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EXHIBIT 2.1
[Execution Copy]
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AGREEMENT AND PLAN OF MERGER
among
EGL, INC.,
EGL DELAWARE I, INC.
and
CIRCLE INTERNATIONAL GROUP, INC.
Dated as of July 2, 2000
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ARTICLE 1
THE MERGER
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Section 1.1 The Merger.............................................................................2
Section 1.2 The Closing............................................................................2
Section 1.3 Effective Time.........................................................................2
Section 1.4 Plan of Reorganization.................................................................2
ARTICLE 2
ARTICLES OF INCORPORATION OF PARENT AND
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation of Parent....................................................3
Section 2.2 Certificate of Incorporation of the Surviving Corporation..............................3
Section 2.3 Bylaws of the Surviving Corporation....................................................3
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION AND PARENT
Section 3.1 Directors of Surviving Corporation.....................................................3
Section 3.2 Officers of Surviving Corporation......................................................3
Section 3.3 Board of Directors of Parent...........................................................3
ARTICLE 4
CONVERSION OF COMPANY COMMON STOCK
Section 4.1 Conversion of Company Stock............................................................4
Section 4.2 Exchange of Certificates Representing Company Common Stock.............................5
Section 4.3 Adjustment of Exchange Ratio...........................................................7
Section 4.4 Rule 16b-3 Approval....................................................................7
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Existence; Good Standing; Corporate Authority..........................................8
Section 5.2 Authorization, Validity and Effect of Agreements.......................................8
Section 5.3 Capitalization.........................................................................9
Section 5.4 Subsidiaries...........................................................................9
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Section 5.5 No Violation of Law....................................................................9
Section 5.6 No Conflict...........................................................................10
Section 5.7 SEC Documents.........................................................................11
Section 5.8 Litigation; Decrees...................................................................12
Section 5.9 Absence of Certain Changes............................................................12
Section 5.10 Taxes.................................................................................12
Section 5.11 Employee Benefit Plans................................................................14
Section 5.12 Labor Matters.........................................................................15
Section 5.13 Environmental Matters.................................................................15
Section 5.14 Intellectual Property.................................................................16
Section 5.15 Insurance.............................................................................16
Section 5.16 Customs Broker and Other Licenses and Approvals.......................................17
Section 5.17 No Brokers............................................................................18
Section 5.18 Opinion of Financial Advisor..........................................................18
Section 5.19 Parent Stock Ownership................................................................18
Section 5.20 Reorganization........................................................................18
Section 5.21 Pooling...............................................................................18
Section 5.22 Vote Required.........................................................................19
Section 5.23 Certain Contracts.....................................................................19
Section 5.24 Amendment to the Company Rights Agreement.............................................19
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Section 6.1 Existence; Good Standing; Corporate Authority.........................................19
Section 6.2 Authorization, Validity and Effect of Agreements......................................20
Section 6.3 Capitalization........................................................................20
Section 6.4 Subsidiaries..........................................................................21
Section 6.5 No Violation of Law...................................................................21
Section 6.6 No Conflict...........................................................................22
Section 6.7 SEC Documents.........................................................................22
Section 6.8 Litigation; Decrees...................................................................23
Section 6.9 Absence of Certain Changes............................................................23
Section 6.10 Taxes.................................................................................23
Section 6.11 Employee Benefit Plans................................................................25
Section 6.12 Labor Matters.........................................................................26
Section 6.13 Environmental Matters.................................................................26
Section 6.14 Intellectual Property.................................................................27
Section 6.15 Insurance.............................................................................27
Section 6.16 Customs Broker and Other Licenses and Approvals.......................................28
Section 6.17 No Brokers............................................................................28
Section 6.18 Opinion of Financial Advisor..........................................................28
Section 6.19 Company Stock Ownership...............................................................29
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Section 6.20 Reorganization........................................................................29
Section 6.21 Pooling...............................................................................29
Section 6.22 Vote Required.........................................................................29
Section 6.23 Certain Contracts.....................................................................29
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Company Businesses.........................................................29
Section 7.2 Conduct of Parent Businesses..........................................................32
Section 7.3 No Solicitation by the Company........................................................33
Section 7.4 No Solicitation by Parent.............................................................35
Section 7.5 Meetings of Stockholders..............................................................36
Section 7.6 Filings; Commercially Reasonable Efforts..............................................37
Section 7.7 Inspection............................................................................38
Section 7.8 Publicity.............................................................................39
Section 7.9 Registration Statement................................................................39
Section 7.10 Listing Application...................................................................40
Section 7.11 Letters of Accountants................................................................40
Section 7.12 Agreements of Rule 145 Affiliates.....................................................40
Section 7.13 Expenses..............................................................................41
Section 7.14 Indemnification and Insurance.........................................................41
Section 7.15 Certain Benefits......................................................................42
Section 7.16 Reorganization; Pooling...............................................................43
Section 7.17 Rights Agreement......................................................................44
Section 7.18 Agreement with Employees..............................................................44
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger............................44
Section 8.2 Conditions to Obligation of the Company to Effect the Merger..........................45
Section 8.3 Conditions to Obligation of Parent and Merger Sub to Effect
the Merger............................................................................46
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent.........................................................47
Section 9.2 Termination by Parent or the Company..................................................47
Section 9.3 Termination by the Company............................................................48
Section 9.4 Termination by Parent.................................................................48
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Section 9.5 Effect of Termination.................................................................49
Section 9.6 Extension; Waiver.....................................................................50
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and Agreements.............................50
Section 10.2 Notices...............................................................................50
Section 10.3 Assignment; Binding Effect; Benefit...................................................51
Section 10.4 Entire Agreement......................................................................51
Section 10.5 Amendments............................................................................51
Section 10.6 Governing Law.........................................................................52
Section 10.7 Counterparts..........................................................................52
Section 10.8 Headings..............................................................................52
Section 10.9 Interpretation........................................................................52
Section 10.10 Waivers...............................................................................53
Section 10.11 Incorporation of Disclosure Letters...................................................53
Section 10.12 Severability..........................................................................53
Section 10.13 Enforcement of Agreement..............................................................53
Section 10.14 Obligation of Parent..................................................................53
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
July 2, 2000 is among EGL, Inc., a Texas corporation ("Parent"), EGL Delaware I,
Inc., a Delaware corporation and a direct, wholly owned subsidiary of Parent
("Merger Sub"), and Circle International Group, Inc., a Delaware corporation
(the "Company").
RECITALS
WHEREAS, Parent and the Company have each determined to engage in
a strategic business combination with the other;
WHEREAS, in order to effect the business combination of Parent
and the Company, the parties hereto desire to merge Merger Sub with and into the
Company (the "Merger"), with the Company surviving as a direct, wholly owned
subsidiary of Parent, pursuant to which each share of common stock, par value
$1.00 per share, of the Company (the "Company Common Stock") will be converted
into the right to receive one share of common stock, par value $.001 per share,
of Parent (the "Parent Common Stock");
WHEREAS, the Boards of Directors of each of Parent, Merger Sub
and the Company have determined the Merger, in the manner contemplated herein,
to be desirable and in the best interests of their respective corporations,
shareholders and stockholders, and to be consistent with, and in furtherance of,
their respective business strategies and goals, and by resolutions duly adopted,
have approved and adopted this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for financial accounting purposes, it is intended that
the Merger be accounted for as a "pooling of interests" under U.S. generally
accepted accounting principles;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent and the Company are executing and delivering (i) a Stock
Option Agreement dated the date hereof pursuant to which Parent has granted to
the Company an option to purchase a certain number of shares of Parent Common
Stock, and (ii) a Stock Option Agreement dated the date hereof pursuant to which
the Company has granted to Parent an option to purchase a certain number of
shares of Company Common Stock (such Stock Option Agreements being collectively
referred to herein as the "Stock Option Agreements"); and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) certain affiliates of the Company are entering into a Stockholder
Agreement with Parent providing for, among other things, the voting of shares of
Company Common Stock owned by such affiliates, and (ii) an affiliate of Parent
is entering into a Stockholder Agreement with the Company providing for, among
other things, the voting of shares of Parent Common Stock owned by such
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affiliate (such Stockholder Agreements being collectively referred to herein as
the "Stockholder Agreements");
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub
shall be merged with and into the Company in accordance with this Agreement, and
the separate corporate existence of Merger Sub shall thereupon cease. The
Company shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"). The Merger shall have the effects
specified herein and in the Delaware General Corporation Law (the "DGCL").
Section 1.2 The Closing. Subject to the terms and conditions of
this Agreement, the closing of the Merger (the "Closing") shall take place (a)
at the offices of Baker Botts L.L.P., One Shell Plaza, 910 Louisiana, Houston,
Texas, at 9:00 a.m., local time, on the first business day immediately following
the day on which the last to be fulfilled of the conditions set forth in Article
8 shall be fulfilled or, to the extent permitted by applicable law, waived in
accordance herewith, or (b) at such other time, date or place as Parent and the
Company may agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
Section 1.3 Effective Time. If all the conditions to the Merger
set forth in Article 8 shall have been fulfilled or, to the extent permitted by
applicable law, waived in accordance herewith and this Agreement shall not have
been terminated as provided in Article 9, Parent, Merger Sub and the Company
shall cause a certificate of merger (the "Certificate of Merger") meeting the
requirements of Section 251 of the DGCL to be properly executed and filed with
the Secretary of State of the State of Delaware in accordance with such Section
on the Closing Date. The Merger shall become effective at the time of filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
in accordance with the DGCL, or at such later time that the parties hereto shall
have agreed upon and designated in the Certificate of Merger as the effective
time of the Merger (the "Effective Time").
Section 1.4 Plan of Reorganization. The parties to this Agreement
hereby adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368- 3(a) of the Treasury regulations.
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ARTICLE 2
ARTICLES OF INCORPORATION OF PARENT AND
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation of Parent. Subject to the
approval by the holders of outstanding shares of Parent Common Stock as and to
the extent required by the Texas Business Corporation Act and Parent's Articles
of Incorporation and Bylaws, as of the Effective Time the authorized shares of
Parent Common Stock shall be increased to 200,000,000 shares of Parent Common
Stock.
Section 2.2 Certificate of Incorporation of the Surviving
Corporation. The certificate of incorporation of the Company in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation, until duly amended in accordance
with applicable law.
Section 2.3 Bylaws of the Surviving Corporation. The bylaws of
Merger Sub in effect immediately prior to the Effective Time shall be the bylaws
of the Surviving Corporation, until duly amended in accordance with applicable
law.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION AND PARENT
Section 3.1 Directors of Surviving Corporation. The directors of
Merger Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation as of the Effective Time, until their successors shall be
appointed or their earlier death, resignation or removal in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation.
Section 3.2 Officers of Surviving Corporation. The officers of
Merger Sub immediately prior to the Effective Time shall be the officers of the
Surviving Corporation as of the Effective Time, until their successors shall be
appointed or their earlier death, resignation or removal in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation.
Section 3.3 Board of Directors of Parent. Parent will take such
action as may be necessary to cause as of the Effective Time the election or
appointment of Peter Gibert as a director of Parent.
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ARTICLE 4
CONVERSION OF COMPANY COMMON STOCK
Section 4.1 Conversion of Company Stock.
(a) At the Effective Time, each share of common stock, par value
$.001 per share, of Merger Sub outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and non-assessable share
of common stock, par value $1.00 per share, of the Surviving Corporation.
(b) At the Effective Time, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Company Common Stock (i) held in the Company's treasury or (ii) owned
by Parent, Merger Sub or any other wholly owned Subsidiary (as defined in
Section 10.9) of Parent or the Company) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive one validly issued, fully paid and nonassessable share of
Parent Common Stock (the "Exchange Ratio").
(c) As a result of the Merger and without any action on the part
of the holder thereof, each share of Company Common Stock shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate (a "Certificate") representing any shares of Company
Common Stock shall thereafter cease to have any rights with respect to such
shares of Company Common Stock, except the right to receive, without interest, a
certificate representing shares of Parent Common Stock and cash for fractional
shares of Parent Common Stock in accordance with Sections 4.2(b) and 4.2(e) upon
the surrender of such Certificate.
(d) Each share of Company Common Stock issued and held in the
Company's treasury, and each share of Company Common Stock owned by Parent,
Merger Sub or any other wholly owned Subsidiary of Parent or the Company shall,
at the Effective Time and by virtue of the Merger, cease to be outstanding and
shall be canceled and retired without payment of any consideration therefor, and
no stock of Parent or other consideration shall be delivered in exchange
therefor.
(e) (i) At the Effective Time, all options (individually, a
"Company Option" and collectively, the "Company Options") then outstanding under
the Company's 1982 Stock Option Plan, 1990 Stock Option Plan, Stock Option Plan
for Non-Employee Directors, 1994 Omnibus Equity Incentive Plan, as amended by
Amendment No. 1 thereto, 1995 Stock Option Plan for Non- Employee Directors,
Employee Stock Purchase Plan, Singapore Employee Stock Purchase Plan, Sharesave
Scheme 2000, 1999 Stock Option Plan, 2000 Stock Option Plan and 2000 Stock
Option Plan for Non-Employee Directors (collectively, the "Company Stock Option
Plans") shall remain outstanding following the Effective Time. At the Effective
Time, the Company Options shall, by virtue of the Merger and without any further
action on the part of the Company or the holder of any Company Option, be
assumed by Parent in such manner that Parent (i) is a corporation "assuming a
stock option in a transaction to which Section 424(a) applied" within the
meaning of Section 424 of the Code or (ii) to the extent that Section 424 of the
Code does not apply to any Company Option,
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would be such a corporation were Section 424 of the Code applicable to such
option. Each Company Option assumed by Parent shall, solely to the extent
provided by the Company Stock Option Plans and the option agreements entered
into pursuant thereto, be accelerated and fully vested and exercisable as of the
Effective Time and shall otherwise be subject to the same terms and conditions
as under the applicable Company Stock Option Plan and the applicable option
agreement entered into pursuant thereto, except that (i) each Company Option
shall be exercisable for that whole number of shares of Parent Common Stock
(rounded down to the nearest whole share) into which the number of shares of
Company Common Stock subject to such Company Option immediately prior to the
Effective Time would be converted under Section 4.1(b), (ii) the option price
per share of Parent Common Stock shall be an amount equal to the option price
per share of Company Common Stock subject to such Company Option in effect
immediately prior to the Effective Time divided by the Exchange Ratio (the price
per share, as so determined, being rounded upward to the nearest full cent), and
(iii) notwithstanding clause (i) and (ii) of this sentence, with respect to the
Employee Stock Purchase Plan, the Singapore Employee Stock Purchase Plan and the
Sharesave Scheme 2000, the adjustment to the option price shall reflect the
application of the Exchange Ratio to the option price in effect at the beginning
of the purchase period.
(ii) Parent shall take all corporate action necessary to reserve
for issuance a number of shares of Parent Common Stock equal to the number of
shares of Parent Common Stock issuable upon the exercise of the Company Options
assumed by Parent pursuant to this Section 4.1(e). From and after the date of
this Agreement, no additional options shall be granted by the Company or its
Subsidiaries under the Company Stock Option Plans or otherwise, except as
provided in Section 7.1(f), and no action shall be taken by the Company or its
Subsidiaries to provide for the acceleration of the exercisability of any
Company Options in connection with the Merger other than as required under the
terms of the Company Options and the Company Stock Option Plans. Promptly
following the Effective Time, Parent shall file with the Securities and Exchange
Commission (the "SEC") a Registration Statement on Form S-8 (or a post-effective
amendment on Form S-8 with respect to the Form S-4 (as defined in Section 7.9))
covering all shares of Parent Common Stock to be issued upon exercise of Company
Options and shall cause such registration statement to remain effective for as
long as there are outstanding any Company Options.
