter, and the
Confidentiality Agreement, constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to subject matter hereof. The Agreement shall not be assigned by any
party by operation of law or otherwise without the prior written consent of the
other parties, PROVIDED
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that Parent or Merger Sub may assign any of their respective rights and
obligations to any direct or indirect Subsidiary of Parent, but no such
assignment shall relieve Parent or Merger Sub, as the case may be, of its
obligations hereunder.
SECTION 8.03. JURISDICTION; VENUE. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any United States
District Court for the Southern District of New York or any New York State
court, in each case located in the Borough of Manhattan, in the event any
dispute arises out of this Agreement or any transaction contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or any
transaction contemplated by this Agreement in any court other than any such
court, and (d) waives any right to trial by jury with respect to any action
related to or arising out of this Agreement or any transaction contemplated by
this Agreement. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any Proceeding arising out of this Agreement or the
transactions contemplated hereby in United States District Court for the
Southern District of New York or any New York State court, in each case located
in the Borough of Manhattan, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such Proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 8.04. VALIDITY; SPECIFIC PERFORMANCE. (a) If any term or other
provision of this Agreement is held to be invalid, illegal or incapable of being
enforced by any rule of law or public policy in any jurisdiction, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect and shall not be affected thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced in any
jurisdiction, this Agreement will be reformed, construed and enforced in such
jurisdiction so as to effect the original intent of the parties as closely as
possible to the end that the transactions contemplated hereby are fulfilled to
the fullest extent possible.
(b) The parties hereto agree that irreparable damage would occur in
the event that any provision of this Agreement were not performed by the Company
in accordance with the terms hereof and that, prior to the termination of this
Agreement pursuant to ARTICLE VII, Parent and Merger Sub shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or equity. The parties acknowledge (except with respect to SECTION 5.05(B)) that
the Company shall not be entitled to an injunction or injunctions to prevent
breaches of this Agreement by Parent or Merger Sub or any remedy to enforce
specifically the terms and provisions of this Agreement and that the Company's
sole and exclusive remedy with respect to such breach shall be the remedies set
out in SECTION 7.04.
SECTION 8.05. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be given (and shall be deemed to have been
duly received if given) by hand delivery in writing or by facsimile transmission
with confirmation of receipt or by recognized overnight courier service, as
follows:
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if to Parent or Merger Sub:
WP Prism LLC
c/o Warburg Pincus LLC
466 Lexington Avenue
New York, New York 10017
Attention: Sean D. Carney
Facsimile: 212-716-5040
with a copy to:
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
Attention: Robert P. Davis, Esq.
David Leinwand, Esq.
Facsimile: 212-225-3999
if to the Company:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: Robert B. Stiles
Facsimile: 585-338-0418
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Patricia A. Vlahakis, Esq.,
Joshua R. Cammaker, Esq.
Facsimile: 212-403-2000
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 8.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable to
contracts made and to be performed entirely within that State.
SECTION 8.07. DESCRIPTIVE HEADINGS. The descriptive headings herein
(including the Table of Contents) are inserted for convenience of reference only
and are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
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SECTION 8.08. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, including SECTION 5.08, is intended to confer
upon any other Person any rights or remedies of any nature whatsoever under or
by reason of this Agreement except for SECTION 5.07 and SECTION 7.04 (each of
which provisions is intended to be for the benefit of the Persons referred to
therein, and may be enforced by any such Persons).
SECTION 8.09. RULES OF CONSTRUCTION. The parties to this Agreement
have been represented by counsel during the negotiation and execution of this
Agreement and waive the application of any Laws or rule of construction
providing that ambiguities in any agreement or other document will be construed
against the party drafting such agreement or other document. As used in this
Agreement, the words "HEREBY," "HEREIN," "HEREINAFTER" and similar terms shall
be deemed to refer to this Agreement in its entirety, rather than to any
Article, Section, or other portion of this Agreement, and the word "INCLUDING"
shall be deemed to be followed by the phrase "without limitation." Whenever used
in this Agreement, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders.
SECTION 8.10. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
SECTION 8.11. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
"ACCEPTABLE CONFIDENTIALITY AGREEMENT" means a confidentiality
and standstill agreement that contains confidentiality and standstill
provisions that are no less favorable in the aggregate to the Company
than those contained in the Confidentiality Agreement.
"AFFILIATE" and "ASSOCIATE" have the meanings given to such terms
in Rule 12b-2 under the Exchange Act.
"BENEFICIAL OWNERSHIP" has the meaning given to such term in Rule
13d-3 under the Exchange Act. Phases such as "beneficially own" or
"own beneficially" have correlative meanings.
