EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of November 24, 2004
(this "Agreement"), is among General Electric Company, a New York corporation
("Parent"), Triton Acquisition Corp., a Massachusetts corporation and an
indirect wholly owned Subsidiary of Parent ("Merger Sub"), and Ionics,
Incorporated, a Massachusetts corporation (the "Company"). Certain terms used in
this Agreement are used as defined in Section 8.12.
WHEREAS, the respective Boards of Directors of the Company and
Merger Sub have adopted and approved and declared advisable, and the Board of
Directors of Parent has approved, this Agreement and the merger of Merger Sub
with and into the Company (the "Merger"), on the terms and subject to the
conditions provided for in this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Merger Sub to enter into this Agreement, Parent and certain stockholders of the
Company are entering into a voting agreement (the "Voting Agreement"), pursuant
to which, among other things, such stockholders have agreed to vote to adopt
this Agreement and to take certain other actions in furtherance of the Merger,
in each case upon the terms and subject to the conditions set forth therein; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE I
The Merger
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Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Massachusetts Business
Corporation Act (the "MBCA"), at the Effective Time Merger Sub shall be merged
with and into the Company, and the separate corporate existence of Merger Sub
shall thereupon cease, and the Company shall be the surviving corporation in the
Merger (the "Surviving Corporation").
Section 1.2 Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. (New York City time) on a date to be specified by the
parties, which date shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VI (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of such conditions), unless another time
or date, or both, are agreed to in writing by the parties
hereto. The date on which the Closing is held is herein referred to as the
"Closing Date". The Closing will be held at the offices of Testa, Hurwitz &
Thibeault, LLP, 125 High Street, Boston, Massachusetts, 02110, unless another
place is agreed to in writing by the parties hereto.
Section 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date the parties shall file
with the Secretary of State of the Commonwealth of Massachusetts articles of
merger, executed in accordance with the relevant provisions of the MBCA (the
"Articles of Merger"). The Merger shall become effective upon the filing of the
Articles of Merger or at such later time as is agreed to by the parties hereto
and specified in the Articles of Merger (the time at which the Merger becomes
effective is herein referred to as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the MBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Articles of Organization and By-laws of the Surviving
Corporation.
(a) The articles of organization of the Company, as in effect
immediately prior to the Effective Time, shall be amended in the Merger to be in
the form of Exhibit A hereto and, as so amended, such articles of organization
shall be the articles of organization of the Surviving Corporation until
thereafter amended as provided therein or by applicable Law.
(b) At or prior to the Effective Time, the Company shall cause its
by-laws to be amended, as of the Effective Time, to read in their entirety as
set forth in Exhibit B, and, as so amended, such by-laws shall be the by-laws of
the Surviving Corporation until thereafter amended as provided therein or by
applicable Law.
Section 1.6 Directors of the Surviving Corporation. Parent and the
Company shall take all necessary actions to cause the directors of Merger Sub
immediately prior to the Effective Time to be the directors of the Surviving
Corporation immediately following the Effective Time, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.7 Officers of the Surviving Corporation. The officers of
the Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation until their respective successors are duly appointed and
qualified or their earlier death, resignation or removal in accordance with the
articles of organization and by-laws of the Surviving Corporation.
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ARTICLE II
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates; Company Stock Options
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Section 2.1 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of common stock, par value $1.00 per share, of the Company ("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 validly
issued, fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Any
shares of Company Common Stock that are owned by the Company as treasury stock,
and any shares of Company Common Stock owned by Parent or Merger Sub, shall be
automatically canceled and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than shares to be canceled in accordance
with Section 2.1(b)) shall be converted into the right to receive $44.00 in
cash, without interest (the "Merger Consideration"). 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 which immediately prior to the Effective Time represented any such
shares of Company Common Stock (each, a "Certificate") shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration to be paid in consideration therefor upon surrender of such
Certificate in accordance with Section 2.2(b), without interest.
Section 2.2 Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company to act as agent for payment of the Merger
Consideration upon surrender of the Certificates (the "Paying Agent"). Promptly
after the Effective Time, Parent shall deposit, or cause to be deposited, with
the Paying Agent cash sufficient to pay the aggregate Merger Consideration
payable pursuant to Section 2.1(c) upon surrender of outstanding shares of
Company Common Stock. Such funds provided to the Paying Agent are referred to
herein as the "Payment Fund".
(b) Payment Procedures. Promptly (but in any event within five (5)
Business Days) after the Effective Time, the Paying Agent shall mail to each
holder of record of a Certificate (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent, and which shall be in such form and shall have such
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other provisions as Parent may reasonably specify) 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 Paying
Agent, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions (and such other customary documents
as may reasonably be required by the Paying Agent), the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Company Common Stock formerly represented by such
Certificate shall have been converted pursuant to Section 2.1(c), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of Company Common Stock that is not registered
in the transfer records of the Company, the proper amount of cash may be paid in
exchange therefor to a Person other than the Person in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or shall otherwise be in proper form for transfer and the Person
requesting such payment shall pay any transfer and other Taxes required by
reason of the payment to a Person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such Tax either has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration. No interest will be paid or will accrue on
the cash payable upon surrender of any Certificate.
(c) Transfer Books; No Further Ownership Rights in Company Stock.
All cash paid upon the surrender 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 previously represented
by such Certificates. At the close of business on the day on which the Effective
Time occurs, the stock transfer books of the Company shall be closed and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. Subject to Section 2.2(e),
if, at any time after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond, in such
reasonable amount as Parent may direct, as indemnity against any claim that may
be made against it with respect to such Certificate, the Paying Agent will pay
the Merger Consideration to such Person in exchange for such lost, stolen or
destroyed Certificate.
(e) Termination of Fund. Any portion of the Payment Fund (including
the proceeds of any investments thereof) that remains undistributed to the
holders of the Certificates for 180 days after the Effective Time shall be
delivered by the Paying Agent to the Surviving Corporation upon demand. Any
holders of Certificates who have not theretofore complied with this Article II
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration.
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(f) No Liability. Notwithstanding any provision of this Agreement to
the contrary, none of Parent, the Surviving Corporation or the Paying Agent
shall be liable to any Person for any amount properly paid from the Payment Fund
or delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(g) Investment of Payment Fund. The Paying Agent shall invest the
Payment Fund as directed by Parent. Any interest and other income resulting from
such investment shall be the property of, and shall be paid promptly to, Parent.
Section 2.3 Company Stock Options.
(a) To the extent not inconsistent with contractual rights, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any Option, each Option outstanding immediately prior to the
Effective Time shall be cancelled and terminated or converted into the right to
receive a cash amount equal to the Option Consideration for each share of
Company Common Stock then subject to the Option. Prior to the Effective Time,
the Company shall take all actions necessary to provide that each Option
outstanding immediately prior to the Effective Time (whether or not then vested
or exercisable) shall be cancelled and terminated and converted at the Effective
Time into the right to receive a cash amount equal to the Option Consideration
for each share of Company Common Stock then subject to the Option. Except as
otherwise provided below, the Option Consideration shall be paid as soon (but in
any event within five (5) business days) after the Closing Date as shall be
practicable. Prior to the Effective Time, the Company shall make any amendments
to the terms of the Company Stock Plans, and to the terms of any agreement or
instrument evidencing the grant of any Options issued other than pursuant to the
Company Stock Plans, and use its best efforts to obtain any consents from
holders of Options that, in each case, are necessary to give effect to the
transactions contemplated by this Section 2.3 and, notwithstanding anything to
the contrary, payment may be withheld in respect of any Option until any
necessary consents are obtained. Without limiting the foregoing, the Company
shall take all actions necessary to ensure that the Company will not at the
Effective Time be bound by any options, SARs, warrants or other rights or
agreements which would entitle any Person, other than Parent and its
Subsidiaries, to own any capital stock of the Surviving Corporation or to
receive any payment in respect thereof (other than pursuant to this Section
2.3). Prior to the Effective Time, the Company shall take all actions necessary
to terminate all its Company Stock Plans, such termination to be effective at or
before the Effective Time. For purposes of this Agreement, "Option
Consideration" means, with respect to any share of Company Common Stock issuable
under a particular Option, an amount equal to the excess, if any, of (i) the
Merger Consideration per share of Company Common Stock over (ii) the exercise
price payable in respect of such share of Company Common Stock issuable under
such Option.
(b) The Company shall take such steps as may be reasonably requested
by any party hereto to cause dispositions of Company equity securities
(including derivative securities) pursuant to the transactions contemplated by
this Agreement by each individual who is a director or officer of the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act in accordance with
that certain No-Action
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Letter dated January 12, 1999 issued by the Securities and Exchange Commission
(the "SEC") regarding such matters.
Section 2.4 Withholding Taxes. Parent, the Surviving Corporation and
the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to a holder of shares of Company Common Stock or Options
pursuant to this Agreement such amounts as may be required to be deducted or
withheld with respect to the making of such payment under the Code, or under any
provision of state, local or foreign Tax Law. To the extent that amounts are so
deducted and withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the Person in respect of which such deduction
and withholding was made.
Section 2.5 Adjustments. If during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
Company Common Stock, or securities convertible or exchangeable into or
exercisable for shares of Company Common Stock, shall occur by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares of Company Common Stock, or any similar transaction, or
any stock dividend thereon with a record date during such period, the Merger
Consideration shall be appropriately adjusted to reflect such change.
ARTICLE III
Representations and Warranties of the Company
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Except as set forth in the letter (each section of which qualifies
the correspondingly numbered representation and warranty to the extent expressly
specified therein and such other representations and warranties to the extent a
matter in such section of the disclosure schedule is disclosed in such a way as
to make its relevance to the information called for by such other representation
and warranty readily apparent) dated as of the date hereof and addressed to
Parent from the Company and delivered to Parent simultaneously with the
execution of this Agreement (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Merger Sub that:
Section 3.1 Organization, Standing and Corporate Power.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the Laws of the Commonwealth of Massachusetts and has
all requisite corporate power and authority necessary to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and as currently proposed by its management to be conducted. Each of the
Subsidiaries is duly organized, validly existing and, to the extent applicable
in such jurisdiction, in good standing under the Laws of the jurisdiction in
which it is incorporated or otherwise organized and has all requisite corporate
power and authority necessary to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and as currently
proposed by its management to be conducted, except where the failure of any such
Subsidiary to be duly organized, validly existing or in good standing,
individually or in the aggregate, has
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not had and would not reasonably be expected to have a Company Material Adverse
Effect. Each of the Company and its Subsidiaries is duly licensed or qualified
to do business and, to the extent applicable in such jurisdiction, is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing, individually or in the aggregate,
has not had and would not reasonably be expected to have a Company Material
Adverse Effect. For purposes of this Agreement, the term "Company Material
Adverse Effect" shall mean any change, event, occurrence or state of facts which
has had or would reasonably be expected to have, a material adverse effect on
the business, properties, assets, liabilities (contingent or otherwise), results
of operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; PROVIDED, HOWEVER, that none of the following
shall be deemed either alone or in combination to constitute, and none of the
following shall be taken into account in determining whether there has been, or
would reasonably be expected to be, a Company Material Adverse Effect: (1) any
change, event, occurrence or state of facts relating to the U.S. or global
economy, financial markets or political conditions in general or any of the
industries in which the Company operates in general, including such changes
thereto as are caused by terrorist activities, entry into or material worsening
of war or armed hostilities, or other national or international calamity (in
each case under this clause (1) to the extent not disproportionately affecting
the Company and its Subsidiaries taken as a whole); (2) any change, event,
occurrence or state of facts that directly arises out of or results from the
announcement or pendency of this Agreement or any of the Transactions; (3) any
change, event, occurrence or state of facts directly arising out of or resulting
from any action taken, or failure to take an action, by the Company or its
Subsidiaries with Parent's express written consent or in accordance with the
express written instructions of Parent or as otherwise expressly required or
specifically permitted to be taken by the Company or its Subsidiaries pursuant
to the terms of this Agreement; (4) any change in the Company's stock price or
trading volume or any failure to meet internal projections or forecasts or
published revenue or earnings projections of industry analysts (provided that
this clause (4) shall not be construed as providing that the change, event,
occurrence or state of facts giving rise to such change or failure does not
constitute or contribute to a Company Material Adverse Effect); and (5) any
change, event, occurrence or state of facts arising out of any change in GAAP or
applicable accounting requirements or principles which occur or become effective
after the date of this Agreement. A "Company Material Adverse Effect" shall be
deemed to have occurred if, and only if, the applicable change, event,
occurrence or state of facts (or aggregation of changes, events, occurrences or
state of facts) has resulted in or would reasonably be expected to result in
liability to Parent or its Subsidiaries (including for the purposes hereof, the
Company or its Subsidiaries) or diminution in the value of the Company
(including its Subsidiaries), however arising, of $110,000,000 or more in the
aggregate.
(b) Exhibit 21.0 of the Company's Annual Report on Form 10-K for the
year ended December 31, 2003 lists all Subsidiaries of the Company together with
the jurisdiction of organization of each such Subsidiary. All the outstanding
shares of capital stock of, or other equity interests in, each Subsidiary of the
Company and, to the
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Knowledge of the Company, all the outstanding shares of capital stock, or other
equity interests, owned by the Company in each Joint Venture have been duly
authorized and validly issued and are fully paid and nonassessable. All the
outstanding shares of capital stock of, or other equity interests in, each
Subsidiary of the Company and all the outstanding shares of capital stock, or
other equity interests, owned by the Company in each Joint Venture, are owned
directly or indirectly by the Company, with the exception of liens granted in
favor of UBS AG, Stamford Branch, as the Administrative Agent and Collateral
Agent, pursuant to the Credit Agreement dated February 13, 2004 by and among the
Company and the other parties thereto (as in effect on the date hereof and as
amended with Parent's consent in accordance with this Agreement, the "Credit
Agreement"), free and clear of all liens, pledges, charges, mortgages,
encumbrances, adverse rights or claims and security interests of any kind or
nature whatsoever (including any restriction on the right to vote or transfer
the same, except for such transfer restrictions of general applicability as may
be provided under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), and the "blue sky"
laws of the various States of the United States or any foreign equivalent of any
thereof) (collectively, "Liens"). Except as set forth in Exhibit 21.0 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2003, the
Company does not own, directly or indirectly, any capital stock, voting
securities or equity interests in any Person.
(c) The Company has made available to Parent complete and correct
copies of its articles of organization and by-laws (the "Company Charter
Documents"), in each case as amended to the date of this Agreement. All such
Company Charter Documents and the certificates of incorporation and by-laws (or
comparable organizational documents) of each of the Company's Subsidiaries (the
"Subsidiary Documents"), are in full force and effect and neither the Company
nor any of its Subsidiaries is in violation of any of their respective
provisions. The Company has made available to Parent and its representatives
correct and complete copies of the minutes (or, in the case of minutes that have
not yet been finalized, drafts thereof) of all meetings of stockholders, the
Board of Directors and each committee of the Board of Directors of the Company
held since January 1, 2002.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock. At the close of business on November
22, 2004, (i) 22,787,807 shares of Company Common Stock were issued and
outstanding (no shares of Company Common Stock were held by the Company in its
treasury), (ii) 4,916,840 shares of Company Common Stock were reserved for
issuance under the Company Stock Plans (of which 3,492,117 shares of Company
Common Stock were subject to outstanding Options granted under the Company Stock
Plans) and (iii) 880,000 shares of Company Common Stock were reserved for
issuance under outstanding Options granted other than pursuant to the Company
Stock Plans. All outstanding shares of Company Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Included in Section 3.2(a) of the Company Disclosure Schedule
is a correct and complete list, as of
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November 23, 2004, of all outstanding options or other rights to purchase or
receive shares of Company Common Stock granted under the Company Stock Plans or
otherwise, and, for each such option or other right, (1) the number of shares of
Company Common Stock subject thereto and (2) the exercise price thereof. Since
November 22, 2004, the Company has not issued any shares of its capital stock,
voting securities or equity interests, or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock, voting
securities or equity interests, other than pursuant to the exercise of
outstanding Options referred to above in this Section 3.2(a). Except (A) as set
forth above in this Section 3.2(a) or (B) as otherwise expressly permitted by
Section 5.2 hereof, as of the date of this Agreement there are not, and as of
the Effective Time there will not be, any shares of capital stock, voting
securities or equity interests of the Company issued and outstanding or any
subscriptions, options, warrants, calls, convertible or exchangeable securities,
rights, commitments or agreements of any character providing for the issuance of
any shares of capital stock, voting securities or equity interests of the
Company, including any representing the right to purchase or otherwise receive
any Company Common Stock.
