AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 30, 2000
AMONG
KONINKLIJKE NUMICO N.V.,
a company incorporated under the laws of the Netherlands,
NUTRICIA INVESTMENT CORP.,
a Florida corporation,
AND
REXALL SUNDOWN, INC.
a Florida corporation
TABLE OF CONTENTS
Page
ARTICLE I.
THE TENDER OFFER.........................................................................................1
1.1 The Offer.......................................................................................1
1.2 SEC Filings.....................................................................................3
1.3 Company Action..................................................................................4
1.4 Composition of the Company Board................................................................4
ARTICLE II.
THE MERGER...............................................................................................6
2.1 The Merger......................................................................................6
2.2 Closing.........................................................................................6
2.3 Effective Time..................................................................................6
2.4 Effect of the Merger............................................................................6
2.5 Articles of Incorporation.......................................................................6
2.6 Bylaws..........................................................................................6
2.7 Officers and Directors of Surviving Corporation.................................................6
2.8 Effect on Capital Stock.........................................................................7
2.9 Surrender and Payment...........................................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTIES..........................................................................10
3.1 Representations and Warranties of the Company..................................................10
3.2 Representations and Warranties of Parent.......................................................24
3.3 Representations and Warranties of Parent and Merger Sub........................................27
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................28
4.1 Covenants of the Company.......................................................................28
4.2 Covenants of Parent and Merger Sub.............................................................31
4.3 Advice of Changes; Government Filings..........................................................31
ARTICLE V.
ADDITIONAL AGREEMENTS...................................................................................32
5.1 Approval by the Company's Shareholders.........................................................32
5.2 Access to Information..........................................................................33
5.3 Approvals and Consents; Cooperation............................................................33
5.4 Acquisition Proposals..........................................................................34
5.5 Employee Benefits..............................................................................35
5.6 Fees and Expenses..............................................................................35
5.7 Indemnification; Directors' and Officers' Insurance............................................35
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5.8 Public Announcements...........................................................................36
5.9 Takeover Statutes..............................................................................36
5.10 Third Party Standstill Agreements; Tortious Interference.......................................36
5.11 Company Option Plans...........................................................................36
ARTICLE VI.
CONDITIONS PRECEDENT....................................................................................37
6.1 Conditions to Each Party's Obligation to Effect the Merger.....................................37
ARTICLE VII.
TERMINATION AND AMENDMENT...............................................................................38
7.1 Termination....................................................................................38
7.2 Effect of Termination..........................................................................40
7.3 Amendment......................................................................................40
7.4 Extension; Waiver..............................................................................41
ARTICLE VIII.
GENERAL PROVISIONS......................................................................................41
8.1 Non-Survival of Representations and Warranties.................................................41
8.2 Notices........................................................................................41
8.3 Interpretation.................................................................................42
8.4 Counterparts...................................................................................42
8.5 Entire Agreement; No Third Party Beneficiaries.................................................42
8.6 Governing Law; Jurisdiction; Waiver of Jury Trial..............................................43
8.7 Severability...................................................................................43
8.8 Assignment.....................................................................................44
8.9 Enforcement....................................................................................44
8.10 Definitions....................................................................................44
8.11 Performance by Merger Sub......................................................................46
8.12 Disclosure Schedules...........................................................................46
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GLOSSARY OF DEFINED TERMS
LOCATION OF
DEFINITION DEFINED TERM
- ---------- ------------
Acquisition Proposal.................................................................................Section 5.4(a)
Action......................................................................................................Annex A
Affiliate...........................................................................................Section 8.10(a)
Agreement..................................................................................................Preamble
Articles of Merger......................................................................................Section 2.3
Benefits Letter.........................................................................................Section 5.5
Board ..............................................................................................Section 8.10(b)
Business Day........................................................................................Section 8.10(c)
Certificates.........................................................................................Section 2.9(b)
Closing.................................................................................................Section 2.2
Closing Date............................................................................................Section 2.2
Code................................................................................................Section 8.10(d)
Company....................................................................................................Preamble
Company Assets.......................................................................................Section 3.1(s)
Company Benefit Plans.............................................................................Section 3.1(1)(i)
Company Board..............................................................................................Recitals
Company Common Stock.................................................................................Section 1.1(a)
Company Disclosure Schedule.............................................................................Section 3.1
Company Equity Plans................................................................................Section 8.10(e)
Company Material Contracts..........................................................................Section 8.10(f)
Company Permits......................................................................................Section 3.1(f)
Company Products.....................................................................................Section 3.1(p)
Company SEC Reports...............................................................................Section 3.1(d)(i)
Company Stock Option...................................................................................Section 5.11
Company Stock Options Plans.........................................................................Section 8.10(e)
Company Stock Purchase Plans........................................................................Section 8.10(e)
Company Shareholders Meeting.........................................................................Section 5.1(a)
Company Voting Debt.............................................................................Section 3.1(b)(iii)
Confidentiality Agreement...............................................................................Section 5.2
CPSC.................................................................................................Section 3.1(v)
Dissenting Shareholders..............................................................................Section 2.9(h)
Effective Time..........................................................................................Section 2.3
ERISA.............................................................................................Section 3.1(1)(i)
ERISA Affiliate..................................................................................Section 3.1(1)(iv)
Environmental Law....................................................................................Section 3.1(r)
Exchange Act.........................................................................................Section 1.1(b)
Exchange Agent.......................................................................................Section 2.9(a)
Expenses................................................................................................Section 5.6
FBCA.......................................................................................................Recitals
FDA..................................................................................................Section 3.1(v)
iii
FTC..................................................................................................Section 3.1(v)
GAAP..............................................................................................Section 3.1(d)(i)
Governmental Entity.............................................................................Section 3.1(c)(iii)
Hazardous Substance..................................................................................Section 3.1(r)
HSR Act.....................................................................................................Annex A
Indemnified Party.......................................................................................Section 5.7
Independent Directors................................................................................Section 1.4(c)
Intellectual Property...............................................................................Section 8.10(g)
Liens............................................................................................Section 3.1(b)(ii)
Material Adverse Effect.............................................................................Section 8.10(h)
Maximum Premium.........................................................................................Section 5.7
Merger.....................................................................................................Recitals
Merger Consideration.................................................................................Section 2.8(c)
Merger Fees..........................................................................................Section 3.1(n)
Merger Sub.................................................................................................Preamble
Minimum Condition....................................................................................Section 1.1(b)
Multiemployer Plan................................................................................Section 3.1(1)(i)
Nasdaq..........................................................................................Section 3.1(c)(iii)
Offer...............................................................................................Section 1.1.(a)
Offer Conditions.....................................................................................Section 1.1(a)
Offer Documents......................................................................................Section 1.2(a)
Organizational Documents............................................................................Section 8.10(i)
Outside Date.........................................................................................Section 7.1(b)
Outstanding Options ..............................................................................Section 3.1(b)(i)
Parent.....................................................................................................Preamble
Parent Representatives..................................................................................Section 5.2
Payment Fund.........................................................................................Section 2.9(a)
Person..............................................................................................Section 8.10(j)
Price Per Share......................................................................................Section 1.1(a)
Proxy Statement...................................................................................Section 3.1(e)(i)
Required Company Votes...............................................................................Section 3.1(j)
Required Regulatory Approvals........................................................................Section 6.1(c)
Schedule 14D-9.......................................................................................Section 1.2(b)
Schedule TO..........................................................................................Section 1.2(a)
SEC..................................................................................................Section 1.1(b)
Securities Act....................................................................................Section 3.1(d)(i)
Shareholder Agreement......................................................................................Recitals
Subsidiary..........................................................................................Section 8.10(k)
Superior Proposal....................................................................................Section 5.4(c)
Surviving Corporation...................................................................................Section 2.1
Takeover Statute.....................................................................................Section 3.1(q)
Tax..............................................................................................Section 8.10(l)(i)
Tax Return......................................................................................Section 8.10(l)(ii)
Taxable..........................................................................................Section 8.10(l)(i)
Taxes............................................................................................Section 8.10(l)(i)
iv
Top 20 List..........................................................................................Section 3.1(u)
USDA.................................................................................................Section 3.1(v)
Violation........................................................................................Section 3.1(c)(ii)
v
This AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2000 (this
"Agreement"), by and among KONINKLIJKE NUMICO N.V., a company incorporated under
the laws of the Netherlands ("Parent"), NUTRICIA INVESTMENT CORP., a Florida
corporation and an indirect wholly owned Subsidiary of Parent ("Merger Sub"),
and REXALL SUNDOWN, INC., a Florida corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have each approved the Offer (as defined herein) and the
Merger (as defined herein) and have determined that it is in the best
interests of their respective companies and shareholders for Parent to
acquire the Company upon the terms and subject to the conditions set forth
herein;
WHEREAS, in order to complete such acquisition, the respective Boards
of Directors of Parent, Merger Sub and the Company have approved the merger of
Merger Sub with and into the Company (the "Merger"), upon the terms and subject
to the conditions of this Agreement and in accordance with the Florida Business
Corporation Act (the "FBCA"), whereby each issued and outstanding share of
Company Common Stock (as defined herein) not owned directly or indirectly by
Parent or the Company will be converted into the right to receive the price per
share in cash actually paid in the Offer;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has unanimously approved this Agreement, the Shareholder Agreement (as defined
below), the Offer and the Merger, has determined that the Offer and the Merger
are fair to, and in the best interests of, the Company's shareholders, and is
recommending that the Company's shareholders accept the Offer, tender their
shares of Company Common Stock thereunder and adopt and approve the Merger and
this Agreement;
WHEREAS, Parent, Merger Sub, the Company and the shareholders named
therein have entered into a Shareholder Agreement dated as of April 30, 2000
(the "Shareholder Agreement");
WHEREAS, simultaneously with the execution and delivery of this
Agreement certain executive officers of the Company are entering into
employment agreements with the Company, which will become effective upon the
Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
THE TENDER OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VII hereof and none of the conditions set
forth in Annex A hereto (the "Offer Conditions") shall have occurred or be
existing, within seven (7) Business Days of the date hereof, Merger Sub will
commence a tender offer (the "Offer") for all of the outstanding shares of
common stock, par value $0.01 per share, of the Company (the "Company Common
Stock") at a price per share of the Company Common Stock of U.S. $24.00 net to
the seller in cash (such price, or any higher price paid in the Offer, the
"Price Per Share") upon the terms and conditions set forth in this Agreement,
including Annex A hereto.
(b) Provided that this Agreement shall not have been
terminated in accordance with Article VII hereof, the obligation of Merger Sub
to accept for payment, purchase and pay for any Company Common Stock tendered
pursuant to the Offer shall be subject only to the satisfaction or waiver of the
Offer Conditions including the condition that at least that number of shares of
Company Common Stock equivalent to a majority of the total issued and
outstanding shares of Company Common Stock on a fully diluted basis on the date
such shares are purchased pursuant to the Offer shall have been validly tendered
and not withdrawn prior to the expiration of the Offer (the "Minimum
Condition"). Merger Sub will not, without the prior written consent of the
Company (such consent to be authorized by the Company Board): (i) waive the
Minimum Condition, (ii) decrease the amount or change the form of consideration
payable in the Offer, (iii) decrease the number of shares of Company Common
Stock sought in the Offer, (iv) impose additional conditions to the Offer, (v)
change any Offer Condition or amend any other term of the Offer if any such
change or amendment would be materially adverse to the holders of the Company
Common Stock (other than Parent or Merger Sub) or (vi) except as provided below,
extend the Offer if all of the Offer Conditions have been satisfied. Subject to
the terms and conditions hereof, the Offer shall remain open until midnight, New
York City time, on the date that is twenty (20) Business Days after the Offer is
commenced (within the meaning of Rule 14d-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")); provided, however, that
without the consent of the Company Board, Merger Sub may (w) extend the Offer,
if at the scheduled expiration date of the Offer any of the Offer Conditions
shall not have been satisfied or waived for one (1) or more periods (none of
which shall exceed ten (10) Business Days) until such time as such conditions
are satisfied or waived, (x) extend the Offer for such period as may be required
by any rule, regulation, interpretation or position of the Securities and
Exchange Commission ("SEC") or the staff thereof applicable to the Offer, (y)
extend the Offer for one (1) or more periods (each such period to be for not
more than five (5) Business Days and such extensions to be for an aggregate
period of not more than twenty (20) Business Days beyond the latest expiration
date that would otherwise be permitted under clause (w) or (x) of this sentence)
if on such expiration date the Offer Conditions shall have been satisfied or
waived but there shall not have been tendered that number of shares of Company
Common Stock which would equal more than 80% of the outstanding shares of
Company Common Stock or (z) extend the Offer for any reason for one (1) or more
periods, each period to be for not more than ten (10) Business Days and such
extensions to be for an aggregate period of not more than
2
twenty (20) Business Days beyond the latest expiration date that would otherwise
be permitted under clause (w) or (x) of this sentence. Merger Sub agrees that if
all of the Offer Conditions are not satisfied on any expiration date of the
Offer, then, Merger Sub shall extend the Offer for periods of not more than ten
(10) Business Days each if requested to do so by the Company; provided that (A)
the Company shall be entitled to make only two (2) of such requests; and (B)
Merger Sub shall not be required to extend the Offer beyond the Outside Date or,
if earlier, the date of termination of this Agreement in accordance with the
terms hereof. On the terms of the Offer and subject to the Offer Conditions and
this Agreement, Merger Sub shall pay for all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer that Merger Sub becomes
obligated to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer. Merger Sub may, at its election, provide for a
"subsequent offering period" (as contemplated by and in accordance with Rule
14d-11 promulgated under the Exchange Act).
1.2 SEC FILINGS.
(a) As soon as reasonably practicable on the date of
commencement of the Offer, Parent and Merger Sub shall file with the SEC a
Tender Offer Statement on Schedule TO with respect to the Offer (as supplemented
or amended from time to time, the "Schedule TO") to provide for the purchase of
the issued and outstanding shares of Company Common Stock in accordance with the
terms hereof. Parent and Merger Sub agree, as to the Schedule TO, the Offer to
Purchase and related Letter of Transmittal (which documents, as supplemented or
amended from time to time, together constitute the "Offer Documents") will
comply as to form and content in all material respects with the applicable
provisions of the federal securities laws. The Company and its counsel shall be
given a reasonable opportunity to review and comment upon the Offer Documents
and any amendment or supplement thereto prior to the filing thereof with the
SEC, and Parent and Merger Sub shall consider such comments in good faith.
