EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
MEDICAL DEVICE MANUFACTURING, INC.,
PINE MERGER CORPORATION
and
MEDSOURCE TECHNOLOGIES, INC.
Dated as of April 27, 2004
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EXECUTIION COPY
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER......................................................1
1.1 The Merger......................................................1
1.2 The Closing.....................................................1
1.3 Effective Time..................................................2
1.4 Effects of the Merger...........................................2
ARTICLE II CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION.....................................................2
2.1 Certificate of Incorporation....................................2
2.2 Bylaws..........................................................2
ARTICLE III DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.............2
3.1 Directors.......................................................2
3.2 Officers........................................................2
ARTICLE IV EFFECT OF THE MERGER ON SECURITIES OF MERGER SUB AND THE
COMPANY.........................................................2
4.1 Effect of the Merger on Merger Sub Stock........................2
4.2 Effect of the Merger on Company Securities......................3
4.3 Exchange of Certificates Representing Shares of Common Stock....3
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................5
5.1 Existence; Good Standing; Corporate Authority...................5
5.2 Authorization, Validity and Effect of Agreements................5
5.3 Compliance with Laws............................................6
5.4 Capitalization..................................................6
5.5 Subsidiaries....................................................7
5.6 No Violation....................................................8
5.7 Company Reports.................................................9
5.8 Absence of Certain Changes......................................9
5.9 Taxes..........................................................10
5.10 Employee Benefits..............................................11
5.11 Brokers........................................................13
5.12 Licenses and Permits...........................................13
5.13 Environmental Compliance and Disclosure........................13
5.14 Title to Assets................................................14
5.15 Labor and Employment Matters...................................15
5.16 Intellectual Property..........................................15
5.17 Material Contracts.............................................17
5.18 No Undisclosed Liabilities.....................................19
5.19 Litigation.....................................................19
5.20 Insurance......................................................19
5.21 Real Estate....................................................20
5.22 Affiliate Transactions.........................................20
5.23 Fairness Opinion...............................................20
5.24 Stockholder Rights Plan........................................20
5.25 Vote Required..................................................20
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB.....21
6.1 Existence; Good Standing; Corporate Authority..................21
6.2 Authorization, Validity and Effect of Agreements...............21
6.3 No Violation...................................................21
6.4 Financing......................................................22
6.5 Purchaser-Owned Shares of Common Stock.........................22
6.6 Interim Operations of Merger Sub...............................22
6.7 Brokers........................................................22
ARTICLE VII COVENANTS......................................................22
7.1 Interim Operations.............................................22
7.2 Stockholder Meeting; Proxy Statement...........................26
7.3 Efforts and Assistance; HSR Act................................27
7.4 Publicity......................................................28
7.5 Further Action.................................................28
7.6 Insurance; Indemnity...........................................28
7.7 Financial Statements...........................................29
7.8 Consequences if Rights Triggered...............................29
7.9 Access to Information; Notification............................29
7.10 Acquisition Proposals; Board Recommendation....................30
7.11 Transfer Taxes.................................................31
7.12 Financing Obligation...........................................32
7.13 Stock Options; Warrants; Employee Stock Purchase Plan..........32
ARTICLE VIII CONDITIONS.....................................................32
8.1 Conditions to Each Party's Obligation to Effect the Merger.....32
8.2 Conditions to Obligations of the Company.......................32
8.3 Conditions to Obligations of Purchaser and Merger Sub..........33
ARTICLE IX TERMINATION; AMENDMENT; WAIVER.................................34
9.1 Termination....................................................34
9.2 Effect of Termination..........................................35
ARTICLE X GENERAL PROVISIONS.............................................36
10.1 Nonsurvival of Representations and Warranties..................36
10.2 Notices........................................................36
10.3 Amendment......................................................37
10.4 Extension; Waiver..............................................37
10.5 Assignment; Binding Effect.....................................37
10.6 Entire Agreement...............................................37
10.7 Fees and Expenses..............................................37
10.8 Governing Law..................................................37
10.9 Waiver of Jury Trial...........................................37
10.10 Headings.......................................................37
10.11 Interpretation.................................................38
10.12 Severability...................................................38
10.13 Enforcement of Agreement.......................................38
10.14 Counterparts...................................................38
10.15 Obligation of Purchaser........................................38
Exhibit A Certificate of Incorporation of the Surviving Corporation
Company Disclosure Letter
Purchaser Disclosure Letter
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 27, 2004 (this
"Agreement"), is made and entered into among Medical Device Manufacturing, Inc.,
a Colorado corporation ("Purchaser"), Pine Merger Corporation, a Delaware
corporation ("Merger Sub"), and MedSource Technologies, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the respective boards of directors of Purchaser, Merger Sub and
the Company each have determined by unanimous vote of all of the directors
voting on the matter that it would be advisable and is in the best interests of
their respective companies and stockholders for Purchaser to acquire the Company
by means of the Merger (as hereinafter defined) on the terms and subject to the
conditions set forth herein; and
WHEREAS, it is the intention of the parties that Merger Sub merge with
and into the Company, with the Company being the surviving corporation and a
wholly owned Subsidiary (as hereinafter defined) of Purchaser; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition to the willingness of Purchaser and Merger Sub to enter into
this Agreement, Purchaser's parent, UTI Corporation, a Maryland corporation
("Parent"), Merger Sub and certain holders of the Common Stock (as hereinafter
defined) are entering into a voting agreement (the "Voting Agreement"), pursuant
to which, among other things, such stockholders have agreed to vote all of their
shares of Common Stock in the Company in favor of adopting this Agreement; and
WHEREAS, Purchaser has received the Financing Letters (as hereinafter
defined) and provided copies of the Financing Letters to the Company; and
WHEREAS, the board of directors of the Company (the "Board") has
unanimously (i) determined that the Merger is fair to, and in the best interests
of, the Company and the holders of its outstanding shares of common stock, par
value $0.01 per share (the "Common Stock"), and has declared that the Merger is
advisable, (ii) approved and declared advisable this Agreement and (iii)
resolved to recommend (subject to the limitations contained herein) that the
holders of Common Stock adopt this Agreement; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection herewith.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. On and subject to the terms and conditions of this
Agreement, at the Effective Time (as hereinafter defined), Merger Sub shall be
merged with and into the Company in accordance with this Agreement and the
applicable provisions of the Delaware General Corporation Law ("DGCL"), and the
separate corporate existence of Merger Sub shall thereupon cease (the "Merger").
The Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation").
1.2 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place at the offices of
Hogan & Hartson L.L.P., 1200 Seventeenth Street, Suite 1500, Denver, Colorado
80202, at 10:00 a.m., local time, as soon as practicable following the
satisfaction (or waiver if permissible) of the conditions set forth in Article
VIII, other than those conditions which by their nature are to be satisfied at
the Closing but subject to fulfillment or waiver of those conditions. The date
on which the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger set forth in
Article VIII shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article IX, the parties
hereto shall cause a certificate of merger meeting the requirements of Section
251 of the DGCL and any other appropriate documents to be properly executed and
filed in accordance with Section 251 of the DGCL on the Closing Date (or on such
other date as Purchaser and the Company may agree). The Merger shall become
effective at the time of filing of the certificate of merger with the Secretary
of State of the State of Delaware in accordance with the DGCL or at such later
time that the parties hereto shall have agreed upon and designated in such
filing as the effective time of the Merger (the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects set forth
in this Agreement, the certificate of merger and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all property of the Company and Merger Sub shall vest in
the Surviving Corporation, and all liabilities and obligations of the Company
and Merger Sub shall become liabilities and obligations of the Surviving
Corporation.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. At the Effective Time, the certificate
of incorporation of the Company as in effect immediately prior to the Effective
Time shall be amended as so as to read in its entirety as set forth in Exhibit A
hereto, and so amended shall be the certificate of incorporation of the
Surviving Corporation, until duly amended in accordance with applicable Law (as
hereinafter defined) and the terms thereof.
2.2 Bylaws. The bylaws of Merger Sub as in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation, until duly
amended in accordance with applicable Law, the terms thereof and the Surviving
Corporation's certificate of incorporation.
ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
3.1 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable Law and the Surviving Corporation's certificate of
incorporation and bylaws.
3.2 Officers. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed in accordance with
applicable Law and the Surviving Corporation's certificate of incorporation and
bylaws.
ARTICLE IV
EFFECT OF THE MERGER ON SECURITIES
OF MERGER SUB AND THE COMPANY
4.1 Effect of the Merger on Merger Sub Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of any holder of
common stock of Merger Sub, each share of common stock, par value $0.01 per
share, of Merger Sub outstanding immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Surviving Corporation.
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4.2 Effect of the Merger on Company Securities.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of Common Stock, each share of Common Stock
issued and outstanding immediately prior to the Effective Time that is owned by
the Company or any wholly owned Subsidiary of the Company or by Purchaser,
Merger Sub or any wholly owned Subsidiary of Purchaser shall automatically be
canceled and shall cease to exist, and no cash or other consideration shall be
delivered or deliverable in exchange therefor.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of Common Stock, each share of Common Stock
issued and outstanding immediately prior to the Effective Time (other than any
shares of Common Stock to be canceled pursuant to Section 4.2(a) and shares of
Dissenting Common Stock (as hereinafter defined)) shall automatically be
canceled and shall cease to exist and shall be converted automatically into the
right to receive an amount equal to $7.10 in cash, without interest (the "Merger
Consideration"), payable to the holder thereof upon surrender of the certificate
formerly representing such share of Common Stock in the manner provided in
Section 4.3, and no other consideration shall be delivered or deliverable on or
in exchange therefor.
(c) Notwithstanding any provision of this Agreement to the contrary,
shares of Common Stock (including restricted Common Stock) that are issued and
outstanding immediately prior to the Effective Time and that are held by holders
of such shares of Common Stock who have not voted in favor of the adoption of
this Agreement or consented thereto in writing and who have properly exercised
appraisal rights with respect thereto in accordance with, and who have complied
with, Section 262 of the DGCL (the "Dissenting Common Stock") will not be
converted into the right to receive the Merger Consideration, and holders of
such shares of Dissenting Common Stock will be entitled to receive payment of
the appraised value of such shares of Common Stock in accordance with the
provisions of such Section 262 unless and until such holders fail to perfect or
effectively withdraw or lose their rights to appraisal and payment under the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively waives, withdraws or loses such right, such shares of Common Stock
will thereupon be treated as if they had been converted into at the Effective
Time, the right to receive the Merger Consideration, without any interest
thereon. At the Effective Time, any holder of shares of Dissenting Common Stock
shall cease to have any rights with respect thereto, except the rights provided
in Section 262 of the DGCL and as provided in the previous sentence. The Company
will give Purchaser (i) notice of any demands received by the Company for
appraisals of shares of Common Stock and (ii) the opportunity to participate in
and direct all negotiations and proceedings with respect to such notices and
demands. The Company shall not, except with the prior written consent of
Purchaser, make any payment with respect to any demands for appraisal or settle
or offer to settle any such demands, or agree to do any of the foregoing.
4.3 Exchange of Certificates Representing Shares of Common Stock.
(a) Prior to the Effective Time, Purchaser shall appoint a commercial
bank or trust company, which shall be reasonably satisfactory to the Company, to
act as paying agent hereunder (the "Paying Agent") for the purpose of exchanging
certificates representing Common Stock (each, a "Certificate") for the Merger
Consideration in accordance with this Article IV. On or prior to the Effective
Time, Purchaser shall, or shall cause the Surviving Corporation to, provide the
Paying Agent with cash in amounts necessary to pay the aggregate Merger
Consideration in respect of all the shares of Common Stock pursuant to Section
4.2(b) (other than shares of Dissenting Common Stock, if any). Such amounts
shall hereinafter be referred to as the "Exchange Fund."
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Paying Agent to mail to each holder of record (other than the Company,
any Subsidiary of the Company, Purchaser, Merger Sub or any Subsidiary of
Purchaser) of shares of Common Stock (i) a letter of transmittal that shall
specify that delivery shall be effected, and risk of loss and title to such
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and which letter shall be in such form and have such other provisions as
are reasonable and customary in transactions such as the Merger and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the Merger Consideration. Upon surrender of a Certificate to the Paying Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
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promptly receive in exchange therefor the amount of cash into which shares of
Common Stock theretofore represented by such Certificate shall have been
converted pursuant to Section 4.2, and the shares represented by the Certificate
so surrendered shall forthwith be canceled. No interest will be paid or will
accrue on the cash payable upon surrender of any Certificate. In the event of a
transfer of ownership of Common Stock that is not registered in the transfer
records of the Company, payment may be made with respect to such Common Stock to
such a transferee if the Certificate representing such shares of Common Stock is
presented to the Paying Agent, accompanied by all documents reasonably required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) At the Effective Time, all shares of Common Stock (other than shares
of Common Stock to be canceled and retired in accordance with Section 4.2(a) and
any shares of Dissenting Common Stock) issued and outstanding immediately prior
to the Effective Time shall cease to be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of any such shares shall
cease to have any rights with respect thereto or arising therefrom (including
the right to vote), except the right to receive the Merger Consideration,
without interest, upon surrender of the Certificate representing such shares in
accordance with Section 4.3(b), and until so surrendered, each Certificate
representing such shares shall represent for all purposes only the right to
receive the Merger Consideration, without interest. The Merger Consideration
paid upon the surrender for exchange of Certificates in accordance with the
terms of this Section 4.3 shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Common Stock theretofore represented
by such Certificates.
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Common Stock other than
transfers that occurred prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Article IV.
(e) Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in respect of all such
funds) that remains unclaimed by the former stockholders of the Company 270 days
after the Effective Time shall be delivered to the Surviving Corporation. Any
former stockholders of the Company who have not theretofore complied with this
Article IV shall thereafter look only to the Surviving Corporation for payment
of any Merger Consideration that may be payable in respect of each share of
Common Stock such stockholder holds as determined pursuant to this Agreement,
without any interest thereon.
(f) None of Purchaser, the Company, the Surviving Corporation, the
Paying Agent or any other Person shall be liable to any former holder of shares
of Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar Laws.
(g) If any Certificate is 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 issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration payable in
respect thereof pursuant to this Agreement.
(h) Purchaser shall pay all charges and expenses, including those of the
Paying Agent, in connection with the exchange of the Merger Consideration for
Certificates.
(i) The Surviving Corporation and, to the extent permitted by applicable
Law the Merger Sub, shall be entitled to deduct and withhold, or cause to be
deducted or withheld, from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Common Stock such amounts as are required
to be deducted and withheld with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
applicable state, local or foreign tax Law. To the extent that amounts are so
deducted and withheld, such deducted and withheld amounts shall be treated for
all purposes of this Agreement as having been paid to such holders in respect of
which such deduction and withholding was made.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter, dated the date hereof,
delivered by the Company to Purchaser prior to the execution of this Agreement
(the "Company Disclosure Letter") with specific reference to the particular
Section or subsection of this Agreement to which the limitation set forth in
such Company Disclosure Letter relates, the Company hereby represents and
warrants to Purchaser and Merger Sub as follows:
5.1 Existence; Good Standing; Corporate Authority. Each of the Company
and its Subsidiaries (a) is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization and (b) is duly licensed or qualified to do
business as a foreign corporation, partnership or limited liability company and
is in good standing under the laws of each other state of the United States or
the laws of any foreign jurisdiction, if applicable, in which the character of
the properties owned, licensed or leased by it or in which the transaction of
its business makes such qualification necessary, except where the failure to be
so qualified or to be in good standing has not had and would not reasonably be
expected to have a Company Material Adverse Effect (as hereinafter defined).
Each of the Company and its Subsidiaries has all requisite corporate,
partnership or limited liability company power and authority to own, operate,
license and lease its properties and carry on its business as now conducted and
consummate the transactions contemplated by this Agreement, except where the
failure to have such power and authority would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company has heretofore made available to Purchaser true and correct copies of
the certificate of incorporation and bylaws or other governing documents of the
Company and each of its Subsidiaries as currently in effect.
"Company Material Adverse Effect" means any change, effect, event,
occurrence, state of facts or development that, individually or in the
aggregate, (i) constitutes or would be reasonably expected to result in a
material adverse effect on the business, liabilities, property, assets,
prospects, results of operation or financial condition of the Company and its
Subsidiaries, taken as a whole, or (ii) prevents or delays the ability of the
Company to consummate the transactions contemplated by this Agreement; provided,
however, that none of the following shall be deemed in themselves, either alone
or in combination, to constitute, and none of the following shall be taken into
account in determining whether there has been a Company Material Adverse Effect:
(a) any actions or omissions of any party hereto taken with the prior written
consent of the other party in contemplation of the Merger; (b) the direct
effects of compliance with this Agreement on the operating performance of the
Company, including expenses incurred by the Company in consummating the Merger
or relating to any litigation arising as a result of this Agreement or the
Merger; (c) any decrease in the trading price of the Company's Common Stock (it
being understood that any fact or development giving rise or contributing to
such change in the trading price of the Company's Common Stock may be taken into
account in determining whether there has been a Company Material Adverse
Effect); (d) changes attributable to or resulting from changes in general
economic conditions, except to the extent that the Company and its Subsidiaries
taken as a whole are adversely affected in a disproportionate manner as compared
to other industry participants; (e) changes affecting the industry in which the
Company operates, except to the extent that the Company and its Subsidiaries
taken as a whole are adversely affected in a disproportionate manner as compared
to other industry participants; and (f) changes directly attributable to acts of
terrorism or acts of the public enemy, except to the extent that the Company and
its Subsidiaries taken as a whole are adversely affected in a disproportionate
manner as compared to other industry participants.
