<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AMONG
KC HOLDING CORPORATION,
KC MERGER CORP.,
AND
KENETECH CORPORATION
Dated as of October 25, 2000
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ARTICLE I THE OFFER......................................................... 2
Section 1.1 The Offer.................................................. 2
Section 1.2 Company Actions............................................ 4
ARTICLE II THE MERGER....................................................... 6
Section 2.1 The Merger................................................. 6
Section 2.2 Effective Time............................................. 6
Section 2.3 Effects of the Merger...................................... 6
Section 2.4 Charter and Bylaws; Directors and Officers................. 6
Section 2.5 Conversion of Securities................................... 6
Section 2.6 Exchange of Certificates................................... 7
Section 2.7 Merger Without Meeting of Stockholders..................... 9
Section 2.8 Further Assurances......................................... 10
Section 2.9 Closing.................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................ 10
Section 3.1 Organization............................................... 10
Section 3.2 Authority.................................................. 10
Section 3.3 Consents and Approvals; No Violations...................... 11
Section 3.4 Information Supplied....................................... 12
Section 3.5 Ownership of Shares........................................ 12
Section 3.6 Interim Operations......................................... 12
Section 3.7 Brokers.................................................... 13
Section 3.8 Litigation................................................. 13
Section 3.9 Financing.................................................. 13
Section 3.10 Assets and Revenues........................................ 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... 13
Section 4.1 Organization, Standing and Power........................... 13
Section 4.2 Charter Documents and Bylaws............................... 14
Section 4.3 Capital Structure.......................................... 14
Section 4.4 Authority.................................................. 15
Section 4.5 Consents and Approvals; No Violation....................... 16
Section 4.6 SEC Documents and Other Reports; Financial Statements...... 17
Section 4.7 Information Supplied....................................... 19
Section 4.8 Absence of Certain Changes or Events....................... 19
Section 4.9 Permits and Compliance..................................... 20
Section 4.10 Tax Matters................................................ 21
Section 4.11 Actions and Proceedings.................................... 23
Section 4.12 Certain Agreements......................................... 23
Section 4.13 ERISA; Employee Benefit Plans.............................. 23
Section 4.14 Intellectual Property...................................... 25
Section 4.15 Material Contracts......................................... 26
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Section 4.16 Environmental Matters...................................... 27
Section 4.17 Title to Assets............................................ 28
Section 4.18 State Takeover Statutes.................................... 28
Section 4.19 Required Vote of Company Stockholders...................... 28
Section 4.20 Brokers.................................................... 29
Section 4.21 Fairness Opinion........................................... 29
Section 4.22 Insurance Policies......................................... 29
Section 4.23 Transactions With Affiliates............................... 29
Section 4.24 Investment Company Status.................................. 29
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS......................... 30
Section 5.1 Conduct of Business by the Company Pending the Merger...... 30
Section 5.2 No Solicitation............................................ 32
ARTICLE VI ADDITIONAL AGREEMENTS............................................ 34
Section 6.1 Stockholders Meeting....................................... 34
Section 6.2 Access to Information...................................... 35
Section 6.3 Directors.................................................. 36
Section 6.4 Company Stock Options...................................... 37
Section 6.5 Warrants................................................... 37
Section 6.6 Reasonable Best Efforts.................................... 38
Section 6.7 Public Announcements....................................... 38
Section 6.8 State Takeover Laws........................................ 39
Section 6.9 Indemnification; Directors and Officers Insurance.......... 39
Section 6.10 Notification of Certain Matters............................ 39
Section 6.11 Retention and Incentive Plan; Certain Benefits............. 40
Section 6.12 Stockholder Litigation..................................... 40
Section 6.13 Company SEC Documents...................................... 41
Section 6.14 Voting Agreement........................................... 41
ARTICLE VII CONDITIONS PRECEDENT TO THE MERGER.............................. 41
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger. 41
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.............................. 42
Section 8.1 Termination................................................ 42
Section 8.2 Effect of Termination...................................... 43
Section 8.3 Fees and Expenses.......................................... 43
Section 8.4 Amendment.................................................. 44
Section 8.5 Waiver..................................................... 45
ARTICLE IX GENERAL PROVISIONS............................................... 45
Section 9.1 Non-Survival of Representations and Warranties............. 45
Section 9.2 Notices.................................................... 45
Section 9.3 Interpretation; Certain Definitions........................ 46
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Section 9.4 Counterparts............................................... 48
Section 9.5 Entire Agreement; Third-Party Beneficiaries................ 48
Section 9.6 Governing Law.............................................. 48
Section 9.7 Assignment................................................. 48
Section 9.8 Severability............................................... 48
Section 9.9 Enforcement of this Agreement.............................. 48
Section 9.10 Construction............................................... 48
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EXHIBITS
A Conditions of the Offer
B Form of Press Release
SCHEDULES
1 Form of Amended Company Charter
2 Form of Amended Company Bylaws
iii
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 25, 2000 (this
"Agreement"), among KC Holding Corporation, a Delaware corporation ("Parent"),
KC Merger Corp., a Delaware corporation and a direct wholly-owned subsidiary of
Parent ("Sub"), and Kenetech Corporation, a Delaware corporation (the "Company")
(Sub and the Company being hereinafter collectively referred to as the
"Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub
to make a tender offer (as it may be amended from time to time to the extent
permitted under this Agreement, the "Offer") to purchase any and all of the
shares of Common Stock, par value $.0001 per share, of the Company, together
with the associated rights attached thereto (the "Rights") issued pursuant to
the Rights Agreement (as defined herein) (collectively, the "Shares"), at a
purchase price of $1.04 per Share (the "Offer Price"), net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, following the purchase of Shares pursuant to the Offer, upon the
terms and subject to the conditions set forth herein, Sub will be merged with
and into the Company (the "Merger"), whereby each issued and outstanding Share
not owned directly or indirectly by Parent or the Company will be converted into
the right to receive the price per Share paid in the Offer;
WHEREAS, on October 24, 2000, Mark D. Lerdal, the President, Chief
Executive Officer and a Director of the Company (the "Nonvoting Director"),
entered into a subscription and contribution agreement (the "Contribution
Agreement") with Parent and Sub, a copy of which has been delivered to the
Company, pursuant to which the Nonvoting Director has, among other things,
agreed to contribute his Shares to Parent in exchange for shares of the capital
stock of Parent;
WHEREAS, as an inducement and a condition to Parent and Sub entering into
this Agreement, contemporaneously with the execution and delivery of this
Agreement, the Nonvoting Director has entered into a Voting Agreement with
Parent and Sub (the "Voting Agreement") pursuant to which the Nonvoting Director
has, among other things, (x) agreed not to tender his Shares in the Offer and
(y) granted to Parent a proxy with respect to the voting of such Shares, in each
case upon the terms and subject to the conditions set forth in the Voting
Agreement;
WHEREAS, a special committee of the Board of Directors of the Company,
comprised solely of directors unaffiliated with the Nonvoting Director (the
"Special Committee"), has determined that this Agreement and the transactions
contemplated hereby, including the Offer
<PAGE>
and the Merger, are fair to, and in the best interests of, the Company and its
stockholders, and has recommended that the Board of Directors of the Company
approve and declare advisable this Agreement and the transactions contemplated
hereby, including the Offer and the Merger; and
WHEREAS, the Board of Directors of the Company, based on the recommendation
of the Special Committee, has (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the Company and its stockholders, (ii) approved
and declared advisable this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, and (iii) recommended that the holders of
Shares tender their Shares in the Offer and, if applicable, approve and adopt
this Agreement in all respects;
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Subject to the provisions of this Agreement, as promptly as
practicable (but in no event later than ten (10) business days) following
execution hereof, Sub shall, and Parent shall cause Sub to, commence, within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations thereunder, the "Exchange Act"), the
Offer. The obligation of Sub to, and of Parent to cause Sub to, commence the
Offer and accept for payment, and pay for, any Shares tendered pursuant to the
Offer shall be subject only to the conditions set forth in the attached Exhibit
A (the "Offer Conditions"), any of which may be waived in whole or in part by
Sub in its sole discretion, except that Sub shall not waive the Minimum
Condition (as defined in Exhibit A) without the written consent of the Company
(which shall not be unreasonably withheld). Sub expressly reserves the right to
modify the terms of the Offer, except that, without the consent of the Company,
Sub shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce
the Offer Price, (iii) impose any other conditions to the Offer other than the
Offer Conditions or modify the Offer Conditions (other than to waive any Offer
Conditions to the extent permitted by this Agreement), (iv) except as provided
in Sections 1.1(b) and (c), extend the Offer, (v) change the form of
consideration payable in the Offer, or (vi) amend any other term of the Offer in
a manner adverse to the holders of Shares.
(b) Subject to the terms and conditions hereof, the Offer shall
expire at midnight, New York City time, on the date that is the later of (i)
twenty (20) business days after the date the Offer is commenced, and (ii) thirty
(30) business days after the date of the press release referenced in the proviso
to Section 6.7; provided, that Sub may, without the consent of the Company, (y)
extend the Offer, if at the scheduled or extended expiration date of the Offer
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any of the Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, and (z) extend the Offer for any period
reasonably determined by Sub after consultation with its legal advisors to be
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer, subject in each case to any right of the Company to terminate this
Agreement pursuant to the terms hereof.
(c) If, at any scheduled expiration date of the Offer, the Minimum
Condition (as defined in Exhibit A) or any of the conditions set forth in
paragraphs (a), (c), (e), (f), (g) or (h) of Exhibit A shall not have been
satisfied, but at such scheduled expiration date all the conditions set forth in
paragraphs (b), (d) and (i) of Exhibit A shall then be satisfied, or, if not
then satisfied, are reasonably capable of being satisfied prior to December 27,
2000, at the request of the Company (confirmed in writing), Sub shall extend the
Offer from time to time, subject to any right of Parent, Sub or the Company to
terminate this Agreement pursuant to the terms hereof.
(d) Subject only to the Offer Conditions and so long as this
Agreement has not been terminated in accordance with its terms, Sub shall, and
Parent shall cause Sub to, accept for payment, and pay for, all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable (and in
any event within five (5) business days) after the expiration of the Offer, and
in any event in compliance with the obligations respecting prompt payment
pursuant to Rule 14e-1(c) under the Exchange Act.
(e) As soon as reasonably practicable on the date of commencement of
the Offer, Parent and Sub shall file with the SEC (i) a Tender Offer Statement
on Schedule TO (the "Schedule TO") with respect to the Offer, which shall
contain as an exhibit or incorporate by reference an offer to purchase and a
related letter of transmittal and, if required to commence the Offer, a summary
advertisement (such Schedule TO and the documents included therein pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"), and (ii) jointly, with the Company, a
Transaction Statement on Schedule 13E-3 (the "Rule 13E-3 Statement"). Parent and
Sub shall cause the Offer Documents to be disseminated to holders of Shares as
and to the extent required by applicable federal securities laws. Parent shall
ensure that the Offer Documents and the Rule 13E-3 Statement comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and, if applicable, the date first published,
sent or given to the holders of the Shares, do not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to any information supplied
by the Company in writing for inclusion in the Offer Documents or the Rule 13E-3
Statement. Parent, Sub and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents or the Rule 13E-3
Statement if and to the extent that such information shall have become false or
misleading in any material respect, and Parent and Sub further agree to take all
steps necessary to cause the Offer Documents and the Rule 13E-3 Statement as so
corrected to be filed with the
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SEC and the Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
(f) The Company and its counsel shall be given reasonable opportunity
to review and comment upon the Offer Documents and the Rule 13E-3 Statement
prior to their filing with the SEC or, if applicable, dissemination to the
stockholders of the Company. Parent and Sub shall provide the Company and its
counsel any comments Parent, Sub or their counsel may receive from the SEC or
its staff (orally or in writing) with respect to the Offer Documents and the
Rule 13E-3 Statement promptly after the receipt of such comments. The Company
shall cooperate with Parent and its counsel in responding to any such comments.
Unless there is a reasonable basis for the Company to object, the Company agrees
to execute the Rule 13E-3 Statement as prepared by Parent or Sub.
(g) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any Shares that
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer.
(h) Parent or Sub shall engage an information agent in connection
with the Offer.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer. The
Company represents and warrants that the Board of Directors of the Company, at a
meeting duly called and held, duly adopted, based on the recommendation of the
Special Committee and by unanimous vote of all directors (with the exception of
the Nonvoting Director, who abstained from such vote), resolutions (i)
determining that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
Company and its stockholders, (ii) approving and declaring the advisability of
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, and (iii) recommending that the holders of Shares tender their
Shares in the Offer and, if applicable, approve and adopt this Agreement in all
respects. The Company further represents and warrants that the Board of
Directors has taken all action necessary to render the Rights Agreement
inapplicable to the Offer, the Merger and the other transactions contemplated
hereby.