Parent and Merger Sub agree to provide to the Company and its counsel any
comments which Parent, Merger Sub or their counsel may receive from the Staff of
the SEC promptly after receipt thereof, and any proposed responses thereto, with
respect to the Offer Documents and any amendment or supplement thereto. Parent,
Merger Sub and the Company agree to promptly provide corrections to any
information provided by any of them for use in the Offer Documents (to the party
responsible for filing such documents) which shall have become false or
misleading in any material respect, and Parent and Merger Sub further agree to
take all steps necessary to cause the Schedule TO as so corrected to be filed
with the SEC and to disseminate any revised Offer Documents to the Company's
shareholders, in each case as and to the extent required by the applicable
provisions of the federal securities laws.
(b) The Company Board shall recommend acceptance of the Offer
to its shareholders in a Solicitation/Recommendation Statement on Schedule 14D-9
(as supplemented or amended from time to time, the "Schedule 14D-9"), which the
Company shall file with the SEC upon commencement of the Offer and which will
comply as to form and content in all material respects with the applicable
provisions of the federal securities laws; provided, however, that the Company
Board may amend, modify or withdraw its recommendation, or make no
recommendation, if the Company Board determines, following consultation with the
Company's outside legal counsel, that such action is required in order to comply
with applicable law. The Company will cooperate with Parent and Merger Sub in
mailing or otherwise disseminating the Schedule 14D-9 with the
3
appropriate Offer Documents to the shareholders of the Company. Parent and its
counsel shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-9 and any amendment or supplement thereto prior to the filing
thereof with the SEC, and the Company shall consider any such comments in good
faith. The Company agrees to provide to Parent and Merger Sub and their counsel
any comments which the Company or its counsel may receive from the Staff of the
SEC promptly after receipt thereof, and any proposed responses thereto, with
respect to the Schedule 14D-9 and any amendment or supplement thereto. The
Company, Parent and Merger Sub agree to correct promptly any information
provided by any of them for use in the Schedule 14D-9 which shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause such Schedule 14D-9 as so corrected to be
filed with the SEC and disseminated to the Company's shareholders, in each case
as and to the extent required by the applicable provisions of the federal
securities laws. Parent, Merger Sub and the Company each hereby agree to provide
promptly such information necessary to the preparation of the exhibits and
schedules to the Schedule 14D-9 and the Offer Documents which the respective
party responsible therefor shall reasonably request. The Company hereby consents
to the inclusion in the Offer Documents of the recommendations and approvals
referred to in this Section 1.2.
1.3 COMPANY ACTION.
(a) The Company hereby represents and warrants to Parent and
Merger Sub that, the Company Board (at a meeting duly called and held) has
unanimously (i) determined that each of this Agreement, the Offer and the Merger
is fair to, and in the best interests of, the Company and the holders of Company
Common Stock; (ii) approved this Agreement, the Offer, the Merger and the
Shareholder Agreement, and the transactions contemplated hereby, in accordance
with the provisions FBCA; and (iii) recommended the acceptance of the Offer, the
tender of the Company Common Stock in the Offer and the approval and adoption of
this Agreement and the Merger by the shareholders of the Company. Such approval
by the Company Board constitutes approval of this Agreement, the Offer, the
Merger and the Shareholder Agreement for purposes of Sections 607.0901 and
607.0902 of the FBCA.
(b) In connection with the Offer, the Company shall, not later
than two (2) Business Days after the date of this Agreement, furnish Merger Sub
with such information (including a list of the record holders of the Company
Common Stock and their addresses, as well as mailing labels containing the names
and addresses of all record holders of Company Common Stock, lists of
non-objecting beneficial owners of Company Common Stock and lists of security
positions of Company Common Stock held in stock depositories, in each case as of
the most recent practicable date), and shall thereafter render such assistance
as Parent, Merger Sub or their agents may reasonably request in communicating
the Offer to the record and beneficial holders of Company Common Stock. Subject
to the requirements of applicable law and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Offer and the Merger, Parent and Merger Sub shall (i) hold in
confidence the information contained in any of such labels and lists; (ii) use
such information only in connection with the Offer and the Merger; and (iii) if
this Agreement is terminated, shall, upon request, deliver to the Company or
destroy all copies of such information then in their possession.
4
1.4 COMPOSITION OF THE COMPANY BOARD.
(a) Promptly upon the acceptance for payment of, and payment
by Merger Sub in accordance with the Offer for, not less than a majority of the
outstanding shares of Company Common Stock pursuant to the Offer, Parent and
Merger Sub shall be entitled to designate such number of members of the Company
Board, rounded up to the next whole number, equal to that number of directors
which equals the product of the total number of directors on the Company Board
(giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that such number of shares of Company Common Stock owned in the
aggregate by Merger Sub or Parent, upon such acceptance for payment, bears to
the number of shares of Company Common Stock outstanding. Upon the written
request of Parent or Merger Sub, the Company shall, on the date of such request,
(i) either increase the size of the Company Board or use its reasonable efforts
to secure the resignations of such number of its incumbent directors as is
necessary to enable Parent's and Merger Sub's designees to be so elected or
appointed to the Company Board (including by nomination and approval by the
current Company Board) and (ii) cause Parent's and Merger Sub's designees to be
so elected or appointed, in each case as may be necessary to comply with the
foregoing provisions of this Section 1.4(a). The provisions of this Section
1.4(a) are in addition to and shall not limit any rights which Parent or Merger
Sub may have as a holder or beneficial owner of Company Common Stock as a matter
of applicable law with respect to the election of directors or otherwise.
(b) The Company's obligation to cause designees of Parent and
Merger Sub to be elected or appointed to the Company Board shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.4, and shall
include in the Schedule 14D-9 such information with respect to Parent or Merger
Sub and their designees as is required under Section 14(f) and Rule 14f-1.
Parent and Merger Sub will supply to the Company in writing and be solely
responsible for any information with respect to any of them and their designees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1 and
any other applicable rules and regulations.
(c) After the time that Merger Sub's designees constitute at
least a majority of the Company Board and until the Effective Time, the Company
Board shall always have at least two (2) members (the "Independent Directors")
who are neither officers of Parent nor designees, shareholders or affiliates of
Parent or Parent's affiliates. During such period, any (i) amendment or
termination of this Agreement, (ii) extension of time for the performance or
waiver of the obligations or other acts of Parent or Merger Sub or waiver of the
Company's rights hereunder or (iii) action or inaction by the Company with
respect to this Agreement and the transactions contemplated hereby which
adversely affects the interests of the shareholders of the Company, including
the consummation of the Merger, shall require the approval of a majority of the
Independent Directors in addition to any required approval thereof by the full
Company Board. If the number of Independent Directors shall be reduced below two
(2) for any reason whatsoever, the remaining Independent Director shall be
entitled to designate a person to fill the vacancy, which designee shall not be
a current or former officer or affiliate of Parent or any of Parent's
affiliates, or, if no Independent Directors then remain, the other directors
shall designate two (2) persons to fill such
5
vacancies who shall not be current or former officers or affiliates of Parent or
any of Parent's affiliates, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. The Company Board shall not delegate
any matter set forth in this Section 1.4(c) to any committee of the Company
Board.
ARTICLE II.
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the FBCA, Merger Sub shall be merged
with and into the Company at the Effective Time. Following the Merger, the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation") in
accordance with the FBCA.
2.2 CLOSING. The closing of the Merger (the "Closing") will take place
as soon as practicable (but not later than the third Business Day) after
satisfaction or waiver (as permitted by this Agreement and applicable law) of
the conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article VI hereof (the "Closing Date"),
unless another time or date is agreed to in writing by the parties hereto. The
Closing shall be held at the offices of Vedder, Price, Kaufman & Kammholz, 222
North LaSalle Street, Suite 2600, Chicago, Illinois 60601, unless another place
is agreed to in writing by the parties hereto.
2.3 EFFECTIVE TIME. Upon the Closing, the parties shall file with the
Department of State of the State of Florida articles of merger (the "Articles of
Merger") executed in accordance with the relevant provisions of the FBCA and
shall make all other filings, recordings or publications required under the FBCA
in connection with the Merger. The Merger shall become effective at such time as
the Articles of Merger are duly filed with the Department of State of the State
of Florida, or at such other time as the parties may agree and specify in the
Articles of Merger (the time the Merger becomes effective being the "Effective
Time").
2.4 EFFECT OF THE MERGER. At and after the Effective Time, the Merger
will have the effects specified in the FBCA.
2.5 ARTICLES OF INCORPORATION. At the Effective Time and without any
further action on the part of the Company and Merger Sub, the articles of
incorporation of the Company shall be amended to read in their entirety as the
articles of incorporation of Merger Sub in effect immediately prior to the
Effective Time until thereafter changed or amended as provided therein or by
applicable law, provided that such articles of incorporation shall be further
amended to reflect Rexall Sundown, Inc. as the name of the Surviving
Corporation.
2.6 BYLAWS. The bylaws of Merger Sub as in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by
applicable law.
6
2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of
Merger Sub and/or any individuals designated by Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
until the earlier of their resignation or removal or otherwise ceasing to be a
director or until their respective successors are duly elected and qualified, as
the case may be. The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, until the
earlier of their resignation or removal or otherwise ceasing to be an officer or
until their respective successors are duly elected and qualified, as the case
may be.
2.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company or
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
Each share of Company Common Stock that is owned by the Company and each share
of Company Common Stock that is owned by Parent or Merger Sub shall
automatically be canceled and shall cease to exist, and no Merger Consideration
shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
2.9(h), at the Effective Time each issued and outstanding share of Company
Common Stock (other than shares to be canceled in accordance with Section
2.8(b)) shall be converted into the right to receive the Price Per Share in
cash, without interest (the "Merger Consideration"). Subject to Section 2.9(h),
as of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration upon surrender of such certificate in
accordance with Section 2.9.
2.9 SURRENDER AND PAYMENT.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of shares of Company Common Stock in connection with the
Merger (the "Exchange Agent") to receive the Merger Consideration to which
holders of shares of Company Common Stock shall become entitled pursuant to
Section 2.8. Prior to the filing of the Articles of Merger with the Department
of State of the State of Florida, Parent or Merger Sub shall deposit with the
Exchange Agent cash in an aggregate amount equal to the product of (i) the
number of shares of Company Common Stock outstanding (and not to be canceled
pursuant to Section 2.8(b)) immediately prior to the Effective Time, multiplied
by (ii) the Merger Consideration (the "Payment Fund"). The Exchange Agent shall
cause the Payment Fund to be (A) held for the benefit of the holders of Company
Common Stock
7
and (B) promptly applied to making the payments provided for in Section 2.8(c).
The Payment Fund shall not be used for any purpose that is not provided for
herein.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock, other than shares to be canceled in accordance with
Section 2.8(b), (i) a Letter of Transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such Letter of Transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the Exchange Agent shall pay the holder of such Certificate the Merger
Consideration in respect of such Certificate, less any required withholding
taxes, and the Certificate so surrendered shall forthwith be canceled. If any
portion of the Merger Consideration is to be paid to a Person other than the
registered holder of the shares represented by the Certificate or Certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
shares or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable. Until surrendered as contemplated by this Section
2.9, each Certificate (other than Certificates representing Dissenting Shares
(as defined below) or shares of Company Common Stock to be canceled pursuant to
Section 2.8(b)) shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration upon such
surrender.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by law.
(d) UNCLAIMED FUNDS. Any portion of the Payment Fund made
available to the Exchange Agent pursuant to Section 2.9(a) that remains
unclaimed by holders of the Certificates for six (6) months after the Effective
Time shall be delivered to the Surviving Corporation or a United States parent
thereof, upon demand, and any holders of Certificates who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their claim for Merger Consideration. Any portion of the Merger Consideration
made available to the Exchange Agent to pay for Company Common Stock for which
dissenters' rights have been perfected shall be returned to Parent, upon demand.
8
(e) NO LIABILITY. None of Parent, Merger Sub, the Company or
the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five (5) years after the Effective Time (or immediately
prior to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any public
official), any such shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) INVESTMENT OF FUNDS. The Payment Fund shall be invested by
the Exchange Agent in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investor Services or Standard & Poor's Corporation, respectively, in each case
with maturities not exceeding seven (7) days. All earnings thereon shall inure
to the benefit of Parent or Merger Sub.
(g) LOST CERTIFICATES. In the event that any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the granting of an indemnity reasonably satisfactory
to Parent against any claim that may be made against it, the Surviving
Corporation or the Exchange Agent, with respect to such Certificate, will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration with respect to such Certificate, to which such Person is entitled
pursuant hereto.