The corporate, partnership or limited liability company records and
minute books of the Company and each of its Subsidiaries (true, correct and
complete copies of which or, in the case of minutes that have not yet been
finalized, drafts thereof, have heretofore been made available to Purchaser)
reflect all actions taken and authorizations made at meetings of such companies'
boards of directors, managers or other governing bodies, and any committees
thereof, and at any stockholders', members' or other equity owners' meetings
thereof.
5.2 Authorization, Validity and Effect of Agreements. (a) The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and, subject to the adoption of this Agreement by the affirmative vote
of the holders of a majority of the outstanding shares of the Common Stock
entitled to vote thereon (the "Stockholder Approval"), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
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by the Company and, subject to the Stockholder Approval, the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by the Board, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes a
valid and binding obligation of Purchaser and Merger Sub, constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as each enforceability may be limited by applicable bankruptcy,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies or by other equitable principles of general application.
(b) On or prior to the date hereof, the Board, at a meeting duly called
and held at which all directors of the Company were present, unanimously has
adopted resolutions (i) that as of the date hereof this Agreement and the
transactions contemplated hereby and by the Voting Agreement are fair to and in
the best interests of the Company and its stockholders, (ii) approving this
Agreement, the Merger, the Voting Agreement and the transactions contemplated
hereby and thereby, (iii) declaring this Agreement and the Merger advisable,
(iv) directing that the adoption of this Agreement be submitted as promptly as
practicable to a vote at a meeting of the stockholders of the Company and (v)
recommending that the stockholders of the Company adopt this Agreement and
approve the Merger, which resolutions have not been subsequently rescinded,
modified or withdrawn in any manner except as permitted by Section 7.10. Such
approvals represent all the action necessary to render inapplicable to this
Agreement, the Merger and the other transactions contemplated hereby the
restrictions of Section 203 of the DGCL (the "Takeover Statute") to the extent,
if any, the Takeover Statute would otherwise be applicable to this Agreement,
the Merger or the other transactions contemplated hereby. To the knowledge of
the Company, no other state anti-takeover Laws or regulations apply or purport
to apply to this Agreement, the Merger or the transactions contemplated hereby.
No anti-takeover provision in the Company's certificate of incorporation or
bylaws (as currently in effect) has, or at the Effective Time will have, the
effect of impairing, delaying, hindering or otherwise making less likely to
occur the Merger or the other transactions contemplated by this Agreement.
5.3 Compliance with Laws. (a) Neither the Company nor any of its
Subsidiaries is in violation of any foreign, federal, state or local law,
statute, ordinance, rule, regulation, code, injunction, convention, directive,
order, judgment, ruling or decree or other legal requirement (including any
arbitral award or decision) (the "Laws") of any foreign, federal, state or local
judicial, legislative, executive, administrative or regulatory body or authority
or any court, arbitration, board or tribunal ("Governmental Entity") applicable
to the Company or any of its Subsidiaries except for violations which have not
had, and would not reasonably be expected to have, a Company Material Adverse
Effect. The Company is not being investigated with respect to, or, to the
knowledge of the Company, threatened to be charged with or given notice of any
violation of, any applicable Law, except for such of the foregoing as would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has intentionally
and, to the Company's knowledge, none of the directors, officers, agents or
employees of the Company or any of its Subsidiaries has, (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to political activity or (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended. Neither the Company nor any of its Subsidiaries has
participated in any boycotts.
5.4 Capitalization. (a) The authorized capital of the Company consists
solely of 70,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock"), of which 6,000 shares
have been designated as Series E Preferred, 4,000 shares have been designated as
Series F Preferred and 70,000 shares have been designated as Series G Junior
Participating Preferred stock. As of the close of business on April 26, 2004
(the "Measurement Date"), (i) 28,924,427 shares of Common Stock were issued and
outstanding (including 686,813 restricted shares of Common Stock that will vest
immediately prior to the Effective Time but excluding shares held by the Company
in its treasury), (ii) warrants to purchase an aggregate of 19,665 shares of
Common Stock were issued and outstanding, the holders of which have, or will
have prior to the Effective Time, irrevocably agreed with the Company in writing
to have their warrants treated in the Merger as contemplated under Section 7.13
hereof, (iii) no shares of Preferred Stock were outstanding, (iv) Options (as
hereinafter defined) to purchase an aggregate of 1,851,320 shares of Common
Stock were outstanding (of which, Options to purchase an aggregate of 999,450
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shares of Common Stock with exercise prices per share less than the per share
Merger Consideration were outstanding), (v) 169,341 shares of Common Stock were
held by the Company in its treasury, and (vi) no shares of capital stock of the
Company were held by the Company's Subsidiaries. As of the close of business on
the Measurement Date, there were outstanding with respect to each outstanding
share of Common Stock rights ("Rights") to purchase one thousandth of a share of
Series G Junior Participating Preferred stock of the Company under the Rights
Agreement dated August 12, 2003 between the Company and Wachovia Bank, National
Association (the "Rights Agreement"). The Company and its Subsidiaries have no
outstanding bonds, debentures, notes or other obligations entitling the holders
thereof to vote (or that are convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
Except as set forth in Section 5.4(a) of the Company Disclosure Letter, since
December 31, 2003, the Company has not (A) issued any capital stock of the
Company or securities directly or indirectly convertible into, or exchangeable
or exercisable for, capital stock of the Company other than upon the exercise of
Options, (B) granted any Options, or (C) split, combined, converted or
reclassified any of its shares of capital stock. All issued and outstanding
shares of Common Stock are, and all shares of Common Stock that may be issued
prior to the Effective Time will be when issued, duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Except as set
forth above in this Section 5.4(a), there are no other shares of capital stock
or voting securities of the Company, and no existing options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
that obligate the Company or any of its Subsidiaries to issue, transfer or sell
or cause to be issued, transferred or sold any shares of capital stock of, or
equity interests in or any security convertible into or exercisable or
exchangeable for any capital stock or equity interest in, the Company or any of
its Subsidiaries.
(b) There are no (i) outstanding agreements or other obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
(or cause to be repurchased, redeemed or otherwise acquired) any shares of
capital stock of the Company and, except as set forth in Section 5.4(b) of the
Company Disclosure Letter, there are no performance awards outstanding under the
Stock Option Plans (as hereinafter defined) or any other outstanding
stock-related awards or (ii) voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries or, to the knowledge of the
Company, any of the Company's directors or executive officers is a party with
respect to the voting of capital stock of the Company or any of its Subsidiaries
(other than the Voting Agreement). Section 5.4(b) of the Company Disclosure
Letter sets forth as of the date hereof a complete and accurate list of all
outstanding Options to purchase shares of Common Stock granted pursuant to any
Stock Option Plan (true and correct copies of which have been made available by
the Company to Purchaser), which list sets forth the name of the holders thereof
and, to the extent applicable, the exercise price or purchase price thereof, the
number of shares of Common Stock subject thereto, the governing Stock Option
Plan with respect thereto, the expiration date thereof and the vesting dates
therefore (indicating therein which Options' vesting schedules will accelerate
immediately prior to the Effective Time). Section 5.4(b) of the Company
Disclosure Letter also sets forth as of the date hereof a complete and accurate
list of all outstanding awards of restricted stock granted pursuant to any Stock
Option Plan (true and correct copies of which have been made available by the
Company to Purchaser), which list sets forth the name of the holders thereof
and, to the extent applicable, the purchase price thereof, the number of shares
of Common Stock subject thereto, the governing Stock Option Plan with respect
thereto and the vesting dates therefore (indicating therein which restricted
stock awards' vesting schedules will accelerate immediately prior to the
Effective Time).
5.5 Subsidiaries.
(a) Section 5.5(a) of the Company Disclosure Letter lists each
Subsidiary of the Company together with the jurisdiction of organization of each
such Subsidiary. Except for the capital stock or other ownership interests of
its Subsidiaries, and except as set forth in Section 5.5(a) of the Company
Disclosure Letter, the Company does not own, directly or indirectly, (i) any
shares of outstanding capital stock or other securities convertible into or
exchangeable for capital stock of any other corporation or (ii) any equity or
other participating interest in the revenues or profits of any corporation,
partnership, limited liability company, joint venture or other entity,
association or business enterprise and the Company is not subject to any
obligation to make any investment (in the form of a loan, capital contribution
or otherwise) in any corporation, partnership, limited liability company, joint
venture or other entity , association or business enterprise.
7
(b) The Company owns, directly or indirectly through a wholly owned
Subsidiary, all the outstanding shares of capital stock (or other ownership
interests) of each of the Company's Subsidiaries, as set forth in Section 5.5(b)
of the Company Disclosure Letter. There are no other shares of capital stock or
voting or other securities or ownership interests of any Subsidiary outstanding
or reserved for issuance, and there are no outstanding options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
that obligate the Company or any of its Subsidiaries to issue, transfer or sell
or cause to be issued, transferred or sold any shares of capital stock of, or
equity interests in or any security convertible into or exercisable or
exchangeable for any capital stock or equity interest in, any of the Company's
Subsidiaries.
(c) Except as set forth in Section 5.5(c) of the Company Disclosure
Letter, each of the outstanding shares of capital stock (or other ownership
interests) of each of the Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and free of preemptive or similar rights,
and is owned, directly or indirectly, by the Company or one of its wholly owned
Subsidiaries free and clear of all liens, pledges, security interests, claims or
other encumbrances ("Encumbrances") and all other limitations or restrictions,
including on the right to vote, sell or otherwise dispose of the stock or other
ownership interest.
(d) There are no (i) outstanding agreements or other obligations of any
of the Company's Subsidiaries to repurchase, redeem or otherwise acquire (or
cause to be repurchased, redeemed or otherwise acquired) any shares of capital
stock of such Subsidiaries and there are no performance awards outstanding under
any stock option or other equity plans of any Subsidiary or any other
outstanding stock-related awards of any Subsidiary or (ii) voting trusts or
other agreements or understandings to which any of the Company's Subsidiaries
or, to the knowledge of the Company, any of the Company's or the Company's
Subsidiaries' directors or executive officers is a party with respect to the
voting of capital stock of any of the Company's Subsidiaries.
5.6 No Violation. Neither the execution and delivery by the Company of
this Agreement nor the consummation by the Company of the transactions
contemplated hereby does or will: (a) violate, conflict with or result in a
breach of any provisions of the certificate of incorporation or bylaws (as
currently in effect) of the Company or any of its Subsidiaries; (b) except as
set forth in Section 5.6(b) of the Company Disclosure Letter, violate, conflict
with, result in a breach of any provision of, constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under,
result in the termination, cancellation or amendment or in a right of
termination, cancellation or amendment of, accelerate the performance required
by or benefit obtainable under, result in the triggering of any payment, penalty
or other obligations pursuant to any Contract (as hereinafter defined) or Lease
(as hereinafter defined); (c) result in the creation or imposition of any
Encumbrance (other than Permitted Encumbrances (as defined below)) upon any of
the properties of the Company or its Subsidiaries, except for any such matters
referenced in clauses (b) and (c) with respect to which requisite waivers or
consents have been, or prior to the Effective Time will be, obtained or with
respect to any matters that would not reasonably be expected to have a Company
Material Adverse Effect; (d) except as set forth in Section 5.6(b) of the
Company Disclosure Letter, result in there being declared void, voidable or
without further binding effect, any of the terms, conditions or provisions of
any Material Contract (as hereinafter defined), except to the extent that such
declaration would not reasonably be expected to have a Company Material Adverse
Effect; (e) require any consent, approval, action, order, notification or
authorization of, license, permit or waiver by or declaration, filing or
registration (collectively, "Consents") with any Governmental Entity, including
any such Consent under the Laws of any foreign jurisdiction, other than (i) the
filing of a certificate of merger with the Secretary of State of the State of
Delaware, (ii) the filings required under the Securities Exchange Act of 1934
(the "Exchange Act") or the Securities Act of 1933 (the "Securities Act"), (iii)
the filing required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and any other applicable Law governing
antitrust or competition matters, and any Consents required or permitted to be
obtained pursuant to the Laws of any foreign jurisdiction relating to antitrust
matters or competition ("Foreign Antitrust Laws") (collectively, "Other
Antitrust Filings and Consents," and, together with the other filings described
in clauses (ii) and (iii) above, "Regulatory Filings"), and (iv) those Consents
the failure of which to obtain or make would not reasonably be expected to
result in a Company Material Adverse Effect; or (f) violate any Laws applicable
to the Company or any of its Subsidiaries or any of their respective assets or
properties, except for violations that would not reasonably be expected to have
a Company Material Adverse Effect. Neither the execution and delivery by the
Company of this Agreement nor the consummation by the Company of the
transactions contemplated hereby or thereby will require any Consent of any
Third Parties or other Person except (i) under those Contracts and Leases set
forth in Section 5.6 of the Company Disclosure Letter, (ii) for the Stockholder
Approval, and (iii) under those Contracts that are not Material Contracts, the
failure of which would not be reasonably expected to result in a Company
Material Adverse Effect.
8
5.7 Company Reports. The Company has filed or furnished (i) all reports,
schedules, forms, statements, prospectuses and other documents required to be
filed with, or furnished to, the Securities and Exchange Commission (the "SEC")
by the Company since June 30, 2002 (all such documents, as amended or
supplemented, are referred to collectively as, the "Company Reports") and (ii)
all certifications and statements required by (x) Rule 13a-14 or 15d-14 under
the Exchange Act, or (y) 18 U.S.C. ss.1350 (Section 906 of the Sarbanes-Oxley
act of 2002) with respect to any applicable Company Report (collectively, the
"SOX Certifications"). The Company has previously made available to the
Purchaser all SOX Certifications and comment letters received by the Company
from the staff of the SEC since January 16, 2002 and all responses to such
comment letters by or on behalf of the Company. No Subsidiary currently is, and
no Subsidiary has been, required to file or otherwise furnish any reports,
schedules, forms, statements, prospectuses or other documents with or to the
SEC. Since June 30, 2002, the Company has complied in all respects with its SEC
filing obligations under the Exchange Act and the Securities Act. Each of the
audited financial statements and related schedules and notes thereto and
unaudited interim financial statements of the Company contained in the Company
Reports (or incorporated therein by reference) were prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis ("GAAP") (except in the case of interim unaudited financial statements)
except as noted therein, and fairly present in all respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations, cash flows and
changes in stockholders' equity for the periods then ended, subject (in the case
of interim unaudited financial statements) to normal year-end audit adjustments
(the effect of which will not, individually or in the aggregate, be adverse)
and, such financial statements complied as to form as of their respective dates
in all respects with applicable rules and regulations of the SEC. The financial
statements referred to herein reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements. No financial statements of any Person
not already included in such financial statements are required by GAAP to be
included in the consolidated financial statements of the Company. As of their
respective dates, each Company Report was prepared in accordance with and
complied with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations thereunder, and the Company Reports
(including all financial statements included therein and all exhibits and
schedules thereto and all documents incorporated by reference therein) did not,
as of the date of effectiveness in the case of a registration statement, the
date of mailing in the case of a proxy or information statement and the date of
filing in the case of other Company Reports, contain any untrue statement of a
fact or omit to state a fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. Neither the Company nor, to the Company's knowledge, any
of its officers has received notice from the SEC or any other Governmental
Entity questioning or challenging the accuracy, completeness, content, form or
manner of filing or furnishing of the SOX Certifications.
5.8 Absence of Certain Changes. Except as contemplated by this Agreement
or as set forth in Section 5.8 of the Company Disclosure Letter, since December
31, 2003, the Company and its Subsidiaries have conducted their business in the
ordinary course of such business consistent with past practices. Except as
contemplated by this Agreement or as set forth in Section 5.8 of the Company
Disclosure Letter, since December 31, 2003, there has not been (a) any event,
change, effect, development or state of fact that would reasonably be expected
to have or constitute a Company Material Adverse Effect; (b) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
capital stock of the Company; (c) any issuance by the Company of, or agreement
or commitment of the Company to issue, any shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock; (d) any repurchase,
redemption or any other acquisition by the Company or its Subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company or its Subsidiaries; (e) any change in accounting
principles, practices or methods; (f) any entry into any employment agreement
with, or any increase in the rate or terms (including, without limitation, any
acceleration of the right to receive payment) of compensation payable or to
become payable by the Company or any of its Subsidiaries to, their respective
directors or officers, except for increases occurring in the ordinary course of
business in accordance with their customary practices and employment agreements
entered into in the ordinary course of business; (g) any increase in the rate or
terms (including, without limitation, any acceleration of the right to receive
payment) of any bonus, insurance, pension or other employee benefit plan or
arrangement covering any such directors, officers or employees, except increases
9
occurring in the ordinary course of business in accordance with the Company's
customary practices or as required to comply with applicable law; (h) any
revaluation by the Company or any of its Subsidiaries of any amount of their
assets, taken as a whole, including, without limitation, write-downs of
inventory, goodwill or intangible assets or write-offs of accounts receivable
other than in the ordinary course of business consistent with past practices;
and (i) any action taken of the type described in Section 7.1(b). The Company
has provided Purchaser with a true, accurate and complete copy of its analysis
of the value of its goodwill as of March 31, 2004, as determined in accordance
with SFAS No. 142.