(b) None of the Company or any of its Subsidiaries has issued or is
bound by any outstanding subscriptions, options, warrants, calls, convertible or
exchangeable securities, rights, commitments or agreements of any character
providing for the issuance or disposition of any shares of capital stock, voting
securities or equity interests of any Subsidiary of the Company. There are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock, voting securities or
equity interests (or any options, warrants or other rights to acquire any shares
of capital stock, voting securities or equity interests) of the Company or any
of its Subsidiaries.
Section 3.3 Authority; Noncontravention; Voting Requirements.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the Company
Stockholder Approval, to perform its obligations hereunder and to consummate the
Transactions. The execution, delivery and performance by the Company of this
Agreement, and the consummation by it of the Transactions, have been duly
authorized and approved by its Board of Directors, and except for obtaining the
Company Stockholder Approval for the adoption of this Agreement, no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming due authorization, execution and
delivery hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws of general application affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity, whether considered in a proceeding at law or in equity
(collectively, the "Bankruptcy and Equity Exception").
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(b) The Company's Board of Directors, at a meeting duly called and
held, has unanimously (i) adopted and approved this Agreement and approved the
Transactions, including the Merger, and (ii) resolved to recommend that
stockholders of the Company adopt and approve this Agreement (the "Company Board
Recommendation").
(c) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the Transactions, nor compliance
by the Company with any of the terms or provisions hereof, will (i) conflict
with or violate any provision of the Company Charter Documents or any of the
Subsidiary Documents or (ii) assuming that the authorizations, consents and
approvals referred to in Section 3.4 and the Company Stockholder Approval are
obtained and the filings referred to in Section 3.4 are made, (x) violate any
Law, judgment, writ or injunction of any Governmental Authority applicable to
the Company or any of its Subsidiaries or any of their respective properties or
assets, or (y) materially violate or conflict with, result in the loss of any
material benefit under, constitute a material default (or an event which, with
notice or lapse of time, or both, would constitute a material default) under,
result in the termination or revocation of or a right of termination or
cancellation under, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of, the
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any loan or credit agreement, debenture, note, bond, mortgage,
indenture, deed of trust, license, lease, contract or other agreement,
instrument or obligation (each, a "Contract") to which the Company or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected that is a Material Contract or a Designated
BOO/MSA, or any Permit (other than Environmental Permits).
(d) The affirmative vote (in person or by proxy) of the holders of
two-thirds of the outstanding shares of Company Common Stock at the Company
Stockholders Meeting or any adjournment or postponement thereof in favor of the
adoption of this Agreement (the "Company Stockholder Approval") is the only vote
or approval of the holders of any class or series of capital stock of the
Company or any of its Subsidiaries which is necessary to adopt this Agreement
and approve the Transactions.
Section 3.4 Governmental Approvals. Except for (i) the filing with
the Securities and Exchange Commission (the "SEC") of a proxy statement relating
to the Company Stockholders Meeting (as amended or supplemented from time to
time, the "Proxy Statement"), and other filings required under, and compliance
with other applicable requirements of, the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"), and the rules of The New York Stock Exchange, (ii) the filing of the
Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts pursuant to the MBCA, (iii) filings required under, and compliance
with other applicable requirements of, the HSR Act and (iv) filings required
under, and compliance with other applicable requirements of, non-U.S. Laws
intended to prohibit, restrict or regulate actions or transactions having the
purpose or effect of monopolization, restraint of trade, harm to competition or
effectuating foreign investment (collectively, "Foreign Antitrust Laws"), no
consents or
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approvals of, or filings, declarations or registrations with, any Governmental
Authority are necessary for the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
Transactions, other than such other consents, approvals, filings, declarations
or registrations that, if not obtained, made or given, would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the Company's ability to perform its obligations under this Agreement or
consummate the Transactions.
Section 3.5 Company SEC Documents; Undisclosed Liabilities.
(a) The Company has filed and furnished all required reports,
schedules, forms, prospectuses, and registration, proxy and other statements
with the SEC since January 1, 2003 (collectively, and in each case including all
exhibits, schedules and amendments thereto and documents incorporated by
reference therein, the "Company SEC Documents"). None of the Company's
Subsidiaries is required to file periodic reports with the SEC pursuant to the
Exchange Act. As of their respective effective dates (in the case of Company SEC
Documents that are registration statements filed pursuant to the requirements of
the Securities Act) and as of their respective SEC filing dates (in the case of
all other Company SEC Documents), the Company SEC Documents complied in all
material respects with the requirements of the Exchange Act and the Securities
Act, as the case may be, applicable to such Company SEC Documents, and none of
the Company SEC Documents as of such respective dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. To the Knowledge
of the Company, no investigation by the SEC with respect to the Company or any
of its Subsidiaries is pending or threatened.
(b) At the time they were filed with the SEC, the consolidated
financial statements of the Company included in the Company SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as then in effect, had been prepared in accordance with GAAP (except, in
the case of unaudited quarterly statements, as indicated in the notes thereto)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented (including within the
meaning of the Sarbanes-Oxley Act of 2002) the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments, none of which has been or will be, individually or
in the aggregate, material to the Company and its Subsidiaries, taken as a
whole). At the time they are filed with the SEC, the consolidated financial
statements of the Company included in the Company SEC Documents to be filed
after the date hereof will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as then in effect, will have been prepared in
accordance with GAAP (except, in the case of unaudited quarterly statements, as
indicated in the notes thereto) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and will fairly
present (including within the meaning of the
11
Sarbanes-Oxley Act of 2002) the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal year-end audit
adjustments, none of which has been or will be, individually or in the
aggregate, material to the Company and its Subsidiaries, taken as a whole).
(c) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e)
under the Exchange Act) and internal control over financial reporting (as such
term is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act).
The principal executive officer and the principal financial officer of the
Company have timely made all certifications required by the Sarbanes-Oxley Act
of 2002 and any rules and regulations promulgated by the SEC thereunder (the
"SOxA"). All of the statements contained in such certifications are complete and
correct as of the dates thereof. As of the date of the Company's most recent
Quarterly Report on Form 10-Q, the Company's principal executive officer and its
principal financial officer disclosed, based on their evaluation at that time of
internal control over financial reporting, to the Company's auditors and the
audit committee of the Board of Directors of the Company (x) all significant
deficiencies and material weaknesses (as such terms are defined in PCAOB
Auditing Standard No. 2) in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize and report financial data (each
a "Financial Control Weakness") and (y) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company's internal control over financial reporting.
(d) The Company is in compliance in all material respects with the
provisions of Section 13(b) of the Exchange Act. Neither the Company nor any of
its Subsidiaries nor, to the Company's Knowledge, any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries, has (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Exchange Act or (ii) accepted or received any unlawful
contributions, payments, gifts or expenditures. Except as set forth in Company
SEC Documents filed by the Company and publicly available prior to the date of
this Agreement (the "Filed Company SEC Documents") or for events (or series of
related matters) as to which the amounts involved do not exceed $60,000, since
the Company's proxy statement dated April 1, 2004, no event has occurred that
would be required to be reported pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
(e) Between January 1, 2003 and the date hereof, neither the Company
nor any of its Subsidiaries nor any of their respective directors or officers,
nor to the Company's Knowledge any of their employees, auditors or accountants
has received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company or any of its Subsidiaries or their respective
12
internal accounting controls, including any material complaint, allegation,
assertion or claim that the Company or any of its Subsidiaries has engaged in
questionable accounting or auditing practices. Between January 1, 2003 and the
date hereof, no attorney representing the Company or any of its Subsidiaries,
whether or not employed by the Company or any of its Subsidiaries, has reported
evidence of a material violation of securities Laws, breach of fiduciary duty or
similar violation by the Company or any of its officers, directors, employees or
agents to the Board of Directors of the Company or any committee thereof or to
any director or officer of the Company.
(f) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) whether or not required, if known, to be reflected or reserved
against on a consolidated balance sheet of the Company prepared in accordance
with GAAP or the notes thereto, except liabilities (i) as and to the extent set
forth on the unaudited balance sheet of the Company and its Subsidiaries as of
September 30, 2004 (the "Balance Sheet Date") included in the Company's
Quarterly Report on Form 10-Q for the quarter ended as of such date (including
the notes thereto) or as otherwise set forth in the consolidated financial
statements of the Company included in the Filed Company SEC Documents, (ii)
incurred after the Balance Sheet Date in the ordinary course of business
consistent with past practice, (iii) that are not material to the Company and
its Subsidiaries taken as a whole, (iv) arising in the ordinary course of
business pursuant to Contracts disclosed on the Company Disclosure Schedule or
that are not required to be disclosed on the Company Disclosure Schedule
pursuant to the terms of this Agreement or (v) incurred after the date hereof in
accordance with Section 5.2.
Section 3.6 Absence of Certain Changes or Events. Between the
Balance Sheet Date and the date hereof, there have not been any events, changes,
occurrences or state of facts that, individually or in the aggregate, have had
or would reasonably be expected to have a Company Material Adverse Effect.
Except as disclosed in the Filed Company SEC Documents, between the Balance
Sheet Date and the date hereof (a) the Company and its Subsidiaries have carried
on and operated their respective businesses in all material respects in the
ordinary course of business consistent with past practice and (b) neither the
Company nor any of its Subsidiaries has taken any action described in Section
5.2 hereof that if taken after the date hereof and prior to the Effective Time
without the prior written consent of Parent would violate such provision.
Without limiting the foregoing, except as disclosed in the Filed Company SEC
Documents, since the Balance Sheet Date there has not occurred any damage,
destruction or loss (whether or not covered by insurance) of any material asset
of the Company or any of its Subsidiaries which materially affects the use
thereof.
Section 3.7 Legal Proceedings. Except as disclosed in the Filed
Company SEC Documents, there is no pending or, to the Knowledge of the Company,
threatened, material legal, administrative, arbitral or other proceeding, claim,
suit or action against the Company or any of its Subsidiaries, or, to the
Knowledge of the Company, Governmental Investigation, nor is there any
injunction, order, judgment, ruling or decree imposed (or, to the Knowledge of
the Company, threatened to be imposed) upon the Company, any of its Subsidiaries
or the assets of the Company or any
13
of its Subsidiaries, by or before any Governmental Authority, including, in each
case, in connection with an alleged violation of (i) applicable Laws relating to
the export of goods and services to any foreign jurisdiction against which the
United States or the United Nations maintains sanctions or export controls,
including applicable regulations of the US Department of Commerce and the US
Department of State ("Export Control Requirements"), or (ii) the U.S. Foreign
Corrupt Practices Act (the "FCPA") or any other applicable Law regarding illegal
payments and gratuities (collectively with the FCPA, "Improper Payment Laws").
Section 3.8 Compliance With Laws; Permits.
(a) The Company and its Subsidiaries and, to the Knowledge of the
Company, the Joint Ventures, are (and since January 1, 2002 have been) in
compliance in all material respects with all laws (including common law),
statutes, rules, codes, executive orders, ordinances, regulations, requirements,
administrative rulings or judgments of any Governmental Authority or any order,
writ, injunction or decree, whether preliminary or final, entered by any court,
arbitrator or other Governmental Authority (collectively, "Laws") applicable to
the Company or any of its Subsidiaries or any of the Joint Ventures, or any of
their properties or other assets or any of their businesses or operations
(including those Laws related to Export Control Requirements and the prohibition
of improper payments). Since January 1, 2002, neither the Company nor any of its
Subsidiaries nor, to the Knowledge of the Company, any of the Joint Ventures,
has made or has been ordered to make any payment in respect of any Governmental
Damages. Since January 1, 2002, neither the Company nor any of its Subsidiaries
nor, to the Knowledge of the Company, any of the Joint Ventures, has received
written notice to the effect that a Governmental Authority claimed or alleged
that the Company or any of its Subsidiaries was not in compliance in a material
respect with any Law applicable to the Company or any of its Subsidiaries or any
of the Joint Ventures, any of their material properties or other assets or any
of their businesses or operations (including those Laws related to Export
Control Requirements and Improper Payment Laws). None of the Company, its
Subsidiaries or any of their respective Affiliates nor, to the Knowledge of the
Company, any of the Joint Ventures (i) is conducting as of the date hereof any
internal investigation with respect to any alleged act or omission, or (ii) has
made between January 1, 2002 and the date hereof or is planning to make a
voluntary disclosure to any Governmental Authority with respect thereto.
(b) The Company and each of its Subsidiaries and, to the Knowledge
of the Company, each of the Joint Ventures, hold all material licenses,
franchises, permits, certificates, approvals and authorizations from
Governmental Authorities, or required by Governmental Authorities to be
obtained, in each case necessary for the conduct of their respective businesses,
including the manufacture and sale of their respective products (collectively,
"Permits"). The Company and its Subsidiaries and, to the Knowledge of the
Company, the Joint Ventures, are (and since January 1, 2004 have been) in
compliance in all material respects with the terms of all Permits. Since January
1, 2004, neither the Company nor any of its Subsidiaries nor, to the Knowledge
of the Company, any of the Joint Ventures, has received written notice to the
effect that a Governmental Authority was considering the amendment, termination,
revocation or
14
cancellation of any Permit. To the Knowledge of the Company, the consummation of
the Merger, in and of itself, will not cause the revocation or cancellation of
any Permit that is material to any of the Joint Ventures.
Section 3.9 Information in Proxy Statement. The Proxy Statement and
any other document filed with the SEC by the Company in connection with the
Merger (or any amendment thereof or supplement thereto), at the date first
mailed to the stockholders of the Company, at the time of the Company
Stockholders Meeting and at the time filed with the SEC, as the case may be,
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; PROVIDED, HOWEVER, that no representation is made by the Company
with respect to statements made therein based on information supplied in writing
by Parent or Merger Sub specifically for inclusion in such documents. The Proxy
Statement and such other documents filed with the SEC by the Company will comply
in all material respects with the provisions of the Exchange Act.
Section 3.10 Tax Matters.
(a) Each of the Company and its Subsidiaries has timely filed, or
has caused to be timely filed on its behalf (taking into account an extension of
time within which to file), all income and franchise Tax Returns and all other
material Tax Returns required to be filed by it, and all such Tax Returns are
correct and complete in all material respects. All Taxes shown to be due on such
Tax Returns have been timely paid. For purposes of this Section 3.10(a), "other
material Tax Returns" means any and all Tax Returns (other than income and
franchise Tax Returns) for which Taxes that are due and payable (whether or not
shown due) exceed $25,000.
(b) The Company has made a valid election under Section 338(h)(10)
of the Code (including filing all forms, elections, selling shareholder consents
and other filings required to be filed as of the date hereof and as of the
Closing Date to effect a valid election under Section 338(h)(10) of the Code) to
treat the Company's acquisition of Ecolochem, Inc., a Virginia corporation, as a
taxable acquisition of assets for federal income tax purposes.
(c) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve for all Taxes payable by the
Company and its Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements. No deficiency with respect to
Taxes has been proposed, asserted or assessed against the Company or any of its
Subsidiaries.
(d) The Federal income Tax Returns of the Company and each of its
Subsidiaries have been examined by and settled with the IRS (or the applicable
statute of limitations has expired) for all years through 1996. All assessments
for Taxes due with respect to such completed and settled examinations or any
concluded litigation have been fully paid.
15
(e) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code since the
effective date of Section 355(e) of the Code.
(f) No audit or other administrative or court proceedings are
pending with any Governmental Authority with respect to Taxes of the Company or
any of its Subsidiaries and no written notice thereof has been received.
(g) The Company has made, or will make within 30 days of the date
hereof, available to Parent complete and correct copies of (i) all income and
franchise Tax Returns and all other material Tax Returns of the Company and its
Subsidiaries for the preceding three taxable years and (ii) any audit report
issued within the last three years (or otherwise with respect to any audit or
proceeding in progress) relating to income and franchise and any other material
Taxes of the Company or any of its Subsidiaries.
(h) The Company is not a "United States real property holding
corporation" within the meaning of Section 897 of the Code during the 5-year
period ending on the Closing Date.
(i) For purposes of this Agreement: (i) "Taxes" shall mean (a) all
federal, state, local or foreign taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, (b) all interest,
penalties, fines, additions to tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clauses (a) or (b), and (c)
any amounts in respect of any items described in clauses (a) and/or (b) payable
by reason of contract, assumption, transferee liability, operation of Law,
Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof
of any analogous or similar provision under Law) or otherwise, and (ii) "Tax
Returns" shall mean any return, report, claim for refund, estimate, information
return or statement, tax election or other similar document relating to or
required to be filed with any Governmental Authority with respect to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 3.11 Employee Benefits and Labor Matters.