Section 4.2 Exchange of Certificates Representing Company Common
Stock.
(a) At or immediately following the Effective Time, Parent shall
deposit, or shall cause to be deposited, with an exchange agent selected by
Parent, which shall be Parent's transfer agent for the Parent Common Stock or
such other party reasonably satisfactory to the Company (the "Exchange Agent"),
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Article 4, certificates representing the shares of
Parent Common Stock and the cash in lieu of fractional shares (such cash and
certificates for shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 4.1 and delivered pursuant to
this Section 4.2 in exchange for outstanding shares of Company Common Stock.
(b) Promptly after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of one or more Certificates
(other than to holders of Company
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Common Stock that, pursuant to Section 4.1(d), are canceled without payment of
any consideration therefor): (i) a letter of transmittal (the "Letter of
Transmittal") which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock and cash in lieu of fractional
shares. Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such Letter of Transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of such Certificate shall
be entitled to receive in exchange therefor (A) a certificate representing that
number of whole shares of Parent Common Stock and (B) a check representing the
amount of cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, which such holder has the right to receive in respect of
the Certificate surrendered pursuant to the provisions of this Article 4, after
giving effect to any required withholding tax, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the cash in lieu of fractional shares and unpaid dividends and distributions, if
any, payable to holders of Certificates. In the event of a transfer of ownership
of Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock, together with a check for the cash to be paid in lieu of fractional
shares, may be issued to such a transferee if the Certificate representing such
Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time with
respect to shares of Parent Common Stock with a record date after the Effective
Time shall be paid with respect to the shares to be issued upon exchange of any
Certificate until such Certificate is surrendered for exchange as provided
herein. Subject to the effect of applicable laws, following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid,
less the amount of any withholding taxes which may be required thereon, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole shares of Parent
Common Stock, less the amount of any withholding taxes which may be required
thereon.
(d) At or after the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, the
presented Certificates shall be canceled and exchanged for certificates
representing shares of Parent Common Stock and cash in lieu of fractional
shares, if any, deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article 4. Certificates
surrendered for exchange by any person who is a Rule 145 Affiliate (as
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defined in Section 7.12) shall not be exchanged until Parent has received a
written agreement from such person as provided in Section 7.12.
(e) No fractional shares of Parent Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional share of Parent
Common Stock pursuant to Section 4.1(b), cash adjustments will be paid to
holders in respect of any fractional share of Parent Common Stock that would
otherwise be issuable, and the amount of such cash adjustment shall be equal to
such fractional proportion of the average of the per share closing prices of the
Parent Common Stock as reported in the New York City edition of The Wall Street
Journal (or, if not reported thereby, another authoritative source) for
securities traded on the Nasdaq National Market for the 20 consecutive trading
days ending on the fifth trading day prior to the Closing Date, appropriately
adjusted for any stock splits, reverse stock splits, stock dividends,
recapitalizations or other similar transactions.
(f) Any portion of the Exchange Fund (including the proceeds of
any investments thereof and any shares of Parent Common Stock) that remains
unclaimed by the former stockholders of the Company one year after the Effective
Time shall be delivered to Parent. Any former stockholders of the Company who
have not theretofore complied with this Article 4 shall thereafter look only to
Parent for delivery of their shares of Parent Common Stock and cash in lieu of
fractional shares and for unpaid dividends and distributions on the shares of
Parent Common Stock deliverable to such former stockholder pursuant to this
Agreement.
(g) None of Parent, the Surviving Corporation, the Exchange Agent
or any other person shall be liable to any former holder of shares of Company
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the shares
of Parent Common Stock and cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Parent Common Stock as provided in
Section 4.2(c), deliverable in respect thereof pursuant to this Agreement.
Section 4.3 Adjustment of Exchange Ratio. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
Company changes the number of shares of Company Common Stock or Parent changes
the number of shares of Parent Common Stock, issued and outstanding as a result
of a stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction, the Exchange Ratio and other items dependent thereon shall
be appropriately adjusted.
Section 4.4 Rule 16b-3 Approval. Parent and the Company each
agree that its Board of Directors shall, at or prior to the Effective Time,
adopt resolutions specifically approving, for purposes of Rule 16b-3 ("Rule
16b-3") under the Securities Exchange Act of 1934, as amended
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(the "Exchange Act"), the transactions contemplated by Section 4.1 hereof and
any other dispositions of Company equity securities (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) in the
case of the Company is a director or officer of the Company and (b) in the case
of Parent is, or at the Effective Time will become, a director or officer of
Parent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered to Parent
concurrently with the execution hereof (the "Company Disclosure Letter"), the
Company represents and warrants to Parent that:
Section 5.1 Existence; Good Standing; Corporate Authority. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The Company is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of any jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business makes
such qualification necessary, except where the failure to be so qualified does
not have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect (as defined in Section 10.9). The
Company has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted, except where
the failure to possess such power and authority does not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The copies of the Company's certificate of
incorporation and bylaws previously made available to Parent are true and
correct and contain all amendments as of the date hereof.
Section 5.2 Authorization, Validity and Effect of Agreements. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement, the Stock Option Agreements, the Stockholder Agreement to which
it is a party and all other agreements and documents contemplated hereby and
thereby. The consummation by the Company of the transactions contemplated hereby
and by the Stock Option Agreements has been duly authorized by all requisite
corporate action on behalf of the Company, other than the approvals referred to
in Section 5.22. This Agreement, the Stockholder Agreement to which it is a
party and the Stock Option Agreements constitute the valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity (the
"Enforceability Exceptions"). The Company has taken all action necessary to
render the restrictions set forth in Section 203 of the DGCL inapplicable to the
Merger, this Agreement, the Stock Option Agreements, the Stockholder Agreements
and the transactions contemplated hereby and thereby. No other U.S. or State
takeover or business combination statute to which the Company or any of its
Subsidiaries is subject applies or purports to apply to the Merger, this
Agreement, the Stock Option Agreements, the Stockholder Agreements or the
transactions contemplated hereby or thereby. There is no foreign takeover or
business combination statute that applies or purports to apply to the Company or
any of its Subsidiaries which would require any filing or the taking of any
other action by the Company or
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its Subsidiaries as a result of the execution or delivery of this Agreement, the
Stock Option Agreements, the Stockholder Agreements or the transactions
contemplated hereby or thereby and which would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect if such
filing was not made or such action was not taken.
Section 5.3 Capitalization. The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $1.00 per share, of the Company (the
"Company Preferred Stock"), and as of June 23, 2000, there were 17,645,417
shares of Company Common Stock issued and outstanding and 1,456,683 shares of
Company Common Stock issuable upon exercise of outstanding Company Options and
no shares of Company Preferred Stock issued and outstanding. All such issued and
outstanding shares of Company Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. One right to purchase
Series A Junior Participating Preferred Stock (each, a "Company Right") issued
pursuant to the Rights Agreement, dated as of October 24, 1994 (the "Company
Rights Agreement"), as amended, between the Company and Chemical Trust Company
of California is associated with and attached to each outstanding share of
Company Common Stock. As of the date of this Agreement, except as set forth in
this Section 5.3 or in the Stock Option Agreements and except for any shares of
Company Common Stock issued pursuant to Company Options outstanding as of June
23, 2000 or thereafter granted as permitted by this Agreement, there are no
outstanding shares of capital stock and there are no options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other voting securities of the
Company or any of its Subsidiaries. The Company has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter.
Section 5.4 Subsidiaries. Each of the Company's Subsidiaries is a
corporation, partnership, limited liability company or other entity duly
organized, validly existing and in good standing (where applicable) under the
laws of its jurisdiction of incorporation or organization, has the corporate or
partnership power and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing (where applicable) in each jurisdiction in
which the ownership, operation or lease of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing (where applicable) does not
have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. All of the outstanding shares of
capital stock of, or other ownership interests in, each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and is owned, directly or indirectly, by the Company free and clear of all
liens, pledges, security interests, claims or other encumbrances ("Liens"),
except such Liens as do not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries own any shares of capital stock or other
ownership interests in any corporation, partnership, limited liability company
or other entity, except for shares of capital stock or other ownership interests
in the Company's Subsidiaries.
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Section 5.5 No Violation of Law. Neither the Company nor any of
its Subsidiaries is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation, U.S. or foreign, to which the Company or any of its
Subsidiaries or any of their respective properties or assets is subject
(including, without limitation, those (a) applicable to indirect cargo carriers
under the Federal Aviation Act, (b) adopted or promulgated by the Surface
Transportation Board, including, without limitation, regulations applicable to
motor carrier operations and truck brokerage operations, (c) safety regulations
applicable to interstate motor carrier operations or indirect cargo carriers
that have been prescribed by the Department of Transportation, (d) adopted or
promulgated by the Federal Maritime Commission (the "FMC") and/or those
otherwise relating to Non-Vessel Operating Common Carriers (as defined herein),
(e) adopted or promulgated by the Customs Service of the Department of the
Treasury ("Customs") and/or those otherwise relating to customs brokers, (f)
adopted or promulgated by the Bureau of Alcohol, Tobacco and Firearms relating
to the storage and transportation of certain commodities, (g) adopted or
promulgated by the Department of Justice relating to the storage and
transportation of gambling devices, (h) adopted or promulgated by the
International Air Transport Association (the "IATA"), (i) adopted or promulgated
by the Interstate Commerce Commission and (j) state or foreign laws, ordinances,
governmental rules or regulations comparable to the foregoing (collectively, the
"Specified Governmental Regulations")), except (1) as does not have and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect or (2) as pertains to laws, ordinances, governmental
rules or regulations, U.S. or foreign, relating to taxes paid or payable by the
Company or any of its Subsidiaries or with respect to any of their respective
properties or assets, which matters are addressed in Section 5.10 hereof. The
Company and its Subsidiaries hold all permits, licenses, variances, exemptions,
orders, franchises and approvals of all governmental authorities necessary for
the lawful conduct of their respective businesses (the "Company Permits"),
except where the failure so to hold does not have and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. The Company and its Subsidiaries are in compliance with the terms of the
Company Permits, except where the failure so to comply does not have and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. To the knowledge of the Company, no investigation by
any governmental authority with respect to the Company or any of its
Subsidiaries is pending or threatened, other than those the outcome of which
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 5.6 No Conflict.
(a) Neither the execution and delivery by the Company of this
Agreement or the Stock Option Agreements nor the consummation by the Company of
the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof will: (i) conflict with or result in a breach of any
provisions of the certificate of incorporation or bylaws of the Company; (ii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of the Company or its Subsidiaries under, or result
in being declared void, voidable, or without further
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binding effect, or otherwise result in a detriment to the Company or any of its
Subsidiaries under, any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit (including,
without limitation, any Company Permit), lease, contract, agreement, joint
venture, sponsor agreement or other instrument or obligation to which the
Company or any of its Subsidiaries is a party, or by which the Company or any of
its Subsidiaries or any of their properties is bound or affected; or (iii)
contravene or conflict with or constitute a violation of any provision of any
law, rule, regulation, judgment, order or decree binding upon or applicable to
the Company or any of its Subsidiaries, except for such matters described in
clause (ii) or (iii) as do not and are not likely to have, individually or in
the aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this
Agreement or the Stock Option Agreements or the Stockholder Agreement to which
it is a party nor the consummation by the Company of the transactions
contemplated hereby or thereby in accordance with the terms hereof or thereof
will require any consent, approval or authorization of, or filing or
registration with, any governmental or regulatory authority, U.S. or foreign
(including, without limitation, under the Specified Governmental Regulations),
other than (i) the filings provided for in Article 1 and (ii) the filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), any applicable non-U.S. competition, antitrust or
premerger notification laws or regulations ("Non-U.S. Antitrust Laws"), the
Exchange Act, the Securities Act of 1933, as amended (the "Securities Act"), or
applicable state securities and "Blue Sky" laws ((i) and (ii) collectively, the
"Regulatory Filings"), and (iii) listing on the Nasdaq National Market of the
Company Common Stock to be issued upon exercise of the option granted to Parent
pursuant to the applicable Stock Option Agreement.
Section 5.7 SEC Documents. The Company has made available to
Parent each registration statement, report, proxy statement or information
statement (other than preliminary materials) filed by the Company with the SEC
since December 31, 1999, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "Company Reports"). As of their
respective dates, the Company Reports (i) were prepared in all material respects
in accordance with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations thereunder and (ii) did not 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 made therein,
in the light of the circumstances under which they were made, not misleading,
except for such statements, if any, as have been modified by subsequent filings
with the SEC prior to the date hereof. Each of the consolidated balance sheets
of the Company included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of the Company and its Subsidiaries
as of its date, and each of the consolidated income statements, consolidated
statements of cash flows and consolidated statements of changes in stockholders'
equity of the Company included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, cash flows or changes in
stockholders' equity, as the case may be, of the Company and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited statements,
to (x) such exceptions as may be permitted by Form 10-Q of the SEC and (y)
normal year-end audit adjustments), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted
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therein. Except as reflected in such financial statements, including all notes
thereto, and except for liabilities incurred in connection with this Agreement,
the Stock Option Agreements or the transactions contemplated hereby or thereby,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
other than (i) liabilities and obligations arising in the ordinary course of
business since the date of such financial statements and (ii) liabilities or
obligations which do not have and would not reasonably be expected to have,
individually or in the aggregate (together with those described in clause (i)),
a Company Material Adverse Effect. As of December 31, 1999 and as of May 31,
2000, the intercompany suspense amounts (the difference between the intercompany
payables and receivables) in the Company's accounting records represent in
process transactions that will be completed in a subsequent accounting period.
The Company has established reserves which management believes are appropriate
to properly record the intercompany balance to its net realizable amount in all
material respects.
Section 5.8 Litigation; Decrees. There are no actions, suits or
proceedings pending against the Company or any of its Subsidiaries or, to the
Company's knowledge, threatened against the Company or any of its Subsidiaries,
at law or in equity, or before or by any federal, state or foreign commission,
board, bureau, agency or instrumentality, that have had or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. There are no outstanding judgments, decrees, injunctions, awards or
orders against the Company or any of its Subsidiaries that have or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Except for such matters as do not and are not likely to
have a Company Material Adverse Effect, (i) no order, writ, fine, injunction,
decree, judgment, award or determination of any court or governmental authority
has been issued or entered against the Company or any Subsidiary of the Company
that continues to be in effect that affects the ownership or operation of any of
their respective assets, and (ii) no criminal order, writ, fine, injunction,
decree, judgment or determination of any court or governmental authority has
been issued against the Company or any Subsidiary of the Company.
Section 5.9 Absence of Certain Changes. From March 31, 2000
through the date of this Agreement there has not been (i) any event or
occurrence that has had or would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect, (ii) any material change by
the Company in its accounting methods, principles or practices or its tax
methods, practices or elections, (iii) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of the Company
or any redemption, purchase or other acquisition of any of its securities,
except dividends on the Company Common Stock at a rate of not more than $0.135
per share per semiannual payment, or (iv) any increase in or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option, stock purchase or other employee benefit plan,
except in the ordinary course of business.
Section 5.10 Taxes.