(b) On or as soon as practicable after the date the Offer Documents
are filed with the SEC, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9")
containing (unless the Special Committee or the Board of Directors of the
Company, after consultation with its independent legal counsel, determines in
good faith that such action would be inconsistent with its fiduciary duties to
Company stockholders under applicable law) the recommendation described in
Section 1.2(a) and a copy of the opinion referenced in Section 4.21, and the
Company shall cause the Schedule 14D-9 to be disseminated to holders of Shares
as and to the extent required by applicable federal securities laws. The
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Company shall ensure that the Schedule 14D-9 complies in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and the date first published, sent or given to the holders of
Shares, does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not materially misleading, except that no representation is made by the
Company with respect to any information supplied by Parent or Sub for inclusion
in the Schedule 14D-9. Each of the Company, Parent and Sub agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Board of Directors shall not withdraw or modify its
recommendation that holders of the Shares accept the Offer, except to the extent
that the Special Committee or the Board of Directors, after consultation with
its independent legal counsel, determines in good faith that failure to take
such action is inconsistent with its fiduciary duties to the Company's
stockholders under applicable law.
(c) Parent and its counsel shall be given reasonable opportunity to
review and comment upon the Schedule 14D-9 prior to its filing with the SEC or
dissemination to stockholders of the Company. The Company shall provide Parent
and its counsel any comments the Company or its counsel may receive from the SEC
or its staff (orally or in writing) with respect to the Schedule 14D-9 promptly
after the receipt of such comments. Parent and Sub shall cooperate with the
Company and its counsel in responding to any such comments.
(d) In connection with the Offer and the Merger, the Company shall
instruct its transfer agent or agents to furnish Sub promptly upon request with
mailing labels containing the names and addresses of the record holders of
Shares as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of any other information in the
Company's possession or control, as Parent may reasonably request, and, to the
extent reasonably available to the Company, regarding the beneficial owners of
Shares and any securities convertible into Shares, and shall furnish to Sub such
information and assistance as Parent may reasonably request in communicating the
Offer to the Company's stockholders. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, Parent and
Sub shall, and shall cause their agents to, hold in confidence the information
contained in any such labels, listings and files, use such information only in
connection with the Offer and the Merger and, if this Agreement shall be
terminated, upon request, deliver to the Company all copies of such information
then in their possession or control.
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ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), Sub shall be merged with and into the Company
at the Effective Time (as hereinafter defined). Following the Merger, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Sub in accordance with the DGCL.
Section 2.2 Effective Time. The Merger shall become effective when the
certificate of merger or, if applicable, the certificate of ownership and merger
(each, the "Certificate of Merger"), executed in accordance with the relevant
provisions of the DGCL, is filed with the Secretary of State of the State of
Delaware. When used in this Agreement, the term "Effective Time" shall mean the
date and time at which the Certificate of Merger is so filed or such later date
and time as may be agreed to by the parties hereto and specified therein. The
filing of the Certificate of Merger shall be made on the date of the Closing (as
defined in Section 2.9).
Section 2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 2.4 Charter and Bylaws; Directors and Officers.
(a) At the Effective Time, the Restated Certificate of Incorporation
of the Company, as in effect immediately prior to the Effective Time (the
"Company Charter"), shall be amended in its entirety to be in the form as set
forth in Schedule 1 hereto. At the Effective Time, the Restated Bylaws of the
Company, as in effect immediately prior to the Effective Time (the "Company
Bylaws"), shall be amended in their entirety to be in the form as set forth in
Schedule 2 hereto.
(b) The directors of Sub at the Effective Time shall be the directors
of the Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be. The officers of the Company at the Effective Time shall be the officers
of the Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.
Section 2.5 Conversion of Securities.
(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of Sub, the Company or the holders of any securities of the
Constituent Corporations:
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(i) Each issued and outstanding share of common stock, par
value $.01 per share, of Sub shall be converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation.
(ii) All Shares that are held in the treasury of the Company or
by any wholly-owned Subsidiary of the Company and any Shares owned by
Parent or by any wholly-owned Subsidiary of Parent shall be canceled and no
consideration shall be delivered in exchange therefor.
(iii) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled in accordance with Section
2.5(a)(ii) and other than Dissenting Shares (as defined in Section
2.5(a)(iv)) shall be converted into the right to receive from the Surviving
Corporation in cash, without interest, the per share price paid for Shares
in the Offer (the "Merger Consideration"). All such Shares, when so
converted, shall no longer be outstanding and shall automatically be
canceled and retired and each holder of a Share shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration.
(iv) Notwithstanding any provision of this Agreement to the
contrary, if required by the DGCL, Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by holders who
properly exercise appraisal rights with respect thereto in accordance with
Section 262 of the DGCL (the "Dissenting Shares") will not be converted
into the right to receive the Merger Consideration, and holders of such
Shares will be entitled to receive payment of the appraised value of such
Shares in accordance with the provisions of such Section 262 unless and
until such holders fail to perfect or effectively withdraw or lose their
rights to appraisal and payment under the DGCL. If, after the Effective
Time, any such holder fails to perfect or effectively withdraws or loses
such right, such Shares will thereupon be treated as if they had been
converted at the Effective Time into the right to receive the Merger
Consideration, without any interest thereon. The Company will give Parent
(i) prompt notice of any demands received by the Company for appraisal of
Shares and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demand for payment for Dissenting Shares. The
Company will not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisal or offer to settle or
settle any such demands.
(b) Each Company Stock Option (as hereinafter defined) and each
Warrant (as hereinafter defined) shall be treated in accordance with Section 6.4
and Section 6.5, respectively.
Section 2.6 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
paying agent in the Merger (the "Paying Agent"). From time to time on, prior to
or after the Effective Time, Parent shall make
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available, or cause the Surviving Corporation to make available, to the Paying
Agent cash in amounts and at the times necessary for the payment of the Merger
Consideration pursuant to Section 2.5. Any and all interest earned on funds made
available to the Paying Agent pursuant to this Agreement shall be paid over to
Parent.
(b) Exchange Procedure. As soon as reasonably practicable (and in
any event within five (5) business days) after the Effective Time, Parent shall
cause the Paying Agent to mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented Shares
(the "Certificates"), (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
a form and have such other provisions as Parent and the Company may reasonably
agree prior to the purchase of Shares pursuant to the Offer) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the applicable Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the Shares theretofore represented by such Certificate
shall have been converted into the right to receive pursuant to Section 2.5, and
the Certificate so surrendered shall forthwith be canceled. Until surrendered as
contemplated by this Section 2.6, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 2.5. No interest or
dividends will be paid or will accrue on the cash payable upon the surrender of
any Certificate.
(c) Transfers. In the event of a transfer of ownership of Shares that
is not registered in the transfer records of the Company, payment may be made to
a person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
(d) Withholding. Parent or the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as Parent or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Code (as hereinafter defined) or under any provisions of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the person in respect of which such deduction
or withholding was made by Parent or the Paying Agent.
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(e) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article II shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(f) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Certificates for six months after the Effective
Time shall be delivered to Parent, upon demand, and any holders of Certificates
who have not theretofore complied with this Article II and the instructions set
forth in the letter of transmittal mailed to such holders after the Effective
Time shall thereafter look only to Parent for payment of the Merger
Consideration to which they are entitled.
(g) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to seven years after
the Effective Time (or immediately prior to such earlier date on which any
payment pursuant to this Article II would otherwise escheat to or become the
property of any Governmental Entity (as hereinafter defined)), the cash payment
in respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interests of any person previously entitled thereto.
(h) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Paying Agent, the posting by such person of a bond, in such
reasonable amount as Parent or the Paying Agent may direct as indemnity against
any claim that may be made against them with respect to such Certificate, the
Paying Agent will pay such lost, stolen or destroyed Certificate the amount of
cash to which the holders thereof are entitled pursuant to Section 2.5.
Section 2.7 Merger Without Meeting of Stockholders. Parent and Sub shall
use their reasonable best efforts to cause the Nonvoting Director to transfer to
Parent all Shares owned by the Nonvoting Director in accordance with and subject
to the terms of the Contribution Agreement. If, following such transfer by the
Nonvoting Director and the purchase of Shares pursuant to the Offer, Sub,
Parent, ValueAct Capital Partners, L.P., a Delaware limited partnership ("VAC"),
or any other entity controlled by VAC collectively shall own at least ninety
percent (90%) of the outstanding Shares, Parent and Sub shall promptly take all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after expiration of the Offer without a meeting of
stockholders of the Company, in accordance
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with Section 253 of the DGCL. If the Merger is effected in accordance with
Section 253 of the DGCL, then all effects and terms of Sections 2.1 through 2.6
of this Article II will be applied to such Merger, as applicable.
Section 2.8 Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation's
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
Section 2.9 Closing. The closing of the Merger (the "Closing") and all
actions specified in this Agreement to occur at the Closing shall take place at
the offices of Morrison & Foerster LLP, 425 Market Street, San Francisco,
California, 94105, at 10:00 a.m., local time, no later than the second business
day following the day on which the last of the conditions set forth in Article
VII shall have been fulfilled or waived (if permissible), or at such other time
and place as Parent and the Company shall agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the Company
as follows:
Section 3.1 Organization. Parent and Sub are each a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Parent and Sub has the corporate power and authority to carry
on its business as now being conducted. Each of Parent and Sub is duly qualified
to do business, and in good standing, in each jurisdiction where the character
of its properties owned or held under lease or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not reasonably be expected to have a Material Adverse Effect on Parent or
Sub.
Section 3.2 Authority.
(a) The respective Board of Directors of Parent and Sub have each
approved this Agreement and declared its advisability in accordance with the
DGCL.
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(b) Each of Parent and Sub has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Parent and Sub of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
(including Board action) on the part of Parent and Sub, subject to the filing of
the Certificate of Merger as required by the DGCL. This Agreement has been duly
executed and delivered by Parent and Sub and (assuming the valid authorization,
execution and delivery of this Agreement by the Company and the validity and
binding effect of this Agreement on the Company) constitutes the valid and
binding obligation of each of Parent and Sub, enforceable against them in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 3.3 Consents and Approvals; No Violations.
(a) Assuming that all consents, approvals, authorizations and other
actions described in this Section 3.3 have been obtained and all filings and
obligations described in this Section 3.3 have been made, the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, result
in any violation of or default (with or without notice or lapse of time, or
both) under, give to others a right of termination, cancellation or acceleration
of any obligation under, result in the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Parent or any of its Subsidiaries under,
any provision of:
(i) the Certificate of Incorporation or Bylaws of Parent and
Sub, each as amended to date,
(ii) any provision of the comparable charter or organization
documents of any of Parent's Subsidiaries,
(iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or any of its Subsidiaries, or
(iv) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent or any of its Subsidiaries or any of
their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, losses, liens, security interests, charges or encumbrances
that would not reasonably be expected to have a Material Adverse Effect on
Parent or Sub.
(b) No filing or registration with, or authorization, consent or
approval of, any United States (federal and state), foreign or supranational
court, commission, governmental
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body, regulatory agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent or Sub or is
necessary for the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement, except:
(i) in connection, or in compliance, with the provisions of
the Exchange Act,
(ii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business,
(iii) such filings, authorizations, orders and approvals as may
be required by state takeover laws (the "State Takeover Approvals"),
(iv) applicable requirements, if any, of state securities or
"blue sky" laws ("Blue Sky Laws"), and
(v) such other consents, orders, authorizations,
registrations, approvals, declarations and filings the failure of which to
be obtained or made would not reasonably be expected to have a Material
Adverse Effect on Parent or Sub.
Section 3.4 Information Supplied. None of the information supplied or to
be supplied by VAC, Parent or Sub in writing specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Rule 13E-3
Statement, (iii) the Schedule 14D-9, (iv) the information to be filed by the
Company in connection with the Offer pursuant to Rule 14f-1 promulgated under
the Exchange Act (the "Information Statement") or (v) the proxy statement
(together with any amendments or supplements thereto, the "Proxy Statement")
relating to the Stockholder Meeting (as defined in Section 6.1) will (a) in the
case of the Offer Documents, the Rule 13E-3 Statement, the Schedule 14D-9 and
the Information Statement, at the respective times the Offer Documents, the Rule
13E-3 Statement, the Schedule 14D-9 and the Information Statement are filed with
the SEC or, if applicable, first published, sent or given to the Company's
stockholders, or (b) in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
Section 3.5 Ownership of Shares. Except as contemplated by this
Agreement, VAC and its affiliates do not own any Shares.