5.9 Taxes. Except as set forth in Section 5.9 of the Company Disclosure
Letter, (a) all U.S. Federal Tax returns and all other Tax returns, statements,
reports and forms (collectively, the "Company Returns") required to be filed
with any taxing authority by the Company and each of its Subsidiaries have been
timely filed in accordance in all respects with all applicable Laws; (b) the
Company and each of its Subsidiaries have timely paid all Taxes due and payable
and the Company Returns are true, correct and complete in all respects; (c) the
Company and each of its Subsidiaries have withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other Third Party (as
hereinafter defined); (d) there is no action, suit, proceeding, audit or claim
pending against the Company or any of its Subsidiaries in respect of any Taxes,
nor has any such action, suit, proceeding, audit or claim been threatened in
writing; (e) neither the Company nor any of its Subsidiaries is a party to or
bound by any Tax sharing or allocation agreement or similar contract or
assignment or any agreement that obligates either of them to make any payment
computed by references to the Taxes, taxable income or taxable losses of any
other Person; (f) there are no liens with respect to Taxes (other than Taxes not
yet due and payable) on any of the assets or properties of the Company or any of
its Subsidiaries; (g) neither the Company nor any of its Subsidiaries (1) is, or
has been, a member of an affiliated, consolidated, combined or unitary group,
other than one of which the Company was the common parent and (2) has any
liability for the Taxes of any Person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law), or as a transferee or successor, by
contract or otherwise; (h) the Company will not be required to include any item
of income in, or exclude any item of deduction from, taxable income for any tax
period after the Closing Date ("Post-Closing Tax Period") as a result of any (A)
change in accounting method for any tax period beginning prior to and ending on
or before the Closing Date ("Pre-Closing Tax Period") under Section 481 of the
Code (or any analogous or comparable provision of U.S. state or local or
non-U.S. Tax law), (B) written agreement with a Tax authority with regard to the
Tax liability of the Company for any Pre-Closing Tax Period, (C) deferred
intercompany gain described in U.S. Treasury Regulations under Section 1502 of
the Code (or any corresponding or similar provision of state, local or non-U.S.
Income Tax law) arising from any transaction that occurred prior to the Closing
Date or prior to the Closing on the Closing Date, (D) installment sale or open
transaction disposition made prior to the Closing Date or prior to the Closing
on the Closing Date, or (E) prepaid amount received on or prior to the Closing
Date; (i) no waivers of statutes of limitation with respect to any Company
Returns have been given by the Company or any of its Subsidiaries; (j) all
deficiencies asserted or assessments made as a result of any examinations of the
Company or any of its Subsidiaries have been fully paid, or are fully reflected
as a liability in the Company's 2003 Balance Sheet (as hereinafter defined), or
are being contested and an adequate reserve therefor has been established and is
fully reflected in the 2003 Balance Sheet; (k) none of the Company or any of its
Subsidiaries has received written notice from any Governmental Entity in a
jurisdiction in which such entity does not file a Tax return stating that such
entity is or may be subject to taxation by that jurisdiction; (l) none of the
assets of the Company or any of its Subsidiaries is property required to be
treated as being owned by any other Person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Code; (m) neither the Company nor
any predecessors of the Company by merger or consolidation has within the past
three years been a party to a transaction intended to qualify under Section 355
of the Code or under so much of Section 356 of the Code as relates to Section
355 of the Code; (n) the Company has not been a United States real property
holding corporation, within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code; (o) the
Company has not made any payments, is not obligated to make any payments, and is
not a party to any agreement (other than this Agreement) or other arrangement
that could obligate it to make any payments that would not be deductible under
Section 280G of the Code; (p) except as disclosed in Section 5.9(p) of the
Company Disclosure Letter, the Company has not filed a consent under Section
341(f) of the Code concerning collapsible corporations; (q) the Company is not a
party to any joint venture, partnership or other written arrangement or contract
which could be treated as a partnership or other written arrangement or contract
which could be treated as a partnership for U.S. federal income tax purposes for
any period for which the statute of limitations for any Tax on the income
therefrom has not expired; and (r) the unpaid Taxes of the Company (A) did not,
as of December 31, 2003, exceed the reserve for Tax liability (rather than any
10
reserve for deferred Taxes, established to reflect timing differences between
book and Tax income) set forth on the face of the 2003 Balance Sheet (rather
than in any notes thereto) and (B) do not exceed that reserve as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of the Company in filing its Tax returns. The term "Tax" or "Taxes"
means all United States federal, state, local or foreign income, profits,
estimated gross receipts, windfall profits, environmental (including taxes under
Section 59A of the Code), severance, property, intangible property, occupation,
production, sales, use, license, excise, emergency excise, franchise, escheat,
capital gains, capital stock, employment, withholding, social security (or
similar), disability, transfer, registration, stamp, payroll, goods and
services, value added, alternative or add-on minimum tax, estimated, or any
other tax, custom, duty or governmental fee, or other like assessment or charge
of any kind whatsoever, together with any interest, penalties, fines, related
liabilities or additions to taxes that may become payable in respect therefor
imposed by any Governmental Entity, whether disputed or not.
5.10 Employee Benefits.
(a) Except as set forth in Section 5.10(a) of the Company Disclosure
Letter, neither the Company nor any ERISA Affiliate (as defined below)
maintains, administers, sponsors or otherwise has any liability with respect to
(i) any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) any
employment, severance or similar contract, plan, arrangement or policy or (iii)
any other plan or arrangement (written or oral) whether or not subject to ERISA
(including any funding mechanism therefore now in effect or required) providing
for compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance benefits),
which, without limiting any other limitation hereof, in each case specified in
subsection (i), (ii), (iii), (iv) or (v) below, covers any employee or former
employee or director of the Company or any of its Subsidiaries. The Company has
delivered or made available to Purchaser (i) current, accurate and complete
copies (or to the extent no such copy exists, an accurate description of the
material features) of each Stock Option Plan, each Company Employee Plan (as
defined below) and, if applicable, each related trust agreement and insurance
contract, (ii) all amendments thereto, (iii) the three most recently prepared
IRS Form 5500 Annual Return/Reports and attached schedules, (iv) if applicable,
the most recent audited financial statements and (v) the current summary plan
description and subsequent summaries of modifications for each Company Employee
Plan, to the extent applicable. The plans required to be listed on Section
5.10(a) of the Company Disclosure Letter are referred to collectively herein as
the "Company Employee Plans." An "ERISA Affiliate" means any Person which would
be treated as a single employer with the Company or any of its Subsidiaries
under Section 414 of the Code.
(b) No Company Employee Plan is a defined benefit plan (as defined in
ERISA Section 3(35)) or a multiemployer plan (as defined in ERISA Section
3(37)). Neither the Company, any of its subsidiaries nor any ERISA Affiliates
have ever sponsored or participated in a defined benefit plan or a multiemployer
plan.
(c) No Company Employee Plan is (i) an employee stock ownership plan (as
defined in Code Section 4975(e)(7)) or otherwise invests in employer securities
(as defined in Code Section 409(l)), (ii) a qualified foreign plan (as defined
in Code Section 404A(e)), or (iii) a voluntary employees' beneficiary
association (as defined in Code Section 501(c)(9)).
(d) Each Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and each trust forming a part thereof
is exempt from Tax pursuant to Section 501(a) of the Code and, to the knowledge
of the Company, nothing has occurred which cannot be remedied through
self-correction or otherwise by the expenditure of less than $35,000, whether by
action or failure to act, that could reasonably be expected to cause the loss of
such qualification. The Company has furnished to Purchaser a copy of the most
recent Internal Revenue Service determination letter, if any, with respect to
each Company Employee Plan which is intended to be qualified under Section
401(a) of the Code.
11
(e) Except as set forth in Section 5.10(e) of the Company Disclosure
Letter, each Company Employee Plan has been maintained in compliance in all
respects with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including ERISA and the Code, which are
applicable to such Company Employee Plan. To the knowledge of the Company,
nothing has been done or omitted to be done and no transaction or holding of any
asset under or in connection with any Company Employee Plan has occurred that
will make the Company or any of its Subsidiaries, or any officer or director of
the Company or any Subsidiaries, subject to any liability under Part 4 of Title
I of ERISA or liable for any Tax pursuant to Section 4975 of the Code (assuming
the taxable period of any such transaction expired as of the date hereof).
(f) The Company has made all contributions and other payments required
and due under the terms of each Company Employee Plan prior to the date hereof,
and, except as set forth in Section 5.10(f) of the Company Disclosure Letter,
there has been no amendment to or change in employee participation or coverage
under any Company Employee Plan which would increase the expense of maintaining
such Company Employee Plan above the level of the expense incurred in respect
thereof for the fiscal year ended June 30, 2003.
(g) Except as set forth in Section 5.10(g) of the Company Disclosure
Letter, no amount required to be paid or payable to or with respect to any
employee or other service provider of the Company in connection with the
transactions contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
excess parachute payment (as defined by Code Section 280G). Section 5.10(g) of
the Company Disclosure Letter sets forth (i) the name of each such employee or
other service provider, (ii) any payments that may be classified as parachute
payments to each such employee or other service provider, and (iii) a good faith
estimate of the amount of any tax gross-up payment to which each such employee
or other service provider is entitled with respect to any portion of any excise
tax under Code Section 4999 and other similar state laws.
(h) Neither the Company nor any of its Subsidiaries has any obligations
to provide retiree health and life insurance or other retiree death benefits
under any Company Employee Plan which is a welfare plan as defined in Section
3(1) of ERISA, other than benefits mandated by Section 4980B of the Code or
under applicable Law.
(i) (x) To the knowledge of the Company, no Company Employee Plan is
under audit or is the subject of an audit or investigation by the Internal
Revenue Service, the Department of Labor or any other Governmental Entity, nor
is any such audit or investigation pending and (y) with respect to any Company
Employee Plan and except as would not result in a Company Material Adverse
Effect, no actions, suits, termination proceedings or claims (other than routine
claims for benefits in the ordinary course) are pending or, to the knowledge of
the Company, threatened.
(j) The Board has adopted resolutions that have the effect of (i)
terminating the Company's 1999 Stock Plan and all Options outstanding thereunder
immediately prior to the Effective Time and, where the Merger Consideration is
greater than the exercise price of a vested Option thereunder, providing for the
payment of the Option Consideration (as hereinafter defined) in respect of such
vested Options to purchase shares of Common Stock; (ii) terminating the ACT
Medical, Inc. 1998 Omnibus Stock Plan (the "ACT Plan") and all Options
outstanding thereunder immediately prior to the Effective Time and, where the
Merger Consideration is greater than the exercise price of a vested Option
thereunder, providing for the payment of the Option Consideration in respect of
such vested Options to purchase shares of Common Stock, and all of the holders
of outstanding Options under the ACT Plan have, or will have prior to the
Effective Time, irrevocably agreed with the Company in writing to such treatment
of their ACT Plan Options; and (iii) terminating the Company's 2001 Employee
Stock Purchase Plan immediately prior to the Effective Time, which termination
resolutions with respect to the Company's 2001 Employee Stock Purchase Plan
provide for the complete termination of the plan and a refund of all amounts
credited to the bookkeeping accounts thereunder. Except for the Options
referenced in this Section 5.10(j), there are no Options outstanding providing
for a per share exercise price less than or in excess of the Merger
Consideration.
(k) The Board has adopted resolutions (i) merging effective as of one
day prior to the Effective Time the Danforth Biomedical Inc. 401(k) Plan into
the Company's 401(k) Retirement Plan, with the Company's plan surviving, and
(ii) terminating immediately thereafter and effective as of one day prior to the
Effective Time the Company's 401(k) Retirement Plan; provided, however, that the
Company (or the Surviving Corporation, as applicable) will not make
distributions to participants of such plan until the Company (or the Surviving
Corporation, as applicable) receives a favorable determination letter from the
Internal Revenue Service with respect to such termination.
12
(l) Except as set forth in Section 5.10(l) of the Company Disclosure
Letter or as contemplated by this Agreement, neither the execution and delivery
of this Agreement by the Company nor the consummation of the transactions
contemplated hereby or thereby will result in the acceleration or creation of
any rights of any officer, director or employee of the Company under any Company
Employee Plan or under any agreement (including the acceleration of the vesting
or exercisability of any Options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any plan or the acceleration or creation of any rights under any bonus,
severance, parachute or change in control agreement).
5.11 Brokers. The Company has not retained, authorized to act on behalf
of the Company or any of its Subsidiaries or entered into any contract,
arrangement or understanding with any Person or firm that may result in the
obligation of Purchaser, Merger Sub or the Company or any of their respective
affiliates to pay any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby, except that the
Company has retained the Financial Advisor (as hereinafter defined) and Piper
Jaffray & Co., the arrangements with which have been disclosed in writing to
Purchaser prior to the date hereof, and all of which fees and expenses will be
borne by the Company.
5.12 Licenses and Permits. The Company and its Subsidiaries maintain in
full force and effect and are in compliance with all licenses, permits,
certificates, approvals, consents, easements, variances, exemptions and
authorizations (collectively, "Permits") with and under all Laws and all
Environmental Laws, and from all Governmental Entities, required to conduct
their respective businesses as presently conducted, except for such of the
foregoing the lack of which or failure to comply with which would not reasonably
be expected to have a Company Material Adverse Effect, and no Permit is subject
to any outstanding order, decree, judgment or stipulation that would be likely
to affect such Permit, where the effect of the foregoing would have a Company
Material Adverse Effect.
5.13 Environmental Compliance and Disclosure. Except as set forth in
Section 5.13 of the Company Disclosure Letter under the appropriately captioned
corresponding clause contained herein and except as would not reasonably be
expected to have a Company Material Adverse Effect: (a) the Company and each
Subsidiary have complied and are in compliance with, and the Owned Real Property
and the Leased Real Property (each as hereinafter defined are collectively
referred to in this Section 5.13 as the "Property") and all improvements thereon
are in compliance with, all Environmental Laws (as hereinafter defined), (b)
there are no facts, circumstances, Releases (as hereinafter defined) or
conditions existing, initiated or occurring which have or will result in
liability to the Company or any Subsidiary under Environmental Law, (c) there
are no pending or, to the knowledge of the Company, threatened Environmental
Claims (as hereinafter defined), and neither the Company nor any Subsidiary has
received any written notice of any Environmental Claim from any Person, (d) (i)
the Company and each Subsidiary maintains in full force and effect all
Environmental Permits (as hereinafter defined) necessary to operate the business
or assets of the Company or any Subsidiary as currently operated, a true and
complete list of which is set forth in Section 5.13(d)(i) the Company Disclosure
Letter, (ii) the Company and each Subsidiary has timely filed applications for
all Environmental Permits, and (iii) none of such Environmental Permits require
consent, notification, or other action to remain in full force and effect
following the transactions contemplated hereby; (e) (i) the Owned Real Property
and, to the Company's knowledge, the Leased Real Property do not contain
underground improvements (e.g., tanks) used currently or in the past for the
management of Hazardous Materials, and no portion of the Owned Real Property or,
to the Company's knowledge, the Leased Real Property is or has been used as a
dump or landfill or consists of or contains filled in land or wetlands, (ii)
with respect to any real property formerly owned, operated, or leased by the
Company or any Subsidiary, during the period of such ownership, operation or
tenancy, no portion of such property was used as a dump or landfill and the
Company has no knowledge of any such use at any time prior to its ownership or
operation of or tenancy at such real property, and (iii) neither PCBs (as
hereinafter defined), "toxic mold," nor asbestos-containing materials are
present on or in the Owned Real Property or the improvements thereon or, to the
Company's knowledge, the Leased Real Property or the improvements thereon; (f)
the Company has furnished to Purchaser accurate and complete copies of all
environmental assessments, reports, audits and other documents in its possession
or under its control that relate to the Property, compliance with Environmental
13
Laws, or any other real property that the Company or any Subsidiary formerly
owned, operated, or leased; and (g) (i) no Property, and no property to which
Hazardous Materials (as hereinafter defined) originating on or from such
properties or the businesses or assets of the Company or any Subsidiary has been
sent for treatment or disposal, is listed or, to the Company's knowledge,
proposed to be listed on the National Priorities List or CERCLIS or on any other
governmental database or list of properties that may or do require Remediation
(as hereinafter defined) under Environmental Laws and (ii) neither the Company
nor any Subsidiary has arranged, by contract, agreement, or otherwise, for the
transportation, disposal or treatment of Hazardous Materials at any location
such that it is or will be liable for Remediation of such location pursuant to
Environmental Laws.
