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AGREEMENT AND PLAN OF MERGER
by and among
THE TOPPS COMPANY, INC.,
TORNANTE-MDP JOE HOLDING LLC
and
TORNANTE-MDP JOE ACQUISITION CORP.
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER; CLOSING; EFFECTIVE
TIME..........................................................2
1.1 The
Merger...................................................................................2
1.2
Closing......................................................................................2
1.3 Effective
Time...............................................................................3
ARTICLE II CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION.........................3
2.1 The Certificate of
Incorporation.............................................................3
2.2 The
Bylaws...................................................................................3
ARTICLE III OFFICERS AND DIRECTORS OF THE SURVIVING
CORPORATION..........................................3
3.1
Directors....................................................................................3
3.2
Officers.....................................................................................3
ARTICLE IV EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES..............................4
4.1 Effect on Capital
Stock......................................................................4
4.2 Exchange of
Certificates.....................................................................5
4.3 Treatment of Stock
Plans.....................................................................7
4.4 Adjustments to Prevent
Dilution..............................................................8
ARTICLE V REPRESENTATIONS AND
WARRANTIES...............................................................8
5.1 Representations and Warranties of the
Company................................................8
5.2 Representations and Warranties of Parent and Merger
Sub.....................................28
ARTICLE VI
COVENANTS...................................................................................32
6.1 Interim
Operations..........................................................................32
6.2 Acquisition
Proposals.......................................................................35
6.3 No Change in Company Recommendation or Alternative
Acquisition Agreement....................40
6.4 Proxy
Statement.............................................................................41
6.5 Stockholders
Meeting........................................................................42
6.6 Filings; Other Actions;
Notification........................................................42
6.7 Access and
Reports..........................................................................45
6.8 NASDAQ
De-listing...........................................................................45
6.9
Publicity...................................................................................45
6.10 Employee
Benefits...........................................................................45
6.11
Expenses....................................................................................46
6.12 Indemnification; Directors' and Officers'
Insurance.........................................47
6.13 Takeover
Statutes...........................................................................48
6.14
Financing...................................................................................48
6.15 Director
Resignations.......................................................................50
TABLE OF CONTENTS
(continued)
PAGE
6.16 Rule
16b-3..................................................................................50
ARTICLE VII
CONDITIONS..................................................................................50
7.1 Conditions to Each Party's Obligation to Effect the
Merger..................................50
7.2 Conditions to Obligations of Parent and Merger
Sub..........................................50
7.3 Conditions to Obligation of the
Company.....................................................52
ARTICLE VIII
TERMINATION.................................................................................52
8.1
Termination.................................................................................52
8.2 Effect of
Termination.......................................................................54
ARTICLE IX MISCELLANEOUS AND
GENERAL...................................................................56
9.1
Survival....................................................................................56
9.2 Modification or
Amendment...................................................................56
9.3 Waiver of
Conditions........................................................................57
9.4
Counterparts................................................................................57
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; REMEDIES;
SPECIFIC PERFORMANCE...............57
9.6
Notices.....................................................................................58
9.7 Entire
Agreement............................................................................60
9.8 No Third Party
Beneficiaries................................................................60
9.9 Obligations of Parent and of the
Company....................................................61
9.10
Definitions.................................................................................61
9.11
Severability................................................................................61
9.12 No Personal
Liability.......................................................................61
9.13 Interpretation;
Construction................................................................61
9.14
Assignment..................................................................................62
Annex A Defined
Terms..............................................................................A-1
Exhibit A Form of Guaranty
Exhibit B Form of Voting Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the Effective Date
(this
"Agreement"), by and among The Topps Company, Inc., a Delaware
corporation (the
"Company"), Tornante-MDP Joe Holding LLC, a Delaware limited
liability company
("Parent"), and Tornante-MDP Joe Acquisition Corp, a Delaware
corporation and a
wholly owned subsidiary of Parent ("Merger Sub"). The Company
and Merger Sub are
sometimes hereinafter collectively referred to as the
"Constituent
Corporations". The "Effective Date" means the date last set
forth on the
signature pages hereto, and references herein to the "date
hereof," "date of
this Agreement" or terms of similar import shall mean the
Effective Date.