Section 3.6 Interim Operations. Parent and Sub were formed solely for the
purpose of engaging in the transactions contemplated hereby, have not engaged in
any other business activities and have conducted their operations only as
contemplated hereby. All of the issued
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and outstanding capital stock of Sub is owned by Parent. All of the issued and
outstanding capital stock of Parent is owned by VAC.
Section 3.7 Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of VAC, Parent or
Sub.
Section 3.8 Litigation. There is no (i) claim, action, suit or proceeding
pending or, to the best knowledge of Parent and Sub, threatened against Parent
or Sub before any court, arbitrator or Governmental Authority, or (ii)
outstanding judgment, order, writ, injunction or decree of any court, arbitrator
or Governmental Authority in a proceeding to which Parent or Sub or any of their
respective assets is subject, except such as would not materially impair the
ability of Parent or Sub to perform their respective obligations hereunder.
Section 3.9 Financing. Parent and Sub will have available to them all
funds necessary to purchase and pay for all of the Shares tendered pursuant to
the Offer by stockholders of the Company other than the Nonvoting Director and
to consummate the Merger and the other transactions contemplated hereby.
Section 3.10 Assets and Revenues. VAC is the "ultimate parent entity" of
Parent and is its own "ultimate parent entity" as such term is defined in 16
C.F.R. Section 801.1(a)(3). VAC, and all entities controlled by VAC, do not (i)
have assets having an aggregate book value of $100 million or more based on its
most recent regularly prepared balance sheet or (ii) sales of $100 million or
more in its most recent fiscal year, in each case as determined in accordance
with 16 C.F.R. Section 801.11. The term "controlled by" as used in this section
shall have the meaning set forth in 16 C.F.R. 801.1(b). This representation and
warranty is made solely for the purpose of determining the applicability to the
transactions contemplated by this Agreement of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the letter dated the date hereof and delivered on
the date hereof by the Company to Parent, which relates to this Agreement and is
designated therein as the Company Letter (the "Company Letter") (it being agreed
that a reference to one section in the Company Letter shall be deemed to refer
to other sections of Article IV but only if the fact or item expressly disclosed
in one section of the Company Letter is reasonably relevant to another section),
the Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under
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the laws of the jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary of the Company that is a corporation) or
other power and authority to carry on its business as now being conducted,
except where the failure to be so organized, existing or in good standing or to
have such power or authority would not reasonably be expected to have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each jurisdiction where
the character of their properties owned or held under lease or the nature of
their activities makes such qualification necessary, except where the failure to
be so qualified would not reasonably be expected to have a Material Adverse
Effect on the Company. A true and complete list of all the Subsidiaries of the
Company, together with the jurisdiction of incorporation or organization of each
Subsidiary of the Company, the jurisdictions in which each Subsidiary of the
Company is licensed or qualified to do business and the percentage of each
Subsidiary's outstanding capital stock or other equity interests owned by the
Company or another Subsidiary of the Company, is set forth in Section 4.1 to the
Company Letter.
Section 4.2 Charter Documents and Bylaws. The Company has heretofore
furnished to VAC or Parent a complete and correct copy of the Company Charter
and the Company Bylaws, each as amended to date. The Company Charter and the
Company Bylaws are each in full force and effect. The Company is not in
violation of any of the provisions of the Company Charter or the Company Bylaws.
Section 4.3 Capital Structure.
(a) As of the date hereof, the authorized capital stock of the
Company consists of 110,000,000 Shares, par value $.0001 per share, and
10,000,000 shares of Preferred Stock, par value of $.01 per share, of which
84,000 shares have been designated Series A Junior Participating Preferred
Stock.
(b) At the close of business on October 20, 2000:
(i) 31,970,164 Shares were issued and outstanding, all of
which were validly issued, fully paid and nonassessable and free of
preemptive rights;
(ii) no Shares were held in the treasury of the Company or by
Subsidiaries of the Company;
(iii) 845,600 Shares were subject to issuance upon the exercise
of outstanding stock options previously issued under the Company's 1984
Stock Option Plan and its 1993 Stock Option Plan, as amended (collectively,
the "Company Stock Option Plans"); and
(iv) 500,000 Shares were reserved for issuance upon the
exercise of outstanding warrants (the "Warrants").
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(c) The Company has delivered to VAC or Parent (i) a correct and
complete list as of the date set forth in Section 4.3 of the Company Letter of
each outstanding option (collectively, the "Company Stock Options") to purchase
Shares issued under the Company Stock Option Plans, including the holder,
exercise price and number of Shares subject thereto, and (ii) a correct and
complete list as of the date set forth in Section 4.3 of the Company Letter of
each outstanding Warrant, including the holder, the number of Shares subject
thereto and the warrant exercise price. Except as set forth in Section 4.3 of
the Company Letter, the Company has delivered to VAC or Parent a copy of each
such outstanding option agreement or warrant agreement.
(d) Except for the Rights Agreement, the Company Stock Options and
the Warrants, and except as may be permitted to be issued, delivered or sold
after the date hereof in accordance with this Agreement, there are no options,
warrants, calls, rights or agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or any of
its Subsidiaries.
(e) Each outstanding share of capital stock of each Subsidiary of the
Company is duly authorized, validly issued, fully paid and nonassessable, except
as set forth in Section 4.3 of the Company Letter.
(f) The Company does not have any 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. The Company does not have
any outstanding contractual obligations to repurchase, redeem or otherwise
acquire any shares of capital stock of, or other equity interests in, the
Company or any Subsidiary of the Company.
(g) The Company is not a party to any stockholder agreements, voting
trusts or other agreements or understandings relating to voting or disposition
of any shares of capital stock of the Company or granting to any person or group
of persons the right to elect, or to designate or nominate for election, a
director to the board of directors of the Company.
(h) Except as set forth in Section 4.3 of the Company Letter, neither
the Company nor any Subsidiary of the Company is under any current or
prospective obligation to make a capital contribution or investment in or loan
to, or to assume any liability or obligation of, any corporation, partnership,
joint venture or business association or entity.
Section 4.4 Authority.
(a) The Special Committee, by unanimous vote of all Special Committee
members, has determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are fair to, and in the best
interests of, the Company and its stockholders, and has recommended that the
Board of Directors of the Company approve and declare advisable this Agreement
and the transactions contemplated hereby, including the Offer
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and the Merger. The Board of Directors of the Company, based on the
recommendation of the Special Committee and by unanimous vote of all directors
(with the exception of the Nonvoting Director, who abstained from such vote),
has (i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
Company and its stockholders, (ii) approved and declared advisable this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, and (iii) recommended that the holders of Shares tender their Shares in
the Offer and, if applicable, approve and adopt this Agreement in all respects.
The Company has adopted the necessary amendments to the Company Charter or the
Company Bylaws, as applicable, electing not to be governed by Section 203 of the
DGCL, and thereby has rendered Section 203 of the DGCL inapplicable to this
Agreement and the transactions contemplated hereby.
(b) The Company has all requisite corporate power and authority to
enter into this Agreement and, subject to adoption by the stockholders of the
Company of this Agreement, if applicable, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action (including Board action)
on the part of the Company, subject to (i) adoption of this Agreement by the
stockholders of the Company, if applicable, and (ii) the filing of the
Certificate of Merger as required by the DGCL. This Agreement has been duly and
validly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and
the validity and binding effect of this Agreement on Parent and Sub) constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 4.5 Consents and Approvals; No Violation.
(a) Assuming that all consents, approvals, authorizations and other
actions described in this Section 4.5 have been obtained and all filings and
obligations described in this Section 4.5 have been made, the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, result
in any violation of or default (with or without notice or lapse of time, or
both) under, give to others a right of termination, cancellation or acceleration
of any obligation under, result in the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company or any of its Subsidiaries
under, any provision of:
(i) the Company Charter or the Company Bylaws,
(ii) any provision of the comparable charter or organization
documents of any of the Company's Subsidiaries,
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(iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its Subsidiaries,
or
(iv) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries or any
of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, losses, liens, security interests, charges or encumbrances
that would not reasonably be expected to have a Material Adverse Effect on the
Company.
(b) No filing or registration with, or authorization, consent or
approval of, any Governmental Entity is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by the Company or is necessary for the consummation of the
Offer, the Merger and the other transactions contemplated by this Agreement,
except for:
(i) in connection, or in compliance, with the provisions of the
Exchange Act,
(ii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business,
(iii) such filings, authorizations, orders and approvals as may
be required to obtain the State Takeover Approvals,
(iv) applicable requirements, if any, of Blue Sky Laws, and
(v) such other consents, orders, authorizations,
registrations, approvals, declarations and filings the failure of which to
be obtained or made would not reasonably be expected to have a Material
Adverse Effect on the Company.
Section 4.6 SEC Documents and Other Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents
with the SEC since January 1, 1998 (all such forms, reports, and documents filed
by the Company since such date with the SEC, the "Company SEC Documents"). As of
their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended
(together with the rules and regulations thereunder, the "Securities Act"), or
the Exchange Act, as the case may be, and, at the respective times they were
filed (or, in the case of any Company SEC Document that has been amended or
superseded, as of the date of such amending or superseding filing), none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be
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stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including, in each case,
any notes thereto) of the Company included in the Company SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with United States generally accepted accounting
principles ("GAAP") (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to the absence of footnotes and to normal year-end audit
adjustments and to any other adjustments described therein).
(c) No Subsidiary of the Company is subject to the periodic reporting
requirements of the Exchange Act. To the Knowledge of the Company as of the date
hereof, there is no material unresolved violation of the Exchange Act asserted
by the SEC in writing with respect to the Company SEC Documents. Neither the
Company nor any of its Subsidiaries had, and since such date neither the Company
nor any of its Subsidiaries has incurred, any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which, individually
or in the aggregate, would be required to be disclosed in a balance sheet (or
the footnotes thereto) of the Company prepared in accordance with GAAP except
liabilities incurred in the ordinary and usual course of business and consistent
with past practice, liabilities incurred in connection with the transactions
contemplated herein, and liabilities that have not had and would not reasonably
be expected to have a Material Adverse Effect on the Company.
(d) Except in each case as set forth in the Company SEC Documents or
as set forth in the Company Letter, none of the Company or any of the
Subsidiaries of the Company is indebted to any director or officer of the
Company or any of the Subsidiaries of the Company (except for amounts due as
normal salaries and bonuses, contractual payments, in reimbursement of ordinary
business expenses and directors' fees) and no such person is indebted to the
Company or any of the Subsidiaries of the Company in any material amount.
(e) Set forth in Section 4.6 of the Company Letter is a true and
correct copy of the unaudited consolidated financial statements of the Company
and its consolidated Subsidiaries as at September 30, 2000 and for the nine
months then ended (collectively, the "Interim Financial Statements"). The
interim balance sheet included in the Interim Financial Statements was prepared
in accordance with GAAP and fairly presents the consolidated financial position
of the Company and its consolidated Subsidiaries as at the date thereof and the
consolidated results of operations and changes in financial position of the
Company and its consolidated Subsidiaries for the period indicated (subject to
the absence of footnotes and to normal year-end audit adjustments and to any
other adjustments described therein). Such Interim Financial Statements
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are in draft form, preliminary and subject to change prior to filing of the
Company's report on Form 10-Q with the SEC, for the third fiscal quarter.