(h) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, if required under the FBCA, but only to the extent
required thereby, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and which are held by shareholders
("Dissenting Shareholders") who (i) have not voted in favor of or consented to
the Merger, (ii) in the manner provided in Section 607.1320 of the FBCA, shall
have delivered a written notice of intent to demand payment for such shares of
Company Common Stock if the Merger is effectuated in the time and manner
provided in FBCA and (iii) shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
FBCA shall not be converted into the right to receive the Merger Consideration,
but shall, in lieu thereof, be entitled to receive the consideration as shall be
determined pursuant to Sections 607.1301 through 607.1320 of the FBCA; provided,
however, that any such holder who shall have failed to perfect or shall have
effectively withdrawn or lost his, her or its right to appraisal and payment
under the FBCA, shall thereupon be deemed to have had such person's shares of
Company Common Stock converted, at the Effective Time, into the right to receive
the Merger Consideration set forth herein, without any interest or dividends
thereon. Notwithstanding anything to the contrary contained in this Section
2.9(h), if (A) the Merger is rescinded or abandoned or (B) the shareholders of
the Company revoke the authority to effect the Merger, then the right of any
Dissenting Shareholder to be paid the fair value of such Dissenting
Shareholder's Shares pursuant to Section 607.1302 of the FBCA shall cease as
provided in the FBCA. The Company will give Parent prompt notice of any demands
received by the Company for appraisals of Company Common Stock held by
Dissenting
9
Shareholders. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
specifically set forth in the Company Disclosure Schedule delivered by the
Company to Parent on the date hereof (the "Company Disclosure Schedule") or as
disclosed in the Company SEC Reports (as defined below) filed with the SEC and
publicly available prior to the date hereof, the Company represents and warrants
to Parent and Merger Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and
its Subsidiaries has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and its Subsidiaries is duly qualified and in good standing or otherwise
authorized or licensed to do business in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary, except for any such failure to be so qualified,
authorized or licensed or in good standing when taken together with all other
such failures, could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or materially impair or
delay the ability of the Company to consummate the transactions contemplated
hereby. The copies of the Organizational Documents of the Company and of each
Subsidiary which were previously furnished or made available to Parent are, in
each case, true, complete and correct copies of such documents as in effect on
the date of this Agreement. Each of the Company and its Subsidiaries has the
requisite corporate power and corporate authority to own, lease and operate its
properties and to carry on its respective businesses as they are now being
conducted. The Company's Articles of Incorporation and By-laws and the
comparable governing instruments of each of its Subsidiaries are in full force
and effect. Neither the Company nor any of its Subsidiaries is in violation of
any provisions of its Organizational Documents in any material respect. Section
3.1(a) of the Company Disclosure Schedule contains a true and accurate list of
all the Subsidiaries of the Company. Except for its interests in its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock, membership interest, partnership interest, joint venture interest or
other equity interest in any Person.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Company
consists of 200,000,000 shares of Company Common Stock, of which, as of
the date hereof, 63,971,522 shares have been issued and are outstanding
and 19,816,271 shares have been reserved for issuance upon exercise of
outstanding options, warrants or other rights to acquire capital stock
from the Company. The Company has authorized 5,000,000 shares of
preferred stock, none of which is issued or outstanding. Except as
provided in this Section 3.1(b), there are no shares of capital stock
or other equity securities of the Company issued, reserved for issuance
or outstanding. All issued and outstanding shares of the capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock is entitled to preemptive
rights. As of the date of this Agreement, there are no outstanding
10
options, warrants, convertible or exchangeable securities or other
rights to acquire capital stock from the Company other than options
representing in the aggregate the right to purchase not more than
13,245,023 shares of Company Common Stock under the Company Stock
Option Plans (the "Outstanding Options"), and options or rights to
purchase shares of Company Common Stock under the Company Stock
Purchase Plans. There are 11,879,215 Outstanding Options which have an
exercise price of less than the Price Per Share which options have an
aggregate weighted average exercise price of $12.40 per share of
Company Common Stock.
(ii) All of the issued and outstanding shares of
capital stock of the Company's Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and are owned solely by
the Company, free and clear of any liens, pledges, security interests,
claims, encumbrances, restrictions (including any restriction on the
right to vote or sell such shares, except as may be imposed as a matter
of law), preemptive rights or any other claims of any third party
("Liens").
(iii) As of the date of this Agreement, no bonds,
debentures, notes or other indebtedness of the Company having the right
to vote on any matters on which shareholders may vote ("Company Voting
Debt") are issued or outstanding.
(iv) Except as otherwise set forth in this Section
3.1(b), as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or its Subsidiaries is
a party or by which any of them is bound obligating (and no contract,
agreement, understanding, arrangement or obligation, whether or not
contingent, providing for) the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company or such Subsidiary or obligating the Company or such Subsidiary
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. Except as set forth on Section 3.1(b)(iv) of the Company
Disclosure Schedule, as of the date of this Agreement, there are no
outstanding obligations, arrangements, agreements or commitments of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or such Subsidiary.
Immediately prior to the consummation of the Offer and Merger, no
shares of Company Common Stock or other securities of the Company will
be issuable and, immediately after the Effective Time, the Surviving
Corporation will have no obligation to issue, transfer or sell any
shares of common stock of the Surviving Corporation pursuant to any
compensation and benefit plan of the Company or any of its
Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(i) The Company has all requisite corporate power and
corporate authority to enter into this Agreement and, subject to the
adoption of this Agreement and approval of the Merger by the requisite
vote of the holders of Company Common Stock, to consummate the
transactions contemplated hereby. The execution and delivery of this
11
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of the Company, subject in the case of the consummation of
the Merger to the adoption of this Agreement by the requisite vote of
the shareholders of the Company, and no other corporate proceedings are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due execution and delivery
of this Agreement by Parent and Merger Sub, constitutes a valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally and by general equity
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(ii) The execution, delivery and performance of this
Agreement do not or will not, as the case may be, and the consummation
of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of
consent, termination, amendment, cancellation or acceleration of any
obligation or the loss of a material benefit under, or the creation of
a Lien on any assets (any such conflict, violation, default, right of
consent, termination, amendment, cancellation or acceleration of any
obligations or creation, a "Violation"), or result in any adverse
change in the rights or obligations of the Company pursuant to: (A) any
provision of the Organizational Documents of the Company or any of its
Subsidiaries or (B) except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent, impair or materially delay the consummation of any
of the transactions contemplated hereby and, subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, the
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease, compensation or benefit plan (or any
grant or award made pursuant thereto) or other agreement, obligation,
instrument, contract, permit, concession, franchise, license, judgment,
order, writ, injunction, award, decree, statute, law, ordinance, rule
or regulation applicable to the Company, the Company's Subsidiaries or
any of their respective properties or assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice,
report, or other filing with, any supranational, national, state,
municipal or local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority,
whether U.S. or foreign (a "Governmental Entity"), is required by or
with respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby,
except for (x) those required under or in relation to (A) the Exchange
Act, (B) the FBCA with respect to the filing and recordation of the
Articles of Merger and any other appropriate merger or other documents,
(C) the rules and regulations of The Nasdaq National Market System
("Nasdaq"), and (D) the filing of a pre-merger notification
12
and report form by the Company under the HSR Act, and the rules and
regulations thereunder and (y) such other consents, registrations,
permits, approvals, orders, authorizations, registrations,
declarations, notices, reports and other filings the failure of which
to make or obtain could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent, impair or materially delay the consummation of the
transactions contemplated hereby.
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Since August 31, 1998, the Company has timely
filed all required reports, schedules, forms, statements and other
documents required to be filed by it with the SEC (collectively,
including all exhibits thereto, the "Company SEC Reports"). The Company
SEC Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing), did not, and any Company SEC Reports filed with
the SEC subsequent to the date hereof and prior to the purchase of
shares pursuant to the Offer will not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
(or incorporated by reference) therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Each of the financial statements (including
the related notes) included or to be included in, or incorporated by
reference into, the Company SEC Reports presents or will present
fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of the Company
and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with U.S. generally
accepted accounting principles ("GAAP") consistently applied during the
periods involved except as otherwise noted therein, and subject, in the
case of the unaudited interim financial statements, to normal
accounting year-end adjustments that have not been and will not be
material in amount or nature. All of such Company SEC Reports, as of
their respective dates (and as of the date of any amendment to the
respective Company SEC Report filed prior to the date hereof), complied
in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the Exchange
Act and the rules and regulations promulgated under such acts (as in
effect on the dates on which such SEC Reports were filed).
(ii) Except as set forth in Section 3.1(d)(ii) of the
Company Disclosure Schedule, and except for the Merger Fees as
estimated and set forth in Section 3.1(n) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature required to be set forth in a
consolidated balance sheet of the Company and its consolidated
Subsidiaries under GAAP (whether accrued, absolute, contingent or
otherwise) and there is no existing condition, situation or set of
circumstances, which could reasonably be expected to result in such a
liability or obligation, except for liabilities or obligations which
individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect on the Company.
(iii) The Company has delivered to Parent a complete
and correct copy of any amendments or modifications, which have not yet
been filed with the SEC, to all
13
agreements, documents or other instruments which previously had been
filed by the Company with the SEC pursuant to the Exchange Act.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
(A) the proxy statement relating to the Company Shareholders Meeting
(as defined herein) or the information statement relating to approval
of the Merger and this Agreement by written consent (together, the
"Proxy Statement"), if applicable, (B) the Schedule 14D-9, (C) the
Offer Documents and (D) any other document filed or to be filed with
the SEC or any other Government Entity in connection with the Offer or
this Agreement will, at the respective times such documents or any
amendments or supplements thereto are filed, and, with respect to the
Offer Documents and the Proxy Statement, if any, when first published,
sent or given to the shareholders of the Company, contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not false or
misleading or, in the case of the Proxy Statement, if any, or any
amendment thereof or supplement thereto, at the time of the Company
Shareholders Meeting, if any, and at the Effective Time, contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which
they are made, not false or misleading or necessary to correct any
statement in any earlier communication with respect to the Offer or the
solicitation of proxies for the Company Shareholders Meeting, if any,
which shall have become false or misleading. The Proxy Statement, if
any, and Schedule 14D-9 will comply as to form and content in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.1(e), no representation or warranty is made by the Company
with respect to statements made or incorporated by reference in the
Proxy Statement, if any, or the Offer Documents based on information
supplied by Parent or Merger Sub in writing specifically for inclusion
or incorporation by reference therein.
(f) COMPLIANCE WITH APPLICABLE LAWS; REGULATORY MATTERS. The
Company and each of its Subsidiaries hold all permits, licenses, certificates,
franchises, registrations, variances, exemptions, orders and approvals of all
Governmental Entities other than those the failure to so hold individually or in
the aggregate could not reasonably be expected to have a Material Adverse Effect
on the Company (the "Company Permits"). The Company and each of its Subsidiaries
have performed their respective obligations under and are in compliance with the
terms of the Company Permits, except where the failure so to comply or perform,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company. No event has occurred or condition or
state of facts exists which constitutes or, after notice or lapse of time or
both, would constitute a breach or default under the Company Permits or, after
notice or lapse of time or both, would permit revocation or termination of the
Company Permits, except where such
14
event, condition or state of facts, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company. The
businesses of the Company and its Subsidiaries are not being and have not been
conducted in violation of any law, ordinance, regulation, judgment, decree,
injunction, rule or order of any Governmental Entity, except for violations
which could not reasonably be expected to have a Material Adverse Effect on the
Company. As of the date of this Agreement, no lawsuit, claim, suit, proceeding
or investigation by any Governmental Entity with respect to the Company or any
of its Subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor, to the best knowledge of the Company, has any Governmental
Entity indicated an intention to conduct the same, other than lawsuits, claims,
suits, proceedings or investigations which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
Company.
(g) LITIGATION. There is no litigation, arbitration, claim,
suit, action, investigation or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective properties or assets, which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company or could reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement, nor is there
any judgment, award, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its Subsidiaries
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. This provision shall not apply to
environmental matters which are the subject of Section 3.1(r).
(h) TAXES. (i) The Company and its Subsidiaries have duly and
timely filed (taking into account any extension of time within which to file)
all Tax Returns required to be filed by any of them other than those the failure
of which to file could not reasonably be expected to have individually or in the
aggregate a Material Adverse Effect on the Company and all such filed Tax
Returns are complete and accurate in all material respects; (ii) the Company and
its Subsidiaries have paid all Taxes due and payable by them (whether or not
shown on any Tax Return), other than those the failure of which to pay could not
reasonably be expected to have individually or in the aggregate a Material
Adverse Effect on the Company; (iii) as of the date of this Agreement, there are
no pending or, to the knowledge of the Company, threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters relating to the Company or any of its Subsidiaries which, if determined
adversely to the Company or such Subsidiary, could reasonably be expected to
have a Material Adverse Effect on the Company; (iv) no claim has ever been made
by an authority in a jurisdiction where the Company or any of its Subsidiaries
does not file tax returns that it is or may be subject to taxation by that
jurisdiction except as could not reasonably be expected to have a Material
Adverse Effect; (v) there are no deficiencies or claims for any Taxes that have
been proposed, asserted or assessed, or material issues that have been raised in
connection with the examination of Tax Returns and that could reasonably be
expected to give rise to such deficiencies or claims, against the Company or any
of its Subsidiaries which, if such deficiencies or claims were finally resolved
against the Company or such Subsidiary, could reasonably be expected to have a
Material Adverse Effect on the Company; (vi) there are no material Liens for
Taxes upon the assets of the Company or any of its Subsidiaries, other than
Liens for current Taxes not yet due and payable and Liens for Taxes that are
being contested in good faith by
15
appropriate proceedings and that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company if
any such contest is unsuccessful; (vii) neither the Company nor any of its
Subsidiaries is or was at any time during the five (5) year period ending on the
date on which the Effective Time occurs, a "United States real property holding
corporation" within the meaning of Section 897(c) of the Code; (viii) neither
the Company nor any of its Subsidiaries has made an election under Section
341(f) of the Code; (ix) neither the Company nor any of its Subsidiaries has
filed or been required to file any reports under Section 999 of the Code; (x)
the Company and each of its Subsidiaries has disclosed on its federal Income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Section 6662 of the
Code; (xi) neither the Company nor any of its Subsidiaries is now or has ever
been a party to any tax allocation or sharing agreement; (xii) other than the
consolidated group of which the Company is now the common parent, neither the
Company nor any of its Subsidiaries has ever been (A) a member of an affiliated
group filing a consolidated federal income Tax Return or (B) responsible for any
liability for the Taxes of any Person as a transferee or successor, by contract,
by operation of law, or otherwise; and (xiii) except where the failure to do so
could not reasonably be expected to have individually or in the aggregate a
Material Adverse Effect on the Company, the Company and each of its Subsidiaries
has (A) 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, shareholder, or other third party and (B) collected any and all
amounts required from customers or other third parties in the form of sales,
use, or similar Taxes and paid, when due, such Taxes to the appropriate
governmental authority.