(a) Each of the Company, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or was a member has (i) duly filed (or there has been filed on its behalf) on
a timely basis with appropriate governmental
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authorities all tax returns, statements, reports, declarations, estimates and
forms required to be filed by or with respect to it on or prior to the date
hereof, except to the extent that any failure to file does not have and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, and (ii) duly paid or deposited in full on a timely
basis or made adequate provisions in accordance with generally accepted
accounting principles (or there has been paid or deposited or adequate provision
has been made on its behalf) for the payment of all taxes required to be paid by
it for all periods ended through the date hereof, except to the extent that any
failure to pay or deposit or make adequate provision for the payment of such
taxes does not have and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
(b) (i) The federal income tax returns of the Company and each of
its Subsidiaries have been examined by the Internal Revenue Service (the "IRS")
(or the applicable statutes of limitation for the assessment of federal income
taxes for such periods have expired) for all periods; (ii) except to the extent
being contested in good faith, all deficiencies asserted in writing as a result
of such examinations and any other examinations of the Company and its
Subsidiaries by any taxing authority have been paid, fully settled or adequately
provided for in the financial statements contained in the Company Reports,
except for deficiencies that have not had and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect;
(iii) except as adequately provided for in the Company Reports, no material
federal, state, local or foreign income or franchise tax audits or other
administrative proceedings or court proceedings are presently pending with
regard to any federal, state, local or foreign income or franchise taxes
regarding the Company or any of its Subsidiaries, and no material deficiency for
any such income or franchise taxes has been asserted or assessed in writing
pursuant to such examination against the Company or any of its Subsidiaries by
any federal, state, local or foreign taxing authority with respect to any
period; (iv) as of the date hereof, neither the Company nor any of its
Subsidiaries has granted in writing any requests, agreements, consents or
waivers (that remain in effect) to extend the statutory period of limitations
applicable to the assessment of any taxes with respect to any tax returns of the
Company or any of its Subsidiaries; and (v) neither the Company nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any tax
sharing or similar agreement (other than agreements between the Company and its
Subsidiaries).
(c) Neither the Company nor any of its Subsidiaries has executed
or entered into (or prior to the close of business on the Closing Date will
execute or enter into) with the IRS or any other taxing authority any material
closing agreement pursuant to Section 7121 of the Code, or any predecessor
provision thereof or any similar provision of state, local or foreign income tax
law that relates to the assets or operations of the Company or any of its
Subsidiaries that would require payment of taxes after the Closing Date.
(d) Neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
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(e) Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
For purposes of this Agreement, "tax" or "taxes" means all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
accumulated earnings, personal holding company, excess profits, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, disability, capital stock, or windfall profits
taxes, customs duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or foreign).
Section 5.11 Employee Benefit Plans. For purposes of this Section
5.11, all references to the "Company" shall be deemed to refer to the Company
and any trade or business, whether or not incorporated, that together with the
Company would be (or, during the six years prior to the date of this Agreement,
has been) deemed or treated as a "single employer" within the meaning of Section
4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Code Section 414. Schedule 5.11 of the Company Disclosure Letter
contains a list of all employee benefit plans and other benefit arrangements,
including any stock purchase, stock option, pension, profit-sharing, retirement,
bonus, deferred compensation, incentive compensation, commission, severance or
termination pay, hospitalization, medical, dental, disability, life or other
insurance, or supplemental unemployment benefits plan, policy, contract,
practice or other arrangement, whether or not subject to ERISA or U.S. based and
whether written or oral, that is, or within the six year period preceding the
date hereof has been, sponsored, maintained or contributed to or required to be
contributed to by the Company for the purpose of providing service- or
employment-related compensation or benefits to any current or former officer,
director, employee, retiree or independent contractor of the Company or members
of their respective families (other than directors' and officers' liability
policies), whether or not insured, including, without limitation, benefits that
are required to be provided under applicable law (the "Company Benefit Plans").
True and complete copies of the Company Benefit Plans and, if applicable, the
most recent Form 5500, IRS determination letter, actuarial report, summary plan
description, trust or other funding agreement and annual report for each such
plan have been made available to Parent. The Company has no commitment or
obligation to establish or adopt any new or additional plans or other
arrangements that would constitute Company Benefit Plans if adopted, or to
increase materially the benefits under any existing Company Benefit Plan. All
applicable reporting and disclosure requirements have been met with respect to
the Company Benefit Plans except for any noncompliance that does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. To the extent applicable, the Company Benefit
Plans comply, and have been operated in compliance, in all material respects,
with the requirements of all applicable laws, rules and regulations, including,
without limitation, ERISA and the Code and the requirements of any applicable
jurisdiction. With respect to any Company Benefit Plan intended to be qualified
under Section 401(a) of the Code (i) such plan has received a determination
letter from the IRS stating that it is so qualified and, to the Company's
knowledge, no event has occurred since the date of such letter that would
adversely affect such determination or (ii) the remedial amendment period under
Code Section 401(b) for such plan has not expired. The Company Benefit Plans
have been
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maintained and operated, in all material respects, in accordance with their
terms. To the Company's knowledge, there are no pending or anticipated claims
against or otherwise involving any Company Benefit Plan and no suit, action or
other litigation (excluding claims for benefits incurred in the ordinary course
of Company Benefit Plan activities) has been brought against or with respect to
any such Company Benefit Plan, except for any of the foregoing which does not
have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. All material contributions
required to be made as of the date hereof to the Company Benefit Plans have been
made. Neither the Company nor any Company Benefit Plan provides for medical,
life insurance or health benefits or other welfare benefits after a Company
employee's termination of employment (including retirement) except for
continuation coverage required pursuant to Section 4980B of the Code and Part 6
of Title I of ERISA and the regulations thereunder or coverage mandated by
applicable law outside the U. S., and the Company has not represented, promised
or contracted (whether in oral or written form) to any employee or former
employee that such benefits would be provided. No Company Benefit Plan is a
voluntary employee's beneficiary association within the meaning of Section
501(c)(9) of the Code. With respect to each Company Benefit Plan, the present
value of accrued benefits under such plan did not exceed, as of its latest
valuation date, the then current value of the assets of such plan allocable to
such accrued benefits or, to the extent the amount by which the present value of
the accrued benefits exceeds the current value of plan assets, the financial
statements of the Company and its Subsidiaries made available to Parent fairly
reflect such liabilities in the aggregate. To the Company's knowledge, no
prohibited transaction has occurred with respect to any Company Benefit Plan
that would result in the imposition of any excise tax or other liability under
the Code or ERISA. The Company does not contribute to, and has no obligation to
contribute to, and has not within six years prior to the Effective Time
contributed to, or had an obligation to contribute to, a multiemployer plan
within the meaning of Section 3(37) of ERISA or any "employee pension benefit
plan," as defined in Section 3(2) of ERISA, that is subject to the funding
requirements of Title IV of ERISA or Section 412 of the Code. The Company has no
actual or contingent obligation to make any payments that would be "excess
parachute payments" under Section 280G of the Code. Neither the execution of
this Agreement nor the performance of the transactions contemplated hereby will
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any policy, arrangement, agreement or benefit plan, or
any trust or loan, that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or other compensation or obligations to fund
benefits with respect to any employee or former employee of the Company.
Section 5.12 Labor Matters. Except as does not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries is
a party to, or bound by, any collective bargaining agreement, contract or other
agreement with a labor union or labor organization, U.S. or foreign, and (ii) to
the Company's knowledge, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of the Company or any of its Subsidiaries.
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Section 5.13 Environmental Matters. Except as does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect:
(a) there are not any past or present conditions or circumstances
relating to any substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substance Pollution Contingency
Plan, 40 C.F.R. Section 300.5, or defined as such by, or regulated as such
under, any Environmental Law (as defined below) ("Hazardous Material") that
interfere with the conduct of the business of the Company and each of its
Subsidiaries in the manner now conducted or which interfere with compliance with
any order of any court, governmental authority or arbitration board or tribunal,
or any law, ordinance, governmental rule or regulation related to pollution or
protection of human health or the environment ("Environmental Law");
(b) there are not any past or present conditions or circumstances
at, or arising out of, any current or former businesses, assets or properties of
the Company or any Subsidiary of the Company, including but not limited to
on-site or off-site disposal or release of any Hazardous Materials, which would
reasonably be expected to give rise to: (i) liabilities or obligations for any
cleanup, remediation, disposal or corrective action ("Cleanup") under any
Environmental Law, (ii) any fines or penalties or (iii) claims arising for
personal injury, property damage or damage to natural resources;
(c) neither the Company nor any of its Subsidiaries has (i) given
or received any written notice of noncompliance with, violation of, or liability
or potential liability under any Environmental Law or (ii) entered into any
consent decree or order or is subject to any order of any court or governmental
authority or tribunal under any Environmental Law or relating to the Cleanup of
any Hazardous Materials;
(d) neither the Company nor any of its Subsidiaries have
transported or arranged for the transportation (directly or indirectly) of any
Hazardous Materials to any location which is listed or proposed for listing on
the nationwide priorities list established under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or any
similar state list or to any location to which the transportation (directly or
indirectly) of any Hazardous Materials violates any Environmental Law of any
foreign state or jurisdiction; and
(e) no oral or written notification of a release (as defined in
42 U.S.C. Section 9601) of a Hazardous Materials has been filed by or on behalf
of the Company or any of its Subsidiaries, and no property now or previously
owned or leased by the Company or any of its Subsidiaries is listed or proposed
for listing on the nationwide priorities list established promulgated pursuant
to CERCLA.
Section 5.14 Intellectual Property. The Company and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, patent rights, trademarks, trademark rights and proprietary information
used or held for use in connection with their respective businesses as currently
being conducted, except where the failure to own or possess such licenses and
other rights does not have and would not reasonably be expected to have,
individually or in the aggregate,
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a Company Material Adverse Effect, and there are no pending proceedings
challenging the validity of any of the foregoing which have or would reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. The conduct of the Company's and its Subsidiaries' respective
businesses as currently conducted does not conflict with any patents, patent
rights, licenses, trademarks, trademark rights, trade names, trade name rights
or copyrights of others in any way which has or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. To
the Company's knowledge, there is no material infringement of any proprietary
right owned by or licensed by or to the Company or any of its Subsidiaries which
has or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 5.15 Insurance. The Company and each of its Subsidiaries
have policies of insurance and bonds of the type and in amounts which are
appropriate for the businesses of the Company and its Subsidiaries. There is no
material claim pending under any of such policies or bonds as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
bonds, except questioned, denied or disputed claims the failure to provide
coverage for which does not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Except as
does not have and would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect, (a) all premiums due and
payable under all such policies and bonds have been paid, (b) the Company and
its Subsidiaries are otherwise in compliance in all material respects with the
terms of such policies and bonds and (c) the Company has no knowledge of any
threatened termination of, or material premium increase with respect to, any of
such policies.
Section 5.16 Customs Broker and Other Licenses and Approvals.
(a) The Company and each of its Subsidiaries that is engaged in
the Customs Business (as defined below) is a duly licensed Customs Broker (as
defined below), and holds a valid permit in each location where it conducts
Customs Business, under 19 U.S.C. Section 1641 and applicable Customs
regulations. Such licenses and permits are in full force and effect and have not
been surrendered, suspended or revoked by operation of law or otherwise. The
Company and each of its Subsidiaries that is engaged in the Customs Business
maintains a licensed officer required under 19 C.F.R. Section 111.11(c) in
support of its corporate license and employs a licensed person in each Customs
broker district as required under 19 C.F.R. Section 111.19.
(b) The Company and each of its Subsidiaries that is engaged in
the Customs Business has complied in all respects with 19 U.S.C. Section 1641
and 19 C.F.R. Part III.
(c) The Company and each separately incorporated branch office
where the Company acts as an Ocean Freight Forwarder (as defined below) or a
Non-Vessel Operating Common Carrier (as defined below) is duly licensed as an
Ocean Transportation Intermediary (as defined below) by the FMC and is in full
compliance with all laws and regulations applicable to Ocean Transportation
Intermediaries. Such licenses are in full force and effect and have not been
surrendered, suspended or revoked by operation of law or otherwise.
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(d) The Company and each of its Subsidiaries that is engaged in
the Customs Business or as an Air Freight Forwarder (as defined below) or Ocean
Transportation Intermediary is in compliance with the laws and regulations
administered by Customs, the United States Department of Commerce, and the FMC.
There are no claims pending against, or to the Company's knowledge, threatened
against or affecting the Company or any of its Subsidiaries, by Customs, the
United States Department of Commerce, or the FMC for duties, taxes, fees,
penalties or liquidated damages in excess of $10,000 each or $300,000 in the
aggregate.
(e) The Company and each of its Subsidiaries that is engaged in
the Customs Business or as an Air Freight Forwarder or Ocean Transportation
Intermediary is not the subject of any investigation, audit, debarment, denial
order, charging letter, or license revocation or suspension proceeding by
Customs, the United States Department of Commerce, or the FMC.
(f) "Customs Business" means those activities involving
transactions with Customs concerning the entry and admissibility of merchandise,
its classification and valuation, the payment of duties, taxes, or other charges
assessed or collected by Customs upon merchandise by reason of its importation,
or the refund, rebate, or drawback thereof, as well as the preparation of
documents or forms in any format and the electronic transmission of documents,
invoices, bills, or parts thereof, intended to be filed with Customs in
furtherance of such activities, whether or not signed or filed by the preparer,
or activities relating to such preparation. "Customs Broker" means any person
granted a customs broker's license by the Secretary of the Treasury.
(g) "Ocean Transportation Intermediary" means an Ocean Freight
Forwarder or a Non-Vessel Operating Common Carrier. "Ocean Freight Forwarder"
means a person that: (1) in the United States, dispatches shipments from the
United States via a common carrier and books or otherwise arranges space for
those shipments on behalf of shippers; and (2) processes the documentation or
performs related activities incident to those shipments. "Non-Vessel Operating
Common Carrier" means a common carrier that does not operate the vessels by
which the ocean transportation is provided, and is a shipper in its relationship
with an ocean common carrier.
(h) "Air Freight Forwarder" means a person that dispatches
shipments from the United States via an air carrier and books or otherwise
arranges space for those shipments on behalf of shippers or acts as a shipper
and processes the documentation or performs related activities incident to those
shipments.
Section 5.17 No Brokers. The Company has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of the Company or Parent to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that the Company has retained Morgan Stanley & Co.
Incorporated as its financial advisor, the arrangements with which have been
disclosed in writing to Parent prior to the date hereof.
Section 5.18 Opinion of Financial Advisor. The Board of Directors
of the Company has received the opinion of Morgan Stanley & Co. Incorporated to
the effect that, as of
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the date thereof, the Exchange Ratio is fair, from a financial point of view, to
the holders of the Company Common Stock.
Section 5.19 Parent Stock Ownership. Neither the Company nor any
of its Subsidiaries owns any shares of capital stock of Parent or any other
securities convertible into or otherwise exercisable to acquire capital stock of
Parent.
Section 5.20 Reorganization. Neither the Company nor any of its
Subsidiaries has taken or failed to take any action, as a result of which the
Merger would not qualify as a reorganization within the meaning of Section
368(a) of the Code (and comparable provisions of applicable state or local
laws).
Section 5.21 Pooling. Neither the Company nor any of its
Subsidiaries or Rule 145 Affiliates has taken or failed to take any action, as a
result of which the Merger would not qualify as a "pooling of interests" for
financial accounting purposes.
Section 5.22 Vote Required. The only vote of the holders of any
class or series of Company capital stock necessary to approve any transaction
contemplated by this Agreement is the affirmative vote in favor of approval and
adoption of the Merger and this Agreement and the transactions contemplated
hereby by the holders of at least a majority of the outstanding shares of
Company Common Stock entitled to vote thereon.
Section 5.23 Certain Contracts. Neither the Company nor any of
its Subsidiaries is a party to or bound by (i) any "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC), except as set
forth in the Company Reports, or (ii) any non-competition agreement or any other
agreement or obligation which purports to limit in any material respect the
manner in which, or the localities in which, all or any material portion of the
current business of the Company and its Subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, is conducted.