Section 4.7 Information Supplied. None of the information supplied or to
be supplied by the Company in writing specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Rule 13E-3
Statement, (iii) the Schedule 14D-9, (iv) the Information Statement or (v) the
Proxy Statement, will (a) in the case of the Offer Documents, the Rule 13E-3
Statement, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or, if applicable, first published, sent or given to the
Company's stockholders, or (b) in the case of the Proxy Statement, at the time
the Proxy Statement is first mailed to the Company's stockholders or at the time
of the Stockholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 4.8 Absence of Certain Changes or Events. Except as set forth in
Section 4.8 of the Company Letter, the Interim Financial Statements or the
Company SEC Documents filed prior to the date hereof, since September 30, 2000
through the date of this Agreement:
(a) there has been no change in the capital stock of the Company and
no dividend or distribution of any kind declared, paid or made by the Company on
any class of its stock;
(b) there has not been (i) any adoption of a new Company Benefit Plan
(as defined in Section 4.13), (ii) any amendment to a Company Benefit Plan
materially increasing benefits thereunder, (iii) any granting by the Company or
any of its Subsidiaries to any executive officer or other key employee of the
Company or any of its Subsidiaries of any material increase in compensation,
severance or termination benefits, except in the ordinary course of business
consistent with prior practice or as was required under employment, severance or
termination agreements or (iv) any entry by the Company or any of its
Subsidiaries into any employment, severance, indemnification or termination
agreement with any such executive officer or other key employee;
(c) there have not been any material changes in the amount or terms
of the indebtedness of the Company and its Subsidiaries from that described in
the Company SEC Documents filed prior to the date hereof. Unless shown on the
Interim Financial Statements or Company SEC Documents filed prior to the date
hereof, neither the Company nor any of its Subsidiaries has incurred any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which, individually or in the aggregate, would be required to be
disclosed in a balance sheet (or the footnotes thereto) of the Company prepared
in accordance with GAAP, except liabilities incurred in the ordinary and usual
course of business and consistent with past practice, liabilities incurred in
connection with the transactions contemplated
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herein, and liabilities that have not had and would not reasonably be expected
to have a Material Adverse Effect on the Company;
(d) there has not been any material change by the Company in (i) its
accounting methods, principles or practices except as required by generally
accepted accounting principles, (ii) any material revaluation by the Company of
any material asset (including, without limitation, any writing down of the value
of inventory or writing off of notes or accounts receivable), other than in the
ordinary course of business consistent with past practice after the date of the
most recent Company SEC Document filed prior to the date hereof, (iii) any entry
by the Company or any Subsidiary of the Company into any commitment or
transaction material to the Company and the Subsidiaries of the Company taken as
a whole, except in the ordinary course of business and consistent with past
practice, or (iv) any redemption, purchase or other acquisition of any of the
Company's securities;
(e) the Company has not made (or committed to make) capital
expenditures in an amount which exceeds $50,000 for any item or $200,000 in the
aggregate;
(f) to the Knowledge of the Company, the Company has not suffered a
Material Adverse Effect;
(g) there has not been any (i) settlement or compromise by the
Company or any Subsidiary of the Company of any claim, litigation or other legal
proceeding, other than in the ordinary course of business consistent with past
practice in an amount not involving more than $100,000 or (ii) any payment,
discharge or satisfaction by the Company or any Subsidiary of the Company of any
other claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than (A) in the ordinary course of
business and consistent with past practice or (B) with respect to any other such
claims, liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company; and
(h) there has not been executed any agreement by the Company or any
Subsidiary of the Company to take any of the actions described in this Section
except as expressly contemplated by this Agreement.
Section 4.9 Permits and Compliance.
(a) Each of the Company and its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for the Company or any of its Subsidiaries to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Company Permits"), except where the failure to have any of the Company
Permits would not reasonably be expected to have a Material Adverse Effect on
the Company. No suspension or cancellation of any of the Company Permits is
pending or, to the Knowledge of the Company, threatened, except where the
suspension or cancellation of any of the Company Permits would not reasonably be
expected to have a Material Adverse Effect on the Company.
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(b) Except as otherwise set forth in Section 4.9 of the Company
Letter, neither the Company nor any of its Subsidiaries is in violation of (i)
its charter, bylaws or other organizational documents, (ii) any law, ordinance,
administrative or governmental rule or regulation, or (iii) any order, decree or
judgment of any Governmental Entity having jurisdiction over the Company or any
of its Subsidiaries, except, in the case of clauses (ii) and (iii), for any
violations that would not reasonably be expected to have a Material Adverse
Effect on the Company.
(c) Except as otherwise set forth in Section 4.9 of the Company
Letter, no event of default by the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any other party, or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of default by the
Company or any of its Subsidiaries or, to the Knowledge of the Company, any
other party exists or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
contractual license or other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any such Subsidiary is
bound or to which any of the properties, assets or operations of the Company or
any such Subsidiary is subject, other than any defaults that would not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.10 Tax Matters.
(a) Except as otherwise set forth in Section 4.10 of the Company
Letter, and except in each case for acts or omissions which would not be
expected to have a Material Adverse Effect on the Company, (i) the Company and
each of its Subsidiaries have filed all Tax Returns (as hereinafter defined)
required to have been filed, and such Tax Returns are correct and complete and
disclose all Taxes (as hereinafter defined) required to be paid by the Company
and its Subsidiaries for the periods covered thereby; (ii) all Taxes shown to be
due on such Tax Returns have been timely paid or extensions for payment have
been properly obtained or such Taxes are being contested; (iii) the Company and
each of its Subsidiaries have complied with all rules and regulations relating
to the withholding of Taxes and the remittance of withheld Taxes; (iv) neither
the Company nor any of its Subsidiaries has waived any statute of limitations in
respect of its Taxes, which waiver is currently effective; (v) any Tax Returns
required to have been filed by or with respect to the Company and each of its
Subsidiaries relating to federal and state income Taxes have been examined by
the Internal Revenue Service ("IRS") or the appropriate foreign or state taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (vi) all deficiencies asserted or
assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full or properly reflected on the books of
the Company; (vii) there is no action, suit, investigation, audit, claim or
assessment pending or, to the Knowledge of the Company, threatened in writing
with respect to Taxes of the Company or any Subsidiary of the Company; and
(viii) there are no liens for Taxes upon the assets of the Company or any
Subsidiary of the Company except liens relating to current Taxes not yet due.
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(b) Except as otherwise set forth in Section 4.10 of the Company
Letter, and except in each case for acts and omissions which would not be
expected to have a Material Adverse Effect on the Company, none of the Company
or any of its Subsidiaries has consented to extend the time, in which any
material Tax may be assessed or collected by any taxing authority.
(c) Except as otherwise set forth in Section 4.10 of the Company
Letter, and except in each case for acts and omissions which would not be
expected to have a Material Adverse Effect on the Company, to the Knowledge of
the Company, no written claim has been made by any taxing authority in a
jurisdiction where the Company and its Subsidiaries do not file Tax Returns that
the Company or each Subsidiary of the Company is or may be subject to taxation
in that jurisdiction.
(d) Except as otherwise set forth in Section 4.10 of the Company
Letter, and except in each case for acts and omissions which would not be
expected to have a Material Adverse Effect on the Company, there is no contract
or arrangement, plan or agreement by or with the Company or any Subsidiary of
the Company covering any person that, individually or collectively, could give
rise to the payment of any amount by the Company or a Subsidiary of the Company
that would not be deductible by the Company or such Subsidiary of the Company by
reason of Section 280G of the Code.
(e) Each of the Company and its Subsidiaries has made available to
VAC or Parent true, correct and complete copies of all federal income Tax
Returns, and all other material Tax Returns, examination reports and statements
of deficiencies assessed against or agreed to by any of the Company or its
Subsidiaries that have been filed by any of the Company or the Subsidiaries of
the Company for the taxable years ending December 31, 1997, 1998 and 1999.
(f) None of the Company or the Subsidiaries of the Company (A) has,
since January 1, 1996, been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was the Company), (B) is a party to or bound by any Tax allocation or Tax
sharing agreement with any person or entity other than the Company and its
Subsidiaries, (C) has any liability for the Taxes of any Person (other than any
of the Company or its Subsidiaries) under Treas. Reg. (S) 1. 1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise or (D) has any material liability for the
Taxes of any Person other than the Company, one of its Subsidiaries or in
connection with the acquisition, directly or indirectly, of any Person acquired
by the Company or any Subsidiary of the Company.
(g) The Company and each Subsidiary of the Company has established on
its books and records adequate reserves for the payment of all material Taxes
for which it is liable which are not yet due and payable, and with respect to
any such material Taxes which have been proposed, assessed or asserted against
them.
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Section 4.11 Actions and Proceedings. There are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against the
Company or any of its Subsidiaries or, to the Knowledge of the Company, any of
the properties, assets or businesses of the Company or any of its Subsidiaries
that would reasonably be expected to have a Material Adverse Effect on the
Company or materially impair the ability of the Company to perform its
obligations hereunder. Except as set forth in Section 4.11 of the Company Letter
or the Company SEC Documents filed prior to the date hereof, there are no
actions, suits or claims or legal, administrative or arbitrative proceedings or
investigations (including claims for workers' compensation) pending or, to the
Knowledge of the Company, threatened against the Company or any of its
Subsidiaries, or any of the properties, assets or businesses of the Company or
any of its Subsidiaries, that would reasonably be expected to have a Material
Adverse Effect on the Company.
Section 4.12 Certain Agreements.
(a) Section 4.12 of the Company Letter contains a list of (i) all
severance and all employment agreements with employees of the Company and each
Subsidiary of the Company (other than standard offer letters providing for at
will employment); and (ii) all plans, programs, agreements and other
arrangements of the Company with or relating to its employees that contain
change of control provisions, in each case, other than those involving amounts
that are not material to the Company when considered in the aggregate.
(b) Except as set forth in Section 4.12 of the Company Letter,
neither the Company nor any of its Subsidiaries is a party to any oral or
written plan, program, agreement, policy or other arrangement, any stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting or
exercisability of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement, other than the agreement with the Company's
financial advisor identified in Section 4.20.
(c) To the Knowledge of the Company as of the date hereof, no
executive officer or other key employee of the Company or any of its
Subsidiaries is subject to any noncompete, nonsolicitation, nondisclosure,
confidentiality, employment, consulting or similar agreement relating to,
affecting or in conflict with the business activities of the Company and its
Subsidiaries, except agreements between the Company or its Subsidiaries and its
present and former officers or employees or agreements with VAC, Parent or Sub.
Section 4.13 ERISA; Employee Benefit Plans.
(a) Except for the Company Stock Option Plans and the plans and
agreements listed in Section 4.13 of the Company Letter (collectively, the
"Company Benefit Plans"), neither the Company nor any ERISA Affiliate (as
defined below) maintains, is a party to, contributes to or is obligated to
contribute to, and none of its employees or former employees, their dependents,
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or survivors receive benefits under, any of the following (whether or not set
forth in a written document):
(i) Any employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA");
(ii) Any bonus, deferred compensation, incentive, restricted
stock, stock purchase, stock option, stock appreciation right, phantom
stock, supplemental pension, executive compensation, cafeteria benefit,
dependent care, director or employee loan, fringe benefit, sabbatical,
severance, termination pay or similar plan, program, policy, agreement or
arrangement; or
(iii) Any plan, program, agreement, policy, commitment or other
arrangement relating to the provision of any benefit described in Section
3(1) of ERISA to former employees or directors or to their survivors, other
than procedures intended to comply with the Consolidated Omnibus Budget
Reconciliation Act of 1985.
(b) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company: (i) the Company has complied with ERISA, the Code
and all laws and regulations applicable to the Company Benefit Plans and each
Company Benefit Plan has been maintained and administered in compliance with its
terms; and (ii) each Company Benefit Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination opinion, notification or
advisory letter from the IRS issued after January 1, 1989, and nothing has
occurred to the Knowledge of the Company which may reasonably be expected to
adversely affect such determination.
(c) Neither the Company nor any ERISA Affiliate has, since its
inception, terminated, suspended, discontinued contributions to or withdrawn
from any employee pension benefit plan, as defined in Section 3(2) of ERISA,
including (without limitation) any multiemployer plan, as defined in Section
3(37) of ERISA.
(d) The Company has provided or made available to VAC or Parent
complete, accurate and current copies of each of the Company Benefit Plans,
including the text (including amendments) of each of the Company Benefit Plans,
to the extent reduced to writing and a summary of each of the Company Benefit
Plans, to the extent not previously reduced to writing as well as the most
recent annual report on Form 5500 filed with the Internal Revenue Service with
respect to each Company Benefit Plan (if such report was required), and each
trust agreement and group annuity contract relating to any Company Benefit Plan.
(e) Neither the Company nor any ERISA Affiliate has incurred any
accumulated funding deficiency under Section 412 of the Code or any termination
or withdrawal liability under Title IV of ERISA.
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(f) All contributions, premiums or other payments due from the
Company to (or under) any Company Benefit Plan have been fully paid or
adequately provided for on the books and financial statements of the Company.
All accruals (including, where appropriate, proportional accruals for partial
periods) have been made in accordance with prior practices.
(g) For all purposes under this Section 4.13, "ERISA Affiliate" shall
mean each person (as defined in Section 3(9) of ERISA) that, together with the
Company, is treated as a single employer under Section 4001(b) of ERISA or
Section 414 of the Code.