(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since August 31,
1999 (A) each of the Company and the Company's Subsidiaries has conducted its
business in the ordinary course; (B) there has not been any change in the
business, condition (financial or otherwise), prospects or results of operations
of the Company or its Subsidiaries that has had, or could reasonably be expected
to have, a Material Adverse Effect on the Company; (C) there has not been any
entry by the Company or its Subsidiaries into any employment agreement,
severance agreement or termination agreement with any employee of the Company
other than in the ordinary course of business and except as contemplated hereby;
(D) there has not been any declaration, setting aside or payment of any dividend
or other distribution with respect to the capital stock of the Company nor has
there been any repurchase, redemption or other acquisition by the Company or any
of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or such Subsidiary;
(E) there has not been any material change by the Company in accounting
principles, practices or methods except as required by GAAP; (F) except as
provided or contemplated hereby for herein, there has not been any material
increase in the compensation payable or which could become payable by the
Company and its Subsidiaries to their officers or key employees, or any material
amendment of any compensation and benefit plans; (G) there has not been any
amendment of any material term of any outstanding security of the Company or any
of its Subsidiaries; (H) there has not been any acquisition, sale or transfer of
any material assets of the Company or any of its Subsidiaries; and (I) there has
not been any entry by the Company or its Subsidiaries into any material joint
venture or other similar arrangement with any Person.
16
(j) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock adopting this
Agreement (the "Required Company Votes") is the only vote of the holders of any
class or series of the Company capital stock necessary to approve this Agreement
and the transactions contemplated hereby and is only necessary in the event that
the number of shares of Company Common Stock tendered pursuant to the Offer
represents less than 80% of the issued and outstanding shares of Company Common
Stock. The Company Common Stock which is subject to the Shareholder Agreement
(not counting any option for Company Common Stock which is subject to the
Shareholder Agreement) constitutes a majority of the outstanding shares of the
Company Common Stock on the date hereof.
(k) CONTRACTS; DEBT INSTRUMENTS. (i) Except as disclosed in
the SEC Reports or on Section 3.1(k)(i) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to or subject to:
(A) any employment, consulting, severance,
termination, or indemnification agreement, contract or
arrangement providing for future payments, written or oral,
with any current or former officer, consultant, director or
employee which (1) exceeds $200,000 per annum or (2) requires
aggregate annual payments or total payments over the life of
such agreement, contract or arrangement to such current or
former officer, consultant, director or employee in excess of
$200,000, and is not terminable by it or its subsidiary on 30
days' notice or less without penalty or obligation to make
payments related to such termination;
(B) any joint venture contract or
arrangement or any other agreement which has involved or is
expected to involve a sharing of revenues of $200,000 per
annum or more with other persons;
(C) any lease for real or personal property
in which the amount of payments which the Company is required
to make on an annual basis exceeds $200,000;
(D) any material agreement, contract,
policy, license, permit, document, instrument, arrangement or
commitment which has not been terminated or performed in its
entirety and not renewed which may be, by its terms,
terminated, impaired or adversely affected by reason of the
execution of this Agreement, the closing of the Offer or the
Merger, or the consummation of the other transactions
contemplated hereby;
(E) any agreement, contract, policy,
license, permit, document, instrument, arrangement or
commitment that limits in any material respect the freedom of
the Company or any Subsidiary of the Company to compete in any
line of business or with any person or in any geographic area
or which would so limit in any material respect the freedom of
the Company or any Subsidiary of the Company after the
Effective Time; or
17
(F) any other agreement, contract, policy,
license, permit, document, instrument, arrangement or
commitment not made in the ordinary course of business which
is material to the Company and its Subsidiaries taken as a
whole.
(ii) All of the Company Material Contracts are valid
and in full force and effect, except to the extent they have previously
expired in accordance with their terms, and other than as could not
reasonably be expected to have a Material Adverse Effect on the
Company. Neither the Company nor its Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or
without notice, lapse of time, or both, could reasonably be expected to
constitute a default under the provisions of, any such Company Material
Contract, and neither the Company nor any of its Subsidiaries has
received notice that any party to any Company Material Contract intends
to cancel, terminate or otherwise modify the terms of any applicable
Company Material Contract, except in each case, as could not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. To the knowledge of the Company, no
counterparty to any such Company Material Contract has violated any
provision of, or committed or failed to perform any act which, with or
without notice, lapse of time, or both, could reasonably be expected to
constitute a default or other breach under the provisions of, such
Company Material Contract, except for defaults or breaches which could
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Company.
(iii) Set forth in Section 3.1(k)(iii) of the Company
Disclosure Schedule is (A) a list of all loan or credit agreements,
notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of the Company or any of
its Subsidiaries in an aggregate principal amount in excess of $300,000
is outstanding or may be incurred and (B) the respective principal
amounts currently outstanding thereunder. For purposes of this Section
3.1(k)(iii), "indebtedness" shall mean, with respect to any Person,
without duplication, (A) all obligations of such Person for borrowed
money, or with respect to deposits or advances of any kind to such
Person, (B) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (C) all obligations of such
Person upon which interest charges are customarily paid, (D) all
obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (E)
all obligations of such Person issued or assumed as the deferred
purchase price of property or services (excluding obligations of such
Person to creditors for raw materials, inventory, services, supplies
and other trade payables incurred in the ordinary course of such
person's business), (F) all capitalized lease obligations of such
Person, (G) all obligations of others secured by any Lien on property
or assets owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of
such Person under interest rate or currency swap transactions (valued
at the termination value thereof), (I) all letters of credit issued for
the account of such Person (excluding letters of credit issued for the
benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such Person
to purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar
securities or property, and (K) all guarantees and
18
arrangements having the economic effect of a guarantee of such Person
of any indebtedness of any other Person.
(l) EMPLOYEE BENEFIT PLANS: LABOR MATTERS.
(i) With respect to each employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and with respect to each other material
employee and/or director benefit plan, program, arrangement and
contract (including any bonus, deferred compensation, stock bonus,
stock purchase, restricted stock, stock option, fringe benefit, sick
pay, vacation, employment, termination, change in control and severance
plan, program, arrangement and contract), to which the Company or any
of its Subsidiaries is a party, which is maintained or contributed to
by the Company or any of its Subsidiaries, or with respect to which the
Company or any of its Subsidiaries could incur material liability under
Section 4069, 4201 or 4212(c) of ERISA other than any "multiemployer
plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer
Plan") (collectively, together with any and all amendments thereto, and
any related trust agreement, insurance contract or other funding
instrument, the "Company Benefit Plans") the Company has listed such
Company Benefit Plan on Section 3.1(1)(i) of the Company Disclosure
Schedule and has made available to Parent a true and complete copy of
such Company Benefit Plan (or, to the extent no such copy exists, an
accurate description thereof). A true and complete copy of the most
recent annual report, actuarial reports, summary plan description or
other employee communication material (including any summary of
material modification) and Internal Revenue Service determination
letter with respect to each Company Benefit Plan (to the extent
applicable thereto) has been made available to Parent.
(ii) Each of the Company Benefit Plans that is an
"employee pension benefit plan" within the meaning of Section 3(2) of
ERISA and that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the United
States Internal Revenue Service, and the Company is not aware of any
circumstances likely to result in the revocation of any such favorable
determination letter.
(iii) With respect to the Company Benefit Plans and
any Multiemployer Plan, no event has occurred and, to the knowledge of
the Company, there exists no condition or set of circumstances,
including but not limited to any non-exempt "prohibited transactions"
(as described in ERISA or the Code) with respect to any Company Benefit
Plan, in connection with which the Company or any of its Subsidiaries
could be subject to any liability under the terms of such Company
Benefit Plans, Multiemployer Plan, ERISA, the Code or any other
applicable law which could reasonably be expected to have a Material
Adverse Effect on the Company.
(iv) All Company Benefit Plans, to the extent subject
to ERISA have been and are in substantial compliance with ERISA. There
is no material pending or, to the knowledge of the Company threatened,
litigation relating to the Company Benefit Plans. No Company Benefit
Plan is subject to Title IV of ERISA and no liability under Title IV of
19
ERISA has been or is expected to be incurred by the Company or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, of any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate").
(v) Neither the Company nor any of its Subsidiaries
has any material obligations for retiree health and life benefits under
any Company Benefit Plan except to the extent required by applicable
law.
(vi) All Company Benefit Plans maintained outside of
the United States have been and are in substantial compliance with
applicable local law except where such failure to comply could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(vii) Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining or other labor union contracts
and no collective bargaining agreement is being negotiated by the
Company or any of its Subsidiaries. There is no pending labor dispute,
strike or work stoppage against the Company or any of its Subsidiaries
which may interfere with the respective business activities of the
Company or any of its Subsidiaries, except where such dispute, strike
or work stoppage could not reasonably be expected to have individually
or in the aggregate a Material Adverse Effect on the Company. There is
no pending charge or complaint against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable
state agency, except where such unfair labor practice, charge or
complaint could not reasonably be expected to have a Material Adverse
Effect on the Company.
(viii) Section 3.1(1)(viii) of the Company Disclosure
Schedule sets forth (A) the estimated maximum amount that could be paid
to or received by each "disqualified individual" (as defined in
proposed regulations under Section 280G of the Code) (whether in cash
or property or the vesting of property or the forgiveness of
indebtedness) as a result of the Offer, Merger or the other
transactions contemplated by this Agreement under all Company Benefit
Plans or otherwise; (B) the "base amount" (as defined in Section
280G(b)(3) of the Code) for each disqualified individual calculated as
of the date of this Agreement; and (C) a list of each employee of the
Company or any of its Subsidiaries who is entitled to receive a
retention bonus, severance and/or other payment as a result of the
Offer, Merger or any other transaction contemplated hereby, the amount
of each such bonus, severance and/or other payment and the date and
other terms relating to the payment thereof. Neither the Offer, Merger
or any other transaction or action contemplated by this Agreement will
constitute an "Acquisition Proposal" (or change in control or words of
similar import) as defined in any Company Benefit Plan.
(ix) Other than as set forth on Section 3.1(1)(viii)
of the Company Disclosure Schedule, or as set forth in the Company
Equity Plans, no employee of the Company or any of its Subsidiaries
will be entitled to any additional benefits or any
20
acceleration of the time of payment or vesting of any benefits under
any Company Benefit Plan or otherwise as a result of the transactions
contemplated by this Agreement.
(x) No deduction for compensation payable by the
Company or any of its Subsidiaries to any of its employees under any
Company Benefit Plan or otherwise after the date of this Agreement
(including by reason of the Offer, Merger or other transactions
contemplated hereby) will be subject to disallowance under Section
162(m) of the Code.
(m) INTELLECTUAL PROPERTY.
(i) Except as could not reasonably be expected to
have a Material Adverse Effect on the Company, (A) all patents,
trademarks, trade names, service marks and copyrights and registrations
and applications relating thereto held by the Company and its
Subsidiaries are valid and enforceable, (B) neither the Company nor any
of its Subsidiaries is, nor will the Company or any of its Subsidiaries
be as a result of the execution and delivery of this Agreement or the
performance of the Company's obligations hereunder, in violation of,
and no claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing on
or otherwise violating the rights of any person with regard to any
Intellectual Property and (C) to the Company's knowledge, no person is
infringing on or otherwise violating any right of the Company or any of
its Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company or any of its Subsidiaries.
(ii) It is the general policy of the Company to
require that its employees execute agreements assigning to the Company
all rights such employees otherwise would have in Intellectual Property
developed by such employees while in the employ of the Company.
(n) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee payable by the Company or
any of its Subsidiaries in connection with any of the transactions contemplated
by this Agreement, except Morgan Stanley & Co. Incorporated, the arrangements
with which have been disclosed in writing to Parent prior to the date hereof.
Section 3.1(n) of the Company Disclosure Schedule sets forth the Company's good
faith estimate of the Merger Fees (as defined herein) owed or which will be
owing by the Company and its Subsidiaries in connection with the Offer, the
Merger and the other transactions contemplated by this Agreement. The term
"Merger Fees" means all fees and expenses paid since December 31, 1999 or
payable by or on behalf of the Company or any of its Subsidiaries to all
attorneys, accountants, investment bankers, financial advisors and other experts
and advisers incident to the negotiation, preparation, execution and
consummation of this Agreement and the transactions contemplated hereby.
(o) OPINION OF FINANCIAL ADVISOR. The Company has received a
written opinion of Morgan Stanley & Co. Incorporated dated the date of this
Agreement, to the effect that, as of such
21
date, the consideration to be paid in the Offer and the Merger is fair, from a
financial point of view, to the holders of Company Common Stock. A copy of this
opinion has been provided to Parent.
(p) PRODUCTS AND SERVICES.
(i) The Company has provided to Parent a written list
of each product under development, developed, manufactured, licensed,
distributed or sold by the Company and its Subsidiaries and any other
products in which the Company and its Subsidiaries have any proprietary
rights or beneficial interest (collectively, the "Company Products").
Each Company Product has been designed and manufactured in accordance
with (A) the specifications under which the Company Product is normally
and has normally been manufactured, and (B) the provisions of all
applicable laws, policies, guidelines and any other governmental
requirements, the violation of which could reasonably be expected to
have a Material Adverse Effect on the Company.
(ii) Except as set forth on Section 3.1(p)(ii) of the
Company Disclosure Schedule, to the Company's knowledge there exists no
set of facts which could reasonably be expected to furnish a basis for
the recall, withdrawal or suspension of any product registration,
produce license, manufacturing license, export license or other
license, approval or consent of any governmental or regulatory
authority (whether foreign or U.S.) with respect to the Company and its
Subsidiaries or any of the Company Products, which recall, withdrawal
or suspension could reasonably be expected to have a Material Adverse
Effect on the Company.
(iii) Except as which would not reasonably be
expected to have a Material Adverse Effect on the Company, there are no
claims existing and, to the knowledge of the Company, there is no basis
for any claim against the Company and its Subsidiaries for injury to
persons, animals or property as a result of the sale, distribution or
manufacture of any product or performance of any service by the
Company, including, but not limited to, claims arising out of the
defective or unsafe nature of its products or services.
(q) TAKEOVER STATUTES; RIGHTS PLANS. No "fair price,"
"moratorium," "control share acquisition," "interested shareholder," "business
combination" or other similar anti-takeover statute or regulation (including,
without limitation, Sections 607.0901 and 607.0902 of the FBCA, which have been
rendered inapplicable) (each a "Takeover Statute") or restrictive provision of
any applicable anti-takeover provision in the articles of incorporation of the
Company or bylaws of the Company is applicable to the Company, the Company
Common Stock, the Offer, the Merger, this Agreement, the Shareholders Agreement,
or any of the transactions contemplated by this Agreement. The Company does not
have any stockholder rights plans or similar anti-takeover device in effect.