In this Section 5.13: (a) "Claims" means all demands, claims, actions or
causes of action, assessments, complaints, directives, citations, information
requests issued by government authority, legal proceedings, orders, written
notices of potential responsibility, losses, damages (including, without
limitation, diminution in value), liabilities, sanctions, costs and expenses,
including interest, penalties and attorneys' and experts' fees and
disbursements; (b) "Environmental Claims" means all Claims pursuant to
Environmental Laws, including those based on, arising out of or otherwise
relating to (i) the Remediation, Release of, or exposure to, Hazardous
Materials, (ii) the off-site Release, treatment, transportation, storage or
disposal of Hazardous Materials originating from the Company's or a Subsidiary's
assets or business, and (iii) any violations of Environmental Laws by the
Company or any Subsidiary; (c) "Environmental Laws" means any Laws (including
the Comprehensive Environmental Response, Compensation, and Liability Act)
relating to the Remediation, generation, production, installation, use, storage,
treatment, transportation, Release, threatened Release, or disposal of Hazardous
Materials, or noise control, or the protection of human health, safety, natural
resources, animal health or welfare, or the environment; (d) "Environmental
Permits" means any permits, licenses, certificates and approvals required under
any Environmental Law; (e) "Hazardous Materials" means any wastes, substances,
radiation, or materials (whether solids, liquids or gases) (i) which are
hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or
mutagenic, (ii) which are or become defined as "pollutants," "contaminants,"
"hazardous materials," "hazardous wastes," "hazardous substances," "toxic
substances," "radioactive materials," "solid wastes," or other similar
designations in, or otherwise subject to regulation under, any Environmental
Laws, (iii) the presence of which on the Property causes a nuisance pursuant to
Laws upon the Property or to adjacent properties, (iv) which contain, without
limitation, polychlorinated biphenyls ("PCBs"), mold, methyl-tertiary butyl
ether (MTBE), asbestos or asbestos-containing materials, lead-based paints,
urea-formaldehyde foam insulation, or petroleum or petroleum products
(including, without limitation, crude oil or any fraction thereof), or (v) which
pose a hazard to human health, safety, natural resources, employees, or the
environment; (f) "Release" means any emission, spill, seepage, leak, escape,
leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal,
migration, or release of Hazardous Materials into or upon the environment,
including the air, soil, improvements, surface water, groundwater, the sewer,
septic system, storm drain, publicly owned treatment works, or waste treatment,
storage, or disposal systems; and (g) "Remediation" means any legally required
investigation, clean-up, removal action, remedial action, restoration, repair,
response action, corrective action, monitoring, sampling and analysis,
installation, reclamation, closure, or post-closure in connection with the
threatened or actual Release of Hazardous Materials.
5.14 Title to Assets. The Company and each of its Subsidiaries have good
title to all of their real and personal properties and assets reflected on the
Company's audited balance sheet (including in any related notes thereto) as of
June 30, 2003 included in the Company's annual report on Form 10-K for the
fiscal year then ended (the "2003 Balance Sheet") or acquired after June 30,
2003 (other than assets disposed of since June 30, 2003 in the ordinary course
of business consistent with past practice), in each case free and clear of all
title defects and Encumbrances, except for (a) Encumbrances that secure
indebtedness that is properly reflected in the 2003 Balance Sheet; (b) liens for
Taxes accrued but not yet payable; (c) liens arising as a matter of law in the
ordinary course of business with respect to obligations incurred after June 30,
2003, provided that the obligations secured by such liens are not delinquent or
material; and (d) such title defects or Encumbrances, if any, as would not
reasonably be expected to have a Company Material Adverse Effect (collectively,
"Permitted Encumbrances") and Encumbrances set forth in Section 5.21(a) of the
Company Disclosure Letter. Except where the failure to own or have a valid
leasehold interest would not reasonably be expected to have a Company Material
Adverse Effect, the Company and each of its Subsidiaries either own, or have
valid leasehold interests in, all properties and assets currently used by them
in the conduct of their businesses.
14
5.15 Labor and Employment Matters. (a) Neither the Company nor any of
its Subsidiaries is a party to, or bound by, any collective bargaining agreement
or other Contract or understanding with a labor union or labor organization or
written work rules or written practices agreed to with any labor organization or
employee association applicable to employees of the Company or any of its
Subsidiaries that was certified by the National Labor Relations Board (the
"NLRB"). Except for such of the following as would not reasonably be expected to
result in a Company Material Adverse Effect, there is no (i) unfair labor
practice, labor dispute (other than routine individual grievances) or labor
arbitration proceeding pending before the NLRB or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries relating to
their respective businesses, (ii) to the knowledge of the Company, activity or
proceeding by a labor union or representative thereof to organize any employees
of the Company or any of its Subsidiaries pursuant to NLRB rules and regulations
or (iii) lockout, strike, slowdown, work stoppage or, to the knowledge of the
Company, threat thereof by or with respect to any such employees.
(b) Section 5.15 of the Company Disclosure Letter contains a true and
complete list of each of the Company's written personnel policies or rules
applicable to employees of the Company or any of its Subsidiaries as of the date
hereof, true, correct and complete copies of which have heretofore been made
available to Purchaser. Except as set forth in Section 5.15(b) of the Company
Disclosure Letter, to the knowledge of the Company, (i) the Company and its
Subsidiaries are, and have at all times been, in compliance with all applicable
Laws respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, (ii) no
charges with respect to or relating to the Company or its Subsidiaries are
pending before the Equal Employment Opportunity Commission or any other
corresponding state agency, except for such charges as would not reasonably be
expected to result in a Company Material Adverse Effect, and the Company and its
Subsidiaries are in compliance with all federal and state Laws and regulations
prohibiting discrimination in the workplace including, without limitation, Laws
and regulations that prohibit discrimination and/or harassment on account of
race, national origin, religion, gender, disability, age, workers compensation
status or otherwise, except where the failure to be in such compliance would not
reasonably be expected to result in a Company Material Adverse Effect, (iii) no
federal, state, local or foreign agency responsible for the enforcement of labor
or employment Laws has notified the Company in writing that it intends to
conduct an investigation with respect to or relating to the Company and its
Subsidiaries and no such investigation is in progress, except where such
investigations would not reasonably be expected to result in a Company Material
Adverse Effect, and (iv) except as would not reasonably be expected to result in
a Company Material Adverse Effect, there are no lawsuits, complaints,
controversies or other proceedings pending or, to the knowledge of the Company,
any applicant for employment or classes of the foregoing alleging breach of any
express or implied contract or employment, any Law or regulation governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship.
(c) As of the date hereof and at all times within the last three years,
the Company and its Subsidiaries have been in compliance with The Worker
Adjustment and Retraining Notification Act and similar state and local Laws.
5.16 Intellectual Property.
(a) Section 5.16(a) of the Company Disclosure Letter lists all of the
trademarks (whether registered or unregistered), service marks, trade names,
service names, brand names, trade dress, slogans, likenesses, logos and general
intangibles of like nature (collectively, "Trademarks") of the Company or any of
its Subsidiaries, and all registered copyrights and applications, unregistered
copyrights and copyrightable works (including computer software), patents and
patent applications (together with all reissues, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof), URLs
and domain names, and all other technology, intellectual property, know-how and
confidential information currently owned, used or available for use by, or
material to the conduct of the business of, the Company or its Subsidiaries
(collectively with the Trademarks, the "Proprietary Rights"). Section 5.16(a) of
the Company Disclosure Letter also sets forth: (i) for each patent, the number,
title and date of issuance for each country, or, if applicable, the application
number, title and date of filing and subject matter for each country, (ii) for
each Trademark which is registered or applied for, the application serial number
or registration number, the class of goods or services covered and the date of
filing or issuance for each country, (iii) for each registered copyright, the
registration number and date of registration for each country, and (iv) all
licenses relating to any of the Proprietary Rights. One or more of the Company
15
or its Subsidiaries currently are listed in the records of the appropriate
United States, state or other governmental agency as the sole owner of record
for each owned application and registration listed on Section 5.16(a) of the
Company Disclosure Letter, and each such application and registration is
subsisting, in full force and effect in all respects, and has not been canceled,
expired or abandoned. True and correct copies of all registrations of and
applications to register Proprietary Rights, as well as all agreements
pertaining to the use of or granting any right to use or practice any rights
thereunder, have been provided to Purchaser or its Representatives (as
hereinafter defined). The Company and each of its Subsidiaries are taking or
have taken reasonable measures to maintain and protect the value, validity,
confidentiality and proprietary nature of each item of Proprietary Rights that
the Company or any of its Subsidiaries owns or uses. No trade secret or
confidential know-how of the Company or its Subsidiaries as currently operated
has been disclosed or authorized to be disclosed to any third party, other than
pursuant to a non-disclosure agreement that protects the Company's and its
Subsidiaries' proprietary interests in and to such trade secrets and
confidential know-how.
(b) No current or former officer, director, employee or consultant of
the Company or its Subsidiaries has any right, title or interest, directly or
indirectly, in whole or in part, in or to any Proprietary Right, except as
listed in Section 5.16(b) of the Company Disclosure Letter.
(c) The Company and its Subsidiaries own or control or have a valid
right to use, sell and license each of the Proprietary Rights free and clear of
all Encumbrances (other than Permitted Encumbrances), and none of such
Proprietary Rights will cease to be valid rights by reason of the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby. The consummation of the transactions
contemplated hereby will not require the consent of any governmental authority
or other third party in respect of any Proprietary Right or other intellectual
property right except for such consents set forth on Section 5.16(c) of the
Company Disclosure Letter. The Company and its Subsidiaries have not received
any notice of invalidity or infringement of, misappropriation or other conflict
with, any rights of others with respect to any of the Proprietary Rights except
as listed in Section 5.16(c) of the Company Disclosure Letter. To the Company's
knowledge, no Person is infringing upon, misappropriating or interfering with
any Proprietary Right in any way. Except as set forth on Section 5.16(c) of
Company Disclosure Letter, to the Company's knowledge, the Company's or its
Subsidiaries' use of any such Proprietary Rights does not as of the date hereof
conflict with, infringe upon or otherwise violate the valid rights of any third
party in or to any Proprietary Rights, and no action has been instituted against
or notices received by the Company or any of its Subsidiaries that are presently
outstanding, alleging that the Company's or any such Subsidiary's use of the
Proprietary Rights infringes upon, misappropriates or otherwise violates any
rights of a third party in or to such Proprietary Rights. There is no pending,
existing, or to the knowledge of Company, threatened, opposition, interference,
cancellation proceeding or other legal or governmental proceeding before any
court or registration authority in any jurisdiction against any Proprietary
Right. Except as set forth on Schedule 5.16(c) of the Company Disclosure Letter,
there are no settlements, consents, judgments or orders, or other agreements
which restrict the rights of the Company or its Subsidiaries to use any
Proprietary Rights owned by the Company or its Subsidiaries.
(d) Section 5.16(d) of the Company Disclosure Letter identifies each
item of the Proprietary Rights that is owned by a Person other than the Company
or its Subsidiaries, and all licenses or other agreements pursuant to which the
Company and its Subsidiaries use such items or grant to any Person any right to
use any Proprietary Right owned by the Company or its Subsidiaries. Except as
set forth in Section 5.16(d) of the Company Disclosure Letter with respect to
each such item:
(i) the license or other agreement covering such item is legal,
valid, binding and enforceable and in full force and effect, and shall
remain legal, valid, binding and enforceable on identical terms
following the consummation of the transactions contemplated hereby;
(ii) each such license or other agreement, including licenses to
all third-party software listed in Section 5.16 of the Company
Disclosure Letter other than generally commercially available software,
to which the Company or its Subsidiaries are party, is assignable by the
Company or one of its Subsidiaries, and the Company and its Subsidiaries
which are a party to such license or agreement may be subject to a
change of control, in each case, without the consent or approval of, or
any payment to, any party to any such license or other agreement, and
the consummation of the transactions contemplated by this Agreement will
not conflict with, result in a violation or breach of or constitute a
default under (or would result in a violation, breach or default with
the giving of notice or the passage of time or both) any such license or
other agreement; and
16
(iii) none of the Company and its Subsidiaries or, to the
Company's knowledge, any other Person is in breach of or default under
any such license or agreement, and, to the Company's knowledge, no event
has occurred that, with notice or lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration
thereunder.
5.17 Material Contracts.
(a) Section 5.17 of the Company Disclosure Letter sets forth a complete
and accurate list of the following agreements and other instruments to which the
Company or any of its Subsidiaries is a party ("Contracts") (other than Leases
set forth in Section 5.21(b) of the Company Disclosure Letter and Company
Employee Plans set forth in Section 5.10(a) of the Company Disclosure Letter)
(collectively, and together with the Leases set forth in Section 5.21(b) of the
Company Disclosure Letter and Company Employee Plans set forth in Section
5.10(a) of the Company Disclosure Letter, the "Material Contracts" and each a
"Material Contract"):
(i) Contracts requiring annual expenditures by or liabilities of
any party thereto in excess of $1.0 million that have a remaining term
in excess of 90 days or are not cancelable (without penalty, cost or
other liability) within 90 days;
(ii) all collective bargaining agreements, independent contractor
agreements with a term of greater than one year, director or officer
indemnification agreements;
(iii) all contracts and agreements relating to (a) any
indebtedness, notes payable (including notes payable in connection with
acquisitions), accrued interest payable or other obligations for
borrowed money, whether current, short-term, or long-term, secured or
unsecured, of the Company or any of its Subsidiaries, (b) any purchase
money indebtedness or earn-out or similar obligation in respect of
purchases of property or assets by the Company or any of its
Subsidiaries, (c) any lease obligations of the Company or any of its
Subsidiaries under leases which are capital leases in accordance with
GAAP, (d) any financing of the Company or any of its Subsidiaries
effected through "special purpose entities" or synthetic leases or
project financing, (e) any obligations of the Company or any of its
Subsidiaries in respect of banker's acceptances or letters of credit
(other than stand-by letters of credit in support of ordinary course
trade payables) or (f) any liability of the Company or any of its
Subsidiaries with respect to interest rate swaps, collars, caps and
similar hedging obligations (the liabilities and obligations referred to
in (a) through (f) above, "Indebtedness") or any Encumbrances (other
than Permitted Encumbrances) upon any properties or assets of the
Company or any of its Subsidiaries as security for such Indebtedness;
(iv) all contracts and agreements that (a) limit the ability of
the Company and/or any Subsidiary or affiliate of, or successor to, the
Company, or, to the knowledge of the Company, any executive officer of
the Company (in his or her individual capacity), to compete in any line
of business or with any Person or in any geographic area or during any
period of time, (b) require the Company and/or any Subsidiary or
affiliate of, or successor to, the Company to use any supplier or third
party for all or substantially all or any of its requirements or needs,
(c) limit or purport to limit the ability of the Company and/or any
Subsidiary or affiliate of, or successor to, the Company to solicit any
customers or clients of the other parties thereto, or (d) require the
Company and/or any Subsidiary or affiliate of, or successor to, the
Company to provide to the other parties thereto "most favored nations"
pricing;
(v) all contracts and agreements entered into by the Company or
any of its Subsidiaries and any other party providing for the
acquisition by the Company or such Subsidiary (including by merger,
consolidation, acquisition of stock or assets or any other business
combination) of any corporation, partnership, other business
organization or division thereof or any amount of assets of such other
party (the "Company Acquisition Agreements"); provided, however, that
the Company Acquisition Agreements filed with the SEC as exhibits to the
Company Reports need not be listed in Section 5.17(a) of the Company
Disclosure Letter;
17
(vi) all confidentiality, non-disclosure and/or standstill
agreements entered into by the Company and/or any of its Subsidiaries
(other than in the ordinary course of business) since June 30, 2001
except those which have expired by their terms;
(vii) all other contracts, agreements, commitments, leases,
licenses, instruments and/or obligations, whether or not made in the
ordinary course of business, including all customer contracts;
(viii) joint venture, alliance or partnership agreements or joint
development or similar agreements with any Third Party under which the
Company has or may in the future have an obligation to invest or pay in
excess of $1.0 million pursuant to the terms of any such agreement;
(ix) all licenses, sublicenses, consents, royalty and other
agreements concerning Proprietary Rights or Related Rights of the
Company or any of its Subsidiaries;
(x) employment, severance or termination contracts with current
or former officers or directors, including, without limitation,
change-in-control agreements;
(xi) Contracts with or for the benefit of any director of the
Company or any Person other than a publicly traded entity in which any
director has an equity interest or which is an employer of a director of
the Company;
(xii) Contracts with any Governmental Entity that have a
remaining term in excess of one year or are not cancelable (without
cost, penalty or other liability) within 180 days;
(xiii) Contracts or commitments in which the Company or any of
its Subsidiaries has granted exclusive marketing rights relating to any
product or service, any group of products or services or any territory;
(xiv) Contracts pending for the acquisition or sale, directly or
indirectly (by merger or otherwise), of assets (whether tangible or
intangible), other than sales of inventory and other marketable products
in the ordinary course of business, in excess of $1.0 million in market
or book value with respect to any contract or the capital stock of
another Person, in each case in an amount in excess of $1.0 million; or
(xv) as of the date hereof, any other Contract the performance of
which could be reasonably expected to require annual expenditures in any
calendar year by the Company or any of its Subsidiaries in excess of
$250,000.