(a) Section 3.11(a) of the Company Disclosure Schedule sets forth a
complete and correct list, separately with respect to each country in which the
Company or any of its Subsidiaries has employees, of: (i) all "employee benefit
plans" (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and without regard to whether ERISA applies
thereto), and (ii) all other employee benefit plans, agreements, policies or
arrangements, including employment,
16
consulting or other compensation agreements, collective bargaining agreements
and all plans, agreements, policies or arrangements providing for bonus or other
incentive compensation, equity or equity-based compensation, retirement,
deferred compensation, change in control rights or benefits, termination or
severance benefits, stock purchase, sick leave, vacation pay, salary
continuation, hospitalization, medical insurance, life insurance, fringe
benefits or other compensation, or educational assistance, in each case to which
the Company or any of its Subsidiaries has any obligation or liability
(contingent or otherwise) thereunder for current or former directors or
employees of the Company or any of its Subsidiaries (the "Employees")
(collectively, the "Company Plans"). Section 3.11(a) of the Company Disclosure
Schedule separately sets forth each Company Plan which is a "multiemployer
plan", as defined in Section 3(37) of ERISA (a "Multiemployer Plan"), or is or
has been subject to Sections 4063 or 4064 of ERISA.
(b) True, current and complete copies of the following documents,
with respect to each of the Company Plans (other than a Multiemployer Plan),
have been made available to Parent by the Company, to the extent applicable: (i)
any plans, all amendments thereto and related trust documents, insurance
contracts or other funding arrangements, and amendments thereto; (ii) the most
recent Forms 5500 and all schedules thereto and the most recent actuarial
report, if any; (iii) the most recent IRS determination letter; (iv) the most
recent summary plan descriptions; and (v) written descriptions of all
non-written material agreements relating to the Company Plans.
(c) The Company Plans have been maintained, in all material
respects, in accordance with their terms and with all applicable provisions of
ERISA, the Code and other applicable Laws, and neither the Company nor any of
its Subsidiaries nor, to the Knowledge of the Company, any "party in interest"
or "disqualified person" with respect to the Company Plans has engaged in a
non-exempt "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA or in a violation of any other applicable Laws
comparable to such provisions of the Code or ERISA. No fiduciary has any
material liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
Company Plan; provided that this sentence is subject to the Knowledge of the
Company to the extent that any Company Plan refers to a Plan fiduciary other
than (i) the Company, (ii) any Subsidiary, or (iii) or any of their respective
officers, employees and directors.
(d) Each Company Plan that is intended to meet the requirements for
country specific tax-favored treatment under Subchapter B of Chapter 1 of
Subtitle A of the Code or other applicable Laws meets such requirements,
including (i) any Company Plans intended to qualify under Section 401 of the
Code are so qualified and (ii) any trusts intended to be exempt from federal
income taxation under Section 501 of the Code are so exempt. Nothing has
occurred with respect to the operation of the Company Plans that could cause the
loss of such tax favored treatment, qualification or exemption, or the
imposition of any material liability, penalty or tax under ERISA, the Code or
other applicable Law.
17
(e) Neither the Company, any of its Subsidiaries or any other
Persons who are treated as a single employer together with the Company or any of
its Subsidiaries pursuant to Section 414(b), (c), (m) (o) of ERISA ("ERISA
Affiliates") has any unsatisfied liability with respect to any complete or
partial withdrawal from any Multiemployer Plan, or the termination or
reorganization of any Multiemployer Plan. Parent will not have by reason of the
consummation of the Transactions any additional material obligation or liability
(contingent or otherwise) (i) with respect to any Multiemployer Plan, or (ii)
any collective bargaining agreement (or any memorandum of understanding or other
modification of any collective bargaining agreement).
(f) With respect to each Company Plan that is not intended to
qualify under Section 401 of the Code providing for post-employment benefits
(unless all liabilities under such plan are fully provided for or otherwise
fully satisfied by one or more fully paid up insurance policies or annuity
contracts with a person unaffiliated with the Company or any of its
Subsidiaries), the Company has made available to Parent separately as to each
such plan as of December 31, 2003: (i) a statement of the liabilities under such
plan (as determined using actuarial assumptions consistent with U.S. GAAP
(regardless of whether U.S. GAAP applies), (ii) a list of all assets of such
plan, (iii) the amount of any book reserves or other amounts set aside for
payment of liabilities arising under such plan, and (iv) the amount or a
description of any undisclosed liabilities arising under such plan.
Except as disclosed in Section 3.11(f) of the Company Disclosure
Schedule, each Company Plan primarily covering current or former employees of
the Company or any of its Subsidiaries is funded through assets held in a trust
or similar funding vehicle, insurance, annuity contracts or similar agreements,
or amounts reserved on the financial statements of the Company or any of its
Subsidiaries such that the liabilities arising under such plan (as calculated
using actuarial assumptions and methods consistent with U.S. GAAP regardless of
whether U.S. GAAP applies) are fully satisfied or provided for. Each Company
Plan complies in all material respects with all applicable Laws and to the
extent such plan is intended or required to register with any Governmental
Authority such plan is and has been properly registered.
(g) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Company Plans (including workers compensation) or by law (without regard to
any waivers granted under Section 412 of the Code) to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof (including any valid extension). As of the date of the most recent
consolidated balance sheet of the Company included in the Filed Company SEC
Documents for the period ending as of the Closing Date and for the three
preceding years, all contributions that are not yet due will have been paid or
sufficient accruals for such contributions and other payments in accordance with
GAAP are duly and fully provided for on such balance sheets. No accumulated
funding deficiencies exist in any of the Company Plans or Title IV Plans subject
to Section 412 of the Code.
18
(h) There is no "amount of unfunded benefit liabilities" as defined
in Section 4001(a)(18) of ERISA in any of the Company Plans subject to Title IV
of ERISA, as determined in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation ("PBGC") to determine the level of funding
required in the event of the termination of such Company Plan.
(i) Neither the Company nor any of its Subsidiaries or ERISA
Affiliates has terminated any Title IV Plan in a distress termination, or
incurred any outstanding liability under Section 4062 of ERISA to the PBGC or to
a trustee appointed under Section 4042 of ERISA. All premiums due the PBGC with
respect to the Title IV Plans have been timely paid.
(j) No liability under any Company Plan is funded nor has any such
obligation been satisfied with the purchase of a contract from an insurance
company that is not rated AA by Standard & Poor's Corporation or the equivalent
by a nationally recognized rating agency.
(k) Neither the Company nor any of its Subsidiaries or ERISA
Affiliates, or any organization to which the Company is a successor or parent
corporation within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction within the meaning of Section 4069 or 4212(c) of ERISA as to which
the Company or any of its Subsidiaries has any obligation or liability,
contingent or otherwise.
(l) There are no pending actions, claims or lawsuits which have been
asserted or instituted against the Company Plans, the assets of any of the
trusts under such plans or the sponsor or administrator of any of the Company
Plans, or against any fiduciary of the Company Plans (other than routine benefit
claims), nor does the Company have any Knowledge of facts that could form the
basis for any such claim or lawsuit.
(m) All amendments and actions required to bring the Company Plans
into conformity in all material respects with all of the applicable provisions
of the Code, ERISA and other applicable laws have been made or taken, except to
the extent that such amendments or actions are not required by law to be made or
taken until a date after the Closing Date.
(n) None of the Company Plans provide for post-employment life or
health insurance, or other welfare benefits coverage for any participant or any
beneficiary of a participant, except (i) as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or
other similar law, (ii) deferred compensation benefits accrued as Liabilities on
the Company Financial Statements, and (iii) at the expense of the participant or
the participant's beneficiary. Each of the Company and any ERISA Affiliate which
maintains a "group health plan" within the meaning of Section 5000(b)(1) of the
Code has complied in all material respects with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA.
19
(o) Neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (i) except as set forth in Sections 2.1
and 2.3, result in any payment becoming due to any Employee, (ii) increase any
benefits otherwise payable under any Company Plan or (iii) except as set forth
on Section 3.11 of the Company Disclosure Schedule, result in the acceleration
of the time of payment or vesting of any such benefits under any such plan.
(p) Neither the Company nor any of its Subsidiaries has a contract,
plan or commitment, whether legally binding or not, to create any additional
Company Plan or to modify any existing Company Plan.
(q) No stock or other security issued by the Company or any of its
Subsidiaries forms or has formed a material part of the assets of any Company
Plan.
(r) Any individual who performs services for the Company or any of
its Subsidiaries and who is not treated as an employee of the Company or any of
its Subsidiaries for federal income tax purposes is not an employee for such
purposes.
(s) None of the Employees is represented in his or her capacity as
an employee of the Company or any of its Subsidiaries by any labor organization
or works council or similar representative. Neither the Company nor any of its
Subsidiaries has recognized any labor organization, nor has any labor
organization been elected as the collective bargaining agent of any Employees,
nor has the Company or any of its Subsidiaries entered into any collective
bargaining agreement or union contract recognizing any labor organization as the
bargaining agent of any Employees. There is no union organization activity
involving any of the Employees, pending or, to the Knowledge of the Company,
threatened, nor has there ever been union representation involving any of the
Employees. There is no picketing, pending or, to the Knowledge of the Company,
threatened, and there are no strikes, slowdowns, work stoppages, other job
actions, lockouts, arbitrations, grievances or other labor disputes involving
any of the Employees pending or, to the Knowledge of the Company, threatened.
There are no complaints, charges or claims against the Company or any of its
Subsidiaries pending or, to the Knowledge of the Company, threatened that could
be brought or filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment or failure to employ by the Company or any of its
Subsidiaries, of any individual. The Company and its Subsidiaries are in
compliance with all Laws relating to the employment of labor, including all such
Laws relating to wages, hours, the Worker Adjustment and Retraining Notification
Act and any similar state or local "mass layoff" or "plant closing" law
("WARN"), collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security taxes and any similar tax, except for immaterial
non-compliance. There has been no "mass layoff" or "plant closing" (as defined
by WARN) with respect to the Company or any of its Subsidiaries since September
1, 2003.
Section 3.12 Environmental Matters.
20
(a) Except for those matters that (together with the matters
referred to in Section 3.12(e)) have not resulted and would not reasonably be
expected to result in the Company or any of its Subsidiaries incurring
Environmental Liabilities individually in excess of $2,000,000 or in the
aggregate in excess of $6,000,000, (A) each of the Company and its Subsidiaries
is, and has been, in compliance with all applicable Environmental Laws, (B)
there is no investigation, suit, claim, action or proceeding relating to or
arising under Environmental Laws that is pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any real property currently or, to the Knowledge of the Company, formerly
owned, operated or leased by the Company, its Subsidiaries or any of their
respective predecessors; (C) neither the Company, its Subsidiaries or any of
their respective predecessors has received any notice of or entered into or
assumed by Contract or operation of Law or otherwise, any obligation, liability,
order, settlement, judgment, injunction or decree relating to or arising under
Environmental Laws; (D) no facts, circumstances or conditions exist with respect
to the Company or any of its Subsidiaries or any property currently (or, to the
Knowledge of the Company, formerly) owned, operated or leased by the Company,
any of its Subsidiaries or any of their respective predecessors or any property
to or at which the Company, any of its Subsidiaries or any of their respective
predecessors transported or arranged for the disposal or treatment of Hazardous
Materials that would reasonably be expected to result in the Company and its
Subsidiaries incurring Environmental Liabilities; (E) neither the execution and
delivery of this Agreement by the Company, nor the consummation by the Company
of the Transactions, nor compliance by the Company with any of the provisions
hereof, will result in the termination or revocation of, or a right of
termination or cancellation under any Environmental Permit; and (F) there have
been no Releases of Hazardous Materials on properties currently (or, to the
Knowledge of the Company, formerly) owned, operated or leased by the Company,
its Subsidiaries, or any of their respective predecessors. The matters set forth
in Section 3.12(a) of the Company Disclosure Schedule, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(b) The Company has made available complete copies of all
environmentally related audits, studies, reports, analyses and results of
investigations in the possession of the Company or any of its Subsidiaries or
any of their respective representatives that have been performed by third
parties since March 1, 2003 with respect to currently or previously owned,
leased or operated properties of the Company, any of its Subsidiaries or their
respective predecessors.
(c) (i) The Company has obtained and currently maintains all Permits
necessary under Environmental Laws for their operations ("Environmental
Permits"), (ii) there is no investigation known to the Company, nor any action
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any real property owned, operated or leased by the Company to revoke
such Environmental Permits, and (iii) the Company has not received any written
notice from any Person to the effect that there is lacking any Environmental
Permit required under Environmental Law for the current use or operation of any
property owned, operated or leased by the Company.
21
(d) The Transactions do not require the consent of or filings with
any Governmental Authority with jurisdiction over the Company or any of its
Subsidiaries on environmental matters.
(e) Except as set forth in the environmental reports listed on
Schedule 3.12(e), and for those matters that (together with the matters referred
to in Section 3.12(a)) have not resulted and would not reasonably be expected to
result in the Company and its Subsidiaries incurring Environmental Liabilities,
individually in excess of $2,000,000 or in the aggregate in excess of
$6,000,000, there is not now, nor has there been in the past, on, in or under
any real property owned, leased or operated by the Company, its Subsidiaries or
any of their respective predecessors, (i) any underground storage tanks,
above-ground storage tanks, dikes or impoundments, (ii) any asbestos-containing
materials, (iii) any polychlorinated biphenyls or (iv) any radioactive
substances.
(f) Neither the Company, its Subsidiaries, nor any of their
respective predecessors has (i) manufactured or distributed or otherwise
incorporated into any product it manufactured or distributed, or (ii) ever
acquired any company or business that manufactured or distributed or otherwise
incorporated into any product it manufactured or distributed, any asbestos or
asbestos-containing materials.
(g) For purposes of this Agreement:
(i) "Environmental Laws" means all Laws relating in any way to
the environment, preservation or reclamation of natural resources, the
presence, management or Release of, or exposure to, Hazardous
Materials, or to human health and safety, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss.
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
ss. 5101 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. ss. 6901 et seq.), the Clean Water Act (33 U.S.C. ss. 1251 et
seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Safe
Drinking Water Act (42 U.S.C. ss. 300f et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.), each of
their state and local counterparts or equivalents, each of their
foreign and international equivalents, and any transfer of ownership
notification or approval statute (including the Industrial Site
Recovery Act (N.J. Stat. Ann. ss. 13:1K-6 et seq.), as each has been
amended and the regulations promulgated pursuant thereto.
(ii) "Environmental Liabilities" means, with respect to any
Person, all liabilities, obligations, responsibilities, remedial
actions, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including any amounts paid in
settlement, all reasonable fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result
of any claim or demand by any other Person or in response to any
22
violation of Environmental Law, whether known or unknown, accrued or
contingent, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, to the extent
based upon, related to, or arising under or pursuant to any
Environmental Law, environmental permit, order or agreement with any
Governmental Authority or other Person, which relates to any
environmental, health or safety condition, violation of Environmental
Law or a Release or threatened Release of Hazardous Materials.
(iii) "Hazardous Materials" means any material, substance or
waste that is regulated, classified, or otherwise characterized under
or pursuant to any Environmental Law as "hazardous", "toxic", a
"pollutant", a "contaminant", "radioactive" or words of similar meaning
or effect, including petroleum and its by-products, asbestos,
polychlorinated biphenyls, radon, mold, urea formaldehyde insulation,
chlorofluorocarbons and all other ozone-depleting substances.
(iv) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing of or migrating into or through the environment.
Section 3.13 Contracts.
(a) Set forth in Section 3.13(a) of the Company Disclosure Schedule
is a list of each Contract that would be required to be filed as an exhibit to a
Registration Statement on Form S-1 under the Securities Act or an Annual Report
on Form 10-K under the Exchange Act if such registration statement or report was
filed by the Company with the SEC on the date hereof and which has not
previously been filed as an exhibit to the Filed Company SEC Documents. Set
forth in Section 3.13(a) of the Company Disclosure Schedule is a list of each of
the following to which the Company or any of its Subsidiaries is a party which
has not previously been filed as an exhibit to the Filed Company SEC Documents:
(A) Contract that purports to limit, curtail or restrict the ability of the
Company or any of its existing or future Subsidiaries or Affiliates to compete
in any geographic area or line of business or restrict the Persons with whom it
and existing or future Subsidiaries or Affiliates can compete or to whom it or
its existing or future Subsidiaries or Affiliates can sell products or deliver
services, (B) [Intentionally omitted], (C) Contract with any director, officer
or other Affiliate of the Company (except for Contracts described in the
Company's Definitive Proxy Statement on Schedule 14A filed with the SEC on March
31, 2004 or included as exhibits in the Filed Company SEC Documents), (D) loan
or credit agreement, mortgage, indenture, note or other Contract or instrument
evidencing indebtedness for borrowed money by the Company or any of its
Subsidiaries or any Contract or instrument pursuant to which indebtedness for
borrowed money may be incurred or is guaranteed by the Company or any of its
Subsidiaries (other than letters of credit issued under the Credit Agreement),
(E) financial derivatives master agreement or confirmation, or futures account
opening agreements and/or brokerage statements, evidencing financial hedging or
similar trading activities, (F) voting agreement, (G) mortgage, pledge, security
agreement, deed of trust or other Contract granting a Lien on any material
property or assets of the Company or any of its Subsidiaries, (H) Contract
(other than customer, client or supply Contracts or
23
Joint Ventures or BOO/MSAs) that involve consideration (whether or not measured
in cash) of greater than $5,000,000, (I) "standstill" or similar agreement in
effect as of the date hereof, or (J) commitment or agreement to enter into any
of the foregoing (the Contracts and other documents required to be listed on
Section 3.13(a) of the Company Disclosure Schedule, together with the Contracts
listed on Schedule 3.13(a) under the heading "Joint Venture Agreements" (the
"Joint Venture Agreements") any and all other Contracts of such type entered
into in accordance with Section 5.2 and the Contracts filed as exhibits to the
Filed Company SEC Documents or referred to in the parenthetical included in
clause (C) above, each a "Material Contract"). The Company has heretofore made
available to Parent complete and correct copies of each Material Contract in
existence as of the date hereof, together with any and all amendments and
supplements thereto and material "side letters" and similar documentation
relating thereto.