Section 5.24 Amendment to the Company Rights Agreement. The
Company has amended or taken other action under the Company Rights Agreement so
that none of the execution and delivery of this Agreement, the Stock Option
Agreements or the Stockholder Agreements, or the conversion of shares of Company
Common Stock into the right to receive shares of Parent Common Stock in
accordance with Article 4 of this Agreement, the issuance of shares of Company
Common Stock upon exercise of the option granted to Parent pursuant to the
applicable Stock Option Agreement, and the consummation of the Merger or any
other transactions contemplated hereby or by the Stock Option Agreement or the
Stockholder Agreements, will cause (i) the Company Rights to become exercisable
under the Company Rights Agreement, (ii) Parent or any of its shareholders or
Subsidiaries to be deemed an "Acquiring Person" (as defined in the Company
Rights Agreement), (iii) any such event to be an event described in Sections
11(a)(ii) or 13 of the Company Rights Agreement or (iv) the "Shares Acquisition
Date" or the "Distribution Date" (each as defined in the Company Rights
Agreement) to occur upon any such event, and so that the Company Rights will
expire immediately prior to the Effective Time. The Company has delivered to
Parent a true and complete copy of the Company Rights Agreement, as amended to
date.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Except as set forth in the disclosure letter delivered to the
Company concurrently with the execution hereof (the "Parent Disclosure Letter"),
Parent and Merger Sub, jointly and severally, represent and warrant to the
Company that:
Section 6.1 Existence; Good Standing; Corporate Authority. Parent
and Merger Sub are corporations duly incorporated, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation.
Parent is duly qualified to do business as a foreign corporation and is in good
standing under the laws of any jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified does not have and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect (as defined
in Section 10.9). Parent has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as now conducted,
except where the failure to possess such power and authority does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect. The copies of Parent's articles of incorporation
and bylaws previously made available to the Company are true and correct and
contain all amendments as of the date hereof.
Section 6.2 Authorization, Validity and Effect of Agreements.
Each of Parent and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement, the Stock Option Agreements, the Stockholder
Agreement to which it is a party and all other agreements and documents
contemplated hereby and thereby. The consummation by each of Parent and Merger
Sub of the transactions contemplated hereby and by the Stock Option Agreements
has been duly authorized by all requisite corporate action on behalf of the
Company, other than the approvals referred to in Section 6.22. This Agreement,
the Stockholder Agreement to which it is a party and the Stock Option Agreements
constitute the valid and legally binding obligations of each of Parent and
Merger Sub to the extent it is a party, enforceable in accordance with their
respective terms, subject to the Enforceability Exceptions. Parent has taken all
action necessary to render the restrictions set forth in Part Thirteen of the
Texas Business Corporation Act inapplicable to the Merger, this Agreement, the
Stock Option Agreements, the Stockholder Agreements and the transactions
contemplated hereby and thereby. No other U.S. or State takeover or business
combination statute to which Parent or any of its Subsidiaries is subject
applies or purports to apply to the Merger, this Agreement, the Stock Option
Agreements, the Stockholder Agreements or the transactions contemplated hereby
or thereby. There is no foreign takeover or business combination statute that
applies or purports to apply to Parent or any of its Subsidiaries which would
require any filing or the taking of any other action by Parent or its
Subsidiaries as a result of the execution or delivery of this Agreement, the
Stock Option Agreements, the Stockholder Agreements or the transactions
contemplated hereby or thereby and which would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect if such
filing was not made or such action was not taken.
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Section 6.3 Capitalization. The authorized capital stock of
Parent consists of 100,000,000 shares of Parent Common Stock and 10,000,000
shares of preferred stock, par value $0.001 per share, of Parent ("Parent
Preferred Stock"), and as of June 23, 2000, there were 28,573,881 shares of
Parent Common Stock issued and outstanding and 4,638,547 shares of Parent Common
Stock issuable upon exercise of outstanding Parent options and no shares of
Parent Preferred Stock issued and outstanding. All such issued and outstanding
shares of Parent Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. The shares of Parent Common Stock
to be issued pursuant to the Merger, when issued in accordance with this
Agreement, will be validly issued, fully paid and nonassessable. As of the date
of this Agreement, except as set forth in this Section 6.3 or in the Stock
Option Agreements and except for any shares of Parent Common Stock issued
pursuant to Parent options outstanding as of June 23, 2000 or thereafter granted
as permitted by this Agreement, there are no outstanding shares of capital stock
and there are no options, warrants, calls, subscriptions, convertible securities
or other rights, agreements or commitments which obligate Parent or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Parent or any of its Subsidiaries. Parent has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of Parent on any
matter.
Section 6.4 Subsidiaries.
(a) Each of Parent's Subsidiaries is a corporation, partnership,
limited liability company or other entity duly organized, validly existing and
in good standing (where applicable) under the laws of its jurisdiction of
incorporation or organization, has the corporate or partnership power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted, and is duly qualified to do business and is in
good standing (where applicable) in each jurisdiction in which the ownership,
operation or lease of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing (where applicable) does not have and would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. All of the outstanding shares of capital stock of, or
other ownership interests in, each of Parent's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Parent free and clear of all Liens, except such Liens as do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Neither Parent nor any of its
Subsidiaries own any shares of capital stock or other ownership interests in any
corporation, partnership, limited liability company or other entity, except for
shares of capital stock or other ownership interests in Parent's Subsidiaries.
(b) All of the outstanding shares of capital stock of Merger Sub
are owned directly by Parent. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
activities other than in connection with the transactions contemplated by this
Agreement.
Section 6.5 No Violation of Law. Neither Parent nor any of its
Subsidiaries is in violation of any order of any court, governmental authority
or arbitration board or tribunal, or any
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law, ordinance, governmental rule or regulation, U.S. or foreign, to which
Parent or any of its Subsidiaries or any of their respective properties or
assets is subject (including, without limitation, the Specified Governmental
Regulations), except (1) as does not have and would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect, or
(2) as pertains to laws, ordinances, governmental rules or regulations, U.S. or
foreign, relating to taxes paid or payable by Parent or any of its Subsidiaries
or with respect to any of their respective properties or assets, which matters
are addressed in Section 6.10 hereof. Parent and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders, franchises and approvals of
all governmental authorities necessary for the lawful conduct of their
respective businesses (the "Parent Permits"), except where the failure so to
hold does not have and would not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect. Parent and its Subsidiaries
are in compliance with the terms of the Parent Permits, except where the failure
so to comply does not have and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. To the
knowledge of Parent, no investigation by any governmental authority with respect
to Parent or any of its Subsidiaries is pending or threatened, other than those
the outcome of which would not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
Section 6.6 No Conflict.
(a) Neither the execution and delivery by Parent or Merger Sub of
this Agreement nor the execution and delivery by Parent of the Stock Option
Agreements nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby or thereby in accordance with the terms hereof or thereof
will: (i) conflict with or result in a breach of any provisions of the articles
or certificate of incorporation or bylaws of Parent or Merger Sub; (ii) violate,
or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of Parent or its Subsidiaries under, or result in
being declared void, voidable, or without further binding effect, or otherwise
result in a detriment to Parent or any of its Subsidiaries under, any of the
terms, conditions or provisions of, any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit (including, without limitation, any Parent
Permit), lease, contract, agreement, joint venture, sponsor agreement or other
instrument or obligation to which Parent or any of its Subsidiaries is a party,
or by which Parent or any of its Subsidiaries or any of their properties is
bound or affected; or (iii) contravene or conflict with or constitute a
violation of any provision of any law, rule, regulation, judgment, order or
decree binding upon or applicable to Parent or any of its Subsidiaries, except
for such matters described in clause (ii) or (iii) as do not and are not likely
to have, individually or in the aggregate, a Parent Material Adverse Effect.
(b) Neither the execution and delivery by Parent or Merger Sub of
this Agreement nor the execution and delivery by Parent of the Stock Option
Agreements or the Stockholder Agreement to which it is a party nor the
consummation by Parent or Merger Sub of the transactions contemplated hereby or
thereby in accordance with the terms hereof or thereof will require any consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory
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authority, U.S. or foreign (including, without limitation, under the Specified
Governmental Regulations), other than Regulatory Filings and listing on the
Nasdaq National Market of the shares of Parent Common Stock to be issued in the
Merger and the shares of Parent Common Stock to be issued upon exercise of the
option granted to the Company pursuant to the applicable Stock Option Agreement.
Section 6.7 SEC Documents. Parent has made available to the
Company each registration statement, report, proxy statement or information
statement (other than preliminary materials) filed by Parent with the SEC since
September 30, 1999, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "Parent Reports"). As of their
respective dates, the Parent Reports (i) were prepared in all material respects
in accordance with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations thereunder and (ii) did not 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 made therein,
in the light of the circumstances under which they were made, not misleading,
except for such statements, if any, as have been modified by subsequent filings
with the SEC prior to the date hereof. Each of the consolidated balance sheets
of Parent included in or incorporated by reference into the Parent Reports
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of Parent and its Subsidiaries as
of its date, and each of the consolidated statements of income, cash flows and
shareholders' equity of Parent included in or incorporated by reference into the
Parent Reports (including any related notes and schedules) fairly presents in
all material respects the results of operations, cash flows or changes in
shareholders' equity, as the case may be, of Parent and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to (x)
such exceptions as may be permitted by Form 10-Q of the SEC and (y) normal
year-end audit adjustments), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein. Except as reflected in such financial statements,
including all notes thereto, and except for liabilities incurred in connection
with this Agreement, the Stock Option Agreements or the transactions
contemplated hereby or thereby, neither Parent nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), other than (i) liabilities and obligations arising in
the ordinary course of business since the date of such financial statements and
(ii) liabilities or obligations which do not have and would not reasonably be
expected to have, individually or in the aggregate (together with those
described in clause (i)), a Parent Material Adverse Effect.
Section 6.8 Litigation; Decrees. There are no actions, suits or
proceedings pending against Parent or any of its Subsidiaries or, to Parent's
knowledge, threatened against Parent or any of its Subsidiaries, at law or in
equity, or before or by any federal, state or foreign commission, board, bureau,
agency or instrumentality, that have had or would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect. There
are no outstanding judgments, decrees, injunctions, awards or orders against
Parent or any of its Subsidiaries that have had or would reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect.
Except for such matters as do not and are not likely to have a Parent Material
Adverse Effect, (i) no order, writ, fine, injunction, decree, judgment, award or
determination of any court or governmental authority has been issued or entered
against Parent or
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any Subsidiary of the Parent that continues to be in effect that affects the
ownership or operation of any of their respective assets, and (ii) no criminal
order, writ, fine, injunction, decree, judgment or determination of any court or
governmental authority has been issued against Parent or any Subsidiary of
Parent.
Section 6.9 Absence of Certain Changes. From March 31, 2000
through the date of this Agreement, there has not been (i) any event or
occurrence that has had or would reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect, (ii) any material change by
Parent in its accounting methods, principles or practices or its tax methods,
practices or elections, (iii) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of Parent or any
redemption, purchase or other acquisition of any of its securities or (iv) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock purchase
or other employee benefit plan, except in the ordinary course of business.
Section 6.10 Taxes.
(a) Each of Parent, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or was a member has (i) duly filed (or there has been filed on its behalf) on
a timely basis with appropriate governmental authorities all tax returns,
statements, reports, declarations, estimates and forms required to be filed by
or with respect to it on or prior to the date hereof, except to the extent that
any failure to file does not have and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, and (ii)
duly paid or deposited in full on a timely basis or made adequate provisions in
accordance with generally accepted accounting principles (or there has been paid
or deposited or adequate provision has been made on its behalf) for the payment
of all taxes required to be paid by it for all periods ended through the date
hereof, except to the extent that any failure to pay or deposit or make adequate
provision for the payment of such taxes does not have and would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(b) (i) The federal income tax returns of Parent and each of its
Subsidiaries have been examined by the IRS (or the applicable statutes of
limitation for the assessment of federal income taxes for such periods have
expired) for all periods; (ii) except to the extent being contested in good
faith, all deficiencies asserted in writing as a result of such examinations and
any other examinations of Parent and its Subsidiaries by any taxing authority
have been paid, fully settled or adequately provided for in the financial
statements contained in the Parent Reports, except for deficiencies that have
not had and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect; (iii) except as adequately provided
for in the Parent Reports, no material federal, state, local or foreign income
or franchise tax audits or other administrative proceedings or court proceedings
are presently pending with regard to any federal, state, local or foreign income
or franchise taxes regarding Parent or any of its Subsidiaries, and no material
deficiency for any such income or franchise taxes has been asserted or assessed
in writing pursuant to such examination against Parent or any of its
Subsidiaries by any federal, state, local or foreign taxing authority with
respect to any period; (iv) as of the date hereof, neither Parent nor any of its
Subsidiaries has granted in writing any requests, agreements, consents or
waivers (that remain
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in effect) to extend the statutory period of limitations applicable to the
assessment of any taxes with respect to any tax returns of Parent or any of its
Subsidiaries; and (v) neither Parent nor any of its Subsidiaries is a party to,
is bound by or has any obligation under any tax sharing or similar agreement
(other than agreements between Parent and its Subsidiaries).
(c) Neither Parent nor any of its Subsidiaries has executed or
entered into (or prior to the close of business on the Closing Date will execute
or enter into) with the IRS or any other taxing authority any material closing
agreement pursuant to Section 7121 of the Code, or any predecessor provision
thereof or any similar provision of state, local or foreign income tax law that
relates to the assets or operations of Parent or any of its Subsidiaries that
would require payment of taxes after the Closing Date.
(d) Neither Parent nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Parent or any of its
Subsidiaries.
(e) Neither Parent nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
Section 6.11 Employee Benefit Plans. For purposes of this Section
6.11, all references to "Parent" shall be deemed to refer to Parent and any
trade or business, whether or not incorporated, that together with Parent would
be (or, during the six years prior to the date of this Agreement, has been)
deemed or treated as a "single employer" within the meaning of Section 4001 of
ERISA, or Code Section 414. Schedule 6.11 of the Parent Disclosure Letter
contains a list of all employee benefit plans and other benefit arrangements,
including any stock purchase, stock option, pension, profit-sharing, retirement,
bonus, deferred compensation, incentive compensation, commission, severance or
termination pay, hospitalization, medical, dental, disability, life or other
insurance, or supplemental unemployment benefits plan, policy, contract,
practice or other arrangement, whether or not subject to ERISA or U.S. based and
whether written or oral, that is, or within the six year period preceding the
date hereof has been, sponsored, maintained or contributed to or required to be
contributed to by Parent for the purpose of providing service- or
employment-related compensation or benefits to any current or former officer,
director, employee, retiree or independent contractor of Parent or members of
their respective families (other than directors' and officers' liability
policies), whether or not insured, including, without limitation, benefits that
are required to be provided under applicable law (the "Parent Benefit Plans").