(b) True and complete copies of the written Material Contracts and
descriptions of verbal Material Contracts, if any, together with all amendments,
waivers and other changes thereto, have been delivered or made available to
Purchaser. As of the date hereof, each of the Material Contracts, other than the
Leases identified in Section 5.21(b) of the Company Disclosure Letter as having
expired, is a valid and binding obligation of the Company and, to the knowledge
of the Company, the other parties thereto, enforceable against the other parties
thereto in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization, arrangement or similar Laws
affecting creditors' rights generally and by general principles of equity.
Except as would not reasonably be expected to result in a Company Material
Adverse Effect, each of the Material Contracts is a valid and binding obligation
of the Company and, to the knowledge of the Company, the other parties thereto,
enforceable against the other parties thereto in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization, arrangement or similar Laws affecting creditors' rights
generally and by general principles of equity.
(c) Neither the Company nor any of its Subsidiaries is, or has received
any written notice that any other party is, in breach, default or violation
(each a "Default") (and no event has occurred or not occurred through the
Company's inaction or, to the knowledge of the Company, through the action or
inaction of any third parties, which with notice or the lapse of time or both
would constitute a Default) of any term, condition or provision of any Material
18
Contract to which the Company or any of its Subsidiaries is a party or by which
any of them or any of their respective properties or assets may be bound, except
for Defaults that would not reasonably be expected to have a Company Material
Adverse Effect.
(d) Except as disclosed in Section 5.17(d) of the Company Disclosure
Letter, since December 31, 2003 (i) no supplier or customer of the Company or
any of its Subsidiaries has cancelled or otherwise terminated its relationship
with the Company or any of its Subsidiaries, except for such cancellations and
terminations that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect, (ii) to the knowledge of the
Company, no supplier or customer of the Company or any of its Subsidiaries has
provided notice to the Company or any of its Subsidiaries of its intent either
to terminate its relationship with the Company or any of its Subsidiaries or to
cancel or amend any agreement with the Company or any of its Subsidiaries,
except for such terminations and cancellations that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect, (iii) to the knowledge of the Company, none of the suppliers of the
Company or any of its Subsidiaries is unable to continue to supply the products
or services supplied to the Company or any of its Subsidiaries by such supplier,
except for such inabilities that, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect, and (iv) the
Company and its Subsidiaries have no direct or indirect ownership interest in
any supplier or customer of the Company or any of its Subsidiaries.
(e) Section 5.17(e) of the Company Disclosure Letter sets forth the
maximum amounts, if any, that are still payable or potentially payable to any
party other than the Company or any Subsidiary of the Company under any Company
Acquisition Agreements pursuant to any post-closing purchase price adjustment
(including under any "earn-out" or similar provision).
5.18 No Undisclosed Liabilities. Except for liabilities reflected in the
Company's financial statements (together with the related notes thereto) filed
with the Company's annual report on Form 10-K for the year ended June 30, 2003,
and quarterly reports on Form 10-Q filed after June 30, 2003, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since June 30, 2003, the Company and its
Subsidiaries do not have any liabilities of any kind (whether accrued, absolute,
contingent or otherwise) which, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect.
5.19 Litigation. All of the actions, suits, claims, investigations,
arbitrations or proceedings pending or, to the knowledge of the Company,
threatened, as of the date hereof, against the Company or any of its
Subsidiaries or any of their respective assets or properties before any
arbitrator or Governmental Entity are set forth in Section 5.19 of the Company
Disclosure Letter. There is no action, suit, claim, investigation, arbitration
or proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any of their respective assets or
properties before any arbitrator or Governmental Entity that would be reasonably
expected to result in a Company Material Adverse Effect, and to the knowledge of
the Company, there is no basis for any such action, suit, claim, investigation,
arbitration or proceeding. None of the Company, any of its Subsidiaries or, to
the Company's knowledge, any officer, director or employee of the Company or any
of its Subsidiaries has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any other Governmental Entity from engaging
in or continuing any conduct or practice in connection with the business or
assets of the Company or any of its Subsidiaries nor, to the knowledge of the
Company, is the Company, any of its Subsidiaries or any executive officer or
director of the Company or any of its Subsidiaries under investigation by any
Governmental Entity related to the conduct of the Company's or any of its
Subsidiaries' business. To the knowledge of the Company, there is not in
existence any order, judgment or decree of any court or other tribunal or other
agency that is applicable to the Company or any of its Subsidiaries enjoining or
requiring the Company or any of its Subsidiaries to take any action of any kind
with respect to its business, properties or assets.
5.20 Insurance. Section 5.20 of the Company Disclosure Letter contains a
complete and accurate list of all insurance coverage, including claims made
directors' and officers' insurance coverage (the "Insurance Policies"), of the
Company and its Subsidiaries as of the date hereof, true and complete copies of
which have been made available to Purchaser. With respect to each of such
Insurance Policies, except as would not reasonably be expected to have a Company
Material Adverse Effect: (i) the policy is legal, valid, binding and enforceable
in accordance with its terms and is in full force and effect; (ii) neither the
Company nor any Subsidiary is in breach or default (including any such breach or
19
default with respect to the payment of premiums or the giving of notice), and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification, under the
policy other than the Merger contemplated by this Agreement; (iii) to the
knowledge of the Company, no insurer on the policy has been declared insolvent
or placed in receivership, conservatorship or liquidation; (iv) no notice of
cancellation or termination of, or general disclaimer of liability under, any
such policy has been received; and (v) the policy is sufficient for compliance
with all Contracts to which the Company or its Subsidiaries are parties or
otherwise bound. All claims under the Insurance Policies have been filed in a
timely fashion. To the knowledge of the Company, since the Company's formation,
there have been no historical gaps in insurance coverage of the Company or its
Subsidiaries that presents a risk to coverage under the Insurance Policies.
5.21 Real Estate.
(a) Section 5.21(a) of the Company Disclosure Letter sets forth a true,
correct and complete list of all real property owned by the Company as of the
date hereof (collectively, the "Owned Real Property"). Except as set forth on
Section 5.21(a) of the Company Disclosure Letter, with respect to each such
parcel of Owned Real Property, except for Permitted Encumbrances, (i) such
parcel is free and clear of all Encumbrances, except where such Encumbrance
would not reasonably be expected to adversely affect the Company's or its
Subsidiaries' use of the property; (ii) there are no leases, subleases,
licenses, concessions or other agreements, written or oral, granting to any
Person (other than a Subsidiary) the right of use or occupancy of any portion of
such parcel; and (iii) there are no outstanding rights of first refusal or
options to purchase such parcel.
(b) Section 5.21(b) of the Company Disclosure Letter sets forth a true,
correct and complete list of all Leases (as defined below). Except as would not
have a Company Material Adverse Effect and except as set forth in Section
5.21(b) of the Company Disclosure Letter: (i) all of the leases, licenses,
tenancies, subleases and all other occupancy agreements under which the Company
or any of its Subsidiaries is a tenant, subtenant, landlord or sublandlord
("Leases") (the leased and subleased space or parcel of real property thereunder
being, collectively, the "Leased Real Property") are in full force and effect
and (ii) neither the Company nor any of its Subsidiaries is in Default under the
Leases, and to the knowledge of the Company no event has occurred which, with
notice or lapse of time, would constitute a Default by the Company or any of its
Subsidiaries under the Leases. Neither the Company nor any Subsidiary has
assigned, mortgaged, deeded in trust or otherwise transferred or encumbered the
Leases except as set forth in Section 5.21(b) of the Company Disclosure Letter.
5.22 Affiliate Transactions. Except as set forth in Section 5.22 of the
Company Disclosure Letter, and except for employment agreements with officers of
the Company set forth in Section 5.17 of the Company Disclosure Letter, there
are no Contracts with any (a) present or former officer or director of the
Company or any of its Subsidiaries or any of their immediate family members
(including their spouses), (b) record or beneficial owner of more than 5% of the
Common Stock, or (c) any Person known by the Company's executive officers to be
an affiliate of any such officer, director or beneficial owner.
5.23 Fairness Opinion. The Board has received the opinion of Morgan
Stanley & Co. Incorporated (the "Financial Advisor"), dated the date of this
Agreement, and subject to the qualifications stated therein, to the effect that,
as of such date, the Merger Consideration to be received by the holders of
shares of Common Stock is fair, from a financial point of view, to such holders.
5.24 Stockholder Rights Plan. The Company has amended the Rights
Agreement to provide that (i) the Rights Agreement and the Rights will not be
applicable to the Merger, (ii) the execution of this Agreement and the Voting
Agreement and the consummation of the transactions contemplated hereby and
thereby shall not result in a "Distribution Date" under the Rights Agreement,
and shall not result in Purchaser or Merger Sub or any of their respective
affiliates being an "Acquiring Person" under the Rights Agreement, result in the
occurrence of an event described in Section 13 of the Rights Agreement or
otherwise result in the ability of any Person to exercise any rights under the
Rights Agreement or enable or require the Rights to separate from the shares of
Common Stock to which they are attached and (iii) the Rights Agreement will
expire immediately prior to the Effective Time.
5.25 Vote Required. The affirmative vote of the holders of a majority of
the outstanding shares of Common Stock is the only vote of the holders of any
class or series of the Company's capital stock necessary (under applicable Law
or otherwise) to adopt this Agreement and to consummate the Merger and the other
transactions contemplated hereby.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Except as set forth in the corresponding sections of the disclosure
letter, dated the date hereof, delivered by Purchaser and Merger Sub to the
Company prior to the execution of this Agreement (the "Purchaser Disclosure
Letter") with specific reference to the particular Section or subsection of this
Agreement to which the limitation set forth in such Purchaser Disclosure Letter
relates, Purchaser and Merger Sub hereby represent and warrant to the Company as
follows:
6.1 Existence; Good Standing; Corporate Authority. Each of Purchaser and
Merger Sub (a) is a corporation duly incorporated and validly existing and in
good standing under the laws of its jurisdiction of incorporation; (b) is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of each other state of the United States or the laws of
any foreign jurisdiction, if applicable, in which the transaction of its
business makes such qualification necessary; and (c) has all requisite corporate
power and authority to own, operate and lease its properties and carry on its
business as now conducted, except with respect to (b) and (c) where the failure
to be so qualified, to be in good standing or to have such power and authority
would not, individually or in the aggregate, prevent or delay the ability of
Purchaser or Merger Sub to consummate the transactions contemplated by this
Agreement (any such change, effect, event, occurrence, state of facts or
development, a "Purchaser Material Adverse Effect").
6.2 Authorization, Validity and Effect of Agreements. Each of Purchaser
and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Purchaser and Merger Sub and the
consummation by Purchaser and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by the respective boards of directors of
Purchaser and Merger Sub, and immediately following the execution and delivery
of this Agreement, Purchaser shall cause this Agreement to be adopted by the
stockholders of Merger Sub, and no other corporate proceedings on the part of
Purchaser 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 Purchaser and Merger Sub, and (assuming
this Agreement constitutes a valid and binding obligation of the Company)
constitutes the valid and binding obligation of each of Purchaser and Merger
Sub, enforceable in accordance with its terms.
6.3 No Violation. Neither the execution and delivery by Purchaser and
Merger Sub of this Agreement nor the consummation by Purchaser or Merger Sub of
the transactions contemplated hereby does or will (a) violate, conflict with or
result in any breach of any provision of the respective certificates of
incorporation or bylaws of Purchaser or Merger Sub; (b) violate, conflict with,
result in a breach of any provision of, constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default) under, result
in the termination, cancellation or amendment or in a right of termination,
cancellation or amendment of, accelerate the performance required by or benefit
obtainable under, result in the triggering of any payment or other obligations
pursuant to any material contract or lease of Purchaser or Merger Sub, or result
in the creation or imposition of any Encumbrance upon any of the properties of
Purchaser or Merger Sub; (c) result in there being declared void, voidable or
without further binding effect, any contract to which Purchaser or Merger Sub is
a party, or by which Purchaser or Merger Sub or any of their respective
properties is bound, except for any such breach, default or right with respect
to which requisite waivers or consents have been, or prior to the Effective Time
will be, obtained or any of the foregoing matters that would not have a
Purchaser Material Adverse Effect; (d) other than the Regulatory Filings,
require any Consent of any Governmental Entity, the lack of which would
reasonably be expected to have a Purchaser Material Adverse Effect; or (e)
violate any Laws applicable to Purchaser or the Merger Sub or any of their
respective assets or properties, except for violations that would not have a
Purchaser Material Adverse Effect. Neither the execution and delivery of this
Agreement by Purchaser or Merger Sub, nor the consummation by Purchaser or
Merger Sub of the transactions contemplated hereby will require any consent of
any other Person except as set forth in the Purchaser Disclosure Letter.
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6.4 Financing. Purchaser has delivered to the Company true, correct and
complete copies of (i) signed counterpart(s) of the commitment letter of Credit
Suisse First Boston ("CSFB"), dated as of the date hereof, pursuant to which
such Person has agreed, subject to the terms and conditions set forth therein,
to provide up to an aggregate of $404 million of debt financing in connection
with the transactions contemplated hereby including up to $40 million of
revolving credit (the "Bank Commitment Letter") and (ii) the signed commitment
letter of each of DLJ Merchant Banking Partners III, L.P., DLJ Offshore Partners
III-1, C.V., DLJ Offshore Partners III-2, C.V., DLJ Offshore Partners III, C.V.,
DLJ MB Partners III GmbH & Co. KG, Millennium Partners II, L.P. and MBP III Plan
Investors, L.P. (collectively, "DLJ") pursuant to which DLJ has agreed, subject
to the terms and conditions set forth therein, to make or cause to be made an
equity investment in Purchaser of an amount (the "Equity Commitment") equal to
approximately $89.8 million (collectively, the "Financing Letters"). The
Financing Letters are in full force and effect as of the date hereof. The funds
in the amounts set forth in the Financing Letters will be, when and if drawn,
sufficient to enable Purchaser and Merger Sub to pay the full Merger
Consideration, to make all other necessary payments by it in connection with the
Merger (including the repayment of certain outstanding indebtedness of the
Surviving Corporation) and to pay all of the related fees and expenses, in each
case as contemplated by the Financing Letters. The financing referred to in the
Financing Letters is herein referred to as the "Financing." Purchaser does not
know of any facts that would reasonably be expected to, individually or in the
aggregate, materially impair or delay or prevent the consummation of the
Financing. As of the date hereof, the Persons providing the Financing have not
advised Purchaser or Merger Sub of any reason why the Financing will not be
consummated in accordance with the terms of the Financing Letters.
6.5 Purchaser-Owned Shares of Common Stock. As of the date of this
Agreement, Purchaser, Merger Sub and their respective affiliates beneficially
own no shares of Common Stock (other than pursuant to or as a result of the
Voting Agreement).
6.6 Interim Operations of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
6.7 Brokers. Neither Purchaser nor Merger Sub has entered into any
contract, arrangement or understanding with any Person or firm that may result
in the obligation of the Company or any of its Affiliates to pay or become
liable for any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations of this Agreement or the
consummation of the transactions contemplated hereby.
ARTICLE VII
COVENANTS
7.1 Interim Operations.
(a) Except as contemplated by this Agreement or as set forth in Section
7.1(a) of the Company Disclosure Letter, from and after the date of this
Agreement to the Effective Time, unless Purchaser has consented in writing
thereto, the Company shall, and shall cause each of its Subsidiaries to:
(i) conduct their respective businesses and operations only in
its usual, regular and ordinary course of business consistent with past
practice;
(ii) use reasonable efforts to (A) preserve intact their business
organizations and goodwill, (B) maintain in effect all existing material
qualifications, licenses, permits, approvals and other authorizations
referred to in Section 5.1 and Section 5.12, (C) keep available the
services of the officers and key employees of the Company and each
Subsidiary, and (D) preserve existing relationships with material
customers and suppliers and those Persons having business relationships
with them;
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(iii) promptly upon the discovery thereof notify Purchaser of the
existence of any breach of any representation or warranty contained
herein (or, in the case of any representation or warranty that makes no
reference to Company Material Adverse Effect or materiality, any breach
of such representation or warranty in any material respect) or the
occurrence of any event that would cause any representation or warranty
contained herein no longer to be true and correct (or, in the case of
any representation or warranty that makes no reference to Company
Material Adverse Effect or materiality, to no longer be true and correct
in any material respect);
(iv) promptly deliver to Purchaser copies of any report,
statement or schedule filed with or furnished to the SEC subsequent to
the date of this Agreement; and
(v) prepare and file all documents with, and make all payments
to, the United States Patent and Trademark Office and/or any other
Governmental Entity as necessary or appropriate to maintain each
Proprietary Right listed in the Company Disclosure Letter in full force
and effect, and to correct any and all material deficiencies in previous
payments of patent application prosecution and maintenance fees in
connection with such Proprietary Rights, including payments of
prosecution and maintenance fees to which the "small entity discount"
was taken in violation of applicable law.