(b) Neither the Company nor any of its Subsidiaries nor, to the
Knowledge of the Company, any of the Joint Ventures, has any bid outstanding as
of the date of this Agreement that, if accepted or awarded, would result in a
Loss Contract. For purposes of this Agreement, "Loss Contract" means any
Contract with a value in excess of $10,000,000 in which, at the time of its
execution, billings to the customer over the course of the Contract's stated
term are, to the Knowledge of the Company, expected to be less than the costs of
the Company to perform such Contract.
(c) Each of the Material Contracts and each of the Designated
BOO/MSAs is valid, binding and in full force and effect and is enforceable in
accordance with its terms by the Company and its Subsidiaries party thereto,
subject to the Bankruptcy and Equity Exception. Except as disclosed in the Filed
Company SEC Documents, neither the Company nor any of its Subsidiaries is in
default under any Material Contract or any Designated BOO/MSA, nor does any
condition exist that, with notice or lapse of time or both, would constitute a
default thereunder by the Company or its Subsidiaries party thereto. Except as
disclosed in the Filed Company SEC Documents, to the Knowledge of the Company,
no other party to any Material Contract or any Designated BOO/MSA is in default
thereunder, nor does any condition exist that with notice or lapse of time or
both would constitute a default by any such other party thereunder. Neither the
Company nor any of its Subsidiaries has received any written notice of
termination or cancellation under any Material Contract or any Designated
BOO/MSA, received any notice of breach or default under any Material Contract or
any Designated BOO/MSA which breach has not been cured, or granted to any third
party any rights, adverse or otherwise, that would constitute a breach of any
Material Contract or any Designated BOO/MSA.
(d) To the Knowledge of the Company, each of the Joint Ventures'
material Contracts is valid, binding and in full force and effect and is
enforceable in accordance with its terms by the Joint Venture party thereto,
subject to the Bankruptcy and Equity Exception. To the Knowledge of the Company,
none of the Joint Ventures is in material default under any of its material
Contracts, nor does any condition exist that, with notice or lapse of time or
both, would constitute a material default thereunder by a Joint Venture party
thereto. To the Knowledge of the Company, no other party to any of the Joint
Ventures' material Contracts is in material default thereunder, nor does any
24
condition exist that with notice or lapse of time or both would constitute a
material default by any such other party thereunder. To the Knowledge of the
Company, none of the Joint Ventures has received any notice of termination or
cancellation under any of its material Contracts, received any notice of
material breach or material default under any of its material Contracts which
breach has not been cured, or granted to any third party any rights, adverse or
otherwise, that would constitute a material breach of any of its material
Contracts.
Section 3.14 Government Contracts. In connection with the business
of the Company and its Subsidiaries and the Joint Ventures, since January 1,
2000, (a) none of the Company or its Subsidiaries or, to the Knowledge of the
Company, any of the Joint Ventures, has been debarred or suspended from
participation in the award of Contracts with any Governmental Authority; and (b)
to the Knowledge of the Company, there exist no facts or circumstances that
would warrant the institution of suspension or debarment proceedings or the
finding of nonresponsibility or ineligibility on the part of the Company, its
Subsidiaries or the Joint Ventures.
Section 3.15 Title to Properties. The Company and its Subsidiaries
(i) have good and valid title to all properties and other assets which are
reflected on the most recent consolidated balance sheet of the Company included
in the Filed Company SEC Documents as being owned by the Company or one of its
Subsidiaries (or acquired after the date thereof) and which are, individually or
in the aggregate, material to the Company's business or financial condition on a
consolidated basis (except properties sold or otherwise disposed of since the
date thereof in the ordinary course of business consistent with past practice
and not in violation of this Agreement), free and clear of all Liens except (x)
statutory liens securing payments not yet due, (y) security interests, mortgages
and pledges that are disclosed in the Filed Company SEC Documents that secure
indebtedness that is reflected in the most recent consolidated financial
statements of the Company included in the Filed Company SEC Documents and (z)
such other imperfections or irregularities of title or other Liens that,
individually or in the aggregate, do not and would not reasonably be expected to
materially affect the use of the properties or assets subject thereto or
otherwise materially impair business operations as presently conducted or as
currently proposed by the Company's management to be conducted, and (ii) is the
lessee or sublessee of all leasehold estates and leasehold interests reflected
in the Filed Company SEC Documents (or acquired after the date thereof) which
are, individually or in the aggregate, material to the Company's business or
financial condition on a consolidated basis (other than any such leaseholds
whose scheduled terms have expired subsequent to the date of such Filed Company
SEC Documents).
Section 3.16 Intellectual Property.
(a) The Company and its Subsidiaries are the sole and exclusive
owner of, or have a valid and continuing right to use, sell and license, as the
case may be, all Intellectual Property and Technology ("Intellectual Property
Rights") used, sold or licensed by the Company and its Subsidiaries, as
applicable, in the business of the Company and its Subsidiaries as presently
conducted.
25
(b) To the Knowledge of the Company, the products and operation of
the business of the Company and its Subsidiaries and the use of the Intellectual
Property Rights owned by the Company and its Subsidiaries in connection
therewith, do not infringe, constitute an unauthorized use of, or violate any
Intellectual Property of any third party. The Intellectual Property owned by or
licensed to the Company and its Subsidiaries includes all of the Intellectual
Property necessary to enable the Company and its Subsidiaries to conduct their
business in the manner in which such businesses have been since January 1, 2003,
and are currently being, conducted.
(c) Except with respect to licenses of commercial off-the-shelf
Software, neither the Company nor any of its Subsidiaries is obligated to make
any payments by way of royalties, fees or otherwise to any owner or licensor of,
or other claimant to, any Intellectual Property, with respect to the use thereof
or in connection with the conduct of its business.
(d) Section 3.16(d) of the Company Disclosure Schedule sets forth a
complete and correct list of all Patents, registered Marks, pending applications
for registration of any Marks, unregistered Marks, registered Copyrights, and
pending applications for registration of Copyrights owned by the Company or any
of its Subsidiaries, including the jurisdictions in which such Patents, Marks
and Copyrights have been issued or registered or in which such applications have
been filed.
(e) Neither the Company nor any of its Subsidiaries has licensed any
of its Intellectual Property to any Person on an exclusive basis.
(f) To the Knowledge of the Company, no non-public, proprietary
Intellectual Property Rights have actually been disclosed by the Company or any
of its Subsidiaries to any third party other than pursuant to a non-disclosure
agreement that protects the proprietary interests of the Company and its
Subsidiaries in and to such Intellectual Property Rights. The Company and its
Subsidiaries have taken reasonable security measures to protect the
confidentiality of confidential Intellectual Property Rights.
(g) The Company and its Subsidiaries are not the subject of any
pending or, to the Knowledge of the Company, threatened legal, administrative,
arbitral or other proceeding, claim, suit or action which involve a claim or
notice of infringement of, unauthorized use of, or violation of any Intellectual
Property of any third party or challenging the ownership, use, validity or
enforceability of any Intellectual Property Rights, and have not received
written notice of any such threatened claim. To the Knowledge of the Company,
there are no facts or circumstances which management reasonably believes are
likely to form the basis for any claim of infringement of, unauthorized use of,
or violation of any Intellectual Property of any third party or challenging the
ownership, use, validity or enforceability of any material Intellectual Property
Rights.
(h) To the Knowledge of the Company, no third party is infringing,
violating, misusing or misappropriating any Intellectual Property Rights of the
Company
26
or any of its Subsidiaries, and no such claims have been made against a third
party by the Company or any of its Subsidiaries.
Section 3.17 Insurance. All material insurance policies of the
Company and its Subsidiaries (the "Policies") are in full force and effect.
Neither the Company nor any of its Subsidiaries is in material breach or
default, and neither the Company nor any of its Subsidiaries have taken any
action or failed to take any action which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination or modification
of any of the Policies. No notice of cancellation or termination has been
received by the Company with respect to any such Policy. With respect to each of
the legal proceedings set forth in the Company SEC Documents, no carrier of any
Policy has asserted any denial of coverage other than the issuance of customary
reservation of rights letters issued by such carriers in connection with the
filing of any claims.
Section 3.18 Opinion of Financial Advisor. The Board of Directors of
the Company has received the opinions of Goldman, Sachs & Co. ("Goldman Sachs")
and UBS Securities LLC ("UBS"), each dated as of the date of this Agreement, to
the effect that, as of such date, and subject to the various assumptions and
qualifications set forth therein, the consideration to be received in the Merger
by the stockholders of the Company is fair from a financial point of view to
such stockholders (the "Fairness Opinions").
Section 3.19 Brokers and Other Advisors. Except for Goldman Sachs
and UBS, the fees and expenses of which will be paid by the Company, no broker,
investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission, or
the reimbursement of expenses, in connection with the Transactions based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries. The
Company has heretofore delivered to Parent correct and complete copies of the
Company's engagement letter with each of Goldman Sachs and UBS, which letters
describe all fees payable to Goldman Sachs and UBS, as the case may be, in
connection with the Transactions, all agreements under which any such fees or
any expenses are payable and all indemnification and other agreements related to
the engagement of Goldman Sachs and UBS (the "Engagement Letters").
Section 3.20 State Takeover Statutes. No "fair price", "moratorium",
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States (with the exception of
Section 110C, 110D and 110F of the Massachusetts Corporation-Related Laws)
applicable to the Company is applicable to the Merger, the Voting Agreement or
the other Transactions. The action of the Company's Board of Directors in
adopting and approving this Agreement, the Merger and the other Transactions has
rendered Sections 110C, 110D and 110F of the Massachusetts Corporation-Related
Laws inapplicable to this Agreement, the Voting Agreement and the Transactions.
Section 3.21 Company Rights Plan. The Company has taken all actions
necessary to (a) render the Renewed Rights Agreement, dated as of August 19,
27
1997, between the Company and Equiserve Trust Company, as rights agent (as
amended, the "Company Rights Agreement"), inapplicable to this Agreement, the
Voting Agreement and the Transactions, (b) ensure that (i) none of Parent,
Merger Sub or any other Subsidiary of Parent is an Acquiring Person (as defined
in the Company Rights Agreement) pursuant to the Company Rights Agreement as a
result of this Agreement, the Voting Agreement or the Transactions contemplated
hereby and (ii) a Distribution Date, a Triggering Event or a Stock Acquisition
Date (as such terms are defined in the Company Rights Agreement) does not occur,
in the case of clauses (i) and (ii), solely by reason of the execution of this
Agreement or the Voting Agreement or the consummation of the Transactions, and
(c) provide that the Final Expiration Date (as defined in the Company Rights
Agreement) shall occur immediately prior to the Effective Time.
ARTICLE IV
Representations and Warranties of Parent and Merger Sub
-------------------------------------------------------
Parent and Merger Sub jointly and severally represent and warrant to
the Company:
Section 4.1 Organization, Standing and Corporate Power. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which it is incorporated.
Section 4.2 Authority; Noncontravention.
(a) Each of Parent and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement and to perform their
respective obligations hereunder and to consummate the Transactions. The
execution, delivery and performance by Parent and Merger Sub of this Agreement,
and the consummation by Parent and Merger Sub of the Transactions, have been
duly authorized and approved by their respective Boards of Directors and no
other corporate action on the part of Parent and Merger Sub is necessary to
authorize the execution, delivery and performance by Parent and Merger Sub of
this Agreement and the consummation by them of the Transactions. This Agreement
has been duly executed and delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery hereof by the Company, constitutes a
legal, valid and binding obligation of each of Parent and Merger Sub,
enforceable against each of them in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
(b) Neither the execution and delivery of this Agreement by Parent
and Merger Sub, nor the consummation by Parent or Merger Sub of the
Transactions, nor compliance by Parent or Merger Sub with any of the terms or
provisions hereof, will (i) conflict with or violate any provision of the
certificate of incorporation or bylaws of Parent or the articles of organization
or bylaws of Merger Sub or (ii) assuming that the authorizations, consents and
approvals referred to in Section 4.3 are obtained and the filings referred to in
Section 4.3 are made, (x) violate any Law, judgment, writ or injunction of any
Governmental Authority applicable to Parent or any of its Subsidiaries
28
or any of their respective properties or assets, or (y) violate, conflict with,
result in the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of, Parent or Merger Sub or any
of their respective Subsidiaries under, any of the terms, conditions or
provisions of any Contract to which Parent, Merger Sub or any of their
respective Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected except, in the case of clause
(ii), for such violations, conflicts, losses, defaults, terminations,
cancellations, accelerations or Liens as, individually or in the aggregate,
would not reasonably be expected to prevent or materially impair the ability of
Parent or Merger Sub to consummate the Transactions (a "Parent Material Adverse
Effect").
Section 4.3 Governmental Approvals. Except for (i) filings required
under, and compliance with applicable requirements of, the Securities Act, the
Exchange Act and the rules of The New York Stock Exchange, (ii) the filing of
the Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts pursuant to the MBCA and (iii) filings required under, and
compliance with other applicable requirements of, the HSR Act and Foreign
Antitrust Laws, no consents or approvals of, or filings, declarations or
registrations with, any Governmental Authority are necessary for the execution
and delivery of this Agreement by Parent and Merger Sub or the consummation by
Parent and Merger Sub of the Transactions, other than such other consents,
approvals, filings, declarations or registrations that, if not obtained, made or
given, would not, individually or in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect.
Section 4.4 Information Supplied. The information furnished in
writing to the Company by Parent and Merger Sub specifically for inclusion in
the Proxy Statement will not, at the time the Proxy Statement is first mailed to
the stockholders of the Company, at the time of such Company Stockholders
Meeting and at the time filed with the SEC, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 4.5 Ownership and Operations of Merger Sub. Parent owns
beneficially and indirectly of record all of the outstanding capital stock of
Merger Sub. Merger Sub was formed solely for the purpose of engaging in the
Transactions, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
Section 4.6 Financing. Parent has, and will have at the Effective
Time, sufficient cash resources available to pay the aggregate Merger
Consideration pursuant to the Merger.
Section 4.7 Brokers and Other Advisors. No broker, investment
banker, financial advisor or other Person is entitled to any broker's, finder's,
financial
29
advisor's or other similar fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of Parent or any of its
Subsidiaries.
ARTICLE V
Covenants and Agreements
------------------------
Section 5.1 Preparation of the Proxy Statement; Stockholder Meeting.
(a) As promptly as practicable following the date of this Agreement,
the Company shall prepare and file the Proxy Statement with the SEC. The Company
shall use its reasonable best efforts to (i) respond to any comments on the
Proxy Statement or requests for additional information from the SEC with respect
to the Proxy Statement as soon as practicable after receipt of any such comments
or requests and (ii) cause the Proxy Statement to be mailed to the stockholders
of the Company as promptly as practicable following the date of this Agreement.
The Company shall promptly (A) notify Parent upon the receipt of any such
comments or requests and (B) provide Parent with copies of all correspondence
between the Company and its Representatives, on the one hand, and the SEC and
its staff, on the other hand, with respect to the Proxy Statement. Prior to
responding to any such comments or requests or the filing or mailing of the
Proxy Statement, (x) the Company shall provide Parent with a reasonable
opportunity to review and comment on any drafts of the Proxy Statement and
related correspondence and filings, (y) the Company shall include in such
drafts, correspondence and filings all comments reasonably proposed by Parent
and (z) to the extent practicable, the Company and its outside counsel shall
permit Parent and its outside counsel to participate in all communications with
the SEC and its staff (including all meetings and telephone conferences)
relating to the Proxy Statement, this Agreement or any of the Transactions.