(r) ENVIRONMENTAL MATTERS. Except as could not reasonably be
expected to have a Material Adverse Effect on the Company: (i) the Company and
each Subsidiary is in compliance and to the knowledge of the Company has been in
compliance with all Environmental Laws; (ii) no property that is currently owned
or operated or has been owned or operated by the Company or any current or
former Subsidiary contains any Hazardous Substance or other condition which
could
22
reasonably be expected to require investigation or remediation or lead to any
liability of the Company or its Subsidiaries under any Environmental Law; (iii)
to the Company's knowledge, neither the Company nor any of its Subsidiaries are
subject to liability for any offsite disposal or release of any Hazardous
Substance under any Environmental Law; (iv) there are no pending, or to the
knowledge of the Company, threatened claims against the Company or any of its
Subsidiaries alleging a violation of Environmental Law; (v) neither the Company
nor any of its Subsidiaries has received written notice alleging any claims,
orders or notices alleging responsibility, liability or non-compliance under any
Environmental Law; and (vi) to the Company's knowledge, there are no other past
or present circumstances involving the Company or any of its Subsidiaries that
are likely to result in any claims, liabilities, costs, penalties or property
restrictions in connection with any Environmental Law. As used herein,
"Environmental Law" means any law, regulation, rule, order, decree, or common
law relating to the protection of the environment "Hazardous Substance" means
any substance that is listed, classified or regulated in any concentration under
any Environmental Law including petroleum products, asbestos and polychlorinated
biphenyls. Notwithstanding anything to the contrary contained in this Agreement,
this Section 3.1(r) shall be the sole and exclusive representation and warranty
of the Company or any of its Subsidiaries with regard to environmental matters.
(s) PROPERTIES. Section 3.1(s) of the Company Disclosure
Schedule contains a true and complete list, as of the date hereof, of all real
properties owned or leased by the Company or any of its Subsidiaries. Each of
the Company and its Subsidiaries has good and marketable title to all
properties, assets and rights of any kind whatsoever whether real, personal or
mixed, and whether tangible or intangible owned by it (collectively, the
"Company Assets"), in each case free and clear of all liens and other
encumbrances except those which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company. There
are no pending or, to the knowledge of the Company, threatened condemnation
proceedings against or affecting any Company Asset, and none of the Company
Assets is subject to any commitment or other arrangement for its sale to a third
party outside the ordinary course of business, which either individually or in
the aggregate could not reasonably be expected to have a Material Adverse Effect
on the Company.
(t) CUSTOMERS AND SUPPLIERS. Since August 31, 1999, there has
been no termination, cancellation or curtailment of the business relationship of
the Company with (i) any customer or supplier or group of affiliated customers
or suppliers or (ii) any joint venture or alliance partners, in each case which
could reasonably be expected to result in a Material Adverse Effect on the
Company, and the Company has not received notice or any indication of any such
termination, cancellation or curtailment and the Company has no knowledge of any
facts or circumstances in existence that could reasonably be expected to result
in any such termination, cancellation or curtailment.
(u) DISTRIBUTORS. Rexall Showcase International, Inc.
distributes its products through approximately 120,000 active (as defined in the
Company SEC Reports) independent distributors. Except as the same could not
reasonably be expected to have a Material Adverse Effect on the Company, the
Company and its Subsidiaries are in compliance with its agreements with the
distributors and all laws applicable to their businesses related to the
distributors and their distribution
23
practices, and there is no pending, or, to Company's knowledge, threatened,
grievance by or with respect to the distributors that, if adversely decided,
could reasonably be expected to have a Material Adverse Effect on the Company.
The Company has previously provided a list (the "Top 20 List") to Parent which
accurately sets forth the names of the twenty (20) distributors who received the
highest commissions and overrides paid by Rexall Showcase International, Inc.
for the calendar year ended 1999 and the amounts paid to such Persons. There are
no material disputes existing between the Company or any of its Subsidiaries on
the one hand, and any distributor who is listed on the Top 20 List on the other
hand which, if not resolved to the satisfaction of the Company, could reasonably
be expected to have a Material Adverse Effect on the Company.
(v) REGULATORY COMPLIANCE. The Company and its Subsidiaries
have received approval of all registrations, applications, licenses, requests
for exemptions, permits and other regulatory authorizations necessary or
desirable to the conduct of the business of the Company and its Subsidiaries as
they are now conducted whether foreign or U.S., including, without limitation,
with the United States Food and Drug Administration ("FDA"), the Federal Trade
Commission ("FTC"), the Consumer Product Safety Commission ("CPSC") and the
United States Department of Agriculture ("USDA"), as applicable, except for such
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations of which the failure to so obtain could not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and its Subsidiaries are in compliance in all respects with all such
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations whether foreign or U.S., including, without
limitation, all applicable FDA, FTC, CPSC, USDA, federal, state and local rules
and regulations, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect on the Company. The Company has not
received any written notice and has no reason to believe that any party granting
any such registration, application, license, request for exemption, permit or
other authorization is considering limiting, suspending or revoking the same.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as disclosed in
the Parent's Annual Report for the year ended December 31, 1999 and publicly
available prior to the date hereof, Parent represents and warrants to the
Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Parent has been duly
organized and is validly existing under the laws of its jurisdiction of
organization. Parent is duly qualified or otherwise authorized to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure so to qualify or be so authorized when taken together with all such
other failures, could not reasonably be expected to have a Material Adverse
Effect on Parent or materially impair or delay the ability of the Parent or
Merger Sub to consummate the transactions contemplated hereby. Parent has the
requisite corporate power and corporate authority, in all material respects, to
own, lease and operate its properties and to carry on its businesses as they are
now being conducted. Parent is not in violation of any provisions of its
Organizational Documents in any material respect.
24
(b) AUTHORITY; NO CONFLICTS.
(i) Parent has all requisite corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of Parent and no other corporate proceedings are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and, assuming due execution by the Company,
constitutes a valid and binding agreement of Parent, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws relating to or affecting creditors generally, or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Supervisory Board
of Parent has, at a meeting duly called and held, approved the
transactions contemplated by this Agreement.
(ii) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation or
result in any adverse change in the rights or obligations of the Parent
pursuant to: (A) any provision of the Organizational Documents of
Parent or (B) except as could not reasonably be expected to have a
Material Adverse Effect on Parent or prevent, impair or materially
delay the consummation of any of the transactions contemplated hereby
and subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, the terms, provisions or conditions of any loan
or credit agreement, note, mortgage, bond, indenture, lease,
compensation or benefit plan or grant or award made pursuant thereto,
or other agreement, obligation, instrument, contract, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent, or its properties
or assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration or filing with,
any Governmental Entity or foreign securities exchange is required by
or with respect to Parent in connection with the execution and delivery
of this Agreement by Parent or the consummation by Parent of the
transactions contemplated hereby, except for (A) the consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to clause (x) of Section
3.1(c)(iii) as applicable; (B) any filings required to be made or
consents that have to be obtained or arrangements that have to be made
in order to ensure that the United States government or any agency
thereof will not challenge the consummation of the transactions
contemplated hereby on national security grounds; and (C) such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain could
not reasonably be expected to have a Material Adverse Effect on Parent
or prevent the consummation of the transactions contemplated hereby.
25
(c) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (A) the Offer Documents or (B) the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation
by reference in the Proxy Statement, if any, the Schedule 14D-9 and (C)
any other documents to be filed with the SEC or any other Governmental
Entity or foreign securities exchange in connection with the
transactions contemplated hereby, including any amendment or supplement
to such documents, will, at the respective times such documents are
filed, and, with respect to the Proxy Statement, if any, and the Offer
Documents, when first published, sent or given to shareholders of the
Company, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they are made, not false or misleading or, in
the case of the Proxy Statement, if any, or any amendment thereof or
supplement thereto, at the time of the Company Shareholders Meeting, if
any, and at the Effective Time, contain any untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they are made, not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the Offer or the solicitation of proxies
for the Company Shareholders Meeting, if any, which shall have become
false or misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.2(c), no representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by reference
in the Proxy Statement, if any, or the Offer Documents based on
information supplied by the Company for inclusion or incorporation by
reference therein.
(d) VOTE REQUIRED. No vote of the holders of any capital stock
of Parent is necessary to approve this Agreement and the transactions
contemplated hereby.
(e) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent on Merger Sub, except J. Henry Schroder & Co. Limited and
Salomon Smith Barney Inc. and their affiliates.
(f) OWNERSHIP OF COMPANY CAPITAL STOCK. Except as is
contemplated in connection herewith, as of the date of this Agreement, neither
Parent nor any of its Subsidiaries, "affiliates" or "associates" (as such terms
are defined in the FBCA) (i) beneficially owns, directly or indirectly or (ii)
is party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in case of either clause (i) or
(ii), shares of capital stock of the Company.
26
(g) LITIGATION. As of the date of this Agreement, there is no
litigation, arbitration, claim, suit, action, investigation or proceeding
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its Subsidiaries or any of their respective properties or assets,
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent or could reasonably be expected to prevent the
consummation of the transactions, contemplated by this Agreement, nor is there
any judgment, award, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Parent or any of its Subsidiaries which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
(h) FINANCING. Parent will have the funds necessary to
consummate the Offer and the Merger on the terms contemplated by this Agreement
and will provide such funds to Merger Sub at or prior to the consummation of the
Offer or the Merger, as applicable.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub represent and warrant to the Company as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is an
indirect wholly owned Subsidiary of Parent and a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Florida.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite
corporate power and corporate authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Merger Sub and no other corporate
proceedings are necessary to authorize this Agreement or to consummate the
transactions as contemplated hereby. This Agreement has been duly executed and
delivered by Merger Sub and, assuming due execution by the Company, constitutes
a valid and binding agreement of Merger Sub, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Board of Directors of Merger Sub has unanimously approved
the transactions contemplated by this Agreement.
(c) NON-CONTRAVENTION.
(i) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation or
result in any adverse changes in the rights or obligations of the
Merger Sub pursuant to: (A) any provisions of the Organizational
Documents of Merger Sub or (B) except as could not reasonably be
expected to have a Material Adverse Effect on Parent or prevent, impair
or materially delay the consummation of the transactions contemplated
hereby and subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings
referred to in paragraph (ii) below, the
27
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease, compensation or benefit plan or any
grant or award made pursuant thereto or other agreement, obligation,
instrument, contract, permit, concession, franchise, license,
judgment, order, writ, injunction, award, decree, statute, law,
ordinance, rule or regulation applicable to Merger Sub or any of its
properties or assets.
(ii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice, report
or filing with, any Governmental Entity or foreign securities exchange
is required by or with respect to Merger Sub in connection with the
execution and delivery of this Agreement by Merger Sub or the
consummation by Merger Sub of the transactions contemplated hereby,
except for (A) the consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation
to clause (x) of Section 3.1 (c)(iii) as applicable; (B) any filings
required to be made or consents that have to be obtained or
arrangements that have to be made in order to ensure that the United
States government or any agency thereof will not challenge the
consummation of the transactions contemplated hereby on national
security grounds; and (C) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain could not reasonably be expected to have a
Material Adverse Effect on Parent or to prevent, impair or materially
delay the consummation of the transactions contemplated hereby.
(d) NO BUSINESS ACTIVITIES. Merger Sub is not and has never
been a party to any material agreements and has not conducted any activities
other than in connection with the organization of Merger Sub, the commencement
of the Offer, the negotiation and execution of this Agreement and the
Shareholders Agreement and the consummation of the transactions contemplated
hereby. Merger Sub has no Subsidiaries.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement, set forth in Section 4.1 of the
Company Disclosure Schedule or to the extent that Parent shall otherwise consent
in writing):
(a) ORDINARY COURSE. The Company and its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary course
in all respects, consistent with past practice and shall use their respective
reasonable best efforts to preserve intact their present business organizations
and preserve their existing relationships with customers, suppliers, employees,
Governmental Entities and others having business dealings with them, and shall
not enter into any material joint venture or other similar arrangement;
provided, however, that no action by the Company or its Subsidiaries with
respect to matters specifically addressed by any other provision of this Section
4.1 shall be deemed a breach of this Section 4.1(a) unless such action would
constitute a breach of one or more of such other provisions.
28
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. The Company shall
not, and shall not propose to, (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock; (ii) split,
subdivide, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock; (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock except as otherwise permitted with respect to the payment of the option
exercise price or tax withholding under certain option agreements in effect
on the date of this Agreement under the Company Equity Plans; or (iv) effect
any reorganization or recapitalization.
(c) ISSUANCE OF SECURITIES. The Company shall not and shall
cause its Subsidiaries not to issue, pledge, dispose of or encumber, deliver or
sell, or authorize or propose the issuance, disposition, encumbrance, pledge,
delivery or sale of, any shares of its capital stock of any class, any Company
Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Company Voting Debt,
or enter into any agreement with respect to any of the foregoing, other than the
issuance of Company Common Stock upon the exercise of stock options or rights to
purchase Company Common Stock outstanding on the date of this Agreement in
accordance with the terms of the Company Equity Plans as in effect on the date
of this Agreement.
(d) ORGANIZATIONAL DOCUMENTS. Except to the extent required to
comply with their respective obligations hereunder or required by law, the
Company and its Subsidiaries shall not amend or propose to amend their
respective Organizational Documents.
(e) INDEBTEDNESS. The Company shall not (i) incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
the Company or guarantee any debt securities of other Persons other than
indebtedness (including short term borrowings) of the Company or its
Subsidiaries to the Company or its Subsidiaries and other than in the ordinary
course of business which shall include, without limitation, borrowings in the
ordinary course under its existing credit agreements; (ii) make any loans,
advances or capital contributions to, or investments in, any other Person, other
than by the Company or its Subsidiaries to or in the Company or its
Subsidiaries; or (iii) pay, discharge, modify or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the case of clauses (ii) and (iii), loans, advances,
capital contributions, investments, payments, discharges or satisfactions
incurred or committed to in the ordinary course of business consistent with past
practice.