True and complete copies of the Parent Benefit Plans and, if applicable, the
most recent Form 5500, IRS determination letter, actuarial report, summary plan
description, trust or other funding agreement and annual report for each such
plan have been made available to the Company. Parent has no commitment or
obligation to establish or adopt any new or additional plans or other
arrangements that would constitute Parent Benefit Plans if adopted, or to
increase materially the benefits under any existing Parent Benefit Plan. All
applicable reporting and disclosure requirements have been met with respect to
the Parent Benefit Plans except for any noncompliance that does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse
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Effect. To the extent applicable, the Parent Benefit Plans comply, and have been
operated in compliance, in all material respects, with the requirements of all
applicable laws, rules and regulations, including, without limitation, ERISA and
the Code and the requirements of any applicable jurisdiction. With respect to
any Parent Benefit Plan intended to be qualified under Section 401(a) of the
Code (i) such plan has received a determination letter from the IRS stating that
it is so qualified and, to Parent's knowledge, no event has occurred since the
date of such letter that would adversely affect such determination or (ii) the
remedial amendment period under Code Section 401(b) for such plan has not
expired. The Parent Benefit Plans have been maintained and operated, in all
material respects, in accordance with their terms. To Parent's knowledge, there
are no pending or anticipated claims against or otherwise involving any Parent
Benefit Plan and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Parent Benefit Plan activities) has
been brought against or with respect to any such Parent Benefit Plan, except for
any of the foregoing which does not have and would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect. All
material contributions required to be made as of the date hereof to Parent
Benefit Plans have been made. Neither Parent nor any Parent Benefit Plan
provides for medical, life insurance or health benefits or other welfare
benefits after a Parent employee's termination of employment (including
retirement) except for continuation coverage required pursuant to Section 4980B
of the Code and Part 6 of Title I of ERISA and the regulations thereunder or
coverage mandated by applicable law outside the U.S., and Parent has not
represented, promised or contracted (whether in oral or written form) to any
employee or former employee that such benefits would be provided. No Parent
Benefit Plan is a voluntary employee's beneficiary association within the
meaning of Section 501(c)(9) of the Code. With respect to each Parent Benefit
Plan, the present value of accrued benefits under such plan did not exceed, as
of its latest valuation date, the then current value of the assets of such plan
allocable to such accrued benefits or, to the extent the amount by which the
present value of accrued benefits exceeds the current value of plan assets, the
financial statements of Parent and its Subsidiaries made available to the
Company fairly reflect such liabilities in the aggregate. To the Parent's
knowledge, no prohibited transaction has occurred with respect to any Parent
Benefit Plan that would result in the imposition of any excise tax or other
liability under the Code or ERISA. Parent does not contribute to, and has no
obligation to contribute to, and has not within six years prior to the Effective
Time contributed to, or had an obligation to contribute to, a multiemployer plan
within the meaning of Section 3(37) of ERISA or any "employee pension benefit
plan," as defined Section 3(2) of ERISA, that is subject to the funding
requirements of Title IV of ERISA or Section 412 of the Code. Parent has no
actual or contingent obligation to make any payments that would be "excess
parachute payments" under Section 280G of the Code. Neither the execution of
this Agreement nor the performance of the transactions contemplated hereby will
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any policy, arrangement, agreement or benefit plan, or
any trust or loan, that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or other compensation or obligations to fund
benefits with respect to any employee or former employee of Parent.
Section 6.12 Labor Matters. Except as does not have and would
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, (i) neither Parent nor any of its Subsidiaries is a
party to, or bound by any collective bargaining agreement,
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contract or other agreement with a labor union or labor organization, U.S. or
foreign, and (ii) to Parent's knowledge, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened involving employees of Parent or any of its Subsidiaries.
Section 6.13 Environmental Matters. Except as does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect:
(a) there are not any past or present conditions or circumstances
relating to any Hazardous Material that interfere with the conduct of the
business of Parent and each of its Subsidiaries in the manner now conducted or
which interfere with compliance with any order of any court, governmental
authority or arbitration board or tribunal, or any Environmental Law;
(b) there are not any past or present conditions or circumstances
at, or arising out of, any current or former businesses, assets or properties of
Parent or any Subsidiary of Parent, including but not limited to on-site or
off-site disposal or release of any Hazardous Material, which would reasonably
be expected to give rise to: (i) liabilities or obligations for any Cleanup
under any Environmental Law, (ii) any fines or penalties or (iii) claims arising
for personal injury, property damage or damage to natural resources;
(c) neither Parent nor any of its Subsidiaries has (i) given or
received any written notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law or (ii) entered into any consent
decree or order or is subject to any order of any court or governmental
authority or tribunal under any Environmental Law or relating to the Cleanup of
any Hazardous Materials;
(d) neither Parent nor any of its Subsidiaries have transported
or arranged for the transportation (directly or indirectly) of any Hazardous
Materials to any location which is listed or proposed for listing on the
nationwide priorities list established under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or any
similar state list or to any location to which the transportation (directly or
indirectly) of any Hazardous Materials violates any Environmental Law of any
foreign state or jurisdiction; and
(e) no oral or written notification of a release (as defined in
42 U.S.C. Section 9601) of a Hazardous Materials has been filed by or on behalf
of Parent or any of its Subsidiaries, and no property now or previously owned or
leased by Parent or any of its Subsidiaries is listed or proposed for listing on
the nationwide priorities list established promulgated pursuant to CERCLA.
Section 6.14 Intellectual Property. Parent and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, patent rights, trademarks, trademark rights and proprietary information
used or held for use in connection with their respective businesses as currently
being conducted, except where the failure to own or possess such licenses and
other rights does not have and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, and there
are no pending proceedings challenging the validity of any of the foregoing
which have or would reasonably be expected to have, individually or in the
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aggregate, a Parent Material Adverse Effect. The conduct of Parent's and its
Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in any way which has or would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. To Parent's knowledge, there is no material
infringement of any proprietary right owned by or licensed by or to Parent or
any of its Subsidiaries which has or would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 6.15 Insurance. Parent and each of its Subsidiaries have
policies of insurance and bonds of the type and in amounts which are appropriate
for the businesses of Parent and its Subsidiaries. There is no material claim
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds,
except questioned, denied or disputed claims the failure to provide coverage for
which does not have and would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. Except as does not have
and would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect, (a) all premiums due and payable under all
such policies and bonds have been paid, (b) Parent and its Subsidiaries are
otherwise in compliance in all material respects with the terms of such policies
and bonds and (c) Parent has no knowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
Section 6.16 Customs Broker and Other Licenses and Approvals.
(a) Parent and each of its Subsidiaries that is engaged in the
Customs Business is a duly licensed Customs Broker, and holds a valid permit in
each location where it conducts Customs Business, under 19 U.S.C. Section 1641
and applicable Customs regulations. Such licenses and permits are in full force
and effect and have not been surrendered, suspended or revoked by operation of
law or otherwise. Parent and each of its Subsidiaries that is engaged in the
Customs Business maintains a licensed officer required under 19 C.F.R. Section
111.11(c) in support of its corporate license and employs a licensed person in
each Customs broker district as required under 19 C.F.R. Section 111.19.
(b) Parent and each of its Subsidiaries that is engaged in the
Customs Business has complied in all respects with 19 U.S.C. Section 1641 and 19
C.F.R. Part III.
(c) Parent and each separately incorporated branch office where
Parent acts as an Ocean Freight Forwarder or a Non-Vessel Operating Common
Carrier is duly licensed as an Ocean Transportation Intermediary by the FMC and
is in full compliance with all laws and regulations applicable to Ocean
Transportation Intermediaries. Such licenses are in full force and effect and
have not been surrendered, suspended or revoked by operation of law or
otherwise.
(d) Parent and each of its Subsidiaries that is engaged in the
Customs Business or as an Air Freight Forwarder or Ocean Transportation
Intermediary is in compliance with the laws and regulations administered by
Customs, the United States Department of Commerce, and the FMC. There are no
claims pending against, or to Parent's knowledge, threatened against or
affecting Parent or any of its Subsidiaries, by Customs, the United States
Department of Commerce, or the
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FMC for duties, taxes, fees, penalties or liquidated damages in excess of
$10,000 each or $300,000 in the aggregate.
(e) Parent and each of its Subsidiaries that is engaged in the
Customs Business or as an Air Freight Forwarder or Ocean Transportation
Intermediary is not the subject of any investigation, audit, debarment, denial
order, charging letter, or license revocation or suspension proceeding by
Customs, the United States Department of Commerce, or the FMC.
Section 6.17 No Brokers. Parent has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of the Company or Parent to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Parent has retained Donaldson, Lufkin &
Jenrette Securities Corporation as its financial advisor, the arrangements with
which have been disclosed in writing to the Company prior to the date hereof.
Section 6.18 Opinion of Financial Advisor. The Board of Directors
of Parent has received the opinion of Donaldson, Lufkin & Jenrette Securities
Corporation to the effect that, as of the date thereof, the Exchange Ratio is
fair, from a financial point of view, to Parent.
Section 6.19 Company Stock Ownership. Neither Parent nor any of
its Subsidiaries owns any shares of capital stock of the Company or any other
securities convertible into or otherwise exercisable to acquire capital stock of
the Company.
Section 6.20 Reorganization. Neither Parent nor any of its
Subsidiaries has taken or failed to take any action, as a result of which the
Merger would not qualify as a reorganization within the meaning of Section
368(a) of the Code (and comparable provisions of applicable state or local
laws).
Section 6.21 Pooling. Neither Parent nor any of its Subsidiaries
or Rule 145 Affiliates has taken or failed to take any action, as a result of
which the Merger would not qualify as a "pooling of interests" for financial
accounting purposes.
Section 6.22 Vote Required. The only vote of the holders of any
class or series of Parent capital stock necessary to approve any transaction
contemplated by this Agreement is (a) the affirmative vote of a majority of the
total votes cast on such matter by the holders of shares of Parent Common Stock
present in person or by proxy at the meeting to be held in accordance with
Section 7.5 to approve the issuance of Parent Common Stock pursuant to the
Merger, (b) the affirmative vote of the holders of at least a majority of the
outstanding shares of Parent Common Stock entitled to vote thereon to approve
the increase in the number of authorized shares of Parent Common Stock
contemplated by this Agreement, and (c) the affirmative vote of the holders of
at least a majority of shares of Parent Common Stock present or represented and
entitled to vote at the meeting to be held in accordance with Section 7.5 to
approve an increase in Parent Common Stock authorized for issuance pursuant to
Parent's Long-Term Incentive Plan and the Employee Stock Purchase Plan.
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Section 6.23 Certain Contracts. Neither Parent nor any of its
Subsidiaries is a party to or bound by (i) any "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC), except as set forth
in the Parent Reports, or (ii) any non-competition agreement or any other
agreement or obligation which purports to limit in any material respect the
manner in which, or the localities in which, all or any material portion of the
current business of Parent and its Subsidiaries, taken as a whole, or the
Company and its Subsidiaries, taken as a whole, is conducted.
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Company Businesses. Prior to the Effective Time,
except as set forth in the Company Disclosure Letter or as expressly
contemplated by any other provision of this Agreement, the Stock Option
Agreements or the Stockholder Agreement to which it is a party, unless Parent
has consented in writing thereto, the Company:
(a) shall, and shall use commercially reasonable efforts to cause each
of its Subsidiaries to, conduct its operations according to their usual, regular
and ordinary course in substantially the same manner as heretofore conducted;
(b) shall, and shall use its commercially reasonable efforts to cause
each of its Subsidiaries to use its commercially reasonable efforts to, preserve
intact their business organizations and goodwill, keep available the services of
their officers and employees and maintain satisfactory relationships with those
persons having business relationships with them;
(c) shall not amend its certificate of incorporation or bylaws;
(d) shall promptly notify Parent of any material change in its
condition (financial or otherwise) or business or any material litigation or
material governmental complaints, investigations or hearings (or communications
in writing indicating that the same may be contemplated), or the breach in any
material respect of any representation or warranty contained herein;
(e) shall promptly deliver to Parent true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(f) except as provided in Section 7.18, shall not (i) except pursuant
to the exercise of options, warrants, conversion rights and other contractual
rights existing on the date hereof and disclosed pursuant to this Agreement or
in connection with transactions permitted by Section 7.1(i), issue any shares of
its capital stock, effect any stock split or otherwise change its capitalization
as it existed on the date hereof, (ii) grant, confer or award any option,
warrant, conversion right or other right not existing on the date hereof to
acquire any shares of its capital stock, except (A) automatic awards to
non-employee directors pursuant to the 1995 Nonemployee Director Stock Option
Plan of Parent, the 2000 Stock Option Plan for Non-Employee Directors of the
Company and the 1999 Stock Option Plan for Non-Employee Directors of the Company
and (B) grants of options to new
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employees consistent with past practice to purchase up to an aggregate of 5,000
shares of Company Common Stock, (iii) amend or otherwise modify any option,
warrant, conversion right or other right to acquire any shares of its capital
stock existing on the date hereof, (iv) increase any compensation, except as is
consistent with past practice and in the ordinary course of business, or enter
into or amend any employment agreement with any of its former, present or future
employees, officers or directors, except with new employees consistent with past
practice and in the ordinary course of business, or enter into or amend any
employment agreement and, with respect to any of its former, present or future
officers or directors, increase any compensation or benefits or enter into or
amend any employment agreement, (v) adopt any new employee benefit plan or
arrangement (including any stock option, stock benefit or stock purchase plan)
or amend any existing employee benefit plan, including, without limitation, each
of the Company Benefit Plans, in any material respect, except for changes which
are less favorable to participants in such plans, or (vi) terminate any
executive officer without cause or permit circumstances to exist that would give
any executive officer a right to terminate employment if such termination would
entitle the executive officer to receive enhanced separation payments upon
consummation of the Merger;
(g) shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock or
(ii) redeem, purchase or otherwise acquire any shares of its capital stock or
capital stock of any of its Subsidiaries, or make any commitment for any such
action, except for the declaration and payment of regular, semiannual dividends,
consistent with past practice, not to exceed $0.135 per share of Company Common
Stock per semiannual payment;
(h) shall not, and shall not permit any of its Subsidiaries to, sell,
lease or otherwise dispose of any of its assets (including capital stock of
Subsidiaries) which are material to the Company, individually or in the
aggregate, except in the ordinary course of business or in connection with
transactions with entities directly or indirectly wholly owned by the Company
("Company Intercompany Transactions");
(i) shall not, and shall not permit any of its Subsidiaries to, except
pursuant to contractual commitments in effect on the date hereof and disclosed
in the Company Disclosure Letter, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets or
securities in each case for an aggregate consideration for all such acquisitions
in excess of $500,000 (excluding acquisitions approved in writing by Parent);
(j) except as may be required as a result of a change in law, generally
accepted accounting principles or SEC rules and regulations, change any of the
accounting principles or practices used by it;
(k) shall, and shall use commercially reasonable efforts to cause any
of its Subsidiaries to, maintain with financially responsible insurance
companies insurance in such amounts and against such risks and losses as are
customary for such party;
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(l) shall not, and shall not permit any of its Subsidiaries to, (i)
make or rescind any material express or deemed election relating to taxes,
including elections for any and all joint ventures, partnerships, limited
liability companies, working interests or other investments where it has the
capacity to make such binding election, (ii) settle or compromise any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to taxes, except where such settlement or compromise
will not materially and adversely affect it, or (iii) change in any material
respect any of its methods of reporting income or deductions for federal income
tax purposes from those expected to be employed in the preparation of its
federal income tax return for the most recent taxable year for which a return
has been filed, except as may be required by applicable law or except for such
changes that are reasonably expected not to materially and adversely affect the
Company and Subsidiaries taken as a whole;
(m) shall not, nor shall it permit any of its Subsidiaries to, (i)
incur any indebtedness for borrowed money (except for (A) Company Intercompany
Transactions, (B) working capital under existing credit or commercial paper
facilities in timing and amount in accordance with recent past practices, (C)
refinancings of existing debt and (D) other immaterial borrowings that, in the
case of (C) and (D), permit prepayment of such debt without penalty (other than
LIBOR breakage costs)) or guarantee any such indebtedness or issue or sell any
debt securities or warrants or rights to acquire any debt securities of such
party or any of its Subsidiaries or guarantee any debt securities of others,
(ii) except in the ordinary course of business, enter into any material lease
(whether such lease is an operating or capital lease) or create any material
mortgages, liens, security interests or other encumbrances on its property or
that of its Subsidiaries in connection with any indebtedness thereof, or (iii)
make or commit to make aggregate capital expenditures in excess of 5% over the
fiscal 2000 capital expenditures budget previously disclosed to Parent;
(n) shall not purchase any shares of Parent Common Stock or Company
Common Stock;
(o) subject to Section 7.6, shall not take any action, or refuse to
take any action reasonably requested by Parent, that is likely to delay
materially (but in any event by more than 10 business days) or adversely affect
the ability of any of the parties hereto to obtain any consent, authorization,
order or approval of any governmental commission, board or other regulatory
body, U.S. or foreign, or the expiration of any applicable waiting period
required to consummate the transactions contemplated by this Agreement;
(p) during the period from the date of this Agreement through the
Effective Time, shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its Subsidiaries
is a party; and during such period shall use commercially reasonable efforts to
enforce the provisions of such agreement, including by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States of America or any state
having jurisdiction; and
(q) shall not, nor shall it permit any of its Subsidiaries to, agree in
writing or otherwise to take any action inconsistent with the foregoing.