Subject to Section 5.3(c), the Proxy Statement shall include the Company Board
Recommendation and, if required, a copy of the written opinions of Goldman Sachs
and UBS referred to in Section 3.18. If at any time prior to the Effective Time
any event shall occur, or fact or information shall be discovered, that should
be set forth in an amendment of or a supplement to the Proxy Statement, the
Company shall, in accordance with the procedures set forth in this Section
5.1(a), prepare and file with the SEC such amendment or supplement as soon
thereafter as is reasonably practicable and to the extent required by applicable
Law, cause such amendment or supplement to be distributed to the stockholders of
the Company.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of, convene
and hold a special meeting of its stockholders (the "Company Stockholders
Meeting") solely for the purpose of obtaining the Company Stockholder Approval.
Subject to Section 5.3(c), the Company shall, through its Board of Directors,
make the Company Board Recommendation. Without limiting the generality of the
foregoing (but subject to Section 7.1(d)(ii)), the Company's obligations
pursuant to the first sentence of this Section 5.1(b) shall not be affected by
(i) the commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) except as
30
required by Massachusetts law, the withdrawal or modification by the Board of
Directors of the Company or any committee thereof of the Company Board
Recommendation or such Board of Directors' or such committee's approval of this
Agreement or the Merger unless otherwise required by Law.
Section 5.2 Conduct of Business of the Company. Except as expressly
permitted by this Agreement, as set forth on Section 5.2 of the Company
Disclosure Schedule or as required by applicable Law, during the period from the
date of this Agreement until the Effective Time, unless Parent otherwise agrees
in writing (which agreement will not be unreasonably withheld or delayed), the
Company shall, and shall cause each of its Subsidiaries to, (x) conduct its
business in the ordinary course consistent with past practice, (y) comply in all
material respects with all applicable Laws and the requirements of all Material
Contracts and Permits and make all voluntary disclosures deemed appropriate to
Governmental Authorities and (z) use commercially reasonable efforts to (i)
maintain and preserve intact its business organization and the goodwill of those
having significant business relationships with it, (ii) retain the services of
its present officers and key employees, and (iii) keep in full force and effect
all material insurance policies maintained by the Company and its Subsidiaries,
other than changes to such policies made in the ordinary course of business
consistent with past practice. Without limiting the generality of the foregoing,
except as expressly permitted by this Agreement, as set forth on Section 5.2 of
the Company Disclosure Schedule or as required by applicable Law, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent (which consent will not be unreasonably withheld or delayed):
(a) (i) issue, sell, grant, dispose of, pledge or otherwise encumber
any shares of its capital stock, voting securities or equity interests, or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for any shares of its capital stock, voting
securities or equity interests, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock, voting securities or equity interests or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for, any shares of its capital stock, voting
securities or equity interests, PROVIDED that the Company may issue shares of
Company Common Stock upon the exercise of options that are outstanding on the
date of this Agreement and in accordance with the terms thereof; (ii) redeem,
purchase or otherwise acquire any of its outstanding shares of capital stock,
voting securities or equity interests, or any rights, warrants, options, calls,
commitments or any other agreements of any character to acquire any shares of
its capital stock, voting securities or equity interests; (iii) declare, set
aside for payment or pay any dividend on, or make any other distribution in
respect of, any shares of its capital stock or otherwise make any payments to
its stockholders in their capacity as such (other than dividends by a direct or
indirect wholly owned Subsidiary of the Company to its parent); (iv) split,
combine, subdivide or reclassify any shares of its capital stock; or (v) amend
(including by reducing an exercise price or extending a term) or waive any of
its rights under, or accelerate the vesting under, any provision of the Company
Stock Plans or any agreement evidencing any outstanding stock option or other
right to acquire capital stock of the Company or any restricted stock purchase
agreement
31
or any similar or related contract, except such vesting as required pursuant to
employment agreements in effect on the date of this Agreement and except that
the Company shall amend the Company's Amended and Restated 1997 Stock Incentive
Plan or any agreements evidencing the grant of Awards (as such term is defined
therein) thereunder in order to provide that any outstanding Awards shall be
exchanged for cash upon consummation of the Merger as contemplated by Section
2.3 hereof;
(b) incur or assume any indebtedness for borrowed money or guarantee
any indebtedness for borrowed money (or enter into a "keep well" or similar
agreement) or issue or sell any debt securities or options, warrants, calls or
other rights to acquire any debt securities of the Company or any of its
Subsidiaries, other than (A) borrowings by the Company or its Subsidiaries in
the ordinary course of business under the Company's or any of its Subsidiaries'
existing credit agreements listed on Section 3.13(a) of the Company Disclosure
Schedule or filed as an exhibit to the Filed Company SEC Documents and
guarantees of such borrowings issued by the Company's Subsidiaries to the extent
required under the terms of such credit facility, (B) the issuance of letters of
credit as contemplated by the Credit Agreement in the ordinary course of
business and (C), borrowings from the Company by a direct or indirect wholly
owned Subsidiary of the Company or borrowings by the Company or a direct or
indirect wholly owned Subsidiary of the Company from a direct or indirect wholly
owned Subsidiary of the Company;
(c) sell, transfer, lease, license, mortgage, encumber or otherwise
dispose of or voluntarily permit to become subject to any Lien (including
pursuant to a sale-leaseback transaction or an asset securitization transaction)
any of its material properties or assets (including securities of Subsidiaries)
to any Person, except (A) sales of products in the ordinary course of business
consistent with past practice, (B) pursuant to Contracts in force at the date of
this Agreement and listed on Section 5.2(c) of the Company Disclosure Schedule,
complete and correct copies of which have been made available to Parent, (C)
dispositions of excess equipment or obsolete or worthless assets or (D) sales of
properties or assets (excluding securities of Subsidiaries) in an amount not in
excess of $500,000 in the aggregate;
(d) make any capital expenditures, except in the ordinary course of
business consistent with past practice and in compliance with the Credit
Agreement;
(e) make any acquisition (by purchase of securities or assets,
merger or consolidation, or otherwise) of any other Person, business or
division;
(f) make any investment (by contribution to capital, property
transfers, purchase of securities or otherwise) in, or loan or advance (other
than travel and similar advances to its employees in the ordinary course of
business consistent with past practice) to, any Person other than a direct or
indirect wholly owned Subsidiary of the Company and other than (i) such
investments, loans or advances required by Contracts existing on the date of
this Agreement set forth on Section 5.2(f) of the Company Disclosure Schedule
and (ii) consumer finance related loans for the purchase of home water treatment
equipment and other related equipment that do not exceed $40 million in
32
the aggregate outstanding at any one time (including any such loans outstanding
on the date hereof);
(g) (i) enter into, terminate or amend (other than immaterial
amendments) any (1) Designated BOO/MSA (other than in the ordinary course of
business consistent with past practice), (2) any Joint Venture Agreement, or (3)
any Material Contract of the type described in clause (A) or (D) of Section
3.13(a) or any partnership or joint venture agreement; (ii) enter into any other
Material Contract; (iii) terminate or amend the Stockholders Agreement dated as
of February 13, 2004 among the Company and the stockholders party thereto or the
Escrow Agreement dated as of February 13, 2004 among the Company, the other
entities and persons listed on Annex A thereto and the Escrow Agent thereunder;
(iv) enter into or extend the term or scope of any Contract that purports to
restrict the Company, or any existing or future Subsidiary or Affiliate of the
Company, from engaging in any line of business or in any geographic area; (v)
amend or modify the Engagement Letters; (vi) enter into any Contract that would
be breached by, or require the consent of any third party in order to continue
in full force following, consummation of the Transactions; (vii) release any
Person from, or modify or waive any provision of, any confidentiality,
standstill or similar agreement other than in connection with the termination of
this Agreement by the Company pursuant to Section 7.1(d)(ii); (viii) take any
action to render the restrictive provisions of Sections 110C, 110D and 110F of
the Massachusetts Corporation-Related Laws or the Company Rights Agreement
inapplicable to any transaction (other than the Transactions) or any Person
(other than Parent and Merger Sub) other than in connection with the termination
of this Agreement by the Company pursuant to Section 7.1(d)(ii); (ix) except as
required by this Agreement or in connection with the termination of this
Agreement by the Company pursuant to Section 7.1(d)(ii), amend or modify in any
way the Company Rights Agreement; (x) seek or obtain any waiver or modification
of Section 6.10 of the Credit Agreement; or (xi) enter into any sales
representative or distribution Contract which Contract is with respect to sales
outside North America and is not terminable by the Company within one (1) year
of the date hereof. Nothing in this Section 5.2(g) shall prevent the Company
from taking actions necessary or appropriate in connection with the consummation
of the "Hamma Water Desalination S.p.A." transaction as disclosed to Parent in
presentations on Friday, November 19, 2004;
(h) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend, modify or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity (or equity-based), pension, retirement, vacation,
severance, deferred compensation or other compensation or benefit plan
(including any plan that would constitute a Company Plan), policy, agreement,
trust, fund or arrangement with, for or in respect of, any stockholder,
director, officer, other employee, consultant or Affiliate, other than (i) as
required pursuant to applicable law, (ii) increases in compensation or benefits
in accordance with the terms of agreements in effect on the date of this
Agreement set forth on Section 5.2(h) of the Company Disclosure Schedule
(complete and correct copies of which have been made delivered to Parent by the
Company), (iii) increases in salaries, wages and benefits of employees (other
than officers) made in the
33
ordinary course of business consistent with past practice and in amounts and in
a manner consistent with past practice and (iv) taking any such actions in
connection with the hiring of employees (other than officers and key employees)
in the ordinary course of business consistent with past practice;
(i) make, change or revoke any material election concerning Taxes or
Tax Returns, file any amended Tax Return, enter into any closing agreement with
respect to Taxes, settle any material Tax claim or assessment or surrender any
right to claim a refund of Taxes or obtain any Tax ruling;
(j) make any changes (other than immaterial changes made in the
ordinary course of business) in financial or tax accounting methods, principles,
policies or practices (or change an annual accounting period), except insofar as
may be required by GAAP or applicable Law or such changes in practices as may be
made in connection with the Company's efforts to enhance its and its
Subsidiaries' internal controls over financial reporting;
(k) amend the Company Charter Documents or the Subsidiary Documents;
(l) adopt a plan or agreement of complete or partial liquidation,
dissolution, restructuring, recapitalization, merger, consolidation or other
reorganization;
(m) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction in
accordance with their terms of liabilities, claims or obligations (i) reflected
or reserved against in the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed Company SEC Documents or
(ii) in the ordinary course of business consistent with past practice;
(n) settle or compromise any litigation, proceeding or investigation
in which the Company or any of its Subsidiaries is a defendant that is material
to the Company and its Subsidiaries taken as a whole (this covenant being in
addition to the Company's agreement set forth in Section 5.9 hereof) other than
the class action lawsuit captioned Deckler v. Ionics, Inc., et. al. Case No.
03-CV-10393, United States District Court for the District of Massachusetts,
which may be settled in accordance with that certain Memorandum of Understanding
dated as of July 29, 2004; or
(o) agree, in writing or otherwise, to take any of the foregoing
actions or take any action or agree, in writing or otherwise, to take any
action, which would cause any of the conditions to the Merger set forth in this
Agreement not to be satisfied.
Section 5.3 No Solicitation by the Company; Etc.
(a) The Company shall, and shall cause its Subsidiaries and the
Company's and its Subsidiaries' respective directors, officers, employees,
investment bankers, financial advisors, attorneys, accountants, agents and other
representatives (collectively, "Representatives") to, immediately cease and
cause to be terminated any
34
discussions or negotiations with any Person with respect to a Takeover Proposal.
The Company shall not, and shall cause its Subsidiaries and Representatives not
to, directly or indirectly (i) solicit, initiate or knowingly facilitate or
encourage (including by way of furnishing information) any inquiries or
proposals that constitute, or may reasonably be expected to lead to, any
Takeover Proposal, (ii) participate in any discussions or negotiations with any
third party regarding any Takeover Proposal or (iii) enter into any agreement
related to any Takeover Proposal; PROVIDED, however, that if after the date
hereof the Board of Directors of the Company receives an unsolicited, bona fide
written Takeover Proposal made after the date hereof in circumstances not
involving a breach of this Agreement (other than immaterial breaches that have
not directly or indirectly resulted in the making of a Takeover Proposal) and
the Board of Directors of the Company determines in good faith that such
Takeover Proposal constitutes, or is reasonably likely to result in, a Superior
Proposal and with respect to which such Board determines in good faith, after
considering applicable provisions of Massachusetts Law and after consulting with
and receiving the advice of outside counsel, that the failure to take such
action would be inconsistent with its fiduciary duties to the Company's
stockholders under Massachusetts Law, then the Company may, at any time prior to
obtaining the Company Stockholder Approval (but in no event after obtaining the
Company Stockholder Approval) and after providing Parent not less than 24 hours
written notice of its intention to take such actions, (A) furnish information
with respect to the Company and its Subsidiaries to the Person making such
Takeover Proposal, but only after such Person enters into a customary
confidentiality agreement with the Company (which confidentiality agreement must
be no less favorable to the Company in any material respect (i.e., no less
restrictive with respect to the conduct of such Person) than the Confidentiality
Agreement), provided that (1) such confidentiality agreement may not include any
provision calling for an exclusive right to negotiate with the Company and (2)
the Company advises Parent of all such non-public information delivered to such
Person concurrently with its delivery to such Person and concurrently with its
delivery to such Person the Company delivers to Parent all such information not
previously provided to Parent, (B) participate in discussions and negotiations
with such Person regarding such Takeover Proposal and (C) enter into the
confidentiality agreement contemplated by clause (A) of this proviso. The
Company shall take all action necessary to enforce each confidentiality,
standstill or similar agreement to which the Company or any of its Subsidiaries
is a party or by which any of them is bound (in each case, other than any such
agreement with Parent). Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in this Section 5.3(a) by the
Company, its Subsidiaries or their respective Representatives shall be deemed to
be a breach of this Section 5.3(a) by the Company. The Company shall provide
Parent with a correct and complete copy of any confidentiality agreement entered
into pursuant to this paragraph within 24 hours of the execution thereof.
(b) In addition to the other obligations of the Company set forth in
this Section 5.3, the Company shall promptly advise Parent, orally and in
writing, and in no event later than the later of 48 hours or one business day
after receipt, if any proposal, offer, inquiry or other contact is initially
received by, any information is initially requested from, or any discussions or
negotiations are sought to be initiated or continued with, the Company in
respect of any Takeover Proposal, and shall, in any such notice to
35
Parent, indicate the identity of the Person making such proposal, offer, inquiry
or other contact and the material terms and conditions of any proposals or
offers or the nature of any inquiries or contacts (and shall include with such
notice copies of any written materials received from or on behalf of such Person
relating to such proposal, offer, inquiry or request), and thereafter shall
promptly keep Parent fully informed of all material developments affecting the
status and terms of any such proposals, offers, inquiries or requests (and the
Company shall provide Parent with copies of any additional written materials
received that relate to such proposals, offers, inquiries or requests) and of
the status of any such discussions or negotiations.
(c) Except as expressly permitted by this Section 5.3(c), neither
the Board of Directors of the Company nor any committee thereof shall (i)(A)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the Company Board Recommendation or (B) approve or recommend,
or propose publicly to approve or recommend, any Takeover Proposal or (ii)
approve or recommend, or propose publicly to approve or recommend, or cause or
authorize the Company or any of its Subsidiaries to enter into, any letter of
intent, agreement in principle, memorandum of understanding, merger,
acquisition, purchase or joint venture agreement or other agreement related to
any Takeover Proposal (other than a confidentiality agreement in accordance with
Section 5.3(a)) (each, a "Company Acquisition Agreement"). Notwithstanding the
foregoing or any other provision of this Agreement, (x) the Board of Directors
of the Company may withdraw or modify the Company Board Recommendation, or
recommend a Takeover Proposal, if such Board determines in good faith, after
reviewing applicable provisions of Massachusetts Law and after consulting with
and receiving advice from outside counsel, that the failure to make such
withdrawal, modification or recommendation would be inconsistent with its
fiduciary duties to the Company's stockholders under Massachusetts Law and (y)
if the Board of Directors of the Company receives an unsolicited, bona fide
written Takeover Proposal that was made in circumstances not involving a breach
of this Agreement (other than immaterial breaches that have not directly or
indirectly resulted in the making of a Takeover Proposal) and that such Board
determines in good faith constitutes a Superior Proposal, the Board of Directors
of the Company may, in response to such Superior Proposal and within 48 hours
after the expiration of the three business day period described below, cause the
Company to enter into a definitive agreement with respect to such Superior
Proposal but only if the Company shall have concurrently with entering into such
definitive agreement terminated this Agreement pursuant to Section 7.1(d)(ii)
and prior thereto or concurrently therewith paid the Termination Fee required
pursuant to Section 7.3, but in any event only after the third (or, if
applicable, second) business day following Parent's receipt of written notice
(the "Notice") from the Company advising Parent that the Board of Directors of
the Company is prepared to enter into a definitive agreement with respect to
such Superior Proposal and terminate this Agreement (it being understood that
the Company shall be required to deliver a new Notice in respect of any revised
Superior Proposal (other than immaterial revisions) from such third party or its
Affiliates that the Company proposes to accept (in which event the three
business day period shall be reduced to two business days), attaching the most
current version of such agreement to such Notice (which version shall be updated
on a current basis), and only if, during such three business day period, the
Company and its Representatives shall have negotiated in
36
good faith with Parent and Parent's Representatives to make such adjustments in
the terms of this Agreement as would enable Parent to proceed with the
Transactions on such adjusted terms and, at the end of such three (or, if
applicable, two) business day period, after taking into account any such
adjusted terms as may have been proposed by Parent in writing (and not
withdrawn) since its receipt of such Notice, the Board of Directors of the
Company has again in good faith made the determination referred to above in this
clause (y).