(f) COMPENSATION. The Company shall not, and shall not permit
its Subsidiaries to (i) increase the compensation payable or to become payable
to any of its executive officers or employees or (ii) take any action with
respect to the grant of any severance or termination pay, or stay, bonus or
other incentive arrangement (other than as required by applicable law or the
terms of any collective bargaining agreement or as required pursuant to benefit
plans and policies in effect on the date of this Agreement); except any such
increases or grants made in the ordinary course of business consistent with past
practice, pursuant to agreements, plans or policies existing on the date hereof
or as otherwise provided under this Agreement; provided, however that in no
event shall the
29
Company grant, or permit to be granted, any options or other awards or rights to
purchase under any Company Equity Plan or otherwise after the date of this
Agreement.
(g) TAX ELECTIONS. The Company shall not, and shall not permit
its Subsidiaries to, make any Tax election or change any method of accounting
for Tax purposes except as required by applicable law or GAAP.
(h) EMPLOYMENT. Except as contemplated by this Agreement, the
Company shall not, and shall not permit its Subsidiaries to, release or
otherwise terminate the employment of any management employee or hire any new
management employees, except in the ordinary course of business.
(i) BENEFIT PLANS AND AGREEMENTS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, establish, adopt or enter into any new employee
benefit plans or agreements (including pension, profit sharing, bonus,
incentive compensation, director and officer compensation, severance,
medical, disability, life or other insurance plans, and employment
agreements) or amend or modify any existing Company Benefit Plans, or
extend coverage of the Company Benefit Plans, except as required by
applicable law, the terms of any collective bargaining agreement.
(ii) Subject to Section 5.11, simultaneous with the
execution of this Agreement, the Company shall freeze all Company
Equity Plans as of the date of this Agreement, such that, as a result
thereof, no officer, employee or any other Person or entity shall be
entitled to purchase any additional Company Common Stock under any
Company Equity Plan (other than pursuant to currently outstanding stock
options and stock purchase periods) and no stock options or other
awards shall be granted under any Company Equity Plan after the date of
this Agreement.
(j) OTHER ACTIONS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, take any action that could reasonably be expected to
result in any of the Offer Conditions not being satisfied.
(ii) The Company shall not, and shall not permit its
Subsidiaries to, (A) transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any assets except in the
ordinary course of business consistent with past practice; (B)
authorize capital expenditures in any manner not reflected in the
capital budget of the Company as currently in effect or make any
acquisition of, or investment in, any business or stock of any other
person or entity other than a current Subsidiary; (C) settle or
compromise any material claims or litigation or, except in the ordinary
course of business consistent with past practice, modify, amend or
terminate any of the Company Material Contracts or waive, release or
assign any material rights or claims; (D) permit any material insurance
policy naming it as
30
a beneficiary or a loss payable payee to be canceled or terminated
without the prior written approval of Parent, except in the ordinary
course of business consistent with past practice; or (E) terminate the
employment of any employee who is covered by a change in control,
employment, termination or similar agreement, except for Cause (as
defined in such agreements) or permit circumstances to exist that
would allow such employee to terminate employment and be entitled to
enhanced or special severance or other payments thereunder.
4.2 COVENANTS OF PARENT AND MERGER SUB. During the period from the date
of this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that the Company
shall otherwise consent in writing) Parent shall not, and shall not permit any
of its Subsidiaries to, take any action that could reasonably be expected to
result in (a) any of the representations and warranties of Parent and Merger Sub
set forth in this Agreement (i) to the extent qualified by Material Adverse
Effect becoming untrue or inaccurate and (ii) to the extent not qualified by
Material Adverse Effect becoming untrue or inaccurate, except that this clause
(ii) shall be deemed satisfied so long as such representations and warranties
being untrue or inaccurate, taken together, do not have a Material Adverse
Effect on Parent, or (b) any of the Offer Conditions not being satisfied.
4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall (a) confer
on a regular and frequent basis with the other; (b) report (to the extent
permitted by law, regulation and any applicable confidentiality agreement) to
the other on operational matters; and (c) promptly advise the other orally and
in writing of (i) any representation or warranty made by it in this Agreement
(A) to the extent qualified by Material Adverse Effect becoming untrue or
inaccurate and (B) to the extent not qualified by Material Adverse Effect
becoming untrue or inaccurate, except that this clause (B) shall be deemed
satisfied so long as such representations or warranties being untrue or
inaccurate, taken together, do not have a Material Adverse Effect on the Company
or Parent, as the case may be, or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement required to
be complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement. The Company shall file all reports and
amendments thereto required to be filed by it with the SEC (and all other
Governmental Entities) between the date of this Agreement and the Effective Time
and shall (to the extent permitted by law or regulation) deliver to Parent
copies of all such reports promptly after the same are filed. Subject to
applicable laws relating to the exchange of information, each of the Company and
Parent shall have the right to review in advance, and to the extent practicable
each will consult with the other, with respect to all the information relating
to the other party and each of their respective Subsidiaries, which appears in
any filings, announcements or publications made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable, it will consult
with the other party with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party apprised of the status of
matters relating to completion of the transactions contemplated hereby.
31
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 APPROVAL BY THE COMPANY'S SHAREHOLDERS.
(a) If required by the FBCA or the Company's Organizational
Documents in order to consummate the Merger, the Company shall, at Parent's
option and direction and as soon as practicable either (i) duly call, give
notice of, convene and hold a meeting of its shareholders (the "Company
Shareholders Meeting") or (ii) submit the Merger to its shareholders for
approval through shareholder action by written consent in lieu of a meeting for
the purpose of obtaining the Required Company Votes, and, the Company shall,
through the Company Board, recommend to its shareholders that they vote in favor
of the adoption of this Agreement and the Merger; provided, however, that the
Company Board may amend, modify or withdraw its recommendation if the Company
Board determines, following consultation with the Company's outside legal
counsel, that such action is required in order to comply with applicable law and
so long as the Company Board submits the Merger to the Company's shareholders
for approval at a meeting or by written consent with no recommendation and in
accordance with FBCA Section 607.1103(2)(a). Parent and Merger Sub shall vote or
cause to be voted all the shares of Company Common Stock owned of record by
Parent, Merger Sub or any other Subsidiary of Parent in favor of the approval of
the Merger and adoption of this Agreement.
(b) Notwithstanding the preceding paragraph or any other
provision of this Agreement, in the event Parent, Merger Sub or any other
Subsidiary of Parent shall beneficially own, in the aggregate, at least 80% of
the outstanding shares of the Company Common Stock, the Company shall not be
required to call the Company Shareholders Meeting or to file or mail the Proxy
Statement, and the parties hereto shall, at the request of Parent and subject to
Article VI, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the acceptance for payment of and
payment for shares of the Company Common Stock by Merger Sub pursuant to the
Offer without a meeting of shareholders of the Company in accordance with the
FBCA.
(c) If required by applicable law, as soon as practicable
following Parent's request, the Company and Parent shall prepare and file with
the SEC the Proxy Statement. Each of the Company and Parent shall use reasonable
best efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable and to solicit proxies in favor of the
adoption of this Agreement and the approval of the Merger; provided, however, in
the event the Company Board withdraws its recommendation for the adoption of
this Agreement and the approval of the Merger, the Company shall solicit proxies
regarding this Agreement and this Merger in a neutral fashion; provided that
such obligation to solicit proxies in a neutral fashion shall not prohibit the
Company Board from communicating the basis for its determination not to make a
recommendation to the extent required by FBCA Section 607.1103(2)(a).
(d) Unless required by the rules of the National Association
of Securities Dealers, subsequent to Merger Sub's acceptance of the Company
Common Stock pursuant to the Offer and
32
prior to the Effective Time, the Company shall not take any action to cause the
Company Common Stock to be removed from quotation on the Nasdaq National Market
System and de-registered under the Exchange Act.
5.2 ACCESS TO INFORMATION. Consistent with its legal obligations, from
the date hereof until the earlier of the Effective Time or the termination of
this Agreement, upon reasonable notice, the Company shall afford to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Parent ("Parent Representatives") reasonable access during
normal business hours to all of its and its Subsidiaries' properties, books,
contracts, commitments and records (including security position listings or
other information concerning beneficial and record owners of the Company's
securities) and its officers, management employees and representatives and,
during such period, the Company shall furnish promptly to Parent, all
information concerning its business, properties and personnel as the other party
may reasonably request. Such information shall be held in confidence to the
extent required by, and in accordance with, the provisions of the letter (the
"Confidentiality Agreement") dated as of March 22, 2000, between the Company and
Parent, which Confidentiality Agreement shall remain in full force and effect
subject to the terms hereof.
5.3 APPROVALS AND CONSENTS; COOPERATION. Each of the Company and Parent
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) its reasonable best efforts to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or
advisable on their part under this Agreement and applicable laws to consummate
and make effective the Offer and the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including (a) preparing
and filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and any Governmental Entity in order to consummate the Offer,
the Merger and the other transactions contemplated by this Agreement and (b)
taking all reasonable steps as may be necessary to obtain all such consents,
waivers, licenses, registrations, permits, authorizations, orders and approvals.
Without limiting the generality of the foregoing, each of the Company and Parent
agrees to make all necessary filings in connection with the Required Regulatory
Approvals as promptly as practicable after the date of this Agreement, and in
any event no later than nine (9) Business Days after the date hereof, and to use
its reasonable best efforts to furnish or cause to be furnished, as promptly as
practicable, all information and documents requested with respect to such
Required Regulatory Approvals and shall otherwise cooperate with the applicable
Governmental Entity in order to obtain any Required Regulatory Approvals in as
expeditious a manner as possible. Each of the Company and Parent shall use its
reasonable best efforts to resolve such objections, if any, as any Governmental
Entity may assert with respect to this Agreement and the transactions
contemplated hereby in connection with the Required Regulatory Approvals. In the
event that a suit is instituted by a Person or Governmental Entity challenging
this Agreement and the transactions contemplated hereby as violative of
applicable antitrust or competition laws, each of the Company and Parent shall
use its reasonable best efforts to resist or resolve such suit. The Company and
Parent each shall, upon request by the other, furnish the other with all
information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may reasonably be necessary or advisable
in connection with the Offer Documents, Schedule 14D-9, Proxy Statement or any
other
33
statement, filing, notice or application made by or on behalf of the Company,
Parent or any of their respective Subsidiaries to any third party and any
Governmental Entity in connection with the Offer, the Merger or the other
transactions contemplated by this Agreement.
5.4 ACQUISITION PROPOSALS.
(a) The Company agrees that neither the Company, its
Subsidiaries, nor any of the respective officers and directors of the Company or
its Subsidiaries, shall and the Company shall direct and use its best efforts to
cause its employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
its Subsidiaries) not to, take or cause, directly or indirectly, any of the
following actions with any party other than Parent, Merger Sub or their
respective designees: (a) directly or indirectly solicit, encourage, initiate,
participate in or otherwise facilitate (including by way of furnishing
information) any negotiations, inquiries or discussions with respect to any
offer, indication or proposal to acquire all or more than 15% of the Company's
businesses, assets or capital shares whether by merger, consolidation, other
business combination, purchase of assets, reorganization, tender or exchange
offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (b)
disclose, in connection with an Acquisition Proposal, any information or provide
access to its properties, books or records. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Company will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence of Section 5.4 hereof of the
obligations undertaken in this Section 5.4. The Company also will promptly
request any Person which may have heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company and/or
any of its Subsidiaries to return or destroy all confidential information
heretofore furnished to such person by or on behalf of the Company. If the
Company receives an Acquisition Proposal, or the Company learns that someone
intends to solicit tenders of Company Common Stock or otherwise proposes to
acquire the Company or a significant portion of its equity securities or its and
its Subsidiaries' assets if the Company's shareholders do not approve the
Merger, the Company will promptly notify Parent of that fact and provide Parent
promptly, from time to time, with all information and documents in the
possession of the Company and its legal or financial advisors regarding the
Acquisition Proposal, solicitation of tenders or other proposed transaction.
(b) Notwithstanding anything to the contrary contained in
Section 5.4(a) or elsewhere in this Agreement, prior to the consummation of the
Offer, the Company may participate in discussions or negotiations with, and
furnish non-public information, and afford access to the properties, books,
records, officers, employees and representatives of the Company to any Person,
if such Person has delivered to the Company, prior to the consummation of the
Offer, and in writing, an Acquisition Proposal which the Company Board
reasonably determines in good faith (after consultation with its independent
financial advisor) constitutes a Superior Proposal (as defined in Section
5.4(c)).
(c) A "Superior Proposal" is an Acquisition Proposal (i) which
would result in the Company's shareholders receiving consideration per share of
Company Common Stock (valuing non-cash consideration at its fair market value as
determined in good faith by the Company Board
34
after consultation with its independent financial advisor) which is superior,
from a financial point of view after consultation with its independent financial
advisor, to the Price Per Share; (ii) which is not subject to a financing
contingency; (iii) (A) for which financing, to the extent required, has at least
the same degree of certainty as the Parent's financing (at the time the Company
Board is making such determination), or (B) to the extent financing is not
required, is made by a Person which the Company's Board reasonably determines in
good faith (after consultation with its independent financial advisor) has the
financial resources necessary to carry out the transaction and (iv) has been
publicly disclosed.
5.5 EMPLOYEE BENEFITS. Parent shall or shall cause the Surviving
Corporation to comply with the provisions of the letter of even date herewith
from Parent to Company relating to the employee benefits matters (the "Benefits
Letter").
5.6 FEES AND EXPENSES. Whether or not the transactions contemplated
hereby are consummated, all Expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such Expenses, except (a) if the Merger is consummated, the Surviving
Corporation shall pay, or cause to be paid, any and all property or transfer
taxes imposed on the Company or its Subsidiaries; (b) the Expenses incurred in
connection with the printing, filing and mailing to shareholders of the Proxy
Statement, if any, and the solicitation of shareholder approvals shall be shared
equally by the Company and Parent; and (c) as provided in Section 7.2. As used
in this Agreement, "Expenses" includes all expenses (including, without
limitation, (i) all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates and (ii)
the fees, costs and expenses relating to obtaining financing for the
transactions contemplated hereby, including commitment fees and the like)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including the preparation,
printing, filing and mailing of the Offer Documents and the Proxy Statement, if
any, and the solicitation of shareholder approvals and all other matters related
to the transactions contemplated hereby.