"BUSINESS DAY" has the meaning given to such term in Rule
14d-1(g) under the Exchange Act.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement,
dated as of August 25,2006 (as amended through the date of this
Agreement), by and between the Company and Warburg Pincus LLC.
"CONTROLLED GROUP LIABILITY" means any and all liabilities (i)
under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under
Sections 412 and 4971 of the Code, (iv) resulting from a violation of
the continuation coverage requirements of Section 601 ET SEQ. of ERISA
and Section 4980B of the Code or the group health plan requirements of
65
Sections 601 ET SEQ. of the Code and Section 601 ET SEQ. of ERISA, and
(v) under corresponding or similar provisions of foreign Laws.
"DELAYED FILINGS" means the Company's Quarterly Report on Form
10-Q for the quarter ended on September 24, 2005, the Company's
Quarterly Reports on Form 10Q for the quarters ended on April 1, July
1, and September 30, 2006, and the First Quarter 2007 10-Q.
"DISSENTING SHARE" means each Class B Share that is issued and
outstanding immediately prior to the Effective Date as to which the
holder thereof has properly exercised appraisal rights, if any,
available under Section 910 of the NYBCL.
"KNOWLEDGE" of the Company means the actual knowledge of any of
the persons set forth in Section 8.11 of the Company Disclosure Letter
and "KNOWLEDGE" of Parent means the actual knowledge of any of the
officers of Parent.
"LIEN" means any mortgage, deed of trust, lien (statutory or
other), pledge, security interest, claim, covenant, condition,
restriction, option, right of first offer or refusal, charge,
easement, right-of-way, encroachment, third party right or other
encumbrance or title defect of any kind or nature.
"MATERIAL ADVERSE EFFECT" means any event, change, effect,
development, condition or occurrence that has, or would or would
reasonably be expected to have, individually or in the aggregate, a
material adverse effect on (a) the business, assets, liabilities,
results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole or (b) the ability of
the Company timely to perform its obligations under and consummate the
transactions contemplated by this Agreement; PROVIDED, that in the
case of clause (a) only, Material Adverse Effect shall not be deemed
to include any event, change, effect, development, condition or
occurrence to the extent resulting from (a) changes in general
economic conditions, changes affecting the securities or financial
markets in general, or changes or developments in the industries in
which the Company and its Subsidiaries operate unless such changes or
developments have a disproportionate effect on the Company and its
Subsidiaries, taken as a whole, when compared to other companies
operating in the same industries in which the Company or its
Subsidiaries operate, or (b) public disclosure of the transactions
contemplated hereby, (c) other than as a result of breach by the
Company of the representations and warranties in SECTION 3.05, the
Company's restatement of its historical consolidated financial
statements for the fiscal years ended December 31, 2001, 2002, 2003,
2004 and 2005, and the matters referred to in the Company's reports on
Form 12b-25 filed with the SEC on, respectively, November 11, 2005,
March 17, May 6, August 8 and November 9, 2006, and May 10, 2007, (d)
the Company's failure to file in a timely manner its Annual Reports on
Form 10-K for the fiscal years ended December 31, 2005 and December
30, 2006 or, except to the extent required pursuant to Section 5.03(c)
hereof, the Delayed Filings, (e) the matters contained in the
Company's 2006 10-K under Item 3. "Legal Proceedings" and in Note 19.
"Other Matters" in the financial statements contained in the 2006 10-K
(in each case, other than the first paragraph and
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the "General Litigation Statement" thereof, but including the
description of the recent audit committee investigation of the
Company's Spanish subsidiary) and similar disclosures contained in
Note 17. "Commitments and Contingencies" to such financial statements
and in Item 7, Recent Developments, Legal Matters, (f) the recall of
the Company's MoistureLoc product, (g) an act of terrorism within or
affecting the United States or any jurisdiction where a material
amount of the Company's and its Subsidiaries' business or assets are
located or any outbreak or material worsening of any war (whether
declared or not declared) or similar hostilities involving the United
States or such jurisdiction, in each case, occurring after the date of
this Agreement or any natural disaster or similar calamity affecting
the United States or such jurisdiction, except to the extent any of
the foregoing causes any damage or destruction to or renders unusable
any facility or property of the Company or any of its Subsidiaries,
(h) any action of the Company or any of its Subsidiaries expressly
required hereby or taken at the express request or with the express
consent of Parent or Merger Sub, (i) any change in the market price or
trading volume of securities of the Company in and of itself, PROVIDED
that an event, change, effect, development, condition or occurrence
causing or contributing to such change may be a Material Adverse
Effect, subject to clauses (a) through (h), (j) and (k) of this
paragraph (j) any failure by the Company to meet any internal
projections or forecasts, PROVIDED that an event, change, effect,
development, condition or occurrence causing or contributing to such
failure may be a Material Adverse Effect, subject to clauses (a)
through (i) and (k) of this paragraph, and (k) changes in any
generally accepted accounting principles, tax laws or regulations or
applicable accounting regulations or principles.