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Section 7.2 Conduct of Parent Businesses. Prior to the Effective Time,
except as set forth in the Parent Disclosure Letter or as expressly contemplated
by any other provision of this Agreement, the Stock Option Agreements or the
Stockholder Agreement to which it is a party, unless the Company has consented
in writing thereto, Parent:
(a) shall, and shall use its commercially reasonable efforts to cause
each of its Subsidiaries to use its commercially reasonable efforts to, preserve
intact their business organizations and goodwill, keep available the services of
their respective officers and employees and maintain satisfactory relationships
with those persons having business relationships with them;
(b) shall not amend its articles of incorporation or bylaws;
(c) shall promptly notify the Company of any material change in its
condition (financial or otherwise) or business or any material litigation or
material governmental complaints, investigations or hearings (or communications
in writing indicating that the same may be contemplated), or the breach in any
material respect of any representation or warranty contained herein;
(d) shall promptly deliver to the Company true and correct copies of
any report, statement or schedule filed with the SEC subsequent to the date of
this Agreement;
(e) shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock or
(ii) redeem, purchase or otherwise acquire any shares of its capital stock or
capital stock of any of its Subsidiaries, or make any commitment for any such
action;
(f) except for any change of Parents' fiscal year or as may be required
as a result of a change in law, generally accepted accounting principles or SEC
rules and regulations, change any of the accounting principles or practices used
by it;
(g) shall, and shall cause any of its Subsidiaries to, use commercially
reasonable efforts to maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are customary for
such party;
(h) shall not purchase any shares of Parent Common Stock or Company
Common Stock;
(i) subject to Section 7.6, shall not take any action, or refuse to
take any action reasonably requested by the other party, that is likely to delay
materially (but in any event by more than 10 business days) or adversely affect
the ability of any of the parties hereto to obtain any consent, authorization,
order or approval of any governmental commission, board or other regulatory
body, U.S. or foreign, or the expiration of any applicable waiting period
required to consummate the transactions consummated by this Agreement; and
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(j) shall not, nor shall it permit any of its Subsidiaries to, agree in
writing or otherwise to take any action inconsistent with the foregoing.
Section 7.3 No Solicitation by the Company.
(a) The Company agrees that (i) neither it nor any of its Subsidiaries
shall, and shall not authorize or permit any of its officers, directors,
employees, agents or representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries (the Company, its Subsidiaries and their officers, directors,
employees, agents and representatives being the "Company Representatives")) to,
or on becoming aware of it will stop such person from continuing to, directly or
indirectly, solicit, initiate or encourage (including by way of furnishing
material non-public information), or take any action designed to facilitate,
directly or indirectly, any inquiry, proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to (A) any
purchase of, or similar transaction involving, any of the assets of the Company
or any of its Subsidiaries or any of the Company's voting securities if, as a
result of such transaction or series of transactions, another person or group
(or the stockholders of such person or group) would acquire 15% or more of the
assets, net revenues or net income of the Company (including any ownership
interest in any Subsidiary) on a consolidated basis or 10% or more of any class
of capital stock of the Company, (B) any tender or exchange offer involving any
of the Company's voting securities or (C) any merger, consolidation,
dissolution, recapitalization, business combination or similar transaction
involving the Company or any of its Subsidiaries (any such proposal or offer
being hereinafter referred to as a "Company Acquisition Proposal") or cooperate
with or assist, participate or engage in any substantive discussions or
negotiations concerning a Company Acquisition Proposal; and (ii) it will
immediately cease and cause to be terminated any existing negotiations with any
parties conducted heretofore with respect to any Company Acquisition Proposal;
provided that nothing contained in this Agreement shall prevent the Company or
the Company Representatives from (A) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a Company Acquisition Proposal, or (B) prior to
the Company Cutoff Date, providing information (pursuant to a confidentiality
agreement in reasonably customary form with terms relating to confidentiality at
least as favorable to the Company as those set forth in the letter agreement
dated June 22, 2000 from the Company to Parent (the "Company Confidentiality
Agreement") and which does not contain terms that prevent the Company from
complying with its obligations under this Section) to or engaging in any
negotiations or discussions with any person or group who has made an unsolicited
written Company Acquisition Proposal with respect to all the outstanding capital
stock of the Company or all or substantially all the assets of the Company that,
in the good faith judgment of a committee composed solely of the outside
directors of the Company, taking into account the likelihood of financing and
all other legal, regulatory and other aspects of the proposal, and based on the
written advice of a financial advisor of recognized national reputation, a copy
of which shall be provided to Parent, is superior to the Merger (a "Company
Superior Proposal"), if the Board of Directors of the Company, after
consultation with its outside legal counsel, determines in good faith that the
failure to do so would be reasonably likely to be inconsistent with its
fiduciary obligations.
(b) Prior to taking any action referred to in Section 7.3(a), if the
Company intends to participate in any such discussions or negotiations or
provide any such information to any such
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third party, the Company shall give prompt prior oral and written notice to
Parent of each such action. The Company will immediately notify Parent orally
and in writing of any such requests for such information or the receipt of any
Company Acquisition Proposal or any inquiry with respect to (including, without
limitation, any inquiry as to the Company's willingness or ability to entertain
offers, proposals or engage in discussions or negotiations), or which could
reasonably be expected to lead to, a Company Acquisition Proposal, including the
identity of the person or group engaging in such discussions or negotiations,
requesting such information or making such Company Acquisition Proposal, and the
material terms and conditions of any Company Acquisition Proposal. The Company
will (i) keep Parent fully informed on a timely basis of the status (including
any material changes or proposed changes to such terms and conditions or status)
of any such requests, Company Acquisition Proposals or inquiries and (ii)
provide Parent as soon as practicable after receipt or delivery thereof with
copies of all correspondence and other written material containing or relating
to the terms and conditions of such Company Acquisition Proposal sent or
provided to the Company from any third party in connection with any Company
Acquisition Proposal or sent or provided by the Company to any third party in
connection with any Company Acquisition Proposal. Any written notice under this
Section 7.3 shall be given by facsimile with receipt confirmed or personal
delivery.
(c) Nothing in this Section 7.3 shall permit the Company to enter into
any agreement with respect to a Company Acquisition Proposal during the term of
this Agreement, it being agreed that during the term of this Agreement, the
Company shall not enter into any agreement with any person or group that
provides for, or in any way facilitates, a Company Acquisition Proposal, other
than a confidentiality agreement in reasonably customary form with terms at
least as favorable to the Company as the Company Confidentiality Agreement and
which does not contain terms that prevent the Company from complying with its
obligations under this Section.
(d) For purposes hereof, the "Company Cutoff Date" means the date the
condition set forth in Section 8.1(a)(i) is satisfied.
(e) Notwithstanding anything in this Agreement to the contrary, in the
event of any inconsistency between this Section 7.3 and the terms of paragraph 7
of the Company Confidentiality Agreement (as defined below), the terms of this
Section 7.3 shall control.
Section 7.4 No Solicitation by Parent.
(a) Parent agrees that (i) neither it nor any of its Subsidiaries
shall, and shall not authorize or permit any of its officers, directors,
employees, agents or representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries (Parent, its Subsidiaries and their officers, directors, employees,
agents and representatives being the "Parent Representatives")) to, or on
becoming aware of it will stop such person from continuing to, directly or
indirectly, solicit, initiate or encourage (including by way of furnishing
material non-public information), or take any action designed to facilitate,
directly or indirectly, any inquiry, proposal or offer (including, without
limitation, any proposal or offer to its shareholders) with respect to (A) any
purchase of, or similar transaction involving, any of the assets of Parent or
any of its Subsidiaries or any of Parent's voting securities if, as a result of
such
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transaction or series of transactions, another person or group (or the
stockholders of such person or group) would acquire a majority of the assets,
net revenues or net income of Parent (including any ownership interest in any
Subsidiary) on a consolidated basis or a majority of the voting securities of
Parent, (B) any tender or exchange offer involving a majority of Parent's voting
securities or (C) any merger, consolidation, dissolution, recapitalization,
business combination or similar transaction involving Parent or any of its
Subsidiaries if, as a result of such transaction or series of transactions, the
shareholders of Parent would not hold more than a majority of the voting
securities of the surviving corporation or its ultimate parent (any such
proposal or offer being hereinafter referred to as a "Parent Acquisition
Proposal") or cooperate with or assist, participate or engage in any substantive
discussions or negotiations concerning a Parent Acquisition Proposal; and (ii)
it will immediately cease and cause to be terminated any existing negotiations
with any parties conducted heretofore with respect to any Parent Acquisition
Proposal; provided that nothing contained in this Agreement shall prevent Parent
or the Parent Representatives from (A) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a Parent Acquisition Proposal, or (B)
prior to the Parent Cutoff Date, providing information (pursuant to a
confidentiality agreement in reasonably customary form with terms relating to
confidentiality at least as favorable to the Parent as those set forth in the
letter agreement dated June 22, 2000 from Parent to the Company (the "Parent
Confidentiality Agreement" and collectively with the Company Confidentiality
Agreement, the "Confidentiality Agreements") and which does not contain terms
that prevent Parent from complying with its obligations under this Section) to
or engaging in any negotiations or discussions with any person or group who has
made an unsolicited written Parent Acquisition Proposal with respect to all the
outstanding capital stock of the Parent or all or substantially all the assets
of the Parent that, in the good faith judgment of a committee composed solely of
the outside directors of the Parent, taking into account the likelihood of
financing and all other legal, regulatory and other aspects of the proposal, and
based on the written opinion (with only customary qualifications) of a financial
advisor of recognized national reputation, a copy of which shall be provided to
the Company, is superior to the Merger (a "Parent Superior Proposal"), if the
Board of Directors of Parent, after consultation with its outside legal counsel,
determines in good faith that the failure to do so would be reasonably likely to
be inconsistent with its fiduciary obligations.
(b) Prior to taking any action referred to in Section 7.4(a), if Parent
intends to participate in any such discussions or negotiations or provide any
such information to any such third party, Parent shall give prompt prior oral
and written notice to the Company of each such action. Parent will immediately
notify the Company orally and in writing of any such requests for such
information or the receipt of any Parent Acquisition Proposal or any inquiry
with respect to (including, without limitation, any inquiry as to Parent's
willingness or ability to entertain offers, proposals or engage in discussions
or negotiations), or which could reasonably be expected to lead to, a Parent
Acquisition Proposal, including the identity of the person or group engaging in
such discussions or negotiations, requesting such information or making such
Parent Acquisition Proposal, and the material terms and conditions of any Parent
Acquisition Proposal. Parent will (i) keep the Company fully informed on a
timely basis of the status (including any material changes or proposed changes
to such terms and conditions or status) of any such requests, Parent Acquisition
Proposals or inquiries and (ii) provide to the Company as soon as practicable
after receipt or delivery thereof with copies of all correspondence and other
written material containing or relating to the terms and conditions of such
Parent Acquisition Proposal sent or provided to Parent from any third
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party in connection with any Parent Acquisition Proposal or sent or provided by
Parent to any third party in connection with any Parent Acquisition Proposal.
Any written notice under this Section 7.4 shall be given by facsimile with
receipt confirmed or personal delivery.
(c) Nothing in this Section 7.4 shall permit Parent to enter into any
agreement with respect to a Parent Acquisition Proposal during the term of this
Agreement, it being agreed that during the term of this Agreement, Parent shall
not enter into any agreement with any person or group that provides for, or in
any way facilitates, a Parent Acquisition Proposal, other than a confidentiality
agreement in reasonably customary form with terms at least as favorable to the
Parent as the Parent Confidentiality Agreement and which does not contain terms
that prevent Parent from complying with its obligations under this Section.
(d) For purposes hereof, the "Parent Cutoff Date" means the date the
condition set forth in Section 8.1(a)(ii) is satisfied.
Section 7.5 Meetings of Stockholders.
(a) Each of Parent and the Company will take all action necessary in
accordance with applicable law and its articles or certificate of incorporation
and bylaws to convene a meeting of its shareholders or stockholders as promptly
as practicable to consider and vote upon (i) in the case of Parent, (A) the
approval of the issuance of the shares of Parent Common Stock pursuant to the
Merger contemplated hereby and (B) at the discretion of the Parent, amendments
to Parent's articles of incorporation and stock plans described in Section 6.22
and (ii) in the case of the Company, the approval and adoption of this Agreement
and the approval of the Merger. The Company and Parent shall coordinate and
cooperate with respect to the timing of such meetings and shall use their
commercially reasonable efforts to cause such meetings to occur on the same day.
Notwithstanding any other provision of this Agreement, unless this Agreement is
terminated in accordance with the terms hereof, (A) the Company shall submit
this Agreement and the Merger to its stockholders whether or not the Board of
Directors of the Company withdraws, modifies or changes its recommendation and
declaration regarding such matter and (B) Parent shall submit the issuance of
the shares of Parent Common Stock pursuant to the Merger contemplated hereby to
its shareholders whether or not the Board of Directors of Parent withdraws,
modifies or changes its recommendation and declaration regarding such matter.
(b) Each of the Company and Parent, through its Boards of Directors,
shall recommend approval of such matters in Section 7.5(a)(i)(A) and Section 7.5
(a)(ii) and use its best efforts to solicit from its stockholders proxies in
favor of such matters; provided, however, that the Board of Directors of Parent
or the Board of Directors of the Company may at any time prior to the Company
Cut-Off Date or the Parent Cut-Off Date upon five business days' prior written
notice to the Company or Parent, respectively, withdraw, modify or change any
recommendation and declaration regarding such matters or recommend and declare
advisable any Company Superior Proposal or Parent Superior Proposed, as the case
may be, if in the good faith opinion of a committee of such Board of Directors
composed solely of outside directors after consultation with its outside legal
counsel the failure to so withdraw, modify or change its recommendation and
declaration or to so recommend and declare advisable any Company Superior
Proposal or Parent Superior
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Proposal, as the case may be, would be reasonably likely to be inconsistent with
its fiduciary obligations.