(h) Except as disclosed in the Company Letter, all Pension Plans
intended to be qualified plans have been the subject of determination letters
from the Internal Revenue Service to the effect that such Pensions Plans are
qualified and exempt from Federal income taxes under Section 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been revoked. To
the Knowledge of the Company as of the date hereof, there is no reasonable basis
for the revocation of any such determination letter.
(i) Except as disclosed in the Company Letter, none of the Company or
any of its Subsidiaries has any obligation to provide any material health
benefits or other non-pension benefits to retired or other former employees,
except as specifically required by Part 6 of Title I of ERISA ("COBRA").
Section 4.14 Intellectual Property.
(a) The Company and its Subsidiaries own, or possess, free and clear
of any material liens, adequate licenses or other valid rights to use (including
the right to sublicense to customers, suppliers or others as needed), all of the
material Company Intellectual Property (as defined below) that is necessary for
the conduct of the Company's or Subsidiaries' businesses, except to the extent
as such would not have a Material Adverse Effect on the Company. Section 4.14 of
the Company Letter sets forth a complete list in all material respects of all
registered Company Intellectual Property.
(b) Neither the Company nor any of the Subsidiaries of the Company
has received from a third party any written notice of infringement or
misappropriation of or conflict with, in any material respects, Company
Intellectual Property. To the Knowledge of the Company, the use of such Company
Intellectual Property in connection with the business and operations of the
Company and its Subsidiaries does not infringe, in any material respects, on the
rights of any person or entity. To the Knowledge of the Company, no material
claim by any third party contesting the validity, enforceability, use or
ownership of any of the Company Intellectual Property owned by the Company or
any of its Subsidiaries, is currently outstanding or is threatened. The Company
has not received any written notices of any material infringement or
misappropriation by any third party with respect to the Company Intellectual
Property. The Company and each Subsidiary of the Company has taken reasonable
actions to maintain and protect its Company Intellectual Property, except for
those actions, which the failure to take,
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individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company.
(c) As used herein, "Company Intellectual Property" means all
trademarks, trademark registrations, trademark rights and renewals thereof,
trade names, trade name rights, patents, patent rights, patent applications,
industrial models, inventions, invention disclosures, designs, utility models,
inventor rights, software, computer programs, computer systems, copyrights,
copyright registrations and renewals thereof, servicemarks, servicemark
registrations and renewals thereof, servicemark rights, trade secrets,
applications for trademark and servicemark registrations, know-how, confidential
information and other proprietary rights, used or held for use in connection
with the businesses of the Company and/or its Subsidiaries as currently
conducted by the Company, together with all applications currently pending or in
process for any of the foregoing.
Section 4.15 Material Contracts.
(a) Except as disclosed in the Section 4.15 of the Company Letter,
neither the Company nor any of its Subsidiaries, nor, to the Company's
Knowledge, is any other party, in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
Material Contracts to which it is a party, except for such defaults which,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect on the Company; and, to the Knowledge of the Company,
there has not occurred any event that, with the lapse of time or giving of
notice or both, would constitute such a default, other than such events which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company.
(b) The Company Letter sets forth a list as of the date of this
Agreement of:
(i) all credit agreements, indentures, and other agreements
related to any indebtedness for borrowed money in excess of $100,000 of the
Company or any of its Subsidiaries,
(ii) all joint venture or other similar agreements to which the
Company or any of its Subsidiaries are a party,
(iii) all lease agreements to which the Company or any of its
Subsidiaries are party with annual lease payments in excess of $50,000,
(iv) contracts under which the Company or any of its
Subsidiaries has advanced or loaned any other person or entity any material
amounts,
(v) guaranties of any obligations in excess of $100,000 (other
than a guarantee by the Company of a Subsidiary's debts or a guarantee by a
Subsidiary of the Company's debts or another Subsidiary of the Company's
debts),
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(vi) contracts or groups of related contracts with the same
party or group of parties the performance of which involves annual
consideration in excess of $100,000 which are not cancelable by the Company
on 30-days-or-less notice without premium or penalty,
(vii) warranty agreements with respect to the Company's or the
Subsidiaries' services rendered or products sold or leased,
(viii) agreements under which the Company has granted any person
or entity registration rights (including, without limitation, demand and
piggy-back registration rights), and
(ix) all other contracts and agreements which are material (as
hereinafter defined) to the Company and its Subsidiaries taken as a whole
(collectively, the "Material Contracts").
The Company has made available to VAC or Parent a correct and complete copy of
each agreement listed in the Company Letter. For purposes of this Section 4.15,
except as otherwise expressly set forth in this Section 4.15, an agreement shall
be deemed "material" if the Company reasonably expects that the Company or any
of its Subsidiaries would, pursuant to the terms thereof, (x) recognize during
the current fiscal year of the Company net revenues after the payment of third
party shares in excess of $100,000 or (y) incur during the current fiscal year
of the Company liabilities or obligations in excess of $100,000.
(c) Except as set forth in Section 4.15 of the Company Letter, no
Material Contract will, by its terms, terminate as a result of the transactions
contemplated herein, except for any Material Contracts which, if terminated,
would not have a Material Adverse Effect on the Company.
(d) Except as set forth in Section 4.15 of the Company Letter, the
Company has not granted any right of first refusal or similar right in favor of
any third party with respect to any material portion of its properties or assets
or, except in the ordinary course of business, entered into any non-competition
agreement or similar agreement restricting its ability to engage in any
business.
Section 4.16 Environmental Matters.
(a) To the Knowledge of the Company, and except as set forth in the
Company Letter or documents made available to the VAC or Parent, neither the
Company nor any of its Subsidiaries (i) is in material violation of any law or
regulation applicable to its business or property relating to the protection of
human health and safety or the environment ("Environmental Laws"), (ii) lacks
any material permits, licenses or other approvals required under applicable
Environmental Laws ("Environmental Permits"), (iii) is in material violation of
any term or condition of any such Environmental Permit, or (iv) has received any
written notice or report regarding any allegation of material violation by the
Company or any of the
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Subsidiaries, or of any material liability of the Company or any of the
Subsidiaries for releases of hazardous substances, under any Environmental Laws,
with respect to the operations, properties or facilities of the Company, other
than in the case of each of the foregoing clauses, violations, Environmental
Permits or liability that would not reasonably be expected to have a Material
Adverse Effect on the Company.
(b) To the Knowledge of the Company and except as set forth in the
Company Letter, the Company and the Subsidiaries have made available to VAC or
Parent copies of any material environmental assessment or audit report
(including all material records maintained for required environmental
compliance) or other similar studies or analyses in the possession of the
Company or the Subsidiaries relating to any real property currently or formerly
owned, leased, managed or occupied by the Company or the Subsidiaries, other
than any such assessments, audit reports, records, studies or analyses which, if
not provided, would not reasonably be expected to have a Material Adverse Effect
on the Company.
Section 4.17 Title to Assets.
(a) The Company and its Subsidiaries own good and marketable title to
all of their assets material to their business (excluding, for purposes of this
sentence, assets held under leases or assets covered under Section 4.14 hereof),
free and clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, or security interests, except as set forth in Section
4.17 of the Company Letter and except for such failures or imperfections of
title and such mortgages, liens, encumbrance, charges, claims, restrictions,
pledges or security interests as would not reasonably be expected to have a
Material Adverse Effect on the Company.
(b) The leases to all real estate occupied by the Company and its
Subsidiaries that are material to the operation of the businesses of the Company
and its Subsidiaries are in full force and effect and, to the Knowledge of the
Company, no event has occurred that with the passage of time, the giving of
notice, or both, would constitute an event of default thereunder or event of
default by the Company or any of its Subsidiaries or, to the Knowledge of the
Company, any other person who is a party signatory thereto, other than such
events of default which would not reasonably be expected to have a Material
Adverse Effect on the Company.
Section 4.18 State Takeover Statutes. The Board of Directors of the
Company has taken all action so as to render the provisions of the Rights
Agreement inapplicable to the Offer, the Merger and the consummation of the
transactions contemplated by this Agreement. To the Knowledge of the Company, as
of the date hereof, no other state takeover statute or similar charter or bylaw
provisions are applicable to the Offer, the Merger, this Agreement and the
transactions contemplated hereby.
Section 4.19 Required Vote of Company Stockholders. Subject to Section
2.7, the affirmative vote of the holders of at least a majority of the
outstanding Shares is required to
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adopt this Agreement. No other vote of the security holders of the Company is
required in order for the Company to consummate the Merger and the transactions
contemplated hereby.
Section 4.20 Brokers. No broker, investment banker or other person, other
than Houlihan Lokey Howard & Zukin Financial Advisors, Inc., is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. A true and complete copy of the engagement letter for
Houlihan Lokey Howard & Zukin Financial Advisors, Inc., has been provided to
Parent or VAC.
Section 4.21 Fairness Opinion. The Special Committee has received the
opinion of Houlihan Lokey Howard & Zukin Financial Advisors, Inc., to the effect
that the proposed consideration to be received by holders of Shares pursuant to
the Offer and the Merger is fair to such holders (other than the Nonvoting
Director) from a financial point of view.
Section 4.22 Insurance Policies. Section 4.22 of the Company Letter
contains a list of all material insurance policies of the Company and its
Subsidiaries, and each such policy is in full force and effect. No written
notice of cancellation or termination has been received by the Company or its
Subsidiaries with respect to any such policy. Except as disclosed in Section
4.22 of the Company Letter or the Company SEC Reports filed prior to the date
hereof, to the Company's Knowledge, there are no pending claims against such
insurance by the Company or its Subsidiaries as to which the insurers have
denied coverage or otherwise reserved rights.
Section 4.23 Transactions With Affiliates. Except as disclosed in the
Company SEC Documents filed prior to the date of this Agreement, and except with
respect to the transactions contemplated by this Agreement, no present or former
affiliate of the Company has, or since December 31, 1999 has had, to the
Knowledge of the Company, (i) any material interest in any property (whether
real, personal or mixed and whether tangible or intangible) used in or
pertaining to any of the businesses of the Company or any of its Subsidiaries,
(ii) has had business dealings or a material financial interest in any
transaction with the Company or any of its Subsidiaries (other than compensation
and benefits received in the ordinary course of business as an employee or
director of the Company or any of its Subsidiaries) or (iii) an equity interest
or any other financial or profit interest in any Person that has had business
dealings or a material financial interest in any transaction with the Company or
any of its Subsidiaries.
Section 4.24 Investment Company Status.
The Company is not an "investment company" as such term is defined in
Section 3 of the Investment Company Act of 1940, as amended, and therefore is
not registered or required to be registered as such under the Investment Company
Act of 1940.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company Pending the Merger.
(a) Except as expressly permitted below, during the period from the
date of this Agreement through the Effective Time, the Company shall, and shall
cause each of its Subsidiaries to, in all material respects carry on its
business in the ordinary course of its business as currently conducted and, to
the extent consistent therewith, use commercially reasonable efforts to preserve
intact its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it, and maintain in full
force and effect all authorizations necessary for such business, except to the
extent such would not have a Material Adverse Effect on the Company.