(b) Without limiting the generality of the foregoing, from and after the
date of this Agreement to the Effective Time, except as set forth in Section
7.1(b) of the Company Disclosure Letter or unless Purchaser has consented in
writing thereto, the Company shall not, and shall not permit any of its
Subsidiaries to:
(i) propose to its stockholders an amendment to or amend its
certificate of incorporation or bylaws or comparable governing
instruments, except for any amendment required in connection with the
performance by the Company or its Subsidiaries of their respective
obligations under this Agreement;
(ii) grant, issue, sell, pledge, encumber, transfer, deliver or
register for issuance or sale any shares of capital stock or other
ownership interest in the Company (other than issuances of Common Stock
(and accompanying Rights) pursuant to the exercise of Options or
Warrants outstanding on the date hereof or pursuant to the Rights
Agreement) or any of its Subsidiaries, or any securities convertible
into or exchangeable for any such shares or ownership interest, or any
rights, warrants or options to acquire or with respect to any such
shares of capital stock, ownership interest or convertible or
exchangeable securities; or accelerate any right to convert or exchange
or acquire any securities of the Company or any of its Subsidiaries for
any such shares or ownership interests;
(iii) effect any stock split, combination, reclassification or
conversion of any of its capital stock or otherwise change its
capitalization as it exists on the date hereof;
(iv) directly or indirectly redeem, purchase or otherwise
acquire, or offer to redeem, purchase or otherwise acquire, any shares
of its capital stock or capital stock of any of its Subsidiaries, other
than by repurchasing restricted stock or upon the cashless exercise of
options, in each case in the ordinary course of business;
(v) sell, lease, license, encumber or otherwise dispose of any of
its assets (including Intellectual Property of the Company or its
Subsidiaries or capital stock of any of its Subsidiaries), except for
sales of inventory and obsolete equipment and other obsolete assets in
the ordinary course of business (excluding capital stock of its
Subsidiaries) consistent with past practices;
(vi) (a) merge or consolidate with, or acquire any interest in,
any corporation, partnership, limited liability company, association or
other business organization or division thereof except for the creation
of a wholly owned Subsidiary of the Company in the ordinary course of
business, (b) acquire or agree to acquire any material assets, except
for acquisitions of inventory, equipment and raw materials in the
ordinary course of business and consistent with past practice or (c)
make any loan or advance to, or otherwise make any investment in, any
Persons other than loans or advances to, or investments in, Subsidiaries
of the Company existing on the date of this Agreement consistent with
past practices;
23
(vii) incur or assume any indebtedness for borrowed money, issue
or sell any debt securities or warrants or rights to acquire any debt
Securities of the Company or any of its Subsidiaries or 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 or in the
ordinary course of business up to $250,000), in any such case in excess
of $250,000, except for the incurrence of indebtedness for working
capital purposes in the ordinary course of business under the Company's
or its Subsidiaries' existing credit facilities and capital expenditures
made in accordance with the Company's or its Subsidiaries' previously
adopted capital budgets, copies of which have been provided to
Purchaser;
(viii) make or forgive any loans, advances or capital
contributions to, or investments in, any other Person;
(ix) (A) enter into any new employment, severance, termination,
consulting or salary continuation agreements with any newly hired
employees other than in the ordinary course of business or enter into
any of the foregoing with any existing officers or directors or alter or
amend in any way, except as may be required by Law or pursuant to any
Contract or commitment in existence as of the date hereof, any
compensation or benefits due to employees other than increases or new
incentive awards in the ordinary course of business consistent with past
practices; (B) except as required by Law or any existing Company
Employee Plan or Material Contract or in the ordinary course of business
consistent with past practice, increase the amount of compensation of or
grant new incentive awards to any director or officer of the Company or
any of its Subsidiaries; (C) except as required by Law, a Material
Contract existing on the date hereof or pursuant to a Company severance
policy or Company Employee Plan existing on the date hereof, grant any
severance or termination pay to any director or officer of the Company
or any of its Subsidiaries; (D) except as required by Law, adopt any
additional employee benefit plan; (E) except as required by any existing
Company Employee Plan or agreement thereunder or Material Contract,
provide for the payment of any amounts as a result of the consummation
of the transactions contemplated by this Agreement; or (F) pay any
bonuses except to the extent earned under existing awards or new
incentive awards listed in Section 5.10(l) of the Company Disclosure
Letter;
(x) except as required by applicable law, adopt or amend in any
material respect or terminate any employee benefit plan or arrangement;
(xi) make any material changes in the type or amount of their
insurance coverage or permit any material insurance policy naming the
Company or any of its Subsidiaries as a beneficiary or a loss payee to
be canceled or terminated other than in the ordinary course of business;
(xii) except as required by changes in applicable Law or GAAP, in
each case, as concurred by its independent public accountants, change
any accounting methods, principles or practices used by the Company or
its Subsidiaries or change the Company's fiscal year;
(xiii) (A) settle, pay or discharge, or admit liability or
consent to non-monetary relief in respect of any litigation,
investigation, arbitration, proceeding or other claim, liability or
obligation arising from the conduct of business in the ordinary course
or otherwise for an amount in excess of $250,000 unless compelled by
final, non-appealable court order or other binding order of a
Governmental Entity; or
(B) settle, pay or discharge any claim against the Company
with respect to or arising out of the transactions contemplated by this
Agreement;
(xiv) (A) except as required by Law, make any material Tax
election or take any position on any Company Return filed on or after
the date of this Agreement or adopt any method therein that is
materially inconsistent with elections made, positions taken or methods
used in preparing or filing similar returns in prior periods unless such
position or election is pursuant to applicable Law or the Code, (B)
enter into any settlement or compromise of any material Tax liability,
(C) except as required by law, file any amended Company Return that
would result in a material change in Tax liability, taxable income or
loss, (D) change any annual Tax accounting period, (E) enter into any
closing agreement relating to any material Tax liability, or (F) give or
request any waiver of a statute of limitation with respect to any
Company Return;
24
(xv) enter into any new line of business;
(xvi) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries or alter
through merger, liquidation, reorganization or restructuring the
corporate structure of any of its Subsidiaries (other than the Merger);
(xvii) enter into any contract or agreement other than in the
ordinary course of business consistent with past practices that would be
material to the Company and its Subsidiaries, taken as a whole;
(xviii)except as required by applicable Law or GAAP, revalue in
any material respect any of its assets, including writing down the value
of inventory in any material manner, or writing-off notes or accounts
receivable in any material manner;
(xix) permit to lapse any registrations or applications for
material Intellectual Property owned, licensed, or used by the Company
or any of its Subsidiaries;
(xx) declare or set aside or pay for any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of capital stock of the Company;
(xxi) amend, alter or modify the terms of any currently
outstanding rights, warrants or options to acquire or purchase any
capital stock of, or ownership interest in, the Company, or any
securities convertible into or exchangeable for such capital stock or
ownership interest;
(xxii) except in the ordinary course of business or as required
by Law, amend, modify or terminate any Material Contract, agreement or
arrangement of the Company or any Subsidiary, or otherwise waive,
release or assign any material rights, claims or benefits of the Company
or any Subsidiary thereunder;
(xxiii)enter into any license with respect to Intellectual
Property unless such license is non-exclusive and entered into in the
ordinary course of business consistent with past practice;
(xxiv) make any capital expenditures or series of capital
expenditures which are not reflected in the business plans of the
Company previously provided to the Purchaser in excess of $250,000;
(xxv) (a) redeem the Rights, or amend or modify or terminate the
Rights Agreement, (b) permit the Rights to become non-redeemable at the
redemption price currently in effect, except by reason of clause (c)
below, or (c) take any action which would allow any Person other than
Purchaser or Merger Sub or any of their affiliates to become the
Beneficial Owner (as defined in the Rights Agreement) of 15% or more of
the Common Stock without causing a Distribution Date (as defined in the
Rights Agreement) or a Stock Acquisition Date (as defined in the Rights
Agreement) to occur or otherwise take any action which would render the
Rights Agreement inapplicable to any transaction contemplated by such
Person;
(xxvi) unless such terms as waived, modified or consented to are
no more favorable to the other party than those set forth in the
Confidentiality Agreement (as defined below), waive any benefits of, or
agree to modify in any respect, or fail to enforce, or consent to any
matter with respect to which consent is required under, any standstill
or similar agreement to which the Company or any of its Subsidiaries is
a party or waive any material benefits of, or agree to modify in any
material respect, or fail to enforce in any material respect, or consent
to any matter with respect to which consent is required under, any
material confidentiality or similar agreement to which the Company or
any of its Subsidiaries is a party;
25
(xxvii)knowingly or intentionally take any action that is
reasonably likely to result in any of the representations or warranties
of the Company hereunder being untrue in any material respect; or
(xxviii) agree in writing or otherwise to take any of the
foregoing actions.
7.2 Stockholder Meeting; Proxy Statement.
(a) The Company, Purchaser and Merger Sub shall use their respective
reasonable best efforts to take or cause to be taken such actions as may be
required to be taken under the Exchange Act, the Securities Act and any other
federal securities laws, and under any applicable state securities or blue sky
Laws in connection with the Merger and the other transactions contemplated
hereby.
(b) The Company shall duly call and hold a meeting of its holders of
Common Stock (the "Stockholder Meeting") as promptly as practicable for the
purpose of obtaining the Stockholder Approval, and the Company shall use
reasonable best efforts to hold the Stockholder Meeting as soon as practicable
after the date on which the Proxy Statement is cleared by the SEC.
(c) In connection with the Merger and the Stockholder Meeting, the
Company shall prepare and file with the SEC, as promptly as practicable but in
any event no later than ten business days after the date hereof, a proxy
statement relating to the Stockholder Meeting (together with any amendments
thereof or supplements thereto and any other required proxy materials, the
"Proxy Statement") relating to the Merger and the other transactions
contemplated by this Agreement and shall use its reasonable best efforts to
respond to the comments of the SEC and to cause the Proxy Statement to be mailed
to its stockholders as promptly as practicable; provided, however, that prior to
the filing of the Proxy Statement (or any amendments or supplements thereto),
the Company shall consult with Purchaser and Merger Sub with respect to such
filings and all replies to comments of the SEC and shall afford Purchaser and
Merger Sub reasonable opportunity to comment thereon. Purchaser and Merger Sub
shall provide the Company with any information for inclusion in the Proxy
Statement which may be required under applicable Law and which is reasonably
requested by the Company. The Company shall promptly notify Purchaser and Merger
Sub of the receipt of comments of the SEC and of any request from the SEC for
amendments or supplements to the Proxy Statement or for additional information,
and will promptly supply Purchaser and Merger Sub with copies of all
correspondence between the Company or any of its Representatives, on the one
hand, and the SEC or members of its staff, on the other hand, with respect to
the Proxy Statement or the Merger. If at any time prior to the Stockholder
Meeting any event should occur which is required by applicable Law to be set
forth in an amendment of, or a supplement to, the Proxy Statement the Company
will prepare and mail such amendment or supplement; provided, however, that
prior to such mailing, the Company shall consult with Purchaser and Merger Sub
with respect to such amendment or supplement and shall afford Purchaser and
Merger Sub reasonable opportunity to comment thereon. The Company will notify
Purchaser and Merger Sub at least 48 hours prior to the mailing of the Proxy
Statement, or 24 hours prior to the mailing of any amendment or supplement
thereto, to the Company's stockholders. Subject to the provisions of Section
7.10, the Company Recommendation, together with a copy of the opinion referred
to in Section 5.23, shall be included in the Proxy Statement.
(d) The Company represents and warrants that the Proxy Statement will,
as of the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the Company's stockholders and as of the time of the
Stockholder Meeting, 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 the light of the circumstances under which
they were made, not misleading. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
any statements made or incorporated by reference in the Proxy Statement based on
information supplied by Purchaser or Merger Sub for inclusion or incorporation
by reference therein.
(e) Purchaser and Merger Sub represent and warrant that the information
supplied or to be supplied by Purchaser and Merger Sub in writing for inclusion
or incorporation by reference in the Proxy Statement will, as of the time the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to the Company's stockholders, and as of the time of the Stockholder Meeting,
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 the light of the circumstances under which they are made,
26
not misleading. Notwithstanding the foregoing, Purchaser and Merger Sub make no
representation or warranty with respect to any statements made or incorporated
by reference in the Proxy Statement based on information supplied by Company for
inclusion or incorporation by reference therein.
7.3 Efforts and Assistance; HSR Act.
(a) Subject to the terms and conditions hereof, each party will use its
reasonable best efforts to take, or cause to be taken, all actions, to file, or
caused to be filed, all documents and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable, including, without
limitation, obtaining all necessary consents, waivers, approvals,
authorizations, Permits or orders from all Governmental Entities or any other
Third Party. Subject to Section 7.10 of this Agreement, each party shall refrain
from taking, directly or indirectly, any action which would impair such party's
ability to consummate the Merger and the other transactions contemplated by this
Agreement. Without limiting the foregoing, the Company shall use its reasonable
best efforts to (i) take all action necessary or desirable so that no
anti-takeover laws and regulations or similar laws or regulations are or become
applicable to the Merger or any of the other transactions contemplated by this
Agreement and (ii) if any anti-takeover law or regulation becomes applicable to
any of the foregoing, take all action necessary so that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated in this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and such other
transactions.
(b) The Company, Purchaser and Merger Sub shall cooperate with one
another in determining whether any action by or in respect of, or filing,
including, without limitation, any Regulatory Filing, with, any Governmental
Entity is required, or any actions, consents, approvals or waivers are required
to be obtained from parties to any Material Contracts, in connection with the
consummation of the transactions contemplated by this Agreement. Subject to the
terms and conditions hereof, the Company will, and will cause its Subsidiaries,
to take all reasonable actions necessary to obtain any consent, approval,
waiver, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private Third Party required to be
obtained or made by the Company or any of its Subsidiaries in connection with
the Merger or the taking of any action contemplated by this Agreement.
(c) The Company agrees to provide, and will use its reasonable best
efforts to cause its officers and employees to provide, all necessary
cooperation reasonably requested by Purchaser or Merger Sub in connection with
the arrangement of, and the negotiation of agreements with respect to, the
Financing (and any substitutions or replacements thereof), including by making
available to Purchaser or Merger Sub and such Financing sources and their
Representatives, personnel (including for participation at organizational
meetings, drafting sessions for offering memoranda and in road shows), documents
and information of the Company and its Subsidiaries as may reasonably be
requested by Purchaser or Merger Sub or such Financing sources and, if
applicable, by cooperating with Financing sources in achieving a timely offering
and/or syndication of Financing (or such substitutions or replacements)
reasonably satisfactory to Purchaser or Merger Sub and such Financing sources.
(d) The Company, Purchaser and Merger Sub shall furnish all information
required to be included in any application or other filing to be made pursuant
to the rules and regulations of any Governmental Entity in connection with the
transactions contemplated by this Agreement. The Company, Purchaser and Merger
Sub shall have the right to review in advance, and to the extent reasonably
practicable each will consult the other on, all the information relating to the
other and each of their respective Subsidiaries, that appears in any filing made
with, or written materials submitted to, any Third Party or any Governmental
Entity in connection with the Merger and the other transactions contemplated by
this Agreement.
(e) If required, each of the Company, Purchaser and Merger Sub shall
take all reasonable action necessary to file as soon as practicable
notifications under the HSR Act and any other applicable Law governing antitrust
or competition matters, including, without limitation, Foreign Antitrust Laws
and respond as promptly as practicable to any inquiries from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any state attorney
general or other Governmental Entity in connection with antitrust matters
related to the Merger or the other transactions contemplated by this Agreement.
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7.4 Publicity. The initial press release relating to this Agreement
shall be a joint press release and thereafter, so long as this Agreement is in
effect, the Company and Purchaser shall consult with each other before issuing
any press release or otherwise making public statements with respect to this
Agreement and the transactions contemplated hereby, and shall not issue any such
press release or make any similar public statement without the prior written
consent of the other party, which shall not be unreasonably withheld or delayed,
except as the disclosing party may determine to be required by applicable Law or
any listing agreement with any national securities exchange or the Nasdaq Stock
Market.
7.5 Further Action. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Purchaser, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of the Company or Purchaser, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
the Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
7.6 Insurance; Indemnity.
(a) All rights to indemnification and exculpation from liability for
acts and omissions occurring at or prior to the Effective Time and rights to
advancements of expenses relating thereto now existing in favor of the current
or former directors, officers, employees and agents of the Company and its
Subsidiaries (the "Indemnitees") as provided in their respective charters and/or
bylaws (or similar organizational documents) or any indemnification agreement
listed in Section 7.6(a) of the Company Disclosure Letter shall survive the
Merger and shall not, for a period of six years after the Effective Time, be
amended, repealed or otherwise modified in any manner that would adversely
affect the rights thereunder of any such Indemnitees, unless an alteration or
modification of such documents is required by applicable Law or the Indemnitee
affected thereby otherwise consents in writing thereto.