Section 7.6 Filings; Commercially Reasonable Efforts. Subject to the
terms and conditions herein provided, the Company and Parent shall:
(a) promptly (but in not more than 20 business days from the date
hereof) make their respective filings under the HSR Act and Non-U.S. Antitrust
Laws to be made pursuant to Section 8.1(b) of this Agreement with respect to the
Merger and thereafter shall promptly make any other required submissions under
the HSR Act and Non-U.S. Antitrust Laws;
(b) use their commercially reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Time from governmental or
regulatory authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the Merger and the transactions contemplated hereby,
including, but not limited to, filings required by Specified Governmental
Regulations; and (ii) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations without causing a Parent Material
Adverse Effect or a Company Material Adverse Effect;
(c) promptly notify each other of any communication concerning this
Agreement or the transactions contemplated hereby to that party from any
governmental or regulatory authority and permit the other party to review in
advance any proposed communication concerning this Agreement or the transactions
contemplated hereby to any such governmental or regulatory authority;
(d) not agree to participate in any meeting or discussion with any
governmental authority in respect of any filings, investigation or other inquiry
concerning this Agreement or the transactions contemplated hereby unless it
consults with the other party in advance and, to the extent permitted by such
governmental or regulatory authority, gives the other party the opportunity to
attend and participate thereat;
(e) furnish the other party with copies of all correspondence, filings
and communications (and memoranda setting forth the substance thereof) between
them and their respective affiliates and representatives, on the one hand, and
any government or regulatory authority, or members or their respective staffs,
on the other hand, with respect to this Agreement and the transactions
contemplated hereby;
(f) furnish the other party with such necessary information and
reasonable assistance as such other parties and their respective affiliates may
reasonably request in connection with their preparation of necessary filings,
registrations or submissions of information to any governmental or regulatory
authorities, including without limitation, any filings necessary or appropriate
under the provisions of the HSR Act or any applicable Non-U.S. Antitrust Laws;
and
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(g) use all commercially reasonable efforts to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective the transactions
contemplated hereby, including, without limitation, taking all such further
action as reasonably may be necessary to resolve such objections, if any, as the
Federal Trade Commission, the Antitrust Division of the Department of Justice,
state antitrust enforcement authorities or competition authorities of any other
nation or other jurisdiction or any other person may assert under relevant
antitrust or competition laws with respect to the transactions contemplated
hereby. Notwithstanding anything to the contrary contained in this Agreement, in
connection with any filing or submission required or action to be taken by
Parent, the Company or any of their respective Subsidiaries to consummate the
Merger or other transactions contemplated in this Agreement, the Company shall
not, without Parent's prior written consent, recommend, suggest or commit to any
divestiture of assets or businesses of the Company and its Subsidiaries.
(h) Nothing in this Agreement shall require Parent to dispose of any of
its assets or to limit its freedom of action with respect to any of its
businesses, or to consent to any disposition of the Company's assets or limits
on the Company's freedom of action with respect to any of its businesses,
whether prior to or after the Effective Time, or to agree to any of the
foregoing, to obtain any consents, approvals, permits or authorizations or to
remove any impediments to the Merger relating to the HSR Act, Non-US Antitrust
Laws or other antitrust, competition or premerger notification or trade
regulation law, regulation of order.
Section 7.7 Inspection. From the date hereof to the Effective Time,
each of the Company and Parent shall allow all designated officers, attorneys,
accountants and other representatives of Parent or the Company, as the case may
be, access at all reasonable times upon reasonable notice to the records and
files, correspondence, audits and properties, as well as to all information
relating to commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs of Parent and the Company and their
respective Subsidiaries, including inspection of such properties; provided that
no investigation pursuant to this Section 7.7 shall affect any representation or
warranty given by any party hereunder, and provided further that notwithstanding
the provision of information or investigation by any party, no party shall be
deemed to make any representation or warranty except as expressly set forth in
this Agreement. Notwithstanding the foregoing, no party shall be required to
provide any information which it reasonably believes it may not provide to the
other party by reason of applicable law, rules or regulations, which constitutes
information protected by attorney/client privilege, or which it is required to
keep confidential by reason of contract or agreement with third parties. The
parties hereto will make reasonable and appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. Each of Parent and the Company agrees that it will not, and will
cause its respective representatives not to, use any information obtained
pursuant to this Section 7.7 for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement. All non-public information
obtained pursuant to this Section 7.7 shall be governed by the Confidentiality
Agreements.
Section 7.8 Publicity. The parties will consult with each other and
will mutually agree upon any press releases or public announcements pertaining
to this Agreement or the transactions contemplated hereby and shall not issue
any such press releases or make any such public
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announcements prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange, in which case the party proposing to
issue such press release or make such public announcement shall use its best
efforts to consult in good faith with the other party before issuing any such
press releases or making any such public announcements.
Section 7.9 Registration Statement.
(a) Each of Parent and the Company shall cooperate and promptly prepare
and Parent shall file with the SEC as soon as practicable a Registration
Statement on Form S-4 (the "Form S-4") under the Securities Act, with respect to
the shares of Parent Common Stock issuable pursuant to the Merger, a portion of
which Registration Statement shall also serve as the joint proxy statement with
respect to the meetings of the shareholders of Parent and of the stockholders of
the Company in connection with the transactions contemplated by this Agreement
(the "Proxy Statement/Prospectus"). The respective parties will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Parent shall use its commercially
reasonable efforts, and the Company will cooperate with Parent, to have the Form
S-4 declared effective by the SEC as promptly as practicable. Parent shall use
its commercially reasonable efforts to obtain, prior to the effective date of
the Form S-4, all necessary foreign, state securities law or "Blue Sky" permits
or approvals required to carry out the transactions contemplated by this
Agreement. Parent will advise the Company, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the shares of Parent Common Stock issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
(b) Each of Parent and the Company will use its commercially reasonable
efforts to cause the Proxy Statement/Prospectus to be mailed to its stockholders
as promptly as practicable after the date hereof.
(c) Each of Parent and the Company agrees to ensure that the
information provided by it for inclusion in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the respective meetings of stockholders of Parent and of the Company,
or, in the case of information provided by it for inclusion in the Form S-4 or
any amendment or supplement thereto, at the time it is filed or becomes
effective, (i) will not include an 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, and (ii) will comply as to form in all material respects with
the provisions of the Securities Act and the Exchange Act.
Section 7.10 Listing Application. Parent shall promptly prepare and
submit to the Nasdaq National Market a listing application covering the shares
of Parent Common Stock issuable pursuant to the Merger, and shall use its
commercially reasonable efforts to obtain, prior to the
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Effective Time, approval for the listing of such shares of Parent Common Stock,
subject to official notice of issuance.
Section 7.11 Letters of Accountants.
(a) The Company shall use its commercially reasonable efforts to cause
to be delivered to Parent "comfort" letters of Deloitte & Touche LLP, the
Company's independent public accountants, dated the effective date of the Form
S-4 and the Closing Date, respectively, and addressed to Parent with regard to
certain financial information regarding the Company included in the Form S-4, in
form reasonably satisfactory to Parent and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(b) Parent shall use its commercially reasonable efforts to cause to be
delivered to the Company "comfort" letters of PricewaterhouseCoopers LLP,
Parent's independent public accountants, dated the effective date of the Form
S-4 and the Closing Date, respectively, and addressed to the Company, with
regard to certain financial information regarding Parent included in the Form
S-4, in form reasonably satisfactory to the Company and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
Section 7.12 Agreements of Rule 145 Affiliates. Prior to the Effective
Time, the Company and Parent shall each cause to be prepared and delivered to
the other a list identifying all persons who, at the time of the meetings of
stockholders and shareholders pursuant to Section 7.5, the Company or Parent, as
the case may be, believes may be deemed to be "affiliates" of the Company or
Parent, as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Rule 145 Affiliates"). Parent shall be entitled to place
restrictive legends on any shares of Parent Common Stock received by such Rule
145 Affiliates pursuant to the Merger. The Company shall use its commercially
reasonable efforts to cause each person who is identified as a Rule 145
Affiliate in such list to deliver to Parent, at or prior to the Effective Time,
a written agreement, in the form to be approved by the parties hereto, that such
Rule 145 Affiliate will not sell, pledge, transfer or otherwise dispose of any
shares of Parent Common Stock issued to such Rule 145 Affiliate pursuant to the
Merger, except pursuant to an effective registration statement or in compliance
with Rule 145 or an exemption from the registration requirements of the
Securities Act. The Company and Parent shall each use its best efforts to cause
each person who is identified as a Rule 145 Affiliate in such list, to sign as
soon as possible after the date hereof, but in any event on or prior to the
thirtieth day prior to the Effective Time a written agreement, in the form to be
approved by the Company and Parent that such party will not sell or in any other
way reduce such party's risk relative to any shares of Parent Common Stock or
Company Common Stock (within the meaning of Section 201.01 of the SEC's
Financial Reporting Release No. 1), until such time as financial results
(including combined sales and net income) covering at least 30 days of
post-merger operations have been published, except as permitted by Staff
Accounting Bulletin No. 76 (or any successor thereto) issued by the SEC.
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Section 7.13 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except (a) that all expenses incurred in connection with the printing
and mailing of the Proxy Statement/Prospectus and the Form S-4, as well as the
filing fees related thereto, shall be shared equally by the Company, on the one
hand, and Parent, on the other hand, and (b) as expressly provided herein or as
otherwise agreed in writing by the parties.
Section 7.14 Indemnification and Insurance.
(a) From and after the Effective Time, Parent and the Surviving
Corporation shall indemnify, defend and hold harmless to the fullest extent
permitted under applicable law each person who is now, or has been at any time
prior to the date hereof, an officer or director of the Company (or any
Subsidiary or division thereof) and each person who served at the request of the
Company as a director, officer, trustee or fiduciary of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise (individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") against all losses, claims, damages, liabilities, costs
or expenses (including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), (i) Parent and the
Surviving Corporation shall pay, as incurred, the fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to Parent and the Surviving Corporation, in advance of the final disposition of
any such Action to the fullest extent permitted by applicable law, and upon
receipt of any undertaking required by applicable law, and (ii) Parent and the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that neither Parent nor the Surviving Corporation shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed), and provided further that Parent
and the Surviving Corporation shall not be obligated pursuant to this Section
7.14 to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single Action, unless, in the good faith judgment of
any of the Indemnified Parties, there is or may be a conflict of interests
between two or more of such Indemnified Parties, in which case there may be
separate counsel for each similarly situated group.
(b) The parties agree that the rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any Action,
in the certificate of incorporation and bylaws of the Company and its
Subsidiaries with respect to matters occurring through the Effective Time, shall
survive the Merger and shall continue in full force and effect for a period of
six years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Action pending or asserted within such period
shall continue until the disposition or resolution of such Action.
(c) For a period of six years after the Effective Time, Parent and the
Surviving Corporation shall cause to be maintained officers' and directors'
liability insurance covering the Indemnified Parties who now are, or at any time
prior to the date hereof were, covered by the
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Company's existing officers' and directors' liability insurance policies on
terms substantially no less advantageous to the Indemnified Parties than such
existing insurance; provided that Parent and the Surviving Corporation shall not
be required to pay annual premiums in excess of 250% of the last annual premium
paid by the Company prior to the date hereof (the amount of which premium is set
forth in the Company Disclosure Letter), but in such case shall purchase as much
coverage as reasonably practicable for such amount.
(d) The rights of each Indemnified Party hereunder shall be in addition
to any other rights such Indemnified Party may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, under the
DGCL or otherwise. The provisions of this Section 7.14 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
(e) In the event Parent, 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 in
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in either such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.14.
Section 7.15 Certain Benefits.
(a) At the Effective Time, Parent will cause the Surviving Corporation
and its Subsidiaries to continue the employment of all of the employees of the
Company and its Subsidiaries initially at the same salaries and wages of such
employees immediately prior to the Effective Time. Nothing in this Agreement
shall be considered a contract between Parent, the Surviving Corporation, its
Subsidiaries and any employee or consideration for, or inducement with respect
to, any employee's continued employment and, without limitation, all such
employees are and will continue to be considered to be employees at will
pursuant to the applicable employment at will laws or doctrines, subject to any
express written agreement to the contrary with such employee, and the Surviving
Corporation and its Subsidiaries will have the right, in their discretion and
subject to this Section 7.15, to alter the salaries, wages and terms of
employment of such employees after the Effective Time.
(b) With respect to each Affected Employee, Parent shall cause the
Surviving Corporation to deem the period of employment with the Company and its
Subsidiaries to have been employment and service with Parent for purposes of
determining the Affected Employee's eligibility to join and vesting (but not
benefit accrual) under all employee benefit plans, programs, policies or similar
employment related arrangements to the extent service with Parent is recognized
thereunder. Parent shall waive, and to the extent necessary to effect the terms
hereof, shall use its best efforts to cause the relevant insurance carriers and
other third parties to waive, any restrictions and limitations for medical
conditions existing as of the Effective Time of those Affected Employees and
their dependents who were covered immediately prior to the Effective Time under
a group health plan maintained by the Company, but only to the extent that such
medical condition would be covered by Parent's or the Surviving Corporation's
group health plan if it were not a pre-existing condition
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and only to the extent that such limitations would not have applied under the
Company's group health plan prior to the Effective Time. Further, Parent shall
cause the Surviving Corporation to offer at the Effective Time to each Affected
Employee coverage under a group health plan (as defined in Section 5000(b)(1) of
the Code) which credits such Affected Employee towards the deductibles,
coinsurance and maximum out-of-pocket provisions imposed under such group health
plan, for the year during which the Effective Time occurs, with any applicable
expenses already incurred during such year under the Company's group health
plan.
(c) Effective on or before January 1, 2002, Parent agrees to extend to
the employees of the Surviving Corporation and its Subsidiaries who are based in
the United States eligibility for the employee benefit plans and programs
available to similarly situated employees of Parent.
(d) The Company shall, as promptly as practicable after the date
hereof, use its best efforts to clarify or amend the Sharesave Scheme 2000 or
take other actions requested by Parent so that, on and after the Effective Time,
no shares of Company Common Stock will be issued or issuable under such scheme.
Section 7.16 Reorganization; Pooling.
(a) From and after the date hereof and until the Effective Time, none
of Parent, the Company, or any of their respective Subsidiaries shall knowingly
take any action, or fail to take any reasonable action, as a result of which the
Merger would fail to qualify as a reorganization within the meaning of Section
368(a) of the Code (and any comparable provisions of applicable state or local
law) or enter into any contract, agreement, commitment or arrangement to take or
fail to take any such action.
(b) From and after the date hereof and until the Effective Time, none
of the Company, Parent or any of their respective Subsidiaries shall knowingly
take any action, or fail to take any reasonable action, that would prevent the
treatment of the Merger as a "pooling of interests" for financial accounting
purposes or enter into any contract, agreement, commitment or arrangement to
take or fail to take any such action. Each of the parties shall use its
commercially reasonable efforts to obtain the letter from its independent public
accountant referred to in Sections 8.2(c) and 8.3(c).
(c) Following the Effective Time, neither Parent nor any of its
Subsidiaries shall knowingly take any action or knowingly cause any action to be
taken which would cause the Merger to fail to qualify as a reorganization within
the meaning of Section 368(a) of the Code (and any comparable provisions of
applicable state or local law).
Section 7.17 Rights Agreement. Prior to the Effective Time, the Board
of Directors of the Company shall take any action (including, if necessary,
amending or terminating (but with respect to termination, only as of immediately
prior to the Effective Time) the Rights Agreement) necessary so that none of the
execution and delivery of this Agreement or the Stock Option Agreements, the
Stockholder Agreements, the conversion of shares of Company Common Stock into
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the right to receive shares of Parent Common Stock in accordance with Article 4
of this Agreement, the issuance of Company Common Stock upon exercise of the
option granted to Parent pursuant to the applicable Stock Option Agreement, the
consummation of the Merger, or any other transaction contemplated hereby, by the
Stock Option Agreements or by the Stockholder Agreements will cause (i) the
Company Rights to become exercisable under the Company Rights Agreement, (ii)
Parent or any of its shareholders or Subsidiaries to be deemed an "Acquiring
Person" (as defined in the Company Rights Agreement), (iii) any such event to be
an event described in Section 11(a)(ii) or 13 of the Company Rights Agreement or
(iv) the "Shares Acquisition Date" or the "Distribution Date" (each as defined
in the Company Rights Agreement) to occur upon any such event, and so that the
Company Rights will expire immediately prior to the Effective Time. Neither the
Board of Directors of the Company nor the Company shall take any other action to
(a) terminate the Company Rights Agreement, (b) redeem the Company Rights, (c)
amend the Company Rights Agreement in a manner adverse to Parent, or (d) cause
any person not to be or become an "Acquiring Person."