(d) For purposes of this Agreement:
"Takeover Proposal" means any inquiry, proposal or offer from any
Person or "group" (as defined in Section 13(d) of the Exchange Act), other than
Parent and its Subsidiaries, relating to any (A) direct or indirect acquisition
(whether in a single transaction or a series of related transactions) of assets
of the Company and its Subsidiaries (including securities of Subsidiaries) equal
to 15% or more of the Company's consolidated assets or to which 15% or more of
the Company's consolidated revenues on a consolidated basis for the then
preceding four completed and publicly reported calendar quarters are
attributable, (B) direct or indirect acquisition (whether in a single
transaction or a series of related transactions) of 15% or more of any class of
equity securities of the Company, (C) tender offer or exchange offer that if
consummated would result in any Person or "group" (as defined in Section 13(d)
of the Exchange Act) beneficially owning 15% or more of any class of equity
securities of the Company or (D) merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries; in each case, other than the
Transactions.
"Superior Proposal" means a Takeover Proposal to acquire, directly
or indirectly, for consideration consisting of cash and/or securities, all of
the equity securities of the Company or all or substantially all of the assets
of the Company and its Subsidiaries on a consolidated basis, made by a third
party, which is not subject to a financing contingency and which is otherwise on
terms and conditions which the Board of Directors of the Company determines in
its good faith judgment (after consultation with a financial advisor of national
reputation) to be more favorable to the Company's stockholders from a financial
point of view than the Merger and the other Transactions, taking into account at
the time of determination any changes to the terms of this Agreement that as of
that time had been proposed by Parent in writing (and not withdrawn) and the
ability of the Person making such proposal to consummate the transactions
contemplated by such proposal (based upon, among other things, the availability
of financing and the expectation of obtaining required approvals).
(e) Nothing in this Section 5.3 shall prohibit the Board of
Directors of the Company from taking and disclosing to the Company's
stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item
1012(a) of Regulation M-A promulgated under the Exchange Act if such Board of
Directors determines in good faith, after consultation with outside counsel,
that failure to so disclose such position would constitute a violation of
applicable Law; PROVIDED, HOWEVER, that if such disclosure has the effect of
withdrawing or modifying the Company Board Recommendation in a
37
manner adverse to Parent or the approval of this Agreement by the Board of
Directors of the Company, Parent shall have the right to terminate this
Agreement to the extent set forth in Section 7.1(c)(iii) of this Agreement;
PROVIDED FURTHER, HOWEVER, that in no event shall the Company or its Board of
Directors or any committee thereof take, or agree or resolve to take, any action
prohibited by Section 5.3(c).
Section 5.4 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto shall, and shall cause their respective
Affiliates to, use reasonable best efforts to take, or cause to be taken, all
actions necessary, proper and advisable under applicable Laws to consummate the
Transactions as promptly as practicable. In furtherance and not in limitation of
the foregoing, each party shall: (i) make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
Transactions as promptly as practicable and supply as promptly as practicable
any additional information and documentary material that may be requested
pursuant to the HSR Act; (ii) make any additional filings required by any
applicable Competition Law and take all other actions reasonably necessary,
proper or advisable to cause the expiration or termination of the applicable
waiting periods under the HSR Act or other Competition Laws, and comply with
applicable Foreign Antitrust Laws, as promptly as practicable; and (iii) subject
to applicable Laws relating to access to and the exchange of information, use
its reasonable best efforts to (A) cooperate with each other in connection with
any filing or submission and in connection with any investigation or other
inquiry under or relating to any Competition Law; (B) keep the other parties
informed of any communication received by such party from, or given by such
party to, the Federal Trade Commission (the "FTC"), the Antitrust Division of
the Department of Justice (the "DOJ") or any other Governmental Authority and of
any communication received or given in connection with any proceeding by a
private party under any Competition Laws, in each case regarding any of the
Transactions; and (C) permit the other parties hereto to review in advance any
communication intended to be given by it to, and consult with the other parties
in advance of any meeting or conference with, the FTC, the DOJ or any such other
Governmental Authority, and to the extent permitted by the FTC, the DOJ or such
other applicable Governmental Authority, give the other parties the opportunity
to attend and participate in such meetings and conferences.
(b) In furtherance and not in limitation of the covenants of the
parties contained in Section 5.4(a), but subject to Section 5.4(c), in the event
that any legal, administrative, arbitral or other proceeding, claim, suit or
action is instituted (or threatened to be instituted) by a Governmental
Authority or private party under any Competition Laws challenging any of the
Transactions or in the event that any Governmental Authority shall otherwise
object to any of the Transactions, each of Parent, Merger Sub and the Company
shall cooperate with each other and use its respective reasonable best efforts:
(A) to vigorously defend, contest and resist any such proceeding, claim, suit,
action or challenge; (B) to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Transactions; and (C) to resolve objections.
38
(c) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Parent or any of its Subsidiaries or Affiliates be
obligated to propose or agree to accept any undertaking or condition, enter into
any consent decree, make any divestiture, accept any operational restriction or
take or commit to take any action that would reasonably be expected to limit:
(i) the freedom of action of Parent or its Subsidiaries or Affiliates with
respect to the operation of, or Parent's ability to retain, the Company or any
businesses, product lines or assets of the Company, or (ii) Parent's or its
Subsidiaries' or Affiliates' ability to retain, own or operate any portion of
the businesses, product lines or assets of Parent or any of its Subsidiaries or
Affiliates, or alter or restrict in any way the business or commercial practices
of Parent or its Subsidiaries or Affiliates or the Company or its Subsidiaries.
(d) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 5.4 shall limit a party's right to terminate
this Agreement pursuant to Section 7.1(b)(i) or (ii) so long as such party has
up to then complied in all material respects with its obligations under this
Section 5.4.
(e) The Company shall not take any action that would result in any
state takeover statute or similar Law becoming applicable to any of the
Transactions. If any state takeover statute or similar Law becomes applicable to
any of the Transactions, Parent, Merger Sub and the Company shall use reasonable
best efforts to take all action necessary to ensure that the Transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise minimize the effect of such Law on the Transactions.
(f) The Company has initiated a process to be in compliance with
Section 404 of the SOxA and shall continue in good faith its current efforts
with respect thereto.
(g) For purposes hereof, "Competition Laws" means the Sherman Act,
as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other applicable Laws issued by a
Governmental Authority that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition through merger or acquisition.
Section 5.5 Public Announcements. The initial press release with
respect to the execution of this Agreement shall be a joint press release to be
reasonably agreed upon by Parent and the Company. Thereafter, neither the
Company nor Parent shall issue or cause the publication of any press release or
other public announcement (to the extent not previously issued or made in
accordance with this Agreement) with respect to the Merger, this Agreement or
the other Transactions without the prior consent of the other party (which
consent shall not be unreasonably withheld or delayed), except (i) as may be
required by Law or by any applicable listing agreement with a national
securities exchange or Nasdaq as determined in the good faith judgment of the
party proposing to make such release (in which case such party shall not issue
or cause the publication of such press release or other public announcement
without prior consultation with the other
39
party) or (ii) for press releases or announcements to be issued with respect to
actions taken by the Company or its Board of Directors as permitted by and in
accordance with Section 5.3.
Section 5.6 Access to Information; Confidentiality.
(a) Subject to applicable Laws relating to the exchange of
information (including applicable Competition Laws) and the Procedures Letter,
the Company shall, and shall cause each of its Subsidiaries to, afford to Parent
and Parent's Representatives reasonable access after providing reasonable prior
written notice, during normal business hours to all of the Company's and its
Subsidiaries' properties, assets, books, Contracts, commitments, electronic and
physical records, correspondence (including electronic correspondence),
officers, employees, accountants, counsel, financial advisors and other
Representatives and the Company shall furnish (or otherwise make available,
including through the SEC EDGAR system) promptly to Parent (i) a copy of each
report, schedule and other document (A) filed, furnished or received by it or
any of its Subsidiaries pursuant to the requirements of Federal or state
securities Laws or (B) filed or furnished by it or any of its Subsidiaries with
any Governmental Authority with respect to compliance with applicable Laws and
(ii) all other information concerning its and its Subsidiaries' business,
properties and personnel as Parent may reasonably request; PROVIDED, HOWEVER,
that nothing in this Agreement shall require the Company or any of its
Subsidiaries to provide access to any item that contains confidential
information the Company is obligated to any third party to maintain the
confidentiality of.
(b) Except for disclosures permitted by the terms of the Reciprocal
Confidentiality Agreement, dated as of July 2, 2004, between Parent and the
Company (as it may be amended from time to time, the "Confidentiality
Agreement"), Parent and Parent's Representatives shall hold information received
from the Company pursuant to this Section 5.6 in confidence in accordance with
the terms of the Confidentiality Agreement.
(c) From the date hereof through the eighteen month anniversary of
the date of the termination of this Agreement, Parent shall not, and shall cause
its Subsidiaries and Affiliates not to, without the Company's prior written
consent, solicit for employment any of the employees of the Company or any of
its Subsidiaries in the functional areas set forth on Section 5.6(c) of the
Company Disclosure Schedule; PROVIDED, HOWEVER, that the foregoing shall not
restrict Parent or any of its Subsidiaries or Affiliates from any general
solicitation (including through the use of employment search firms) that is not
targeted at such persons.
(d) As promptly as practicable (and in any event within 30 days)
following the date hereof, the Company shall deliver to Parent a list, and true
and correct copies, of all partnership and joint venture agreements to which the
Company or any of its Subsidiaries is a party.
(e) No investigation by Parent or its representatives or advisors
prior to or after the date of this Agreement shall diminish, obviate or cure any
breach of any
40
representation, warranty, covenant or agreement contained in this Agreement or
otherwise affect Parent's rights under Articles I, VI and VII of this Agreement.
Section 5.7 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of (i) any notice or other communication
received by such party from any Governmental Authority in connection with the
Transactions or from any Person alleging that the consent of such Person is or
may be required in connection with the Transactions, if the subject matter of
such communication or the failure of such party to obtain such consent could be
material to the Company, the Surviving Corporation or Parent, (ii) any actions,
suits, claims, investigations or proceedings commenced or, to such party's
Knowledge, threatened against, relating to or involving or otherwise affecting
such party or any of its Subsidiaries which relate to the Transactions, (iii)
the discovery of any fact or circumstance that, or the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which, would
cause any representation or warranty made by such party contained in this
Agreement to be untrue such that the conditions set forth in Section 6.2(a) or
6.3(a) would not be satisfied and (iv) any material failure of such party to
comply with or satisfy any covenant or agreement to be complied with or
satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 5.7 shall not (x) be considered an admission that any
representation or warranty is untrue for purposes of Article VI or Article VII,
(y) cure any breach or non-compliance with any other provision of this Agreement
or (z) limit the remedies available to the party receiving such notice;
PROVIDED, FURTHER, that the failure to deliver any notice pursuant to this
Section 5.7 shall not be considered in determining whether the condition set
forth in Section 6.2(b) or 6.3(b) has been satisfied or the related termination
right in Article VII is available except to the extent that a party hereto is
actually prejudiced by such failure to give notice. The Company shall give
prompt notice to Parent when the Hamma Water Desalination S.p.A. Joint Venture
has been entered into, and shall provide Parent with copies of all relevant
Contracts and correspondence related thereto.
(b) The Company shall give prompt notice to Parent if (i) the
Company, any of its Subsidiaries or any of their respective directors or
officers, or to the Company's Knowledge, any of their employees, auditors or
accountants receives or otherwise obtains knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company or any of its Subsidiaries or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
the Company or any of its Subsidiaries has engaged in questionable accounting or
auditing practices, (ii) no attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any of its Subsidiaries,
reports evidence of a material violation of securities Laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors,
employees or agents to the Board of Directors of the Company or any committee
thereof or to any director or officer of the Company or (iii) the Company, any
of its Subsidiaries, any of their respective Affiliates or, to the knowledge of
the Company, any of the Joint Ventures commences any internal
41
investigation or determines to make or makes a voluntary disclosure to any
Governmental Authority.
Section 5.8 Indemnification and Insurance.
(a) From and after the Effective Time, the Surviving Corporation
shall (and Parent shall cause the Surviving Corporation to) indemnify the
individuals who at or prior to the Effective Time were directors or officers of
the Company (collectively, the "Indemnitees") with respect to all acts or
omissions by them in their capacities as such at any time prior to the Effective
Time, to the fullest extent permitted by (A) the Company Charter Documents as in
effect on the date of this Agreement, (B) any applicable contract as in effect
on the date of this Agreement and (C) applicable Law; PROVIDED, HOWEVER, that
the Surviving Corporation shall not be required to indemnify any Indemnitee for
such Indemnitee's criminal conduct, fraud, or responsibility for breach of this
Agreement.
(b) Parent will provide, or cause the Surviving Corporation to
provide, for a period of not less than six years after the Effective Time, the
Indemnitees (as defined to mean those persons currently insured under the
Company's directors' and officers' insurance and indemnification policy) with an
insurance and indemnification policy that provides coverage for events occurring
at or prior to the Effective Time (the "D&O Insurance") that is no less
favorable than the existing policy or, if substantially equivalent insurance
coverage is unavailable, the best available coverage; PROVIDED, HOWEVER, that
Parent and the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of 150% of the annual premium currently
paid by the Company for such insurance, PROVIDED, FURTHER, that if the annual
premiums of such insurance coverage exceed such amount, Parent or the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
(c) The Indemnitees to whom this Section 5.8 applies shall be third
party beneficiaries of this Section 5.8. The provisions of this Section 5.8 are
intended to be for the benefit of each Indemnitee, his or her heirs and his or
her representatives.
(d) In the event that Parent or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers or conveys all or a majority
of its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation shall succeed to the obligations set forth in this Section
5.8.
Section 5.9 Securityholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any
securityholder litigation against the Company and/or its directors relating to
the Transactions, and no such settlement shall be agreed to without Parent's
prior consent (which consent shall not be unreasonably withheld or delayed).
42
Section 5.10 Fees and Expenses. Whether or not the Merger is
consummated, all fees and expenses incurred in connection with this Agreement,
the Voting Agreement, the Merger and the Transactions shall be paid by the party
incurring such fees or expenses, except expenses incurred in connection with the
filing fee under the HSR Act and any other filing required to be made pursuant
to any Competition Laws shall be borne entirely by Parent.
Section 5.11 Employee Benefits.
(a) For a period of at least one year following the Effective Time
(such period of time, the "Protected Period"), Parent shall cause the Surviving
Corporation or any of its Affiliates to provide to employees of the Company and
its Subsidiaries pay (which shall include rates of base salary or wages and
annual bonus opportunities), and benefits which are substantially comparable in
the aggregate to those provided by the Company and its Subsidiaries to the
employees of the Company and its Subsidiaries on the date hereof. For purposes
of the preceding sentence, all restricted stock, stock option, stock purchase
and similar awards shall be disregarded.
(b) Employees of the Company and its Subsidiaries as of the Closing
shall also be provided credit for all service with the Company and its
subsidiaries, to the same extent as such service was credited for such purpose
by the Company and its Subsidiaries for such employees, under (i) all employee
benefit plans, programs, policies and fringe benefits arrangements to be
provided to such employees for purposes of eligibility and vesting, (ii)
severance plans, programs and policies to be provided to such employees for
purposes of calculating the amount of each such employee's severance benefits
and (iii) vacation and sick leave plans, programs and policies for purposes of
calculating the amount of each such employee's vacation and sick leave. With
respect to each employee benefit plan, program or policy of Parent or its
Subsidiaries that is a "welfare benefit plan" (as defined in Section 3(1) of
ERISA) in which current employees of the Company or its Subsidiaries participate
following the Effective Time, Parent or its Subsidiaries shall cause there to be
waived any pre-existing condition limitations.