5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent shall
cause to be maintained in effect (a) for a period of six (6) years the
provisions regarding indemnification of current or former officers and directors
of the Company (each an "Indemnified Party") contained in the Organizational
Documents of the Company and its Subsidiaries in effect following the Effective
Time, provided that in the event any claim or claims are asserted or made within
such six (6) year period all rights to indemnification in respect of any claim
or claims shall continue until final disposition of any and all such claims and
(b) for a period of six (6) years, the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
the Company (provided that Parent or the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time) with
respect to claims arising from facts or events that occurred on or before the
Effective Time. Parent shall not be obligated to pay annual premiums to the
extent such premiums exceed $450,000 (the "Maximum Premium"). If such insurance
coverage cannot be obtained at all, or can only be obtained at an
35
annual premium in excess of the Maximum Premium, Parent shall maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Premium. This covenant is intended to be for
the benefit of, and may be enforced by, each of the Indemnified Parties and
their respective heirs and legal representatives.
Notwithstanding anything contained herein to the contrary, the Company
Board shall be permitted to amend the Company's Bylaws so that Section 8.1
thereof shall read in its entirety as set forth in Schedule 5.7 attached hereto.
Parent and Merger Sub agree that, for a period of no less than six (6) years,
the bylaws of the Surviving Corporation shall include the same indemnification
provisions as those set forth in the Company's bylaws in effect on the date
hereof (including the amendment set forth in Schedule 5.7) and none of the
Company, Parent and the Surviving Corporation shall take any action (including
amendment of any bylaw provision of the Company or the Surviving Corporation)
which adversely affects the rights of any Indemnified Person (as such term is
defined in the Company's Bylaws (including the amendment set forth in Schedule
5.7)) who was an officer or director of the Company on the date hereof. This
paragraph shall be enforceable by any such Indemnified Person.
5.8 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the
Company and Parent shall use all reasonable best efforts to develop a joint
communications plan and each party shall use all reasonable best efforts (a) to
ensure that all press releases and other public statements with respect to the
transactions contemplated hereby shall be consistent with such joint
communications plan and (b) unless otherwise required by applicable law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange, to consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
5.9 TAKEOVER STATUTES. If any Takeover Statute shall become applicable
to the transactions contemplated hereby, the Company and the members of the
Company Board shall grant such approvals and take such actions as are necessary
so that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such Takeover Statute on the transactions contemplated
hereby.
5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE. During
the period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the Company or any
of its Subsidiaries is a party (other than involving Parent). Subject to the
foregoing, during such period, the Company agrees to enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including seeking to obtain injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof and any
court having jurisdiction.
5.11 COMPANY OPTION PLANS. Upon the Effective Time, each outstanding
option (a "Company Stock Option") to purchase Company Common Stock, whether or
not fully exercisable, shall be canceled and, in exchange therefore, each holder
thereof shall, upon delivery of a
36
cancellation agreement in form and substance satisfactory to Parent, receive a
cash payment at the Effective Time (or, if later, on the fifth business day
after delivery of such cancellation agreement), in an amount equal to the
product of (x) the excess, if any, of the Merger Consideration per share over
the exercise price per share of the Company Common Stock subject to such Company
Stock Options and (y) the number of shares of Company Common Stock subject to
such Company Stock Options. All amounts payable pursuant to this Section 5.11
shall be subject to any required withholding of taxes and shall be paid without
interest. In furtherance of the foregoing, the Company has, as of the date of
this Agreement, amended each of the Company Stock Option Plans to provide that
at the Effective Time, each Company Stock Option shall thereupon represent the
right, upon exercise, to receive the Merger Consideration, in cash (without
interest) and, that in lieu of exercise, each holder of the Company Stock Option
may receive the cash payment described in this Section 5.11 upon delivery of the
cancellation agreement.
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver (subject to Section 1.4(c)) on or prior
to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. The Company shall have obtained all
approvals of holders of shares of capital stock of the Company necessary to
approve this Agreement and all the transactions contemplated hereby (including
the Merger) to the extent required by law.
(b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) REQUIRED REGULATORY APPROVALS. All authorizations,
consents, orders and approvals of, and declarations and filings with, and all
expirations of waiting periods imposed by, any Governmental Entity which, if not
obtained in connection with the consummation of the transactions contemplated
hereby, could reasonably be expected to have a Material Adverse Effect on the
Company or prevents the Company, Parent or Merger Sub from consummating the
transactions contemplated hereby (collectively, "Required Regulatory
Approvals"), shall have been obtained, have been declared or filed or have
occurred, as the case may be, and all such Required Regulatory Approvals shall
be in full force and effect.
(d) COMPLETION OF THE OFFER. Merger Sub shall have (i)
commenced the Offer pursuant to Section 1.1 hereof and (ii) subject to the
satisfaction or waiver of all conditions to the Offer, purchased, pursuant to
the terms and conditions of such Offer, all shares of Company Common Stock duly
tendered and not withdrawn; provided, however, that neither Parent nor Merger
Sub shall be entitled to rely on the condition in clause (ii) above if either of
them shall have failed to purchase shares of Company Common Stock pursuant to
the Offer in breach of their obligations under this Agreement.
37
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after approval of this
Agreement and the matters contemplated herein, including the Merger, by the
shareholders of the Company:
(a) By mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
(b) By either the Company or Parent if the Offer shall not
have been consummated by the date which is four (4) months from the date of this
Agreement (the "Outside Date"); provided that the right to terminate this
Agreement under this Section 7.1 (b) shall not be available to any party whose
failure to fulfill any obligation or condition under this Agreement has been the
cause of, or resulted in, the failure of the Offer to be consummated on or
before such date; notwithstanding the foregoing, if the sole reason the Offer
shall not have been consummated by the Outside Date is the failure to have
obtained all Required Regulatory Approvals prior to the date which is four (4)
months from the date of this Agreement, the Outside Date shall, at the request
of either Parent or the Company, be extended for a period of sixty (60) days;
(c) By either the Company or Parent if any court or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties shall have
used their reasonable best efforts to resist, resolve or lift, as applicable,
subject to the provisions of Section 5.3) permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and nonappealable;
(d) By Parent if (i) the Company Board (or any committee
thereof) shall have withdrawn or adversely modified (including by amendment of
the Schedule 14D-9) its approval or recommendation of the Offer, the Merger or
this Agreement or the Company Board, upon request by Parent following receipt by
the Company of an Acquisition Proposal, shall fail to reaffirm such approval or
recommendation within ten (10) Business Days after such request or shall have
resolved to do any of the foregoing; (ii) the Company Board shall have
recommended to the shareholders of the Company that they approve an Acquisition
Proposal other than transactions contemplated by this Agreement; or (iii) a
tender offer or exchange offer is commenced that, if successful, would result in
any Person becoming a "beneficial owner" (as such term is defined under
Regulation 13D under the Exchange Act) of 15% or more of the outstanding shares
of Company Common Stock (other than by Parent or an affiliate of Parent) and the
Company Board recommends that the shareholders of the Company tender their
shares in such tender or exchange offer;
(e) By Parent, prior to the purchase by Merger Sub of shares
of Company Common Stock pursuant to the Offer, upon a material breach of any
material covenant or agreement on the part of the Company set forth in this
Agreement, or if the Offer Condition contained in
38
paragraph (c)(i) or (ii) of Annex A is not capable of being satisfied or cured
by the earlier of (x) the Outside Date or (y) within thirty (30) days after any
executive officer of the Company becomes aware of the breach of any
representation or warranty resulting in the failure to satisfy such Offer
Condition;
(f) By the Company, upon a material breach of any material
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement, or upon the failure of any representation or warranty of Parent or
Merger Sub set forth in this Agreement (i) to the extent such representation or
warranty is qualified by Material Adverse Effect, to be true and correct and
(ii) to the extent such representation or warranty is not qualified by Material
Adverse Effect, to be true and correct, except that, in the case of this clause
(ii), no failure shall be deemed to have occurred so long as such failure, taken
together with all other such failures, does not have a Material Adverse Effect
on Parent in the case of each of clause (i) and (ii) as of the date of this
Agreement and (except to the extent such representation or warranty speaks as of
an earlier date) as of the consummation of the Offer as though made on and as of
such date, and except that, in the case of each of clause (i) and (ii), no
failure shall be deemed to have occurred so long as such failure is capable of
being satisfied or cured by the earlier of (x) the Outside Date or (y) within
thirty (30) days after any executive officer of Parent becomes aware of the
breach of any representation or warranty resulting in such failure;
(g) By the Company, if Merger Sub fails to (i) commence the
Offer or keep the Offer open as required in Section 1.1 hereof or (ii) purchase
validly tendered shares of the Company Common Stock in violation of the terms of
the Offer and this Agreement;
(h) By Parent, if any Person other than Parent, Merger Sub, or
any of their affiliates or any group of which any of them is a member, shall
have entered into a definitive agreement or an agreement in principle with the
Company or any of its Subsidiaries with respect to an Acquisition Proposal or
the Company Board (or any committee thereof) shall have adopted a resolution
approving any of the foregoing;
(i) By the Company, prior to the purchase by Merger Sub of
Shares of Company Common Stock pursuant to the Offer, if (i) the Company Board
determines to accept a Superior Proposal pursuant to Section 5.4(b); (ii) the
Company notifies Parent in writing that it intends to enter into such agreement,
attaching the final version of such agreement to such notice; and (iii)
Purchaser does not make within 72 hours after receipt of the Company's written
notice of its intention to enter into a binding agreement for a Superior
Proposal, any offer the Company Board reasonably and in good faith determines
(after consultation with its independent financial advisor and outside legal
counsel) is at least as favorable to the shareholders of the Company (other than
the shareholders who are parties to the Shareholder Agreement) as the Superior
Proposal and during such period the Company reasonably considers and discusses
in good faith all proposals submitted by Parent and, without limiting the
foregoing, meets with, and causes its financial advisors and legal advisors to
meet with, Parent and its advisors from time to time as required by Parent to
consider and discuss in good faith Parent's proposals. The Company agrees to
notify Parent immediately if its intention to enter into a binding agreement
referred to in its notice to Parent shall change at any time after giving
notice; or
39
(j) By Parent, if the holders of shares of Company Common
Stock which are a party to the Shareholder Agreement either (i) fail to tender
into the Offer (and not withdraw) a majority of the outstanding shares of
Company Common Stock or (ii) in any material respect, fail to vote, fail to act
by consent or interfere with or frustrate the exercise of the rights conferred
upon the holders of proxies identified and set forth in Section 6(a) of the
Shareholder Agreement.
7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
the Company or Parent as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent
or the Company or their respective officers or directors except that (a) Section
5.6, Section 5.7 (but only if the Parent or any affiliate thereof owns any
Company Common Stock), this Section 7.2 and Section 8.5(a) shall survive any
termination of this Agreement and (b) notwithstanding anything to the contrary
contained in this Agreement, neither Parent or Company shall be relieved or
released from any liabilities or damages arising out of its breach of any
provision of this Agreement which shall include the obligation to pay all
expenses incurred by the non-breaching party in connection with this Agreement.
(b) In the event that this Agreement is terminated pursuant to
Section 7.1(d), Section 7.1(e) (due to a material breach of any material
covenant or agreement on the part of the Company contained in Article I hereof,
or in Sections 5.1, 5.2, 5.3, 5.4, 5.8, 5.9, 5.10 or 7.1(i) hereof), Section
7.1(h), Section 7.1(i), or Section 7.1(j), then the Company shall pay Parent in
cash (A) U.S. $65,000,000 plus (B) up to U.S. $14,000,000 of Parent's Expenses
incurred in connection with the Offer and Merger. The amounts set forth in this
Section 7.2(b) shall be payable by wire transfer of immediately available funds
(A) prior to such termination by the Company pursuant to Section 7.1(i) or (B)
on the date of such termination by Parent pursuant to Section 7.1(d), Section
7.1(e), Section 7.1(h) or Section 7.1(j). The Company acknowledges that the
agreements contained in this Section 7.2(b) are an integral part of the
transaction contemplated in this Agreement, and that, without these agreements,
Parent and Merger Sub would not enter into this Agreement. In the event the
Company shall fail to pay any amount payable pursuant to this Section 7.2(b)
when due, the Expenses of Parent and Merger Sub shall be deemed to include (i)
the costs and expenses actually incurred or accrued by Parent and Merger Sub
(including, without limitations, fees and expenses of counsel) in connection
with the collection under the enforcement of this Section 7.2(b), together with
(ii) interest on such unpaid amounts, commencing on the date that such amounts
became due, at a rate equal to the prime rate of Citibank, N.A. on the date that
such amounts became due plus 2.00% per annum.
7.3 AMENDMENT. Subject to Section 1.4(c), this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Boards
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company, but, after any
such approval, no amendment shall be made which by law or in accordance with the
rules of Nasdaq requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
40
7.4 EXTENSION; WAIVER. Subject to Section 1.4(c), at any time prior to
the Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (a) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
No delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. Unless otherwise provided, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
which the parties hereto may otherwise have at law or in equity. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 NON-SURVIVAL 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. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally; (b) on the first Business Day following the date of dispatch if
delivered by a nationally recognized next-day courier service; or (c) if sent by
facsimile transmission, with a copy mailed on the same day in the manner
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
(a) if to Parent or Merger Sub, to:
Koninklijke Numico N.V.
Rokkeveenseweg 49
2712 PJ Zoetermeer
The Netherlands
Facsimile: 011-31-79-353-9671
Attention: Julitte van der Ven, General Counsel
41
with a copy to:
Vedder Price Kaufman & Kammholz
222 North LaSalle Street, Suite 2400
Chicago, Illinois 60601
Facsimile: (312) 609-5005
Attention: Guy E. Snyder
William J. Bettman
(b) if to the Company, to,
Rexall Sundown, Inc.
6111 Broken Sound Parkway, NW
Boca Raton, Florida 33487
Facsimile: (561) 999-4729
Attention: Richard Werber, Vice President
and General Counsel
with a copy to
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Facsimile: (305) 579-0717
Attention: Paul Berkowitz
Ira Rosner
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the content requires otherwise.