(b) The Surviving Corporation shall either: (i) cause to be obtained and
have in effect at the Effective Time "tail" insurance policies with a claims
period of six years from the Effective Time with respect to officers' and
directors' or fiduciary duty liability insurance for acts or omissions occurring
prior to the Effective Time ("D&O Insurance") covering the persons described in
Section 7.6(a) (whether or not they are entitled to indemnification thereunder)
who are currently covered by the Company's Current D&O Insurance on terms
(particularly as to coverage and amount) no less advantageous in the aggregate
to such indemnified parties than such Current D&O Insurance; or (ii) provide and
maintain, for a period of six years from and after the Effective Time, D&O
Insurance covering the persons described in Section 7.6(b)(i) on terms
(particularly as to coverage and amount) no less advantageous in the aggregate
to such indemnified parties than such Current D&O Insurance; provided, that the
Surviving Corporation will not be required to pay an annual premium for any D&O
Insurance obtained pursuant to this Section 7.6(b)(ii) in excess of 150% of the
annual premium being paid as of the date hereof, which the Company represents
and warrants to be $1,042,420 (the "Current Premium"); and if the provision and
maintenance of D&O Insurance in accordance with this Section 7.6(b)(ii) exceeds
150% of the Current Premium, the Surviving Corporation shall provide the
greatest amount of substantially equivalent D&O Insurance obtainable for 150% of
the Current Premium.
(c) In the event the Surviving Corporation or any of its respective
successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers all or substantially all of its properties and
assets to any Person, proper provisions shall be made so that such Person
assumes the obligations set forth in this Section 7.6.
(d) This Section 7.6, which shall survive the consummation of the Merger
at the Effective Time and shall continue for the periods specified herein, is
intended to benefit the Company, the Surviving Corporation, and any Person
referenced in this Section 7.6 or indemnified hereunder, each of whom may
enforce the provisions of this Section 7.6 (whether or not parties to this
Agreement). The rights of this Section 7.6 shall be in addition to any rights
such Persons may have under the Company's certificate of incorporation or bylaws
28
as currently in effect or the articles or certificate of incorporation or bylaws
or other organizational documents of any Subsidiary, or under Delaware Law or
any other applicable Laws or under an agreement of any Indemnitee with the
Company or an Subsidiary that is listed in Section 5.5(a) of the Company
Disclosure Letter.
7.7 Financial Statements. During the period prior to the Closing Date,
the Company shall provide the Purchaser as promptly as practicable (i) (and in
any event within twenty (20) days following the end of such month) with a copy
of an unaudited consolidated balance sheet of the Company and its Subsidiaries
for each of the months ended prior to the Closing Date (commencing with the
month ended March 31, 2004), and the related consolidated statements of
earnings, stockholders' equity and cash flows for the month then ended, and (ii)
(and in any event within thirty (30) days following the end of such month) with
a copy of the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of March 31, 2004 and, if the Closing shall not have earlier
occurred, June 30, 2004, in each case for the three month period then ended,
together with the related consolidated statements of earnings, stockholders'
equity and cash flows for such three month period.
7.8 Consequences if Rights Triggered. If any Distribution Date (as
defined in the Rights Agreement) or Stock Acquisition Date (as defined in the
Rights Agreement) occurs under the Rights Agreement at any time during the
period from the date of this Agreement to the Effective Time other than as a
result of the actions of Purchaser, Merger Sub or their respective affiliates,
the Company, Purchaser and Merger Sub shall make such adjustments to the per
share Merger Consideration (without any increase in the aggregate Merger
Consideration) as the Company, Purchaser and Merger Sub shall mutually agree so
as to preserve the economic benefits that the parties each reasonably expected
on the date of this Agreement to receive as a result of the consummation of the
Merger.
7.9 Access to Information; Notification. (a) The Company shall, and
shall cause each of its Subsidiaries to, afford to Purchaser and to the
officers, employees, accountants, counsel, financial advisors and other
Representatives of Purchaser, reasonable access during normal business hours
during the period prior to the Effective Time to all their respective offices,
properties, books, contracts, commitments, personnel and records and, during
such period, the Company shall, and shall cause its respective Subsidiaries to,
furnish promptly to Purchaser (i) a copy of each report, schedule, registration
statement and other document filed or furnished by it during such period
pursuant to the requirements of federal or state securities laws, or received by
it from the SEC or state securities commissions (ii) any financial and operating
data or information and (iii) all other information concerning its business,
properties and personnel as such other party may reasonably request. The Company
shall instruct its officers, employees, accountants, counsel, financial advisors
and other Representatives to cooperate with reasonable requests of Purchaser in
its investigation. Except as required by applicable Laws, each of the parties
hereto will hold, and will cause its respective officers, employees,
accountants, counsel, financial advisors and other Representatives and
affiliates to hold, any nonpublic information in confidence to the extent
required by, and in accordance with, the provisions of the confidentiality
agreement previously entered into by Purchaser and the Company (the
"Confidentiality Agreement").
(b) Purchaser shall give prompt notice to the Company of any facts or
events of which Purchaser becomes aware or any notice received by Purchaser
which in any such case would reasonably be expected to cause the Financing to be
unavailable by the End Date (as hereinafter defined). The Company shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would reasonably be expected to cause any representation
or warranty of such party contained in this Agreement to be untrue or inaccurate
in any material respect, (ii) any failure of the Company or Purchaser, as the
case may be, to materially comply with or satisfy, or the occurrence or
nonoccurrence of any event, the occurrence or nonoccurrence of which would
reasonably be expected to cause the failure by such party to materially comply
with or satisfy, any covenant, condition or agreement to be complied with or
satisfied by it hereunder, (iii) any written notice or other communication from
any Third Party alleging that the consent of such Third Party is or may be
required in connection with the transactions contemplated by this Agreement,
(iv) any actions, suits, claims, investigations or proceedings commenced or, to
the best of such party's knowledge, threatened against, or affecting such party
which, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to this Agreement or which relate to the
consummation of the transactions contemplated hereby, and (v) the occurrence of
any event, development or circumstance which has had or would be reasonably
expected to result in a Company Material Adverse Effect or Purchaser Material
Adverse Effect, as applicable; provided, however, that the delivery of any
notice pursuant to this Section 7.9(b) shall not limit or otherwise affect the
remedies available hereunder to the party giving or receiving such notice.
29
7.10 Acquisition Proposals; Board Recommendation.
(a) The Company shall immediately terminate, and shall instruct its and
its Subsidiaries' officers, directors, employees, attorneys, accountants,
advisors, representatives and agents ("Representatives") to immediately
terminate, all existing discussions or negotiations, if any, with any Person
conducted heretofore with respect to, or that would reasonably be expected to
lead to, an Acquisition Proposal. The Company shall promptly demand that each
Person which has heretofore executed a confidentiality agreement with or for the
benefit of the Company or any of its Subsidiaries or any of its or their
Representatives with respect to such Person's consideration of a possible
Acquisition Proposal promptly return or destroy (which destruction shall be
certified in writing by such Person to the Company) all confidential information
heretofore furnished by the Company or any of its Subsidiaries or any of its or
their Representatives to such Person or any of its or their Representatives in
accordance with the terms of any confidentiality agreement with such Person. The
term "Acquisition Proposal" means any offer or proposal (whether or not in
writing) (other than an offer or proposal by or on behalf of Purchaser or its
affiliates) for, or any indication of interest in: (i) a transaction or series
of transactions pursuant to which any Person or group of Persons acquires or
would acquire beneficial ownership of more than 5% of the outstanding voting
power of the Company or any of its Subsidiaries, whether from the Company or
pursuant to a tender offer, exchange offer or otherwise; (ii) a merger,
consolidation, business combination, reorganization, share exchange, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries; (iii) any
transaction or series of transactions which would result in any Person (or group
of Persons) other than Purchaser, Merger Sub or any of their affiliates (any
such Person, a "Third Party") acquiring 5% or more of the fair market value of
the assets (including the capital stock of any Subsidiary of the Company) of the
Company and its Subsidiaries, taken as a whole, immediately prior to such
transaction (whether by purchase of assets, acquisition of stock of a Subsidiary
of the Company or otherwise); or (iv) any combination of the foregoing.
(b) From the date of this Agreement until the Effective Time, the
Company shall not, and the Company shall cause its Subsidiaries and its and
their Representatives not to, (i) solicit, initiate or encourage or take any
other action to facilitate any proposal, inquiry or request that constitutes, or
may reasonably be expected to lead to, an Acquisition Proposal, (ii) participate
or engage in discussions or negotiations with, or disclose or provide any
non-public information relating to the Company or its Subsidiaries to, or afford
access to any of the properties, books or records of the Company or its
Subsidiaries to, any Person that has made an Acquisition Proposal or such a
proposal, inquiry or request or any of such Person's affiliates, (iii) except as
provided in this Section 7.10 and subject to compliance herewith, enter into any
agreement or agreement in principle with any Person that has made an Acquisition
Proposal or such a proposal, inquiry or request or any of such Person's
affiliates or any Subsidiary of the Company or any of its or their
Representatives, or (iv) grant any waiver or release under, or fail to enforce
to the maximum extent possible, any standstill or similar agreement by any
Person who has made an Acquisition Proposal or such a proposal, inquiry or
request; provided, however, that prior to obtaining Stockholder Approval, the
Company and its Representatives may take any actions described in clause (ii) of
this subsection (b) in respect of a Person that has made an Acquisition Proposal
if, but only if, (A) such Person has submitted a written Acquisition Proposal,
(B) the Company has not violated its obligations under this Section 7.10 and at
such time the Company has complied with its obligations under this Section 7.10,
and the Company is proceeding in good faith with respect to its obligations
under Section 7.2, to the extent applicable, (C) such Person has entered into a
confidentiality agreement and a standstill agreement with the Company on terms
that are no less favorable to the Company than the Confidentiality Agreement and
the provisions of Section 2 of the Exclusivity Agreement dated as of March 8,
2004, as amended from time to time thereafter, between the Company and
Purchaser, (D) the Board has determined in good faith, after receipt of advice
from outside counsel and a financial advisor of nationally recognized
reputation, that such Acquisition Proposal constitutes or is reasonably likely
to constitute a Superior Proposal, (E) a majority of the Board has determined in
good faith, after receipt of advice from outside counsel, that the failure to
take such action would result in a failure of the Board to comply with its
fiduciary duties imposed by Delaware law, and (F) prior to disclosing or
providing any such nonpublic information the Company shall disclose all such
information to Purchaser. For purposes of this Agreement, a "Superior Proposal"
means any written Acquisition Proposal (with all of the percentages included in
the definition of Acquisition Proposal increased to 100% for purposes of this
definition and provided that no Acquisition Proposal shall constitute a Superior
Proposal if immediately following the consummation of such Acquisition Proposal,
30
the stockholders of the Company would own a majority of the voting power of the
survivor or acquiring entity) that a majority of the members of the Board
determine in good faith, after consultation with its outside legal counsel and
financial advisors (w) provides to the Company's stockholders consideration with
a value per share of Common Stock that exceeds the value per share of Common
Stock of the consideration provided for in this Agreement (after taking into
account any revisions made or proposed by Purchaser or Merger Sub), (x) would
result in a transaction, if consummated, that would be more favorable to the
Company's stockholders (taking into account all facts and circumstances,
including all legal, financial, regulatory and other aspects of the proposal and
the identity of the offeror) than the transactions contemplated hereby, (y) is
reasonably likely to be consummated in a timely manner (taking into account all
legal, financial, regulatory and other relevant considerations), and (z) is made
by a Person or group of Persons who have provided the Company with reasonable
evidence that such Person or group has or will have sufficient funds or
committed financing to complete such Acquisition Proposal.
(c) The Company shall promptly (and in any event, within 24 hours)
advise Purchaser, telephonically and in writing, of the Company's receipt of any
Acquisition Proposal or any proposal, inquiry or request that could reasonably
be expected to lead to an Acquisition Proposal. The Company shall promptly (and
in any event, within 24 hours) provide Purchaser, in writing and in reasonable
detail, with the terms and conditions of any such Acquisition Proposal, inquiry
or request and the identity of the Person making the same, and copies of any
written materials received from such Person. The Company shall update Purchaser
and Merger Sub in respect of material changes in the status or content of any
discussions or negotiations regarding any Acquisition Proposal, and shall
promptly (and in any event, within 24 hours) inform Purchaser of any change in
any of the price, form of consideration or other meaningful terms of any
Acquisition Proposal. Promptly (and in any event, within 24 hours) upon
determination by the Board that an Acquisition Proposal constitutes a Superior
Proposal, the Company shall deliver to Purchaser a written notice advising it
that the Board has so determined, specifying in reasonable detail the terms and
conditions of such Superior Proposal and the identity of the Person making such
Superior Proposal, and providing Purchaser and Merger Sub with copies of all
written materials received from such Person and not previously provided.
(d) The Board has adopted a resolution recommending the adoption of this
Agreement by the Company's stockholders (the "Company Recommendation") and,
except as provided in the next sentence, the Board shall not withdraw or modify
such Company Recommendation. The Board shall be permitted to (i) withdraw or
modify in a manner adverse to Purchaser and Merger Sub (or not to continue to
make) its recommendation to its stockholders or (ii) cause the Company to enter
into an agreement relating to a Superior Proposal if, but only if, (A) a
majority of the Board has determined in good faith, after receipt of advice from
outside counsel, that the failure to take such action would result in a failure
of the Board to comply with its fiduciary duties imposed by Delaware law, (B)
the Company has given Purchaser and Merger Sub five business days' prior written
notice of its intention to withdraw or modify such recommendation or enter into
such agreement, (C) during such five business day period, if requested by
Purchaser, the Company has negotiated in good faith with the Purchaser with
respect to any proposed changes to this Agreement made by the Purchaser and (D)
the Company has complied with its obligations under this Section 7.10. Nothing
in this Section 7.10 shall prohibit the Company or the Board from taking and
disclosing to the stockholders of the Company a position with respect to an
Acquisition Proposal by a Third Party to the extent the Company determines to be
required under Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act;
provided, that unless and until this Agreement is terminated in accordance with
Section 9.1 hereof, nothing in this sentence shall affect the obligations of the
Company or the rights of Purchaser or Merger Sub under any other provision of
this Agreement, and the Company shall hold the Stockholder Meeting even if the
Board has changed its Company Recommendation.
7.11 Transfer Taxes. Purchaser and the Company shall cooperate in the
preparation, execution and filing of all returns, applications, questionnaires
or other documents, regarding any real property transfer, stamp, recording,
documentary, gains, sales, use, value added, stock transfer or other taxes and
any other fees and similar taxes which become payable in connection with the
Merger (collectively, "Transfer Taxes"). From and after the Effective Time, the
Surviving Corporation shall pay or cause to be paid, without deduction or
withholding from any amounts payable to the holders of Common Stock, all
Transfer Taxes.
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7.12 Financing Obligation. Purchaser and Merger Sub will use their
reasonable best efforts to cause the Financing, subject to the terms and
conditions set forth in the Financing Letters, to be available at the Effective
Time. Purchaser shall not, and shall not permit Merger Sub to, without the prior
written consent of the Company, take any action or enter into any transaction,
including any merger, acquisition, joint venture, disposition, lease, contract
or debt or equity financing, that would reasonably be expected to materially
impair or delay or prevent the Financing. Purchaser shall not amend or alter, or
agree to amend or alter the Financing Letters in any manner that would
reasonably be expected to materially impair or delay or prevent the Financing
without the prior written consent of the Company.
7.13 Stock Options; Warrants; Employee Stock Purchase Plan. At or
immediately prior to the Effective Time, (a) all options to purchase shares of
Common Stock under any plan, program or arrangement of the Company
(collectively, the "Stock Option Plans"), whether or not then exercisable
(individually, an "Option" and collectively, the "Options"), shall automatically
be cancelled and, with respect to those Options that are exercisable on the date
of such cancellation, the holder of a then vested Option shall be entitled to
receive for each share of Common Stock subject to such Option an amount in cash
equal to the excess, if any, of the Merger Consideration over the per share
exercise price of such Option (such amount being herein referred to as the
"Option Consideration"), (b) all outstanding warrants to purchase shares of
Common Stock shall be cancelled and all then vested warrants shall be entitled
to receive for each share of Common Stock subject to such warrant an amount in
cash equal to the excess, if any, of the Merger Consideration over the per share
exercise price of such warrant, and (c) as of May 1, 2004, the Company shall
ensure that all payroll deductions under the Company's Employee Stock Purchase
Plan shall cease and that all payroll deductions under such plan which related
to any offering periods which have not terminated on or prior to the Effective
Time shall be returned to the employees who made such deductions, without
interest or other benefit. All amounts payable pursuant to this Section 7.13
shall be subject to any required withholding of taxes required by applicable Law
and shall be paid without interest.
ARTICLE VIII
CONDITIONS
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
obligations the Company, Purchaser and Merger Sub to consummate the Merger are
subject to the of the following conditions:
(a) the Stockholder Approval shall have been obtained;
(b) any applicable waiting period or required approval under the HSR
Act, or any other similar applicable Laws required prior to the completion of
the Merger shall have expired or been earlier terminated or received; and
(c) no Governmental Entity of competent authority or jurisdiction shall
have issued any Laws or taken any other action then in effect, which restrains,
enjoins or otherwise prohibits or makes illegal the consummation of the Merger;
provided, however, that the parties hereto shall use their respective reasonable
best efforts to have any such Law or other legal restraint vacated.