(c) Parent shall, or shall cause the Surviving Corporation to,
assume and either shall, or shall cause the Surviving Corporation to, discharge
the obligations under each employment or severance agreement listed in Section
3.11(a) of the Company Disclosure Schedule.
(d) Notwithstanding anything in this Agreement to the contrary,
nothing in this Section 5.11 shall impede or limit Parent, Merger Sub, the
Company, the Surviving Corporation or any of their Affiliates from terminating
any of their employees at any time for any reason or no reason, subject to the
provisions of applicable Law.
Section 5.12 Environmental Matters. The Company shall, and shall
cause each of its Subsidiaries to, subject to the Procedures Letter:
(a) complete an Environmental Health and Safety ("EHS")
questionnaire provided by Parent with respect to each warehouse facility owned
or leased
43
by the Company or its Subsidiaries, and permit Parent and/or Parent's
environmental consultant to conduct a "walk through" of a representative sample
of such warehouses to be mutually agreed;
(b) permit Parent and/or its designated environmental consultant to
complete a high-level EHS compliance assessment at each manufacturing facility
owned or leased by the Company or its Subsidiaries;
(c) permit Parent and/or its designated environmental consultant to
complete a high-level compliance assessment at each Joint Venture or
build-own-operate facility in which the Company or its Subsidiary owns 50% or
more of such Joint Venture or build-own-operate facility;
(d) permit Parent and/or its designated environmental consultant to
conduct a "walk through" of each Joint Venture or build-own-operate facility in
which the Company or its Subsidiary owns less than 50% of such Joint Venture or
build-own-operate facility; and
(e) permit Parent and/or its designated environmental consultant to
conduct a "walk through" of a representative sample of facilities (to be
mutually agreed) serviced by the Company or its Subsidiary pursuant to a
management services agreement.
Section 5.13 Voting Agreement. The Company shall not register the
transfer of any Certificate representing any Stockholder Shares (as defined in
the Voting Agreement) made or attempted to be made in violation of the Voting
Agreement.
ARTICLE VI
Conditions Precedent
--------------------
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
shall be subject to the satisfaction (or waiver, if permissible under applicable
Law) on or prior to the Closing Date of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval shall
have been obtained in accordance with applicable Law and the Company Charter
Documents;
(b) Antitrust. The waiting period (and any extension thereof by the
government or by the parties agreeing not to close) applicable to the Merger
under the HSR Act shall have expired or shall have been terminated and the
applicable filings, approvals or expiration or termination of any applicable
waiting periods under Foreign Antitrust Laws in jurisdictions in which such
filings, approvals or expiration or termination are required by Law to be made,
obtained or expired, or terminated prior to the Closing, shall have been made,
obtained or expired, or terminated; and
44
(c) No Injunctions or Restraints. No Law, injunction, judgment or
ruling enacted, promulgated, issued, entered, amended or enforced by any
Governmental Authority (collectively, "Restraints") shall be in effect
enjoining, restraining, preventing or prohibiting consummation of the Merger or
making the consummation of the Merger illegal.
Section 6.2 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction (or waiver, if permissible under applicable Law) on or prior to
the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement (without giving effect to
any materiality or Company Material Adverse Effect qualification other than such
qualifications set forth in Sections 3.5(a), 3.5(b), 3.5(c), 3.5(e), 3.9 and
3.13(a), the first sentence of Section 3.6 and when used in the definition of,
or to modify, the terms Permits and "Material Contract") shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on the Closing Date except (i) to the extent such representations and
warranties expressly relate to a specified date, in which case representations
and warranties shall have been true and correct, subject to the qualification
set forth in the following clause (ii), as of such specified date, and (ii)
where the failure of such representations and warranties to be true and correct
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect; PROVIDED, HOWEVER, that the representations and
warranties made in Section 3.2(a) shall be true and correct except for
immaterial inaccuracies as of the date of this Agreement and as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties made in Section 3.2(a) expressly relate to an
earlier date, in which case as of such earlier date;
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date;
(c) Officer's Certificate. Parent shall have received a certificate,
signed by the chief executive officer or chief financial officer of the Company,
certifying as to the matters set forth in Sections 6.2(a) and 6.2(b);
(d) Company Material Adverse Effect. Since the date of this
Agreement, there shall have been no change, event, occurrence or state of facts
that, individually or in the aggregate, has had or would reasonably be expected
to have a Company Material Adverse Effect;
(e) No Litigation. There shall not be any action, investigation,
proceeding or litigation instituted, commenced, pending or threatened by or
before any Governmental Authority in which a Governmental Authority is a party,
nor shall there be any Restraint in effect, that would or is reasonably likely
to (i) restrain, enjoin, prevent, prohibit or make illegal the acquisition of
some or all of the shares of Company Common
45
Stock by Parent or Merger Sub or the consummation of the Merger or the other
Transactions, (ii) impose limitations on the ability of Parent or its Affiliates
effectively to exercise full rights of ownership of all shares of the Surviving
Corporation, or (iii) result in a Governmental Investigation or in Governmental
Damages being imposed on Parent or the Surviving Corporation or any of their
respective Affiliates;
(f) Appraisal Rights. Appraisal rights shall not have been exercised
and notice of the intention to exercise such rights shall not have been given in
accordance with the provisions of Section 13.02 of the MBCA by the stockholders
of the Company with respect to more than five percent (5%) of the issued and
outstanding shares of Company Common Stock as of immediately prior to the
Effective Time; and
(g) Sarbanes-Oxley Certifications. With respect to any applicable
reports of the Company filed with the SEC after the date of this Agreement,
neither the chief executive officer nor the chief financial officer of the
Company shall have failed to provide the necessary certifications (i) as and in
the form required under Section 302 of SOxA and (ii) as required under Section
906 of SOxA and in the form previously filed by the Company.
Section 6.3 Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is further subject to the satisfaction (or
waiver, if permissible under applicable Law) on or prior to the Closing Date of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement (without giving
effect to any materiality or Parent Material Adverse Effect qualification) shall
be true and correct as of the date of this Agreement and as of the Closing Date
as though made on the Closing Date (except to the extent such representations
and warranties expressly relate to an earlier date, in which case as of such
earlier date), except as would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect;
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date; and
(c) Officer's Certificate. The Company shall have received a certificate, signed
by a duly authorized representative of Parent, certifying as to the matters set
forth in Sections 6.3(a) and 6.3(b).
Section 6.4 Frustration of Closing Conditions. None of the Company,
Parent or Merger Sub may rely on the failure of any condition set forth in
Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was
caused by such party's failure to use its reasonable best efforts to consummate
the Merger and the other Transactions, as required by and subject to Section
5.4.
46
ARTICLE VII
Termination
-----------
Section 7.1 Termination. This Agreement may be terminated and the
Transactions abandoned at any time prior to the Effective Time:
(a) by the mutual written consent of the Company and Parent duly
authorized by each of their respective Boards of Directors; or
(b) by either of the Company or Parent:
(i) if the Merger shall not have been consummated on or before
August 1, 2005 (the "Outside Date"), PROVIDED, HOWEVER, that the right
to terminate this Agreement under this Section 7.1(b)(i) shall not be
available to a party if the failure of the Merger to have been
consummated on or before the Outside Date was primarily due to such
party's breach or failure to perform any of its representations,
warranties, covenants or agreements set forth in this Agreement;
(ii) if any Restraint having the effect set forth in Section
6.1(c) shall be in effect and shall have become final and
nonappealable; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 7.1(b)(ii) shall not be available to a
party if such Restraint was primarily due to such party's breach or
failure to perform any of its representations, warranties, covenants or
agreements set forth in this Agreement; or
(iii) if the Company Stockholder Approval shall not have been
obtained at the Company Stockholders Meeting duly convened therefor or
at any adjournment or postponement thereof; or
(c) by Parent:
(i) if the Company shall have breached or failed to perform
any of its representations, warranties, covenants or agreements set
forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case such that the
conditions set forth in Section 6.2(a) or (b) would not be satisfied (a
"Terminating Company Breach"); PROVIDED, HOWEVER, that if such
Terminating Company Breach is curable by the Company by the Outside
Date through the exercise of reasonable best efforts and for so long as
the Company continues to exercise such reasonable best efforts, Parent
may not terminate this Agreement under this Section 7.1(c)(i);
(ii) if any Restraint having the effect of granting or
implementing any relief referred to Section 6.2(e) shall be in effect
and shall have become final and nonappealable;
47
(iii) if (x) the Company enters into a Company Acquisition
Agreement or (y) the Board of Directors of the Company or any committee
thereof (A) shall have withdrawn or modified, in a manner adverse to
Parent, the Company Board Recommendation or its approval of any of the
Transactions, (B) shall have approved or recommended to the
stockholders of the Company a Takeover Proposal or (C) shall not have
rejected any bona fide written or publicly announced offer for a
Takeover Proposal within ten (10) days of the making thereof
(including, for these purposes, by taking no position with respect to
the acceptance of a tender offer or exchange offer by its stockholders,
which shall constitute a failure to recommend against acceptance of
such tender offer or exchange offer); or
(d) by the Company:
(i) if Parent or Merger Sub shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, or if any representation or warranty of
Parent or Merger Sub shall have become untrue, in either case such that
the conditions set forth in Section 6.3(a) or (b) would not be
satisfied (a "Terminating Parent Breach"); PROVIDED, HOWEVER, that if
such Terminating Parent Breach is curable by Parent or Merger Sub by
the Outside Date through the exercise of reasonable best efforts and
for so long as Parent or Merger Sub continues to exercise such
reasonable best efforts, the Company may not terminate this Agreement
under this Section 7.1(d)(i); or
(ii) if (A) the Company has not breached Section 5.3 (other
than immaterial breaches that have not directly or indirectly resulted
in the making of a Takeover Proposal), (B) the Company Stockholder
Approval has not been obtained (other than as a result of the breach of
this Agreement by the Company) and (C) concurrently the Company enters
into a definitive Company Acquisition Agreement providing for a
Superior Proposal in accordance with Section 5.3; PROVIDED that prior
thereto or concurrently therewith the Company shall have paid or caused
to be paid the Termination Fee to Parent in accordance with Section 7.3
(and such termination of this Agreement by the Company shall not take
effect unless and until the Termination Fee shall have been paid to
Parent).
Section 7.2 Effect of Termination. In the event of the termination
of this Agreement as provided in Section 7.1, written notice thereof shall be
given to the other party or parties, specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void (other than the provisions of the first sentence of Sections 3.19 and
4.7, the last sentence of Section 5.6(a), Sections 5.10, 7.2 and 7.3, and
Article VIII, all of which shall survive termination of this Agreement), and
there shall be no liability on the part of Parent, Merger Sub or the Company or
their respective directors, officers and Affiliates, except (i) the Company may
have liability as provided in Section 7.3, and (ii) nothing shall relieve any
party from
48
liability for fraud or any willful breach of this Agreement or willful
misrepresentation herein.
Section 7.3 Termination Fee.
(a) In the event that (A)(x) this Agreement is terminated by the
Company or Parent pursuant to Section 7.1(b)(i) (and at the time of such
termination a vote to obtain the Company Stockholder Approval has not been held)
or Section 7.1(b)(iii) or by Parent pursuant to Section 7.1(c)(i), (y) prior to
such termination, any Person or "group" (as defined in Section 13(d) of the
Exchange Act), other than Parent and its Subsidiaries, Affiliates and
Representatives (on behalf of Parent), shall have made a Takeover Proposal or
shall have publicly announced an intention (whether or not conditional or
withdrawn) to make a Takeover Proposal and (z) the Company enters into a
definitive agreement with respect to, or consummates, a transaction contemplated
by any Takeover Proposal within twelve (12) months of the date this Agreement is
terminated, (B) this Agreement is terminated by Parent pursuant to Section
7.1(c)(iii) or (C) this Agreement is terminated by the Company pursuant to
Section 7.1(d)(ii), then in any such event under clause (A), (B) or (C) of this
Section 7.3(a), the Company shall pay to Parent a termination fee of $33,000,000
in cash (the "Termination Fee").
(b) Any payment required to be made pursuant to clause (A) of
Section 7.3(a) shall be made to Parent promptly following the earlier of the
execution of a definitive agreement with respect to, or the consummation of, any
transaction contemplated by a Takeover Proposal; any payment required to be made
pursuant to clause (B) of Section 7.3(a) shall be made to Parent promptly
following (and in any event not later than two business days after) termination
of this Agreement by Parent pursuant to Section 7.1(c)(iii); and any payment
required to be made pursuant to clause (C) of Section 7.3(a) shall be made to
Parent prior to or simultaneously with (and as a condition to the effectiveness
of) termination of this Agreement by the Company pursuant to Section 7.1
(d)(ii). All such payments shall be made by wire transfer of immediately
available funds to an account to be designated by Parent.
(c) In the event that the Company shall fail to pay the Termination
Fee required pursuant to this Section 7.3 when due, such fee shall accrue
interest for the period commencing on the date such fee became past due, at a
rate equal to the rate of interest publicly announced by Citibank, in the City
of New York from time to time during such period, as such bank's Prime Lending
Rate. In addition, if the Company shall fail to pay such fee when due, the
Company shall also pay to Parent all of Parent's costs and expenses (including
attorneys' fees) in connection with efforts to collect such fee. The Company
acknowledges that the fee and the other provisions of this Section 7.3 are an
integral part of the Transactions and that, without these agreements, Parent
would not enter into this Agreement.
49
ARTICLE VIII
Miscellaneous
-------------
Section 8.1 Nonsurvival of Representations and Warranties. Except as
otherwise provided in this Agreement, the representations, warranties and
agreements of each party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any other party
hereto, any Person controlling any such party or any of their officers,
directors or Representatives, whether prior to or after the execution of this
Agreement, and no information provided or made available shall be deemed to be
disclosed in this Agreement or in the Company Disclosure Schedule, except to the
extent actually set forth herein or therein. The representations, warranties and
agreements in this Agreement shall terminate at the Effective Time or, except as
otherwise provided in Section 7.2, upon the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article II and Sections 5.8, 5.9, 5.10 and 5.11 and any other agreement
in this Agreement which contemplates performance after the Effective Time shall
survive the Effective Time indefinitely and those set forth in Sections 3.19,
4.7, 5.6(b), 5.10, 7.2 and 7.3 and this Article VIII shall survive termination
indefinitely. The Confidentiality Agreement shall (i) survive termination of
this Agreement in accordance with its terms and (ii) terminate as of the
Effective Time.
Section 8.2 Amendment or Supplement. At any time prior to the
Effective Time, this Agreement may be amended or supplemented in any and all
respects, whether before or after receipt of the Company Stockholder Approval,
by written agreement of the parties hereto, by action taken by their respective
Boards of Directors; PROVIDED, HOWEVER, that following approval of the
Transactions by the stockholders of the Company, there shall be no amendment or
change to the provisions hereof which by Law would require further approval by
the stockholders of the Company without such approval.
Section 8.3 Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, any party may, subject to applicable Law, (a) waive any
inaccuracies in the representations and warranties of any other party hereto,
(b) extend the time for the performance of any of the obligations or acts of any
other party hereto or (c) waive compliance by the other party with any of the
agreements contained herein or, except as otherwise provided herein, waive any
of such party's conditions. Notwithstanding the foregoing, no failure or delay
by the Company, Parent or Merger Sub in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
Section 8.4 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of Law or otherwise, by any of the parties without the prior
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any of or all
50
its rights, interests and obligations under this Agreement to any direct or
indirect wholly owned Subsidiary of Parent, but no such assignment shall relieve
Merger Sub of any of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns. Any purported assignment not permitted under this Section shall be null
and void.
Section 8.5 Counterparts; Facsimile; Electronic Transmission. This
Agreement may be executed in counterparts (each of which shall be deemed to be
an original but all of which taken together shall constitute one and the same
agreement) and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. The exchange
of copies of this Agreement and of signature pages by facsimile or electronic
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile or electronic
transmission shall be deemed to be their original signatures for all purposes.
Section 8.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Company Disclosure Schedule, the Procedures Letter and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and thereof
and (b) except for the provisions of Section 5.8, are not intended to and shall
not confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 8.7 Governing Law; Waiver of Jury Trial.
(a) This Agreement and the Procedures Letter shall be governed by,
and construed in accordance with, the laws of the State of New York, applicable
to contracts executed in and to be performed entirely within that State, except
to the extent the MBCA is applicable hereto.
(b) Each of the parties hereto hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or related to
this Agreement or the Transactions.