(b) Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement or as set forth in Section
5.1 of the Company Letter, the Company shall not, and shall not permit any of
its Subsidiaries to, without the prior written consent of Parent (which in any
event shall not be unreasonably withheld):
(i) (A) other than dividends paid by wholly-owned Subsidiaries
of the Company, declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, or otherwise
make any payments to its stockholders in their capacity as such, (B) other
than in the case of any Subsidiary of the Company, split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company (other than repurchases of
Shares required pursuant to existing agreements) or any other securities
thereof;
(ii) issue, deliver, sell, pledge, or otherwise dispose of any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company Stock Option Plans) to acquire
any such shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of shares of Stock upon the
exercise of Company Stock Options outstanding on the date of this Agreement
in accordance with their current terms, and (B) the issuance of shares of
Stock upon exercise of the Warrants;
(iii) amend its charter or bylaws;
(iv) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity in,
or by any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or
division thereof, other than acquisitions in which the
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aggregate amount of consideration to be paid in connection with an
individual acquisition does not exceed $100,000;
(v) (i) incur or assume any indebtedness for borrowed money or
make any loans, advances or capital contributions to, or other investments
in, any other person, other than (A) in the ordinary course of business
consistent with past practices, (B) indebtedness, loans, advances, capital
contributions and investments between the Company and any of its wholly-
owned Subsidiaries or between any of such wholly-owned Subsidiaries, in
each case in the ordinary course of business consistent with past
practices, or (C) investments in any other person which, if such
investments were treated as an acquisition, would be permitted under clause
(iv) of this Section 5.1, (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other person, except in the ordinary course of
business and consistent with past practice, (iii) settle any claim other
than in the ordinary course of business, in accordance with past practice,
and without admission of material liability, or (iv) enter into any
material commitment or transaction, except in the ordinary course of such
business;
(vi) except as provided in Sections 6.4 or 6.5, enter into or
adopt any, or amend any existing, severance plan, agreement or arrangement
or enter into or amend any Company Benefit Plan, except as may be required
to maintain such plan's compliance with ERISA or the Code, or employment or
consulting agreement or hire or agree to hire any new or additional key
employees or officers, except to replace existing employees as necessary in
the ordinary course of business;
(vii) except as provided in Sections 6.4 or 6.5, (A) adopt,
enter into, terminate, amend or increase the amount or accelerate the
payment or vesting of any benefit or award or amount payable under any
Company Benefit Plan or other arrangement for the current or future benefit
or welfare of any director, officer or current or former employee, (B)
increase in any manner the compensation or fringe benefits of, or pay any
bonus to, any director, officer or, other than in the ordinary of business
consistent with past practice, employee, (C) pay any benefit not provided
for under any Company Benefit Plan, other than in the ordinary course of
business, (D) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Company Benefit Plan (including
the grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any Company Benefit Plans or agreements or awards
made thereunder), other than in the ordinary course of business, or (E)
take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Company Benefit Plan;
(viii) make any change to accounting policies or procedures
(other than actions required to be taken by GAAP or applicable law);
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(ix) authorize or make any single capital expenditure in excess
of $50,000 or capital expenditures in excess of $200,000 in the aggregate;
(x) except in the ordinary course of business, amend or
terminate any Material Contract or waive, release or assign any material
rights or claims;
(xi) transfer, lease, license, sell, mortgage, pledge, dispose
of, or encumber any material property or assets, other than in the ordinary
course of business and consistent with past practice;
(xii) except as required by law, make any material Tax election
or settle or compromise any material Tax liability;
(xiii) pay, discharge or satisfy any other claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), individually in amounts in excess of $100,000 or other than the
payment, discharge or satisfaction of (A) any such other claims,
liabilities or obligations, in the ordinary course of business and
consistent with past practice, or (B) of any such other claims, liabilities
or obligations reflected in the financial statements (or the notes thereto)
of the Company;
(xiv) except in the ordinary course of business consistent with
past practice, waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any Subsidiary of the Company is a party;
(xv) cancel or terminate, or take any action designed to
terminate, any material insurance policy of the Company, except in the
ordinary course of business and consistent with past practice;
(xvi) settle or compromise any claim, litigation or other legal
proceeding, other than in the ordinary course of business consistent with
past practice in an amount not involving more than $100,000;
(xvii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction; or
(xviii) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Section 5.2 No Solicitation.
(a) The Company shall not, and shall not authorize any of its
Subsidiaries or any officer, director or employee of or any financial advisor,
attorney or other advisor or
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representative of, the Company or any of its Subsidiaries to, and the Company
shall instruct its officers, directors, financial advisors and attorneys not to,
directly or indirectly:
(i) solicit, initiate or encourage the submission of any
Takeover Proposal,
(ii) participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to the Company or any
Subsidiary of the Company in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or
(iii) authorize, engage in, or enter into any agreement or
understanding with respect to any Takeover Proposal;
provided, that nothing contained in this Agreement shall prohibit the Company or
its directors or any special committee of the Company's Board of Directors from
(1) complying with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act
or making such disclosure to the Company's stockholders as, in the good faith
judgment of any such special committee or the Board of Directors of the Company
after consultation with its independent legal counsel, is required under
applicable law or (2) referring a third party to this Section 5.2(a) or making a
copy of this Section 5.2(a) available to any third party. The Company shall
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
(b) Nothing in this Agreement shall prohibit the Company prior to the
purchase of Shares pursuant to the Offer from engaging in the activities
described in clauses (ii) and (iii) of subsection (a) above with respect to any
person who has submitted on an unsolicited basis to the Company (A) a Takeover
Proposal believed by the Company to in good faith to be bona fide or (B) an
expression of interest believed by the Company in good faith to be bona fide
indicating such person's desire to pursue the possibility of making a Takeover
Proposal on terms believed by the Company to be financially superior to the
Offer and the Merger (a "Superior Proposal") and, in either such case:
(i) the Company's Board of Directors or any committee thereof,
after consultation with its independent legal counsel, determines that
taking such action is appropriate for such Board to comply with its
fiduciary duties under applicable law,
(ii) the Company's Board of Directors or any committee thereof,
after consultation with its financial advisors, concludes in good faith
that such Takeover Proposal, taking into account, among other things, all
material legal, financial, regulatory and other aspects of such proposal
and the person making such proposal, could lead to a Superior Proposal; and
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(iii) prior to providing any of the information described in
clause (ii) of subsection (a) above, the Company obtains from such person
an executed confidentiality agreement similar in form and scope to the
Confidentiality Agreement.
(c) The Company shall promptly advise Parent in writing of any
Takeover Proposal received by any officer or director of the Company or, to the
Knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, including the identity of the person making such
Takeover Proposal and the material terms of such Takeover Proposal. The Company
shall:
(i) use reasonable best efforts to so advise Parent no later
than one business day following receipt of such Takeover Proposal,
(ii) refrain from entering into any agreement authorizing any
Takeover Proposal until two (2) business days following delivery by the
Company of the notice described in the preceding clause (i),
(iii) promptly provide Parent any non-public information
concerning the Company provided to any other person making such Takeover
Proposal which was not provided to VAC or Parent, and
(iv) keep Parent reasonably informed of the status of any such
Takeover Proposal.
(d) The parties agree that the press release to be issued pursuant to
Section 6.7 by the Company upon the execution of this Agreement shall not be
deemed to be a solicitation of any Takeover Proposal or otherwise in violation
of this Agreement, and that any inquiries or proposals made as a result of or in
connection with such press release shall not be deemed to have been solicited by
or on behalf of the Company.
(e) Concurrently with entry into any agreement authorizing a Takeover
Proposal, the Company shall terminate this Agreement pursuant to and in
accordance with Section 8.1(e) hereof.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Stockholders Meeting.
(a) Unless Parent and Sub are required to take action to effect the
Merger pursuant to Section 2.7, following the purchase of Shares pursuant to the
Offer, the Company will duly call, give notice of, convene and hold a meeting of
stockholders (the "Stockholder Meeting") for the purpose of considering the
adoption of this Agreement and at such meeting
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call for a vote and cause proxies to be voted in respect of the adoption of this
Agreement. The Stockholder Meeting shall be held as soon as reasonably
practicable following the purchase of Shares pursuant to the Offer, and (except
to the extent that the Special Committee or Board of Directors of the Company,
after consultation with its independent legal counsel, determines in good faith
that such action is inconsistent with its fiduciary duties to the Company's
stockholders under applicable law) the Company will, through its Board of
Directors, recommend to its stockholders the adoption of this Agreement, and
shall not withdraw or modify such recommendation. The record date for the
Stockholder Meeting shall be a date subsequent to the date Parent or Sub becomes
a record holder of Shares purchased pursuant to the Offer.
(b) Unless Parent and Sub are required to take action to effect the
Merger pursuant to Section 2.7, the Company shall, at Parent's request, as soon
as reasonably practicable following the purchase of Shares pursuant to the
Offer, prepare and file a preliminary Proxy Statement with the SEC and use its
reasonable best efforts to respond to any comments of the SEC or its staff and
to cause the Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after responding to all such comments to the
satisfaction of the staff of the SEC. Parent shall furnish to the Company such
information concerning itself and Sub as may reasonably be requested by the
Company in connection with the Proxy Statement. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholder Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. The Company shall not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. Parent shall cooperate with the Company in the preparation
of the Proxy Statement or any amendment or supplement thereto, including the
supply of any information required to be included in the Proxy Statement
regarding Parent or Sub.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares beneficially owned by VAC, Parent or any Subsidiary of VAC
to be voted in favor of adoption of the Merger Agreement.
Section 6.2 Access to Information.
(a) Subject to currently existing contractual and legal restrictions
applicable to the Company or any of its Subsidiaries, and in each case below
only to the extent as would not result in the loss of attorney-client privilege,
the Company shall, and shall cause each of its Subsidiaries to, afford to the
accountants, counsel, financial advisors and other representatives of Parent
reasonable access to, and permit them to make such inspections as they may
reasonably require of, during the period from the date of this Agreement through
the Effective Time, all of their respective properties, books, contracts,
commitments and records (including accounting
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records and Tax Returns and the work papers of independent accountants, if
available and subject to the consent of such independent accountants) and,
during such period, the Company shall, and shall cause each of its Subsidiaries
to, (i) furnish promptly to Parent a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws, (ii) furnish promptly to
Parent all other information within its possession concerning its business,
properties and personnel as Parent may reasonably request and (iii) promptly
make reasonably available to Parent all personnel of the Company and its
Subsidiaries knowledgeable about matters relevant to such inspections. No
investigation pursuant to this Section 6.2 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
(b) All information obtained by VAC, Parent or Sub pursuant to this
Section 6.2 shall be kept confidential in accordance with the terms and
conditions of the Confidentiality Agreement dated June 29, 2000 between VAC and
the Company (the "Confidentiality Agreement").
Section 6.3 Directors.
(a) Promptly after such time as Sub purchases Shares pursuant to the
Offer, Sub shall be entitled, to the fullest extent permitted by law, to
designate at its option up to that number of directors, rounded to the nearest
whole number, of the Company's Board of Directors, subject to compliance with
Section 14(f) of the Exchange Act, as will make the percentage of the Company's
directors designated by Sub equal to the percentage of the aggregate voting
power of the Shares held by Parent or any of its Subsidiaries; provided,
however, that if Sub's designees are elected to the Board of Directors of the
Company, until the Effective Time such Board of Directors shall have at least
three (3) directors (excluding the Nonvoting Director) who are directors of the
Company on the date of this Agreement (the "Continuing Directors"); and
provided, further that, in such event, (i) if the number of Continuing Directors
(excluding the Nonvoting Director) shall be reduced below three (3) for any
reason whatsoever, the remaining Continuing Directors or Director shall
designate a person or persons to fill such vacancy or vacancies, each of whom
shall be deemed to be an Continuing Director for purposes of this Agreement or
(ii) if no Continuing Directors then remain, the other directors shall designate
three (3) persons (excluding the Nonvoting Director) to fill such vacancies who
shall not be officers or affiliates of the Company or any of its subsidiaries,
or officers or affiliates of Parent or any of its subsidiaries, and such persons
shall be deemed to be Continuing Directors for purposes of this Agreement, and
in the case of either clause (i) or (ii) Sub shall cause such person or persons
to be elected to fill such vacancy or vacancies.
(b) To the fullest extent permitted by applicable law, the Company
shall take all action requested by Parent that is reasonably necessary to effect
any such election, including mailing to its stockholders the Information
Statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and the Company agrees to make such
mailing with the mailing of the Schedule 14D-9 (provided that Sub shall
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have provided to the Company on a timely basis all information required to be
included in the Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company will promptly, at the option of
Parent, to the fullest extent permitted by law, the Company Charter and the
Company Bylaws, either increase the size of the Company's Board of Directors
and/or obtain the resignation of such number of its current directors (subject
to Section 6.3(a)) as is necessary to enable Sub's designees to be elected or
appointed to the Company's Board of Directors as provided above.
(c) Following the election or appointment of Sub's designees pursuant
to this Section 6.3 and prior to the Effective Time, Parent and Sub shall not
cause the Company to take any action with respect to any amendment, or waiver of
any term or condition, of this Agreement or the Company Charter or the Company
Bylaws, any termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Sub or Parent or waiver or assertion of any of the Company's rights
hereunder, and any other consent or action by the Board of Directors of the
Company with respect to this Agreement or the Offer, without the concurrence of
a majority of the Continuing Directors.
Section 6.4 Company Stock Options.
(a) Prior to the acceptance for payment of any Shares by Sub pursuant
to the Offer, the Board of Directors of the Company shall adopt such resolutions
and take any and all other action necessary or appropriate to cause each Company
Stock Option that is outstanding as of the consummation of the Merger to be
canceled at the Effective Time of the Merger, in consideration for which the
holder thereof (an "Option Holder") shall receive the right to receive from the
Company cash in an amount (the "Option Consideration") equal to (A) the product
of (1) the number of Shares subject to such option and (2) the excess, if any,
of the Offer Price over the exercise price per share for the purchase of Shares
subject to such option, minus (B) all applicable federal, state and local Taxes
required to be withheld in respect of such payment.