"OUTSIDE DATE" means December 31, 2007, PROVIDED, that if the
Marketing Period has not ended on or prior to December 31, 2007, then
the Outside Date shall be deemed to be February 8, 2008.
"PERMITTED LIENS" means (i) statutory liens securing payments not
yet due, (ii) such imperfections or irregularities of title, claims,
liens, charges, security interests, easements, covenants and other
restrictions or encumbrances as do not materially affect the use of
the properties or assets subject thereto or affected thereby or
otherwise materially impair business operations at such properties,
(iii) mortgages, or deeds of trust, security interests or other
encumbrances on title related to indebtedness reflected on the
consolidated financial statements of the Company set forth in Section
8.11 of the Company Disclosure Letter, (iv) Liens for Taxes not yet
due and payable or that are being contested in good faith and by
appropriate proceedings, (v) mechanics', materialmen's or other Liens
or security interests arising by operation of law that secure a
liquidated amount that are being contested in good faith and by
appropriate proceedings, (vi) any other Liens that would not have,
individually or in the aggregate, a Material Adverse Effect, (vii)
pledges or deposits to secure obligations under workers' compensation
Laws or similar legislation or to secure public or statutory
obligations, and (viii) pledges and deposits to secure the performance
of bids, trade contracts, leases, surety and appeal bonds, performance
bonds and other obligations of a similar nature, in each case in the
ordinary course of business.
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"PERSON" means any individual, corporation, limited liability
company, partnership, association, trust, estate or other entity or
organization, including any Governmental Entity.
"PLAN" means each "employee benefit plan" as defined in Section
3(3) of ERISA, whether or not subject to ERISA. including each bonus,
profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock or other
equity-based or other employee benefit plan, program, policy,
practice, arrangement, agreement, fund or commitment, , and each
employment, retention, consulting, change in control, salary
continuation, termination or severance plan, program, policy,
practice, arrangement or agreement entered into, maintained, sponsored
or contributed to by the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries has any obligation to
contribute, or with respect to which the Company or any of its
Subsidiaries has any liability, direct or indirect, contingent or
otherwise (including a liability arising out of an indemnification,
guarantee, hold harmless or similar agreement) or otherwise providing
benefits to any current, former or future employee, officer or
director of the Company or any of its Subsidiaries or to any
beneficiary or dependant thereof; PROVIDED that "multiemployer plans"
(within the meaning of Section 4001(a)(3) of ERISA), standard-form
employment agreements outside the United States with notice periods of
180 days or less, and plans, programs, policies, or agreements
required to be maintained by applicable Law shall not be considered
Plans.
"PLAN OF MERGER" means a plan of merger within the meaning of
Section 902 of the NYBCL.
"REPRESENTATIVES" means, when used with respect to Parent or the
Company, the directors, officers, employees, consultants, financial
advisors, accountants, legal counsel, investment bankers, and other
agents, advisors and representatives of Parent or the Company, as
applicable, and its Subsidiaries.
"RESTRICTED STOCK UNITS" means all units under the Company's
Long-Term Equity Equivalent Accumulation Plan and all stock units or
restricted stock units under the following plans: the 1990 Plan, the
2001 Plan, the 2003 Plan, the Company's Director Stock Unit Plan, and
the Annual Retainer Stock Plan for Non-Employee Directors.
"SUBSIDIARY" means, when used with reference to a Person, any
other Person (other than natural persons) of which securities or other
ownership interests having ordinary voting power to elect a majority
of the Board of Directors or other Persons performing similar
functions, or a majority of the outstanding voting securities of
which, are owned directly or indirectly by such first Person.
"TREASURY REGULATIONS" means the regulations promulgated under
the Code, as amended from time to time (including any successor
regulations).
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all at or
on the day and year first above written.
WP PRISM LLC
By: /s/ Sean D. Carney
---------------------------------------
Name: Sean D. Carney
Title: Partner
WP PRISM MERGER SUB INC.
By: /s/ Sean D. Carney
---------------------------------------
Name: Sean D. Carney
Title: Partner
BAUSCH & LOMB INCORPORATED
By: /s/ Ronald L. Zarrella
---------------------------------------
Name: Ronald L. Zarrella
Title: Chairman, Chief Executive Officer
[SIGNATURE PAGE TO MERGER AGREEMENT]
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