Section 8.8 Specific 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 or were otherwise
breached.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the City of New York or, if jurisdiction in the federal
courts is not available, in any New York state court sitting in the City of New
York, without bond or other security being required, this being in addition to
any other remedy to which they are entitled at law or in equity.
51
Section 8.9 Consent to Jurisdiction. All actions and proceedings
arising out of or relating to this Agreement or any of the Transactions shall be
heard and determined in any federal or, if jurisdiction in the federal courts is
not available, state court sitting in the City of New York, and the parties
hereto hereby irrevocably submit to the exclusive jurisdiction of such courts
(and, in the case of appeals, appropriate appellate courts therefrom) in any
such action or proceeding and irrevocably waive the defense of an inconvenient
forum to the maintenance of any such action or proceeding. The consent to
jurisdiction set forth in this paragraph shall not constitute general consent to
service of process in the State of New York and shall have no effect for any
purpose except as provided in this paragraph and shall not be deemed to confer
rights on any Person other than the parties hereto. The parties hereto agree
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 applicable law.
Section 8.10 Notices. All notices, requests and other communications
to any party hereunder shall be in writing and shall be deemed given if
delivered personally, facsimiled (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses:
If to Parent or Merger Sub, to:
GE Infrastructure
187 Danbury Road
Wilton, CT 06897
Attention: General Counsel
Facsimile: (203) 761-1924
with copies (which shall not constitute notice) to:
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Attention: Senior Counsel, Transactions
Facsimile: (203) 373-3008
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Howard Chatzinoff, Esq.
Facsimile: (212) 310-8007
52
If to the Company, to:
Ionics, Incorporated
65 Grove Street
Watertown, MA 02472
Attention: Chief Executive Officer
Facsimile: (617) 926-3760
with copies (which shall not constitute notice) to:
Ionics, Incorporated
65 Grove Street
Watertown, MA 02472
Attention: General Counsel
Facsimile: (617) 926-3760
and
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Mark H. Burnett, Esq.
Kathy A. Fields, Esq.
Facsimile: (617) 248-7100
or such other address or facsimile number as such party may hereafter specify by
like notice to the other parties hereto. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 P.M. in the place of receipt and such day is a
business day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
Section 8.11 Severability. If any term or other provision of this
Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other terms, provisions and conditions of this Agreement shall nevertheless
remain in full force and effect. 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 to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
Transactions are fulfilled to the extent possible.
Section 8.12 Definitions.
(a) As used in this Agreement, the following terms have the meanings
ascribed thereto below:
53
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, controls, or is controlled by, or is under common
control with, such Person. For this purpose, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person, whether through the ownership
of securities or partnership or other ownership interests, by contract or
otherwise.
"BOO/MSA" shall mean a build-own-operate or operation and
maintenance agreement.
"business day" shall mean a day except a Saturday, a Sunday or other
day on which the SEC or banks in the City of New York are authorized or required
by Law to be closed.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Company Stock Plans" shall mean the following plans of the Company:
(i) the Amended and Restated 1997 Stock Incentive Plan; (ii) the 2003
Non-Employee Directors Stock Option Plan; (iii) the 1986 Stock Option Plan for
Non-Employee Directors; and (iv) the 1979 Stock Option Plan.
"Designated BOO/MSA" shall mean a BOO/MSA where the aggregate amount
of revenue expected to be received from such BOO/MSA under the remaining life of
the Contract exceeds $10 million.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Governmental Authority" means any United States, non-United States
or multi-national government entity, body or authority, including (i) any United
States federal, state or local government (including any town, village,
municipality, district or other similar governmental or administrative
jurisdiction or subdivision thereof, whether incorporated or unincorporated),
(ii) any non-United States or multi-national government or governmental
authority or any political subdivision thereof, (iii) any United States,
non-United States or multi-national regulatory or administrative entity,
authority, instrumentality, jurisdiction, agency, body or commission,
exercising, or entitled or purporting to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power, including any court, tribunal, commission or arbitrator, (iv) any
self-regulatory organization, or (v) any official of any of the foregoing.
"Governmental Damages" shall mean (i) any penalties or fines paid or
payable to a Governmental Authority, or (ii) any restitution paid or payable to
a third party, in the case of each of clauses (i) and (ii), resulting from the
(x) conviction (including as a result of the entry of a guilty plea, a consent
judgment or a plea of NOLO CONTENDRE) of the Company or any of its Subsidiaries
of a crime or (y) settlement with a
54
Governmental Authority for the purpose of closing a Governmental Investigation;
provided, however, that any de minimis penalties, fines or payments shall not be
deemed to be Governmental Damages.
"Governmental Investigation" shall mean an investigation by a
Governmental Authority for the purpose of imposing criminal sanctions.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Intellectual Property" of any Person shall mean all intellectual
property rights arising from or in respect of the following, whether protected,
created or arising under any Law, including: (i) all patents and applications
therefor, including continuations, divisionals, continuations-in-part, or
reissues of patent applications and patents issuing thereon (collectively,
"Patents"); (ii) all trademarks, service marks, trade names, service names,
brand names, trade dress rights, logos, Internet domain names and corporate
names, together with the goodwill associated with any of the foregoing, and all
applications, registrations and renewals thereof, (collectively, "Marks"); (iii)
copyrights and registrations and applications therefor, works of authorship and
mask work rights (collectively, "Copyrights"); (iv) discoveries, concepts,
ideas, research and development, know-how, formulae, inventions, compositions,
manufacturing and production processes and techniques, technical data,
procedures, designs, drawings, specifications, databases and other proprietary
and confidential information, including customer lists, supplier lists, pricing
and cost information, and business and marketing plans and proposals, in each
case excluding any rights in respect of any of the foregoing that comprise or
are protected by Copyrights or Patents (collectively, "Trade Secrets"); and (v)
all Software.
"Intellectual Property License" shall mean any grant to a Person of
any right to use any Intellectual Property.
"Joint Ventures" shall mean the joint ventures formed pursuant to
the Contracts listed on Schedule 3.13(a) under the heading "Joint Venture
Agreements" plus Hamma Water Desalination S.p.A.
"Knowledge" shall mean, (i) in the case of any Person other than the
Company or its Subsidiaries that is not an individual, with respect to any
matter in question, the actual knowledge after due inquiry of such Person's
executive officers and all other officers and managers having responsibility
relating to the applicable matter and (ii) in the case of the Company or its
Subsidiaries, the actual knowledge, after reasonable inquiry within the scope of
their respective business responsibilities (which shall not require inquiry of
persons other than the persons hereinafter named in this definition), of Douglas
Brown, Edward Cichon, Anthony DiPaola, J. Kevin Duffy, Lyman B. Dickerson, John
Curtis, Daniel Kuzmak, Stephen Korn, Kenneth Schmidt, Ark Pang, Gary Podrabsky,
Theodore Papastavros and Roger Taylor. Notwithstanding the foregoing, with
respect to Joint Ventures, the Company's Knowledge shall mean the actual
knowledge of the individuals listed in clause (ii) above.
55
"Options" shall mean options representing the right to acquire
shares of Company Common Stock.
"Person" shall mean an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity,
including a Governmental Authority.
"Procedures Letter" shall mean the letter, dated the date hereof,
from Parent to the Company.
"Software" means any and all (i) computer programs, including any
and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, screens, user
interfaces, report formats, firmware, development tools, templates, menus,
buttons and icons, and (iv) documentation including user manuals and other
training documentation related to any of the foregoing.
"Subsidiary" when used with respect to any party, shall mean any
corporation, limited liability company, partnership, association, trust or other
entity the accounts of which would be consolidated with those of such party in
such party's consolidated financial statements if such financial statements were
prepared in accordance with GAAP, as well as any other corporation, limited
liability company, partnership, association, trust or other entity of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power (or, in the case of a partnership,
more than 50% of the general partnership interests) are, as of such date, owned
by such party or one or more Subsidiaries of such party or by such party and one
or more Subsidiaries of such party. Notwithstanding the foregoing, for all
purposes hereunder the definition of Subsidiary with respect to the Company
shall specifically exclude the Desalination Company of Trinidad and Tobago
Limited (except, with respect to references to the Company's consolidated
financial statements as of times, and for periods, ending, after January 1,
2004, to the extent its operations, assets, liabilities and minority interests
have been consolidated in the Company's financial statements since January 1,
2004).
"Technology" shall mean, collectively, all designs, formulae,
algorithms, procedures, methods, techniques, ideas, know-how, research and
development, technical data, programs, subroutines, tools, materials,
specifications, processes, inventions (whether patentable or unpatentable and
whether or not reduced to practice), apparatus, creations, improvements, works
of authorship and other similar materials, and all recordings, graphs, drawings,
reports, analyses, and other writings, and other tangible embodiments of the
foregoing, in any form whether or not specifically listed herein, and all
related technology.
56
"Transactions" refers collectively to this Agreement and the
transactions contemplated hereby, including the Merger, and the Voting Agreement
and the transactions contemplated thereby.
The following terms are defined on the page of this Agreement set forth after
such term below:
Agreement..........................1 FTC...............................38
Articles of Merger.................2 Improper Payment Laws.............14
Balance Sheet Date................13 Indemnitees.......................42
Bankruptcy and Equity Exception....9 Intellectual Property Rights......25
Certificate........................3 Joint Venture Agreements..........24
Closing............................1 Laws..............................14
Closing Date.......................2 Liens..............................8
COBRA.............................19 Loss Contract.....................24
Company............................1 Material Contract.................24
Company Acquisition Agreement.....36 MBCA...............................1
Company Board Recommendation......10 Merger.............................1
Company Charter Documents..........8 Merger Consideration...............3
Company Common Stock...............3 Merger Sub.........................1
Company Disclosure Schedule........6 Multiemployer Plan................17
Company Material Adverse Effect....7 Notice............................36
Company Plans.....................17 Outside Date......................47
Company Rights Agreement..........28 Parent.............................1
Company SEC Documents.............11 Parent Material Adverse Effect....29
Company Stockholder Approval......10 Paying Agent.......................3
Company Stockholders Meeting......30 Payment Fund.......................3
Competition Laws..................39 PBGC..............................19
Confidentiality Agreement.........40 Permits...........................14
Contract..........................10 Policies..........................27
Credit Agreement...................8 Protection Period.................43
D&O Insurance.....................42 Proxy Statement...................10
DOJ...............................38 Representatives...................34
Effective Time.....................2 Restraints........................45
EHS...............................44 SEC...............................10
Employees.........................17 Securities Act.....................8
Engagement Letters................27 SOxA..............................12
Environmental Permits.............21 Subsidiary Documents...............8
ERISA.............................16 Superior Proposal.................37
ERISA Affiliates..................18 Surviving Corporation..............1
Exchange Act......................10 Takeover Proposal.................37
Export Control Requirements.......14 Tax Returns.......................16
Fairness Opinions.................27 Taxes.............................16
FCPA..............................14 Terminating Company Breach........47
Filed Company SEC Documents.......12 Terminating Parent Breach.........48
Financial Control Weakness........12 Termination Fee...................49
Foreign Antitrust Laws............10 Voting Agreement...................1
57
WARN..............................20
Section 8.13 Interpretation.
(a) When a reference is made in this Agreement to an Article, a
Section, Exhibit or Schedule, such reference shall be to an Article of, a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a Person
are also to its permitted successors and assigns.
(b) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
[SIGNATURE PAGE FOLLOWS]
58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
GENERAL ELECTRIC COMPANY
By: /s/ William A. Woodburn
---------------------------------------------
Name: William A. Woodburn
Title: President and CEO,
GE Infrastructure
IONICS, INCORPORATED
By: /s/ Douglas R. Brown
---------------------------------------------
Name: Douglas R. Brown
Title: Chief Executive Officer
TRITON ACQUISITION CORP.
By: /s/ Derek Feng
---------------------------------------------
Name: Derek Feng
Title: Vice President
Schedules and Exhibits Omitted in Accordance With Item 601(b)(2) of Regulation
S-K.
Procedures Letter
Ionics will furnish supplementally a copy of any omitted schedule or exhibit to
the Securities and Exchange Commission upon request, provided however that
Ionics may request confidential treatment pursuant to Rule 24-2 of the Exchange
Act for any schedule or exhibit so furnished.
59
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of November 24, 2004
among
GENERAL ELECTRIC COMPANY,
TRITON ACQUISITION CORP.
and
IONICS, INCORPORATED
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I The Merger......................................................1
Section 1.1 The Merger................................................1
Section 1.2 Closing...................................................1
Section 1.3 Effective Time............................................2
Section 1.4 Effects of the Merger.....................................2
Section 1.5 Articles of Organization and By-laws of the Surviving
Corporation...............................................2
Section 1.6 Directors of the Surviving Corporation....................2
Section 1.7 Officers of the Surviving Corporation.....................2
ARTICLE II Effect of the Merger on the Capital Stock of the Constituent
Corporations; Exchange of Certificates; Company Stock
Options.........................................................3
Section 2.1 Effect on Capital Stock...................................3
Section 2.2 Surrender of Certificates.................................3
Section 2.3 Company Stock Options.....................................5
Section 2.4 Withholding Taxes.........................................6
Section 2.5 Adjustments...............................................6
ARTICLE III Representations and Warranties of the Company...................6
Section 3.1 Organization, Standing and Corporate Power................6
Section 3.2 Capitalization............................................8
Section 3.3 Authority; Noncontravention; Voting Requirements..........9
Section 3.4 Governmental Approvals...................................10
Section 3.5 Company SEC Documents; Undisclosed Liabilities...........11
Section 3.6 Absence of Certain Changes or Events.....................13
Section 3.7 Legal Proceedings........................................13
Section 3.8 Compliance With Laws; Permits............................14
Section 3.9 Information in Proxy Statement...........................15
Section 3.10 Tax Matters..............................................15
Section 3.11 Employee Benefits and Labor Matters......................16
Section 3.12 Environmental Matters....................................20
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 3.13 Contracts................................................23
Section 3.14 Government Contracts.....................................25
Section 3.15 Title to Properties......................................25
Section 3.16 Intellectual Property....................................25
Section 3.17 Insurance................................................27
Section 3.18 Opinion of Financial Advisor.............................27
Section 3.19 Brokers and Other Advisors...............................27
Section 3.20 State Takeover Statutes..................................27
Section 3.21 Company Rights Plan......................................27
ARTICLE IV Representations and Warranties of Parent and Merger Sub........28
Section 4.1 Organization, Standing and Corporate Power...............28
Section 4.2 Authority; Noncontravention..............................28
Section 4.3 Governmental Approvals...................................29
Section 4.4 Information Supplied.....................................29
Section 4.5 Ownership and Operations of Merger Sub...................29
Section 4.6 Financing................................................29
Section 4.7 Brokers and Other Advisors...............................29
ARTICLE V Covenants and Agreements.......................................30
Section 5.1 Preparation of the Proxy Statement; Stockholder Meeting..30
Section 5.2 Conduct of Business of the Company.......................31
Section 5.3 No Solicitation by the Company; Etc......................34
Section 5.4 Further Action; Reasonable Best Efforts..................38
Section 5.5 Public Announcements.....................................39
Section 5.6 Access to Information; Confidentiality...................40
Section 5.7 Notification of Certain Matters..........................41
Section 5.8 Indemnification and Insurance............................42
Section 5.9 Securityholder Litigation................................42
Section 5.10 Fees and Expenses........................................43
Section 5.11 Employee Benefits........................................43
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 5.12 Environmental Matters....................................43
Section 5.13 Voting Agreement.........................................44
ARTICLE VI Conditions Precedent...........................................44
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................44
Section 6.2 Conditions to Obligations of Parent and Merger Sub.......45
Section 6.3 Conditions to Obligation of the Company..................46
Section 6.4 Frustration of Closing Conditions........................46
ARTICLE VII Termination....................................................47
Section 7.1 Termination..............................................47
Section 7.2 Effect of Termination....................................48
Section 7.3 Termination Fee..........................................49
ARTICLE VIII Miscellaneous...........................................50
Section 8.1 Nonsurvival of Representations and Warranties............50
Section 8.2 Amendment or Supplement..................................50
Section 8.3 Extension of Time, Waiver, Etc...........................50
Section 8.4 Assignment...............................................50
Section 8.5 Counterparts; Facsimile; Electronic Transmission.........51
Section 8.6 Entire Agreement; No Third-Party Beneficiaries...........51
Section 8.7 Governing Law; Waiver of Jury Trial......................51
Section 8.8 Specific Enforcement.....................................51
Section 8.9 Consent to Jurisdiction..................................52
Section 8.10 Notices..................................................52
Section 8.11 Severability.............................................53
Section 8.12 Definitions..............................................53
Section 8.13 Interpretation...........................................58
iii