(b) The Option Consideration shall be paid as soon as reasonably
practicable (and in any event within five (5) business days) following the
acceptance for payment of Shares by Sub at the Effective Time of the Merger;
provided, that such payment may be conditioned upon receipt by the Company of
any documents the Company reasonably deems necessary to evidence the acceptance
by the Option Holders of the Option Consideration.
Section 6.5 Warrants.
(a) Prior to the acceptance for payment of any Shares by Sub pursuant
to the Offer, the Company will use commercially reasonable efforts to obtain
written confirmation, in form and substance reasonably satisfactory to Parent,
from the holder of the Warrants that after the Effective Time each such Warrant
will represent the right to receive in cash an amount equal to (A) the product
of (1) the number of Shares subject to such Warrant and (2) the excess, if any,
of the Merger Consideration over the exercise price per share for the purchase
of the Shares
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subject to such Warrant, minus (B) all applicable federal, state and local Taxes
required to be withheld in respect of such payment.
(b) The consideration for the Warrants shall be paid as soon as
reasonably practicable (and in any event within five (5) business days)
following the Effective Time; provided, that such payment may be conditioned
upon receipt by the Company of any documents the Company reasonably deems
necessary to evidence the acceptance by the holder of the Warrants of such
consideration.
Section 6.6 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including: (i) the obtaining of all necessary actions or non-
actions, waivers, consents and approvals from all Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (including any pre-merger filings and
State Takeover Approvals), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement. No party to this Agreement shall consent to any
voluntary delay of the consummation of the Offer or the Merger at the behest of
any Governmental Entity without the consent of the other parties to this
Agreement, which consent shall not be unreasonably withheld.
(b) Each party shall use reasonable best efforts to not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
Section 6.7 Public Announcements. Parent and the Company will not issue
any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the other party, except as may be
required by applicable law or the rules and regulations of the OTC Bulletin
Board (including any obligations to report corporate actions to the OTC Bulletin
Board Coordinator) applicable to the Company; provided, that the Company, Parent
and Sub acknowledge that the Company, upon the execution of this Agreement, will
issue a press release that will contain, among other things, the language set
forth in Exhibit B.
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Section 6.8 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby,
Parent and the Company and their respective Boards of Directors shall use their
reasonable best efforts to obtain such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
Section 6.9 Indemnification; Directors and Officers Insurance.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify, defend and hold harmless (and make advances
for expenses as incurred to) all past and present officers and directors of the
Company and of its Subsidiaries to the same extent and in the same manner such
persons are entitled to indemnification and advancement of expenses as of the
date of this Agreement (to the extent consistent with applicable law) by the
Company pursuant to the DGCL, the indemnification agreements set forth in
Section 6.9(b) of the Company Letter, the Company Charter or the Company Bylaws
for acts or omissions occurring at or prior to the Effective Time.
(b) From and after the Effective Time, Parent shall cause the
Surviving Corporation to perform, as of the consummation of the Offer, all of
the obligations set forth in Article 9 of the Company Charter, Article V of the
Company Bylaws and the indemnification agreements set forth in Section 6.9(b) of
the Company Letter. In addition, Parent shall cause the Surviving Corporation to
pay all amounts that become due and payable under the Company Charter, the
Restated Bylaws and such indemnification agreements.
(c) Parent shall cause the Surviving Corporation to provide, for a
period of not less than three years from the Effective Time, to or for those
persons covered at the date hereof or at the Effective Time by the Company's
directors and officers' insurance and indemnification policy (the "D&O
Insurance"), insurance that is substantially similar to the Company's existing
policy or, if substantially equivalent insurance coverage is unavailable, the
best available coverage; provided, that the Surviving Corporation shall not be
required to pay an annual premium for the D&O Insurance in excess of 175% of the
last annual premiums paid prior to the date hereof, but in such case shall
purchase as much coverage as possible for such amount.
(d) Notwithstanding anything to the contrary in this Agreement, this
Section 6.9 shall survive the consummation of the transactions contemplated by
this Agreement and the provisions of this Section 6.9 are intended to be for the
benefit of, and may be enforced by, each person entitled to indemnification
pursuant to this Section 6.9.
Section 6.10 Notification of Certain Matters. Parent and Sub shall use
its reasonable best efforts to give prompt notice to the Company, and the
Company shall use its reasonable best efforts to give prompt notice to Parent,
of: (i) the occurrence, or non-occurrence, of any event
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the occurrence, or non-occurrence, of which it is aware and which would be
reasonably likely to cause (x) any representation or warranty contained in this
Agreement and made by it to be untrue or inaccurate in any material respect on
the date hereof or (y) any covenant, condition or agreement contained in this
Agreement and made by it not to be complied with or satisfied in all material
respects, (ii) any failure of Parent or Sub or the Company, as the case may be,
to comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii) any
occurrence, change or event which would be reasonably likely to have a Material
Adverse Effect on VAC, Parent or Sub or the Company, as the case may be;
provided, that the delivery of any notice pursuant to this Section 6.10 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 6.11 Retention and Incentive Plan; Certain Benefits.
(a) Parent shall cause Sub and the Surviving Corporation and their
Subsidiaries to honor all enforceable employment, change in control, deferred
compensation, pension, retirement and severance agreements, pay and personnel
policies in effect on the date hereof between the Company or one of its
Subsidiaries and any employee of the Company or any of its Subsidiaries, or
maintained for the benefit of any employee of the Company or any of its
Subsidiaries, and honor all annual bonus awards made by the Company or any of
its Subsidiaries prior to the date hereof, subject to the power of the Company
or its Subsidiaries to amend, modify, invoke or terminate any such policies and
awards pursuant to their terms or applicable law or the mutual agreement by Sub
and the Surviving Corporation and the current or former employee, officer or
director covered by such agreement.
(b) For one year after the Effective Time, Parent shall cause Sub and
the Surviving Corporation to provide employees of the Company and its
Subsidiaries with benefits (including welfare benefits) that are no less
favorable taken as a whole, than the benefits provided under the Company's and
such Subsidiary's benefits plans (other than equity-based plans) as in effect on
the date hereof, unless such employees otherwise agree to such changes. To the
extent that service is relevant for eligibility, vesting or benefit calculations
or allowances (including entitlements to vacation, severance, and sick days)
under any plan or arrangement of the Company or its Subsidiaries, Parent shall
ensure that such plan or arrangement shall credit employees for service on or
prior to the Effective Time with the Company or any of its Subsidiaries.
Notwithstanding anything in this Section 6.11 to the contrary, nothing in this
Section 6.11 shall be deemed to limit or otherwise affect the right of the
Surviving Corporation to terminate employment or change the place of work,
responsibilities, status or description of any employee or group of employees as
the Surviving Corporation may determine in exercise of its business judgment.
Section 6.12 Stockholder Litigation. In connection with any litigation
which may be brought after the date hereof against the Company or its directors
relating to the transactions contemplated hereby, the Company shall keep Parent,
and any counsel which Parent may retain at its own expense, reasonably informed
of the status of such litigation and will provide Parent's counsel the right to
participate in the defense of such litigation to the extent Parent is not
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otherwise a party thereto, and the Company shall not enter into any settlement
or compromise of any such stockholder litigation without Parent's prior written
consent, which consent shall not be unreasonably withheld or delayed.
Section 6.13 Company SEC Documents. From the date of this Agreement to
the Effective Time, the Company shall file on a timely basis all Company SEC
Documents required to be filed by it with the SEC under the Exchange Act, the
Securities Act and the published rules and regulations of the SEC under either
of the foregoing applicable to such Company SEC Documents, which Company SEC
Documents shall comply in all material respects with the requirements of the
Exchange Act, the Securities Act and the published rules and regulations of the
SEC thereunder, each as applicable to such Company SEC Documents.
Section 6.14 Voting Agreement. The Company agrees to notify the Company's
transfer agent that there is a limitation on the transferability of the Shares
owned by the Nonvoting Director.
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. Subject to Section 2.7, this Agreement
shall have been adopted by the affirmative vote of the stockholders of the
Company entitled to vote thereon as required by the DGCL and the Company
Charter.
(b) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer, except that neither Parent,
Sub nor the Company shall be entitled to invoke this condition if it shall have
been the cause of the failure of Sub to purchase Shares pursuant to the Offer in
breach of its obligations under this Agreement.
(c) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making illegal or directly or indirectly restraining, prohibiting
or restricting the consummation of the Merger.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after adoption of this Agreement
by the stockholders of the Company or Sub:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance with
its terms without Sub having accepted for payment any Shares pursuant to
the Offer or (y) Sub shall not have accepted for payment any Shares
pursuant to the Offer prior to December 27, 2000; provided, that the right
to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be
available to any party whose failure to perform any of its obligations
under this Agreement results in the failure of any such condition or if the
failure of such condition results from facts or circumstances that
constitute a breach of any representation or warranty under this Agreement
by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer or the Merger and such order,
decree or ruling or other action shall have become final and nonappealable;
(c) by Parent or Sub, prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation, warranty,
covenant or other agreement contained in this Agreement which (i) would give
rise to the failure of a condition set forth in paragraph (e) or (f) of Exhibit
A and (ii) cannot be or has not been cured within 20 business days after the
giving of written notice to the Company;
(d) by Parent or Sub, if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
paragraph (d) of Exhibit A;
(e) by the Company, if the Company's Board of Directors or any
committee thereof determines that a Takeover Proposal constitutes a Superior
Proposal and the Company's Board of Directors or any such committee determines,
in its good faith judgment, after consultation with independent counsel, that
failing to terminate this Agreement would be inconsistent with such Board's
fiduciary duties under applicable law; provided, that the Company has complied
in all material respects with all provisions of Section 5.2, including the
notice provisions therein;
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(f) by the Company, if at any time prior to the purchase of Shares
pursuant to the Offer (i) any of the representations or warranties of Parent or
Sub set forth in this Agreement that are qualified as to materiality shall not
be true and correct in any respect or any such representations or warranties
that are not so qualified shall not be true and correct in any material respect,
or (ii) Parent or Sub shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of Parent or Sub to be performed or complied with by it
under this Agreement and such untruth, incorrectness or failure cannot be or has
not been cured within 20 business days after the giving of written notice to
Parent or Sub, as applicable;
(g) by the Company, if the Offer has not been commenced by the Parent
or Sub on or prior to 15 business days following the date of the initial public
announcement of the Offer, provided that the Company may not terminate this
Agreement pursuant to this Section 8.1(g) if the Company is in material breach
of this Agreement; or
(h) by Parent or the Company, if prior to the purchase of Shares
pursuant to the Offer any of the derivative claims currently pending against the
Company and its directors shall have been resolved in favor of the plaintiffs in
such action.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by Parent, Sub or the Company, as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for Section 6.2(b) and the entirety of Section 8.3, which
shall survive the termination); provided, that nothing contained in this Section
8.2 shall relieve any party hereto from any liability for any breach of a
representation or warranty contained in this Agreement, the breach of any
covenant contained in this Agreement or for fraud.
Section 8.3 Fees and Expenses.
(a) Except as provided in this Section 8.3, whether or not the Merger
is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including the fees and
disbursements of counsel, financial advisors and accountants, shall be paid by
the party incurring such costs and expenses; provided, that effective as of the
Closing, the Company shall pay all of the expenses of Parent and Sub. In
addition, the Company shall pay the filing, printing and mailing costs (but not
any legal, advisory or other costs) directly incurred by Parent or Sub in
connection with the preparation of the Offer Documents, whether or not the Offer
and/or the Merger is consummated, provided, that the Company's aggregate
obligation to pay such costs shall be limited to the lower of (i) fifty percent
(50%) of such costs or (ii) $50,000.