8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
42
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement (including the Company Disclosure Schedule)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, which
Confidentiality Agreement shall survive the execution and delivery of this
Agreement or any termination hereof. Notwithstanding the foregoing, the entering
into of this Agreement by the Company shall constitute the written consent of
the Company for Parent and or its affiliates to take any of the actions
proscribed by Sections 7(i), (ii), (iii), (iv) and (v) of the Confidentiality
Agreement.
(b) Except as otherwise expressly set forth herein, this
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to the laws
that might be applicable under conflicts of laws principles; provided, that the
matters affecting the validity of the corporate action taken by the Company,
Parent or Merger Sub relating to the Merger shall be governed by the laws of the
State of Florida.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United States
of America, sitting in Delaware, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or the
agreements delivered in connection herewith or the transactions contemplated
hereby or thereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and unconditionally (i)
agrees not to commence any such action or proceeding except in such courts; (ii)
agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Delaware State court or, to the extent permitted by law,
in such Federal court; (iii) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in any such Delaware State or
Federal court; and (iv) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such Delaware State or Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.2. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
43
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS; (ii) IT MAKES SUCH WAIVERS VOLUNTARILY; AND
(iii) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.6(c).
8.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. Any provision of this Agreement held invalid or
unenforceable only in part, degree or certain jurisdictions will remain in full
force and effect to the extent not held invalid or unenforceable. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective permitted successors and
assigns.
8.9 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.10 DEFINITIONS. As used in this Agreement unless the context requires
otherwise:
(a) "affiliate" means any person directly or indirectly
controlling, controlled by or under common control with such other person at the
time at which the determination of affiliation is being made. The term "control"
(including, with correlative meanings, the term "controlled by"
44
or "under common control with"), as applied to any person, means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or other ownership interest, by contract or otherwise.
(b) "Board" means the Board of Directors of any specified
Person (and with respect to Parent means its Supervisory Board) and any properly
serving and acting committees thereof.
(c) "Business Day" means any day on which banks are not
required or authorized to close in the City of New York.
(d) "Code" means the Internal Revenue Code of 1986, as amended
or replaced and as in effect from time to time.
(e) "Company Equity Plans" means (i) the Company's Amended and
Restated 1993 Employee Stock Incentive Plan, the Company's Amended and Restated
1993 Non-Employee Director Stock Option Plan, the Company's Amended and Restated
1994 Non-Employee Director Stock Option Plan, and the Company's 1996 Rexall
Showcase International Distributor Stock Option Plan (collectively, the "Company
Stock Options Plans") and (ii) the Company's Amended and Restated 1993 Employee
Stock Purchase Plan and the Company's 1996 Rexall Showcase International
Distributor Stock Purchase Plan (the "Company Stock Purchase Plans").
(f) "Company Material Contracts" means (a) all contracts
listed as an exhibit to the Company SEC Reports; (b) any other agreement within
the meaning set forth in item 601(b)(10) of Regulation S-K of Title 17, Part 229
of the Code of Federal Regulations; and (c) such agreements listed on Sections
3.1(k)(i) and 3.1(k)(iii) of the Company Disclosure Schedule).
(g) "Intellectual Property" shall mean patents, copyrights,
trademarks (registered and unregistered), service marks, brand names, trade
names, and registrations in any jurisdiction of, and applications in any
jurisdiction to register the foregoing, technology, know-how, software, and
tangible or intangible proprietary information or materials that are used in the
business of the Company and its Subsidiaries as currently conducted and any
other trade secrets related thereto.
(h) "Material Adverse Effect" means, with respect to any
Person, any adverse change, circumstance, development, event or effect that,
individually or in the aggregate with all other adverse changes, circumstances,
developments, events and effects, is or could reasonably be expected to be
materially adverse to the business, operations, properties, assets, liabilities,
condition (financial or otherwise), results of operations or prospects of such
entity and its Subsidiaries taken as a whole, or on the ability of such Person
to perform its obligations under this Agreement or on the ability of such Person
to consummate the Merger and the other transactions contemplated hereby without
material delay other than any change or effect attributable to the economy in
general.
(i) "Organizational Documents" means, with respect to any
entity, the certificate of incorporation, the articles of incorporation, bylaws
or other similar governing documents of such entity.
45
(j) "Person" means an individual, corporation, partnership,
limited liability company association, trust, unincorporated organization,
entity or group (as defined in Section 13(d)(3) the Exchange Act).
(k) "Subsidiary" when used with respect to any Person means
any corporation or other organization, whether incorporated or unincorporated,
(i) of which such Person or any other Subsidiary of such Person is a general
partner (excluding partnerships, the general partnership interests of which held
by such Person or any of its Subsidiaries of such Person do not have a majority
of the voting and economic interests in such partnership) or (ii) at least a
majority of the securities or other interests of which having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
(l) (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax, and
(ii) "Tax Return" means all returns and reports (including elections, claims,
declarations, disclosures, schedules, estimates, computations and information
returns) required to be supplied to a Tax authority in any jurisdiction relating
to Taxes.
(m) "the other party" means, with respect to the Company,
Parent and means, with respect to Parent, the Company.
8.11 PERFORMANCE BY MERGER SUB. Subject to the terms hereof, Parent
hereby agrees to cause Merger Sub to, and to take all reasonable steps to enable
it to, comply with its obligations hereunder and under the Offer and to cause
Merger Sub to consummate the Merger as contemplated herein and whenever this
Agreement requires Merger Sub to take any action, such requirement shall be
deemed to include an undertaking of Parent to cause Merger Sub to take such
action.
8.12 DISCLOSURE SCHEDULES. Notwithstanding anything to the contrary set
forth in the Company's Disclosure Schedule, any matter disclosed in any
subsection of the Company's Disclosure Schedule shall be deemed disclosed only
for the purposes of the specific subsections of this Agreement to which such
subsection relates.
***
46
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of April 30, 2000.
KONINKLIJKE NUMICO N.V.
By: /s/ Julitte van der Ven
---------------------------------
Name: Julitte van der Ven
Title: Attorney-in-Fact
NUTRICIA INVESTMENT CORP.
By: /s/ Julitte van der Ven
------------------------------------
Name: Julitte van der Ven
Title: President
REXALL SUNDOWN, INC.
By: /s/ Damon DeSantis
---------------------------------
Name: Damon DeSantis
Title: President and CEO
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, and subject to the
terms and conditions of the Agreement, Merger Sub shall not be obligated to
accept for payment any shares of Company Common Stock until all Required
Regulatory Approvals shall have been obtained, made or satisfied including until
the expiration of any waiting periods applicable under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and Merger Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC (including Rule 14e-1(c) promulgated under the
Exchange Act) pay for, and may delay the acceptance for payment of or payment
for, any shares of Company Common Stock tendered in the Offer and (subject to
the terms and conditions of the Agreement, including Section 1.1(b)) may amend,
extend or terminate the Offer if, (i) immediately prior to the expiration of the
Offer (as extended in accordance with the Agreement) the Minimum Condition shall
not have been satisfied or (ii) prior to the time of acceptance of any shares of
Company Common Stock pursuant to the Offer any of the following shall occur:
(a) there shall be threatened or pending any action,
litigation or proceeding (hereinafter, an "Action") by any Governmental Entity
or other Person: (i) challenging the acquisition by Parent or Merger Sub of
shares of Company Common Stock or seeking to restrain or prohibit the
consummation of the Offer or the Merger; (ii) seeking to prohibit or impose any
material limitation (including any hold separate obligation) on Parent's, Merger
Sub's or any of their respective affiliates' ownership or operation of all or
any material portion of the business or assets of the Company and its
Subsidiaries taken as a whole or Parent and its Subsidiaries taken as a whole;
or (iii) seeking to impose material limitations on the ability of Parent or
Merger Sub effectively to acquire or hold, or to exercise full rights of
ownership of, the shares of Company Common Stock including the right to vote the
shares of Company Common Stock purchased by them on an equal basis with all
other shares of Company Common Stock on all matters properly presented to the
shareholders of the Company; or
(b) any statute, rule, regulation, order or injunction shall
be enacted, promulgated, entered, enforced or deemed to or become applicable to
the Agreement, the Offer, the Merger or the Shareholder Agreement, or any other
action shall have been taken, by any court or other Governmental Entity, that
could reasonably be expected to result in any of the effects of, or have any of
the consequences sought to be obtained or achieved in, any Action referred to in
clauses (i) through (iii) of paragraph (a) above; or
(c) (i) the representations and warranties of the Company
contained in Section 3.1(b) of the Agreement shall not be true and correct in
all material respects as of the date of the Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (ii) the
representations and warranties of the Company set forth in the Agreement (other
than those set forth in Section 3.1(b) of the Agreement), (x) to the extent
qualified by Material Adverse Effect shall not be true and correct and (y) to
the extent not qualified by Material Adverse Effect shall not be true and
correct, except that this clause (y) shall be deemed satisfied so long as any
failures of such
representations and warranties to be true and correct, taken together, do not
have a Material Adverse Effect on the Company, in the case of each of clause (x)
and (y) as of the date of the Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (iii) the
Company shall have breached or failed to comply in any material respect with any
of its material obligations, covenants or agreements under the Agreement; or
(iv) any change or event shall have occurred that has, or could reasonably be
expected to have, a Material Adverse Effect on the Company; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange or the American Stock Exchange; (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, the European Union or the United Kingdom; (iii) any material limitation
(whether or not mandatory) by any Governmental Entity on the extension of credit
by banks or other lending institutions; (iv) a suspension of, or limitation on,
the currency exchange markets or the imposition of, or material changes in, any
currency or exchange control laws in the United States or abroad; (v) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or the Netherlands
which could reasonably be expected to have a Material Adverse Effect on the
Parent or Company or prevent (or materially delay) the consummation of the
Offer; or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or a worsening thereof; or
(e) (i) if the holders of shares of Company Common Stock which
are the subject of the Shareholder Agreement shall have either (A) failed to
tender into the Offer (and not withdrawn) a majority of the oustanding shares of
Company Common Stock or (B) in any material respect, failed to vote, failed to
act by consent or have interfered with or have frustrated the exercise of the
rights confered upon the holders of proxies identified and set forth in Section
6(a) of the Shareholder Agreement, or (ii) any of the representations and
warranties of any such party set forth in the Shareholder Agreement shall not be
true in any material respect, in each case, when made or at any time prior to
the consummation of the Offer as if made at and as of such time, or (iii) the
Shareholder Agreement shall have been invalidated or terminated with respect to
any shares of Company Common Stock subject thereto; or
(f) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified in any manner
adverse to Parent or Merger Sub its approval or recommendation of the Offer, the
Merger or this Agreement; or
(g) the Company shall have entered into or shall have publicly
announced its intention to enter into, an agreement or agreement in principle
with respect to any Acquisition Proposal; or
(h) the Agreement or the Shareholder Agreement shall have been
terminated in accordance with its terms.
The conditions set forth in clauses (a) through (h) are for the sole
benefit of Parent and Merger Sub and may be asserted by Parent and Merger Sub
regardless of the circumstances giving
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rise to such condition and may be waived by Parent and Merger Sub in whole or in
part at any time and from time to time, by express and specific action to that
effect, in their sole discretion. The failure by Parent or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed.
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SCHEDULE 5.7
8.1 INDEMNIFICATION OF OFFICERS AND DIRECTORS
(a) The Corporation (and any successor to the Corporation by merger
or otherwise) shall indemnify each person (including the heirs, personal
representatives, executors, administrators and estate of the person) who was
or is a party, or is threatened to be made a party, or was or is a witness,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and any appeal therefrom
(collectively, a "Proceeding"), against all liability (including judgments,
settlements, penalties and fines) and reasonable costs, charges and expenses
(including attorneys' fees) asserted against him or incurred by him by reason
of the fact that the person is or was a director or officer of the
Corporation (each an "Indemnified Person").
(b) Notwithstanding the foregoing, except with respect to the
indemnification specified in the third sentence of subsection (d) of this
Section, the Corporation shall not indemnify an Indemnified Person in
connection with a Proceeding (or part thereof) initiated by such Indemnified
Person.
(c) Reasonable costs, charges and expenses (including attorneys'
fees) incurred by an Indemnified Person in defending a Proceeding may and, in
connection with a transaction involving a Change in Control of the
Corporation or a potential Change in Control of the Corporation shall, be
paid by the Corporation in advance of the final disposition of the
Proceeding, upon receipt of an undertaking reasonably satisfactory to the
Board (the "Undertaking") by the Indemnified Person to repay all amounts so
advanced if it is ultimately determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Section. A person to
whom costs, charges and expenses are advanced pursuant to this Section shall
not be obligated to repay pursuant to the Undertaking until the final
determination of (A) the pending Proceeding in a court of competent
jurisdiction concerning the right of that person to be indemnified or (B) the
obligation of the person to repay pursuant to the Undertaking.
For purposes hereof, a "Change in Control" shall mean a merger,
sale of all or substantially all of the assets, or acquisition of more than
40% of the voting stock of the Corporation, by a tender offer, stock purchase
or otherwise.
(d) Any indemnification or advance under this Section shall be made
as promptly as practicable after delivery of the written request of the
Indemnified Person. The right to indemnification or advances as granted by
this Section shall be enforceable by an Indemnified Person in any court of
competent jurisdiction if the Corporation denies the request under this
Section in whole or in part, or if no disposition of the request is made as
promptly as practicable after delivery of the request. The requesting
person's reasonable costs and expenses incurred in connection with
successfully establishing his right to indemnification shall also be
indemnified by the Corporation.
(e) The indemnification provided by this Section shall not be
deemed exclusive of any other rights to which an Indemnified Person may now
or thereafter be entitled under any by-law, statute, agreement, vote of
shareholders or disinterested directors or recommendation of counsel or
otherwise. All rights to indemnification and advances under this Section
shall be deemed to be a contract between the Corporation and each Indemnified
Person who is an Indemnified Person at any time while this Section is in
effect. Any repeal or modification of this Section shall not in any way
diminish the rights to indemnification of such indemnified Person or the
obligations of the Corporation arising hereunder for claims relating to
matters occurring prior to the repeal or modification.
(f) If this Section or any portion is invalidated or held to be
unenforceable on any ground by a court of competent jurisdiction, the
Corporation shall nevertheless indemnify each Indemnified Person to the
fullest extent permitted by all applicable portions of this Section that have
not been invalidated or adjudicated unenforceable, and as permitted by
applicable law.