Section 7.18 Agreement with Employees. Prior to the Effective Time, the
Company shall use its best efforts to enter into employment agreements with key
individuals identified by Parent. The employment agreements shall contain such
terms and conditions, including non-competition covenants, as the Parent shall
reasonably require, and shall become effective at the Effective Time.
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) (i) This Agreement and the Merger shall have been adopted and
approved by the affirmative vote of holders of a majority of the outstanding
shares of Company Common Stock entitled to vote thereon; and
(ii) the issuance of shares of Parent Common Stock pursuant to the
Merger shall have been approved by the affirmative vote of the holders of a
majority of the total votes cast on such matter by holders of shares of Parent
Common Stock.
(b) The waiting period applicable to the consummation of the Merger
shall have expired or been terminated under (i) the HSR Act and (ii) any
Non-U.S. Antitrust Laws where the failure to observe any such mandatory waiting
period referred to in this clause (ii) has or would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect or a
Company Material Adverse Effect.
(c) None of the parties hereto shall be subject to any decree, order or
injunction of a court of competent jurisdiction, U.S. or foreign, which
prohibits the consummation of the Merger; provided, however, that prior to
invoking this condition each party agrees to comply with
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Section 7.6, and with respect to other matters not covered by Section 7.6 to use
its commercially reasonable efforts to have any such decree, order or injunction
lifted or vacated; and no statute, rule or regulation shall have been enacted by
any governmental authority, U.S. or foreign, which prohibits or makes unlawful
the consummation of the Merger.
(d) The Form S-4 shall have become effective and no stop order with
respect thereto shall be in effect.
(e) The shares of Parent Common Stock to be issued pursuant to the
Merger shall have been authorized for listing on the Nasdaq National Market,
subject to official notice of issuance.
(f) Other than the filing of the Certificate of Merger provided for
under Article 1, all consents, approvals, authorizations of, or filings or
registrations with and notices to any governmental or regulatory authority, U.S.
or foreign, required of Parent on the one hand and the Company on the other
hand, or any of their Subsidiaries, to consummate the Merger and the other
transactions contemplated hereby shall have been made and obtained except for
any consent, approval or authorization the failure of which to obtain and for
any filing, registration or notice the failure of which to make do not have and
would not reasonably expected to have, individually or in the aggregate, a
Parent Material Adverse Effect or a Company Material Adverse Effect.
(g) There shall not be pending or threatened in writing any
governmental claim, proceeding or action seeking to restrain or prohibit the
consummation of the Merger and the other transactions contemplated hereby.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment (or, to the extent permitted by applicable law, waiver) at or
prior to the Closing Date of the following conditions:
(a) Parent shall have performed in all material respects its covenants
and agreements contained in this Agreement required to be performed on or prior
to the Closing Date, except for any such failure to perform as is both (1)
inadvertent and for which Parent uses its best efforts to cure following the
discovery of such failure to perform and (2) did not have and would not
reasonably be expected to have, individually or in the aggregate with any other
such failures, a Material Adverse Effect with respect to Parent or the Company,
and the Company shall have received a certificate of Parent, executed on its
behalf by its Chief Executive Officer, its President or one of its Vice
Presidents, dated the Closing Date, certifying to such effect.
(b) The representations and warranties of Parent and Merger Sub
contained in this Agreement and in any document delivered in connection herewith
shall be true and correct in all respects as of the date of this Agreement and
as of the Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct in all respects only as of the
specified date), except as expressly contemplated by this Agreement and except
for such breaches of representations and inaccuracies in warranties that do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect, and the
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Company shall have received a certificate of Parent, executed on its behalf by
its Chief Executive Officer, its President or one of its Vice Presidents, dated
the Closing Date, certifying to such effect. For purposes of this Section 8.2(b)
only, in determining whether representations and warranties are true and correct
in all respects, no effect shall be given to any exceptions or limitations
contained in such representations and warranties relating to materiality or to a
Parent Material Adverse Effect.
(c) The Company shall have received from Deloitte & Touche LLP, the
Company's independent public accountants, a letter, a copy of which shall be
furnished to Parent, indicating that no conditions exist that would preclude the
Company from being eligible to be a party to a "pooling of interests" relative
to this transaction for financial accounting purposes.
(d) At any time after the date of this Agreement, there shall not have
been any event or occurrence, or series of events or occurrences, that has had
or would reasonably be expected to have, individually or in the aggregate with
all other events or occurrences since the date of this Agreement, a Parent
Material Adverse Effect.
Section 8.3 Conditions to Obligation of Parent and Merger Sub to Effect
the Merger. The obligations of Parent and Merger Sub to effect the Merger shall
be subject to the fulfillment (or, to the extent permitted by applicable law,
waiver) at or prior to the Closing Date of the following conditions:
(a) The Company shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date, except for any such failure to perform as is both
(1) inadvertent and for which the Company uses its best efforts to cure
following the discovery of such failure to perform and (2) did not have and
would not reasonably be expected to have, individually or in the aggregate with
any other such failures, a Material Adverse Effect with respect to Parent or the
Company, and Parent shall have received a certificate of the Company, executed
on its behalf by its Chief Executive Officer, its President or one of its Vice
Presidents, dated the Closing Date, certifying to such effect.
(b) The representations and warranties of the Company contained in this
Agreement and in any document delivered in connection herewith shall be true and
correct in all respects as of the date of this Agreement and as of the Closing
Date (except for representations and warranties made as of a specified date,
which need be true and correct in all respects only as of the specified date),
except as expressly contemplated by this Agreement and except for such breaches
of representations and inaccuracies in warranties that do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, and Parent shall have received a certificate of the
Company, executed on its behalf by its Chief Executive Officer, its President or
one of its Vice Presidents, dated the Closing Date, certifying to such effect.
For purposes of this Section 8.3(b) only, in determining whether representations
and warranties are true and correct in all respects, no effect shall be given to
any exceptions or limitations contained in such representations and warranties
relating to materiality or to a Company Material Adverse Effect.
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(c) Parent shall have received from PricewaterhouseCoopers LLP,
Parent's independent public accountants, a letter, a copy of which shall be
furnished to the Company, indicating that the Merger will be treated as a
"pooling of interests" for financial accounting purposes.
(d) At any time after the date of this Agreement, there shall not have
been any event or occurrence, or series of events or occurrences, that has had
or would reasonably be expected to have, individually or in the aggregate with
all other events or occurrences since the date of this Agreement, a Company
Material Adverse Effect.
(e) Parent shall have received from each Rule 145 Affiliate an
agreement to the effect set forth in Section 7.12.
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Effective Time by the mutual written consent
of the Company and Parent.
Section 9.2 Termination by Parent or the Company. This Agreement may be
terminated by action of the Board of Directors of Parent or of the Company if:
(a) the Merger shall not have been consummated by February 15, 2001;
provided, however, that the right to terminate this Agreement pursuant to this
clause (a) shall not be available to any party whose failure to perform or
observe in any material respect any of its obligations under this Agreement in
any manner shall have been the cause of, or resulted in, the failure of the
Merger to occur on or before such date;
(b) the approval of the Company's stockholders required by Section
8.1(a)(i) shall not have been obtained at a meeting duly convened therefor or at
any adjournment thereof;
(c) the approval of Parent's shareholders required by Section
8.1(a)(ii) shall not have been obtained at a meeting duly convened therefor or
at any adjournment thereof; or
(d) a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission, U.S. or foreign, shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and non- appealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause (d) shall have used its commercially
reasonable efforts to remove such injunction, order or decree.
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Section 9.3 Termination by the Company. This Agreement may be
terminated at any time prior to the Effective Time, by action of the Board of
Directors of the Company after consultation with its outside legal advisors, if:
(a) (i) there has been a breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement 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 8.2(a) or
8.2(b) would not be satisfied and (ii) such breach is not curable, or, if
curable, is not cured within 30 days after written notice of such breach is
given to Parent by the Company; provided, however, that the right to terminate
this Agreement pursuant to Section 9.3(a) shall not be available to the Company
if it, at such time, is in material breach of any representation, warranty,
covenant or agreement set forth in this Agreement such that the condition set
forth in Section 8.3(a) or 8.3(b) would not be satisfied; or
(b) the Board of Directors of Parent shall have withdrawn or materially
modified, in a manner adverse to the Company, its approval or recommendation of
the issuance of shares of Parent Common Stock pursuant to the Merger or
recommended a Parent Acquisition Proposal, or resolved to do so.
Section 9.4 Termination by Parent. This Agreement may be terminated at
any time prior to the Effective Time, by action of the Board of Directors of
Parent after consultation with its outside legal advisors, if:
(a) (i) there has been a breach by the Company of any representation,
warranty, covenant or agreement 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 8.3(a) or 8.3(b) would not be
satisfied and (ii) such breach is not curable, or, if curable, is not cured
within 30 days after written notice of such breach is given to the Company by
Parent; provided, however, that the right to terminate this Agreement pursuant
to Section 9.4(a) shall not be available to Parent if Parent or Merger Sub, at
such time, is in material breach of any representation, warranty, covenant or
agreement set forth in this Agreement such that the condition set forth in
Section 8.2(a) or 8.2(b) would not be satisfied; or
(b) the Board of Directors of the Company shall have withdrawn or
materially modified, in a manner adverse to Parent, its approval or
recommendation of the Merger or recommended a Company Acquisition Proposal, or
resolved to do so.
Section 9.5 Effect of Termination.
(a) If this Agreement is terminated
(i) by the Company or Parent pursuant to Section 9.2(b) [failure to
obtain Company stockholders approval], after the public announcement of a
Company Acquisition Proposal (whether or not the Company Acquisition Proposal is
still pending or has been consummated); or
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(ii) by Parent pursuant to Section 9.4(b) [withdrawal of Company
recommendation to stockholders], after the public announcement or receipt by the
Company's Board of Directors of a Company Acquisition Proposal (whether or not
the Company Acquisition Proposal is still pending or has been consummated);
then the Company shall pay Parent a fee of $16 million (subject to reduction
pursuant to Section 7 of the applicable Stock Option Agreement) at the time of
such termination in cash by wire transfer to an account designated by Parent.
(b) If this Agreement is terminated
(i) by the Company or Parent pursuant to Section 9.2(c) [failure to
obtain Parent shareholder approval], after the public announcement of a Parent
Acquisition Proposal (whether or not the Parent Acquisition Proposal is still
pending or has been consummated); or
(ii) by the Company pursuant to Section 9.3(b) [withdrawal of Parent
recommendation to shareholders], after the public announcement or receipt by
Parent's Board of Directors of a Parent Acquisition Proposal (whether or not the
Parent Acquisition Proposal is still pending or has been consummated);
then Parent shall pay the Company a fee of $16 million (subject to reduction
pursuant to Section 7 of the applicable Stock Option Agreement) at the time of
such termination in cash by wire transfer to an account designated by the
Company.
(c) If this Agreement is terminated by the Company or Parent pursuant
to Section 9.2(b) other than in circumstances covered by Section 9.5(a), then
the Company shall pay Parent a fee of $3 million to reimburse it for its costs
and expenses incurred in connection with this transaction. If this Agreement is
terminated by the Company or Parent pursuant to Section 9.2(c), other than in
circumstances covered by Section 9.5(b), then Parent shall pay the Company a fee
of $3 million to reimburse it for its costs and expenses incurred in connection
with this transaction.
(d) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article 9, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
9.5 and Section 7.13 and except for the provisions of Sections 10.3, 10.4, 10.6,
10.8, 10.9, 10.12, 10.13 and 10.14, provided that nothing herein shall relieve
any party from any liability for any willful and material breach by such party
of any of its representations, warranties, covenants or agreements set forth in
this Agreement. The Confidentiality Agreements shall survive any termination of
this Agreement prior to the Effective Time, and the provisions of the
Confidentiality Agreements shall apply to all information and material delivered
by any party hereunder.
Section 9.6 Extension; Waiver. At any time prior to the Effective Time,
each party may by action taken by its Board of Directors, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
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document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and Agreements.
All representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger;
provided, however, that the agreements contained in Articles 2, 3 and 4 and in
Sections 7.12, 7.13, 7.14, 7.15 and 7.16 and this Article 10 and the agreements
delivered pursuant to this Agreement shall survive the Merger.
Section 10.2 Notices. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission or by courier
service (with confirmation of receipt or proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows:
(a) if to Parent or Merger Sub:
James R. Crane
President, Chief Executive Officer and
Chairman of the Board of Directors
EGL, Inc.
15350 Vickery Drive
Houston, Texas 77032
Facsimile: (281) 618-3204
with a copy to:
Gene J. Oshman, Esq.
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Facsimile: (713) 229-1522
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(b) if to the Company:
Peter Gibert
Chairman and Chief Executive Officer
Circle International Group, Inc.
260 Townsend Street
San Francisco, California 94107
Facsimile: (415) 978-0773
with a copy to:
John F. Seegal, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111-3143
Facsimile: (415) 773-5759
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated or personally delivered or three business days after so mailed.
Section 10.3 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Section 3.3, Article 4 and Sections 7.14 (collectively, the "Third Party
Provisions"), nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement. The Third Party Provisions may be enforced by the
beneficiaries thereof.
Section 10.4 Entire Agreement. This Agreement, the Stock Option
Agreements, the Stockholder Agreements, the Company Disclosure Letter, the
Parent Disclosure Letter, the Confidentiality Agreements and any documents
delivered by the parties in connection herewith constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties with respect thereto.
During the term of this Agreement, no party thereto shall terminate the
Confidentiality Agreements.
Section 10.5 Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of the Company or the shareholders of Parent, but after any
such stockholder or shareholder approval, no amendment shall be made which by
law requires the further approval of stockholders or shareholders without
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obtaining such further approval. No addition to or modification of any provision
of this Agreement shall be binding upon any party hereto unless made in writing
and signed by all parties hereto.
Section 10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws.
Section 10.7 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 10.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
Section 10.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and words denoting any
gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa.
(b) The phrase "to the knowledge of" and similar phrases relating to
knowledge of the Company or Parent, as the case may be, shall mean the actual
knowledge of its executive officers.
(c) The phrase "Material Adverse Effect" with respect to Parent or the
Company shall mean a material adverse effect on or change in (i) the business,
assets, liabilities, condition (financial or otherwise) or results of operations
of a party and its Subsidiaries on a consolidated basis, except for such changes
or effects (A) in general economic, capital market, regulatory or political
conditions or changes that affect generally the respective industries in which
Parent and the Company conduct their operations, (B) as a result of the public
announcement of the transactions contemplated by this Agreement or (C) in the
market price for the Parent Common Stock or the Company Common Stock, as the
case may be, or (ii) the ability of a party to consummate the transactions
contemplated by this Agreement or fulfill the conditions to closing. "Parent
Material Adverse Effect" and "Company Material Adverse Effect" mean a Material
Adverse Effect with respect to Parent and the Company, respectively.
(d) The word "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, of
which such party directly or indirectly owns or controls at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which such party is a general partner.
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Section 10.10 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
Section 10.11 Incorporation of Disclosure Letters. The Company
Disclosure Letter and the Parent Disclosure Letter are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein.
Section 10.12 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 10.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 10.14 Obligation of Parent. Whenever this Agreement requires
Merger Sub (or its successors) to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause Merger Sub to
take such action and a guarantee of the performance thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
EGL, INC.
By: /s/ Elijio V. Serrano
----------------------------------------
Name: Elijio V. Serrano
--------------------------------------
Title: Chief Financial Officer
-------------------------------------
EGL DELAWARE I, INC.
By: /s/ Elijio V. Serrano
----------------------------------------
Name: Elijio V. Serrano
--------------------------------------
Title: Chief Financial Officer
-------------------------------------
CIRCLE INTERNATIONAL GROUP, INC.
By: /s/ Peter Gibert
----------------------------------------
Name: Peter Gibert
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