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(b) The Company shall pay, or cause to be paid, in same day funds to
Parent the following amounts, if applicable, under the circumstances and at the
times set forth as follows:
(i) if Parent or Sub terminates this Agreement under Section
8.1(d), the Company shall pay to Parent, within two (2) business days
following receipt of written demand from Parent, $750,000 (the "Termination
Fee");
(ii) if the Company terminates this Agreement under Section
8.1(e), the Company shall pay the Termination Fee upon such termination; or
(iii) if Parent or Sub terminates this Agreement under Section
8.1(c) as a result of the breach by the Company of any covenant or
agreement contained in this Agreement resulting in a failure of the
condition set forth in paragraph (f) of Exhibit A and at the time of any
such termination a Takeover Proposal shall have been made, and if
concurrently therewith or within 12 months thereafter, the Company enters
into a definitive merger agreement, acquisition agreement or similar
agreement with respect to a Takeover Proposal, or a Takeover Proposal is
consummated, involving any party (1) with whom the Company had any
discussions with respect to a Takeover Proposal, (2) to whom the Company
furnished information with respect to or with a view to a Takeover Proposal
or (3) who had submitted a proposal or expressed any interest publicly in a
Takeover Proposal, in the case of each of clauses (1), (2) and (3), prior
to such termination, the Company shall pay the Termination Fee within two
(2) business days of the earlier of the execution of such agreement or upon
consummation of such Takeover Proposal.
(c) If Parent or Sub terminates this Agreement under Section
8.1(b)(i)(x) as a result of the failure of the condition set forth in paragraphs
(c) or (f) of Exhibit A, or if the Company terminates this Agreement pursuant to
8.1(b)(i)(y) prior to January 31, 2001, unless at the time of such termination
Parent or Sub is in breach of this Agreement, then the Company shall pay to Sub,
promptly upon receipt, but in no event later than two (2) business days
following receipt, of reasonable supporting documentation, all actual and
reasonably documented out-of-pocket expenses incurred by or on behalf of Sub or
its stockholders (including expenses incurred by or on behalf of the Nonvoting
Director) in connection with or in anticipation of the Offer, the Merger, this
Agreement and the consummation of the transactions contemplated hereby in an
amount not to exceed $250,000; provided, that no such expenses shall be payable
in the event that Parent or Sub terminates this Agreement as a result of the
occurrence of a Material Adverse Change resulting from any Company litigation
pending as of the date hereof as set forth in Section 4.11(1) of the Company
Letter, or any litigation instituted as a consequence of the Company entering
into this Agreement or consummating any of the transactions contemplated hereby.
Section 8.4 Amendment. This Agreement may be amended by the parties
hereto, subject to Section 6.3, at any time before or after approval of the
matters presented in connection
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with the Merger by the stockholders of the Company, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.5 Waiver. At any time prior to the Effective Time, subject to
Section 6.3, the parties hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. 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 IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
Section 9.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, one day after
being delivered to an overnight courier or when telecopied (with a confirmatory
copy sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
if to Parent or Sub, to:
c/o ValueAct Capital Partners, L.P.
One Maritime Plaza
Suite 1400
San Francisco, CA 94111
Attention: Jeff Ubben
Facsimile No.: 415-362-5727
with copies to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Dennis M. Myers
Facsimile No.: 312-861-2200
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(b) if to the Company, to:
Kenetech Corporation
500 Sansome Street
San Francisco, CA 94111
Attention: Dianne P. Urhausen
Facsimile No.: 415-984-8191
with a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105-2482
Attention: Michael O'Bryan
Facsimile No.: 415-268-7522
and a copy to:
Potter Anderson & Corroon, LLP
Hercules Plaza
P.O. Box 951
Wilmington, DE 19899
Attention: Mark A. Morton
Facsimile No.: 302-658-1192
Section 9.3 Interpretation; Certain Definitions.
(a) When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
(b) For purposes of this Agreement, the following terms have the
meaning specified in this Section 9.3:
"business day" means any day that is a business day for the purposes of the
Exchange Act.
"Code" means the Internal Revenue Code of 1986, as amended.
"Knowledge of the Company" means the actual knowledge of the directors,
officers and key employees of the Company.
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<PAGE>
"Material Adverse Change" or "Material Adverse Effect" means, when used
with respect to the Company or Parent, as the case may be, any event,
occurrence, fact, circumstances, change or effect that is or would reasonably be
expected (as far as can be foreseen at the time) to be materially adverse to (i)
the ability of either the Company or Parent or Sub to perform their respective
obligations under this Agreement or to consummate the transactions contemplated
hereby or (ii) the business, operations, properties or results of operations or
the condition (financial or otherwise), assets or liabilities (actual or
contingent) of the Company and its Subsidiaries, taken as a whole, or VAC,
Parent and its Subsidiaries, taken as a whole, as the case may be; provided,
that none of the following shall be deemed, either alone or in combination, to
have or constitute a Material Adverse Effect on or a Material Adverse Change
with respect to the Company: (i) changes in the market price or trading volume
of the Company's securities, (ii) conditions generally affecting the Company's
industry or general economic and business conditions which do not have a
materially disproportionate effect on the Company and its Subsidiaries taken as
a whole, and (iii) any disruption of employee, customer, supplier or other
similar relationships, which are directly attributable to the execution and
announcement of this Agreement or the identity of Parent.
"Rights Agreement" means the Rights Agreement, dated May 4, 1999 between
the Company and ChaseMellon Shareholder Services, LLC.
"Subsidiary" means any corporation, partnership, limited liability company,
joint venture or other legal entity of which Parent or the Company, as the case
may be (either alone or through or together with any other Subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, limited
liability company, joint venture or other legal entity.
"Takeover Proposal" means any proposal for (i) a merger, share exchange or
other business combination involving the Company or any of its Subsidiaries,
(ii) any proposal or offer to acquire in any manner, directly or indirectly, an
equity interest in or any voting securities of the Company representing 15% or
more of the Shares outstanding, (iii) an offer to acquire in any manner,
directly or indirectly, any assets of the Company or any of its Subsidiaries in
excess of $100,000, or (iv) any similar transaction or business combination
involving the Company or its business or capital stock or assets, other than the
transactions contemplated by this Agreement.
"Taxes" means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value-added, transfer or
excise tax, or other tax, custom, duty, governmental fee or any other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity.
"Tax Return" means any return, report or similar statement (including the
attached schedules) required to be filed with respect to any Tax, including any
information return, claim for refund, amended return or declaration of estimated
Tax.
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Section 9.4 Counterparts.
------------
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
Section 9.5 Entire Agreement; Third-Party Beneficiaries.
-------------------------------------------
This Agreement, except as provided in Section 6.2(b), constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
This Agreement, except for the provisions of Section 6.9, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 9.6 Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
Section 9.7 Assignment.
----------
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.
Section 9.8 Severability.
------------
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
terms, conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic and legal substance of the
transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
Section 9.9 Enforcement of this Agreement.
-----------------------------
Each party hereby irrevocably submits to the exclusive jurisdiction of the
United States District Court for the District of Delaware in any action, suit or
proceeding arising in connection with this Agreement, and agrees that any such
action, suit or proceeding shall be brought only in such courts (and waives any
objection based on forum non conveniens or any other objection to venue
therein). Each party hereto waives any right to a trial by jury in connection
with any such action, suit or proceeding.
Section 9.10 Construction.
------------
This Agreement and any documents or instruments delivered pursuant hereto
or in connection herewith shall be construed without regard to the identity of
the person who drafted the various provisions of the same. Each and every
provision of this Agreement and such other documents and instruments shall be
construed as though all of the parties participated equally in the drafting of
the same. Consequently, the parties acknowledge and agree that any rule of
construction that a document is to be construed against the drafting party shall
not be applicable either to this Agreement or such other documents and
instruments.
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<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
KC HOLDING CORPORATION
By: /s/ Jeffrey W. Ubben
Name: Jeffrey W. Ubben
Its: Secretary and Treasurer
KC MERGER CORP.
By: /s/ Jeffrey W. Ubben
Name: Jeffrey W. Ubben
Its: Secretary and Treasurer
KENETECH CORPORATION
By: /s/ Dianne P. Urhausen
Name: Dianne P. Urhausen
Its: Vice President and Secretary
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<PAGE>
Exhibit A
---------
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1 under the Exchange Act (relating to
Sub's obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer,
unless there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares as equals at least 85% of the
outstanding Shares on a fully diluted basis, giving effect to all the currently
exercisable Company Stock Options and other securities exercisable or
convertible into Shares (excluding those Shares held by the Nonvoting Director)
(the "Minimum Condition").
Furthermore, notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject as aforesaid, to pay
for any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement and
before the acceptance of such Shares for payment or the payment therefor, any of
the following conditions exists (other than as a result of any action or
inaction of Parent or any of its subsidiaries that constitutes a breach of this
Agreement):
(a) there shall be instituted after the date hereof and pending before any
court of competent jurisdiction or Governmental Entity any suit, action or
proceeding (including new claims made in any pending proceedings) (i)
challenging the acquisition by Parent or Sub of any Shares under the Offer,
seeking to prohibit the making or consummation of the Offer or the Merger
or the performance of any of the other transactions contemplated by this
Agreement, or seeking to obtain from the Company, Parent or Sub any damages
(including damages against the Company's directors or officers for which
they may seek indemnification from the Company) that, if awarded, would
have a Material Adverse Effect on the Company, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of the business or assets of the Company
and its Subsidiaries, taken as a whole, or to compel the Company or Parent
to dispose of or hold separate any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, in each case
as a result of the Offer or any of the other transactions contemplated by
this Agreement, or (iii) seeking to impose material limitations on the
ability of Parent, Sub or the Nonvoting Director to acquire or hold, or
exercise full rights of ownership of, any Shares, including the right to
vote Shares on all matters properly presented to the stockholders of the
Company, provided, in the case of each of clauses (i), (ii) and (iii)
above, that Parent and Sub shall have used its reasonable best efforts to
oppose, contest and resolve any such pending or threatened suit, action or
proceeding;
(b) there shall be enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger by any Governmental Entity any statute,
A-1
<PAGE>
rule,
regulation, judgment, order or injunction that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iii) of paragraph (a) above, provided, that Parent and
Sub shall have used reasonable best efforts to oppose, contest and resolve
any such judgment, order, injunction or enforcement;
(c) there shall have occurred and be continuing any Material Adverse Change
with respect to the Company;
(d) (i) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or Sub its
approval or recommendation of the Offer, the Merger or this Agreement, or
recommended any Takeover Proposal, (ii) the Board of Directors of the
Company or any committee thereof shall have resolved to take any of the
foregoing actions, or (iii) upon the reasonable request of Sub, the Board
of Directors of the Company, or any committee thereof, shall fail within a
reasonable period of time to reaffirm its approval or recommendation of the
Offer, this Agreement or the Merger;
(e) the representations and warranties of the Company set forth in this
Agreement shall not be true and correct in each case at the date of this
Agreement and at the scheduled or extended expiration of the Offer, unless
the inaccuracies (without giving effect to any materiality or Material
Adverse Effect qualifications or exceptions contained therein) under such
representations and warranties, taking all the inaccuracies under all such
representations and warranties together in their entirety, do not result in
a Material Adverse Effect on the Company or unless such inaccuracies are as
a result of actions expressly permitted by Section 5.1;
(f) the Company shall have failed to perform any obligation or to comply with
any agreement or covenant of the Company to be performed or complied with
by it under this Agreement (other than any failures which would not
reasonably be expected to have a Material Adverse Effect on the Company),
which failure to perform or comply, if capable of being cured, continues
for more than twenty (20) business days after the giving of written notice
to the Company;
(g) there shall have occurred and be continuing (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (ii) a declaration of war by the United States or (iii) in the case
of any of the foregoing existing at the time of the execution of this
Agreement, a material acceleration or worsening thereof; or
(h) the Company shall not have obtained consents of third parties listed in
Section 4.5 of the Company Letter (other than such consents, the failure of
which to obtain would not either individually or in the aggregate be
reasonably expected to have a Material Adverse Effect); or
A-2
<PAGE>
(i) this Agreement shall have been terminated in accordance with its terms or
the parties shall have agreed in writing to terminate the Offer.
The foregoing conditions are for the sole benefit of Parent and Sub and
may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right. The waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances. Each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Terms used but not defined herein shall have the meanings assigned to such terms
in the Agreement to which this Exhibit A is a part.
A-3
<PAGE>
Exhibit B
---------
FORM OF PRESS RELEASE
The press release shall include the following:
"Notwithstanding its recommendation and consistent with the terms of
the Agreement and Plan of Merger, the Special Committee of the Company's
Board of Directors requested that the Special Committee's financial
advisor, Houlihan Lokey Howard & Zukin Financial Advisors, Inc., be
available to receive unsolicited inquiries from any other parties
interested in the possible acquisition of the Company. If the Special
Committee or the Company's Board of Directors, after consultation with its
independent legal counsel, determines that taking such actions is
appropriate in light of its fiduciary duties to Company stockholders under
applicable law, the Company may provide information to and engage in
discussions and negotiations with such parties and take other appropriate
actions in connection with any such indicated interest."
B-1