8.2 Conditions to Obligations of the Company. The obligations of the
Company to consummate the Merger are subject to the satisfaction or waiver of
the following further conditions:
(a) (i) Purchaser and Merger Sub shall have performed in all material
respects all of their obligations hereunder required to be performed by them at
or prior to the Effective Time, (ii) the representations and warranties of
Purchaser and Merger Sub contained in this Agreement that are qualified as to
materiality or Purchaser Material Adverse Effect shall be true and correct in
all respects, and those not so qualified shall be true and correct in all
material respects, in each case on the date hereof and at and as of the
Effective Time with the same force and effect as though made at and as of the
Effective Time (except that representations made as of a specific date shall be
required to be true and correct as of such date only), and (iii) the Company
shall have received a certificate signed by the Chief Executive Officer or
President of each of Purchaser and Merger Sub to the foregoing effect; and
32
(b) Purchaser shall have obtained all consents or approvals identified
on Section 8.2(b) of the Purchaser Disclosure Letter; provided, however, that
this condition shall be deemed satisfied if the failure of this condition is due
to willful breach by the Company of any of its material covenants in this
Agreement.
8.3 Conditions to Obligations of Purchaser and Merger Sub. The
obligations of Purchaser and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver of the following further conditions:
(a) (i) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of the Company contained
herein that are qualified as to Company Material Adverse Effect shall be true
and correct in all respects and those not so qualified shall be true and correct
except to the extent that the failure of such representations and warranties to
be true and correct, individually or in the aggregate, would not be reasonably
expected to result in a Company Material Adverse Effect, in each case on the
date hereof and at and as of the Effective Time with the same force and effect
as though made at and as of the Effective Time (except that representations made
as of a specific date shall be required to be true and correct as of such date
only), and (iii) Purchaser shall have received a certificate signed by the Chief
Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect;
(b) there shall not be pending (i) any action or proceeding by any
Governmental Entity or (ii) any action or proceeding by any other Person, in any
case referred to in clauses (i) and (ii), before any court or Governmental
Entity that has a reasonable probability of success seeking to (x) restrain or
prohibit the consummation of the Merger or seeking to obtain material damages,
(y) restrain or prohibit Purchaser's (including its affiliates) ownership or
operation of all or any material portion of the business or assets of the
Company (including the Surviving Corporation after the Effective Time) or
Subsidiaries or affiliates, or to compel Purchaser or any of its affiliates
(including the Surviving Corporation after the Effective Time) to dispose of or
hold separate all or any material portion of the business or assets of the
Company (including the Surviving Corporation after the Effective Time) or its
Subsidiaries, or (z) impose or confirm material limitations on the ability of
Purchaser or any of its affiliates (including the Surviving Corporation after
the Effective Time) to effectively control the business or operations of the
Company (including the Surviving Corporation after the Effective Time) or any of
its Subsidiaries or effectively to exercise full rights of ownership of the
Common Stock, including, without limitation, the right to vote any Common Stock
acquired or owned by Purchaser or any of its affiliates on all matters properly
presented to the holders of Common Stock, and no Governmental Entity or
arbitrator shall have issued any judgment, order, decree or injunction, and
there shall not be any Law, that, in Purchaser's reasonable judgment, is likely,
directly or indirectly, to result in any of the consequences referred to in the
preceding clauses (x) through (z);
(c) the Company shall have obtained all consents (including the
Consents) or approvals identified on Section 8.3(c) of the Company Disclosure
Letter; provided, however, that this condition shall be deemed satisfied if the
failure of this condition is due to willful breach by Purchaser or Merger Sub of
any of its material covenants in this Agreement;
(d) the aggregate number of shares of Common Stock at the Effective
Time, the holders of which have demanded appraisal of their shares from the
Company in accordance with the provisions of Section 262 of the DGCL, shall not
equal 10% or more of the Common Stock outstanding as of the record date for the
Stockholder Meeting;
(e) since the date of this Agreement, there shall not have occurred any
change, event, occurrence, development or circumstance which, individually or in
the aggregate, constitutes or would reasonably be expected to result in, a
Company Material Adverse Effect; and
(f) Purchaser and Merger Sub shall have obtained the proceeds of the
Financing substantially on the terms contemplated by the Financing Letters.
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ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 Termination. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time by written notice, whether
before or after the Stockholder Approval shall have been obtained:
(a) by mutual written agreement of Purchaser and the Company, in each
case duly authorized by their respective boards of directors;
(b) by either Purchaser or the Company, if:
(i) the Merger shall not have been consummated by (A) August 31,
2004 (the "End Date"); provided, however, that the right to terminate
this Agreement under this Section 9.1(b)(i)(A) shall not be available to
any party whose breach of any provision of this Agreement has resulted
in the failure of the Merger to occur on or before the End Date; or (B)
October 31, 2004.
(ii) there shall be any Law that makes consummation of the Merger
illegal or otherwise prohibited or any ruling, judgment, injunction,
order or decree of any Governmental Entity having competent jurisdiction
enjoining the Company or Merger Sub from consummating the Merger is
entered and the ruling, judgment, injunction, order or decree shall have
become final and nonappealable and, prior to that termination, the
parties shall have used reasonable efforts to resist, resolve or lift,
as applicable, any Law, ruling, judgment, injunction, order or decree;
provided, however, that the right to terminate this Agreement pursuant
to this Section 9.1(b)(ii) shall not be available to any party whose
breach of any provision of this Agreement results in the imposition of
such ruling, judgment, injunction, order or decree or the failure of
such ruling, judgment, injunction, order or decree to be resisted,
resolved or lifted, as applicable;
(iii) at the Stockholder Meeting or any adjournment thereof at
which this Agreement has been voted upon, the Stockholder Approval shall
not have been obtained; or
(iv) either the Bank Commitment Letter or the Equity Commitment
is terminated by CSFB or DLJ, respectively, or terminates by its terms
and such termination results in the Financing being unavailable;
(c) by the Company, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of Purchaser or
Merger Sub set forth in this Agreement shall have occurred which would cause any
of the conditions set forth in Section 8.2(a) not to be satisfied, and such
condition shall either be incapable of being satisfied by the End Date or is not
cured within ten business days after notice from the party wishing to terminate;
provided, however, that the Company shall not also then be in material breach of
this Agreement;
(d) by Purchaser, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement shall have occurred which would cause any of the
conditions set forth in Section 8.3(a) not to be satisfied, and such condition
is either incapable of being satisfied by the End Date or is not cured within
ten business days after notice from the party wishing to terminate; provided,
however, that Purchaser or Merger Sub shall not also then be in material breach
of this Agreement;
(e) by Purchaser: (i) if the Company shall have breached any of its
obligations under Section 7.2 or Section 7.10 of this Agreement; or (ii) if the
Board shall (A) amend, withdraw, modify, change, condition or qualify the
Company Recommendation in a manner adverse to Merger Sub, (B) approve or
recommend to the stockholders of the Company an Acquisition Proposal (other than
by Purchaser, Merger Sub or their affiliates), (C) approve or recommend that the
stockholders of the Company tender their Common Stock in any tender or exchange
offer that is an Acquisition Proposal (other than by Purchaser, Merger Sub or
their affiliates) or the Company shall not have sent to its stockholders within
ten business days after the commencement of such tender or exchange offer, a
statement disclosing that the Company recommends rejection of such tender or
34
exchange offer, (D) fail to reaffirm the Company Recommendation or fail to
reaffirm its determination that the Merger is in the best interest of the
Company's stockholders, within five business days after Purchaser requests in
writing that such recommendation or determination be reaffirmed, or (E) approve
a resolution or agree to do any of the foregoing; or
(f) by the Company, prior to the Stockholder Meeting and following
receipt of a Superior Proposal, if (i) the Superior Proposal has been made, has
not been withdrawn, continues to be a Superior Proposal and the Company has
entered into a definitive agreement for such Superior Proposal, and (ii) the
Company shall have fully complied with Section 7.10, and shall not have breached
in any material respect any of the other provisions set forth in this Agreement.
The party desiring to terminate this Agreement pursuant to Sections
9.1(b) through 9.1(f) shall give written notice of such termination to the other
party in accordance with Section 10.2; provided, that no such termination by the
Company shall be effective unless and until the Company shall have paid the
Termination Fee and/or Purchaser Termination Expenses, if any, required to be
paid by it pursuant to Section 9.2; provided, further, that no such termination
by Purchaser or Merger Sub shall be effective unless and until Purchaser shall
have paid any Company Termination Expenses required to be paid by it pursuant to
Section 9.2(c). With respect to any termination of this Agreement, the term (A)
"Termination Fee" means a cash amount equal to $8,522,000 and (B) "Purchaser
Termination Expenses" means Purchaser's actual and reasonably documented
out-of-pocket expenses and fees (including reasonable attorneys' fees) that have
been paid or that may become payable by Purchaser, Merger Sub and their
respective affiliates in connection with the transactions contemplated by this
Agreement not to exceed $3,000,000. With respect to any termination of this
Agreement, the term "Company Termination Expenses" means the Company's actual
and reasonably documented out-of-pocket expenses and fees (including reasonable
attorneys' fees) that have been paid or that may become payable by the Company
and its affiliates in connection with the transactions contemplated by this
Agreement not to exceed $750,000.
9.2 Effect of Termination.
(a) In the event of termination of this Agreement by any of the Company,
Purchaser or Merger Sub as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of the Company, Purchaser or Merger Sub or their respective Subsidiaries,
officers or directors except (i) with respect to Sections 7.4 and 7.9, this
Section 9.2 and Article X and (ii) with respect to any liabilities for damages
incurred or suffered by a party as a result of the willful breach by the other
party of any of its representations, warranties, covenants or other agreements
set forth in this Agreement.
(b) Notwithstanding any other provision of this Agreement, the Company
and Purchaser agree that: (i) if this Agreement is terminated pursuant to
Section 9.1(e) or Section 9.1(f) then the Company shall immediately pay to
Purchaser the Termination Fee; (ii) if this Agreement is terminated pursuant to
either (A) Section 9.1(b)(i) (provided, that at the time of such termination
pursuant to Section 9.1(b)(i), the condition precedent in Section 8.1(b) shall
have been satisfied and the reason for the Closing not having previously
occurred shall not be the failure to satisfy the conditions precedent set forth
in Section 8.2 through no fault of the Company) or (B) Section 9.1(b)(iii),
then, in the event that, prior to such termination, any Third Party shall have
publicly made, proposed, communicated or disclosed an intention to make an
Acquisition Proposal, or such Acquisition Proposal becomes publicly known, and
within 12 months following such termination the Company enters into a definitive
agreement with respect to an Acquisition Proposal, then the Company shall
immediately pay to Purchaser the Termination Fee; and (iii) if (A) this
Agreement is terminated pursuant to Section 9.1(d), (B) no Termination Fee has
been paid by the Company to Purchaser, and (C) within 12 months following such
termination the Company enters into a definitive agreement with respect to an
Acquisition Proposal, then, the Company shall immediately pay to Purchaser the
Termination Fee upon the entry into such definitive agreement; provided,
however, that for purposes of this Section 9.2(b)(iii), an Acquisition Proposal
shall not include (x) any merger, consolidation, business combination,
35
reorganization, recapitalization or similar transaction solely among the Company
and/or its wholly owned Subsidiaries, or (y) any acquisition by the Company or
any of its wholly owned Subsidiaries, whether by merger, consolidation, business
combination, reorganization or otherwise, unless as a result of any such
acquisition or series of acquisitions (1) the Company issues, during such
12-month period, an amount of shares of its Common Stock, or other securities
convertible into or exchangeable for Common Stock or other voting securities of
the Company, equal to or greater than the number of shares of the Company's
Common Stock outstanding on the date this Agreement is terminated or (2) the
stockholders of the Company on the date this Agreement is terminated own at any
time during such 12-month period less than a majority of the voting power of the
Company or the acquired or surviving entity. Any Termination Fee payable
pursuant to this Section 9.2(b) shall be reduced by an amount equal to the
amount of the Purchaser Termination Expenses actually paid to Purchaser pursuant
to Section 9.2(c).
(c) In the event that this Agreement is terminated prior to the
Effective Time pursuant to Section 9.1(b)(iii) or 9.1(d) or as a consequence of
the failure or non-waiver of any of the conditions set forth in Section 8.3(a),
8.3(c) or 8.3(e), then the Company shall pay Purchaser an amount equal to the
Purchaser Termination Expenses. In the event that this Agreement is terminated
prior to the Effective Time (i) pursuant to Section 9.1(c), (ii) as a
consequence of the failure or non-waiver of any of the conditions set forth in
Section 8.2(a), or (iii) pursuant to Section 9.1(b)(iv) and such termination
right is available under such Section 9.1(b)(iv) solely because either (A) DLJ
has declared a Holdings Material Adverse Effect (as such term is defined in the
Equity Commitment but excluding from such definition clause (ii) thereof) or (B)
CSFB has declared that there has been a material adverse change in the business,
assets, liabilities, operations, condition (financial or otherwise), operating
results or prospects of Parent and its Subsidiaries, taken as a whole, then
Purchaser shall pay the Company an amount equal to the Company Termination
Expenses.
ARTICLE X
GENERAL PROVISIONS
10.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
10.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Purchaser or Merger Sub: If to the Company:
c/o UTI Corporation MedSource Technologies, Inc.
200 West 7th Avenue 110 Cheshire Lane, Suite 100
Collegeville, PA 19426-0992 Minneapolis, MN 55305
Facsimile: (610) 489-1150 Facsimile: (952) 807-1235
Attention: Ron Sparks, CEO Attention: Rich Effress, CEO
With a copy to: With a copy to:
Hogan & Hartson L.L.P. Jenkens & Gilchrist Parker Chapin LLP
One Tabor Center, Suite 1500 The Chrysler Building
1200 Seventeenth Street 405 Lexington Avenue
Denver, CO 80202 New York, NY 10174
Facsimile: (303) 899-7333 Facsimile: (212) 704-6288
Attention: Christopher J. Walsh Attention: Edward R. Mandell
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
10.3 Amendment. Any provision of this Agreement may be amended to the
extent permitted by Section 251(d) of the DGCL or waived prior to the Effective
36
Time, if, and only if, the amendment or waiver is in writing and signed, in the
case of an amendment, by the Company, Purchaser and Merger Sub, or in the case
of a waiver, by the party against whom the waiver is to be effective.
10.4 Extension; Waiver. At any time prior to the Effective Time, any
party hereto may with respect to any other party hereto (a) extend the time for
the performance of any of the obligations or other acts of such party and (b)
waive any inaccuracies in the representations and warranties of such party
contained herein or in any document delivered pursuant hereto. No such extension
or waiver shall be deemed or construed as a continuing extension or waiver on
any occasion other than the one on which such extension or waiver was granted or
as an extension or waiver with respect to any provision of this Agreement not
expressly identified in such extension or waiver on the same or any other
occasion. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law.
10.5 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 7.6, nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.6 Entire Agreement. This Agreement, the Confidentiality Agreement,
the Company Disclosure Letter, the Purchaser Disclosure Letter and the Exhibits
hereto constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto.
10.7 Fees and Expenses. Except as otherwise provided herein, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware without regard to its rules of
conflict of laws. Each of the Company, Purchaser and Merger Sub hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the Court of Chancery of the State of Delaware, County of New Castle or, if
under applicable Law, exclusive jurisdiction is vested in federal courts, then
of the United States of America located in the District of Delaware
(collectively, the "Delaware Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the laying of venue of any such litigation in the Delaware
Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in an inconvenient forum. Any party
hereto may make service on another party by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided for
the giving of notices in Section 10.2. Nothing in this Section, however, shall
affect the right of any party to serve legal process in any other manner
permitted by law.
10.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.10 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
10.11 Interpretation. In this Agreement (including Exhibit A to this
Agreement, the Company Disclosure Letter and the Purchaser Disclosure Letter),
unless the context otherwise requires, words describing the singular number
shall include the plural and vice versa, and words denoting any gender shall
include all genders and words denoting natural persons shall include
37
corporations and partnerships and vice versa. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." As used in this Agreement, (a) the
words "Subsidiary," "affiliate" and "associate" shall have the meanings ascribed
thereto in Rule 12b-2 under the Exchange Act, (b) "Person" means an individual,
corporation, limited liability company, partnership, association, trust or any
other entity or organization, including any Governmental Entity, (c) "business
day" means any day other than Saturday, Sunday or any other day on which banks
in the City of New York are required or permitted to close, and (d) "knowledge"
means the actual knowledge, after due inquiry, of any executive officer of the
Company or Purchaser, as the case may be.
10.12 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Delaware Court, this
being in addition to any other remedy to which they are entitled at law or in
equity. The prevailing party in any judicial action shall be entitled to receive
from the other party reimbursement for the prevailing party's reasonable
attorneys' fees and disbursements, and court costs.
10.14 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
10.15 Obligation of Purchaser. Whenever this Agreement requires Merger
Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Purchaser to cause Merger Sub to take such action.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
MEDICAL DEVICE MANUFACTURING, INC.
By: /s/ Ron Sparks
-------------------------------------
Name: Ron Sparks
-------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
PINE MERGER CORPORATION
By: /s/ Ron Sparks
-------------------------------------
Name: Ron Sparks
-------------------------------------
Title: President
-------------------------------------
MEDSOURCE TECHNOLOGIES, INC.
By: /s/ Richard J. Effress
-------------------------------------
Name: Richard J. Effress
-------------------------------------
Title: Chairman and CEO
-------------------------------------
39