R E C I T A L S:
WHEREAS, the parties to this Agreement desire to effect the
acquisition of the Company by Parent through a merger of the
Company and Merger
Sub;
WHEREAS, in furtherance of the foregoing and in accordance with
the
Delaware General Corporation Law (the "DGCL"), the respective
boards of
directors or comparable governing bodies of each of Parent,
Merger Sub and the
Company have approved, adopted and declared advisable and in the
best interests
of the equityholders of Parent, Merger Sub and the Company,
respectively, this
Agreement, the merger of Merger Sub with and into the Company
with the Company
as the Surviving Corporation (the "Merger") and the other
transactions
contemplated hereby upon the terms and subject to the conditions
set forth in
this Agreement;
WHEREAS, concurrently with the execution of this Agreement, and
as a
condition to the willingness of the Company to enter into this
Agreement,
Madison Dearborn Capital Partners V-A, L.P. ("MDCP-VA"), Madison
Dearborn
Capital Partners V-C, L.P. ("MDCP-VC"), and Madison Dearborn
Capital Partners V
Executive-A, L.P. (together with MDCP-VA and MDCP-VC, the "MDCP
Guarantors"), on
one hand, and The Tornante Company LLC, on the other hand
(severally and not
jointly with the MDCP Guarantors, the "Guarantors") have
executed and delivered
to the Company two guarantees, each in the form attached hereto
as Exhibit A
(each, a "Guaranty"), pursuant to which each Guarantor is
guarantying a portion
of the obligation of Parent to pay the Parent Termination
Fee;
WHEREAS, concurrently with the execution and delivery of
this
Agreement and as a condition to the willingness of Parent and
Merger Sub to
enter into this Agreement, Arthur T. Shorin and other directors
constituting a
majority of the board of directors of the Company, as holders of
Shares is
entering into a voting agreement with Parent in the form
attached hereto as
Exhibit B (the "Voting Agreements"), pursuant to which, among
other things, such
holders will agree to vote all of their Shares in the Company in
favor of
adopting and approving this Agreement; and
WHEREAS, the Company, Parent and Merger Sub desire to make
certain
representations, warranties, covenants and agreements in
connection with the
Merger as provided in this Agreement;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained
herein, and for
other good and valuable consideration, the receipt and
sufficiency of which are
hereby acknowledged, the parties hereto, each intending to be
legally bound,
hereby agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Upon the terms and subject to the conditions set
forth
in this Agreement, and in accordance with the DGCL, Merger Sub
shall be merged
with and into the Company at the Effective Time. At the
Effective Time, the
separate corporate existence of Merger Sub shall cease and the
Company shall
continue as the surviving corporation in the Merger (the
"Surviving
Corporation") and shall succeed to and assume all of the rights
and obligations
of Merger Sub in accordance with Section 259 of the DGCL.
1.2 Closing. Unless otherwise mutually agreed in writing by the
Company
and Parent, the closing of the Merger (the "Closing") shall take
place at the
offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue,
New York, New York
at 9:00 a.m. (New York time) on the second Business Day
following the day on
which the last to be satisfied or waived of the conditions set
forth in Article
VII (other than those conditions that by their nature are to be
satisfied at the
Closing, but subject to the fulfillment or waiver of those
conditions) shall be
satisfied or waived in accordance with this Agreement; provided,
however, that
notwithstanding the satisfaction or waiver of the conditions set
forth in
Article VII, Parent and Merger Sub shall not be required to
effect the Closing
until the earlier of (a) a date during the Marketing Period
specified by Parent
on no less than three (3) Business Days' written notice to the
Company and (b)
the final day of the Marketing Period, in each case subject to
the satisfaction
or waiver on such date of all of the conditions set forth in
Article VII. The
date of the Closing is referred to as the "Closing Date." For
purposes of this
Agreement, the term "Business Day" shall mean any day ending at
5:00 p.m. (New
York time) other than a Saturday or Sunday or a day on which
banks are required
or authorized to close in New York, New York. For purposes of
this Agreement,
the term "Marketing Period" shall mean the first period of 15
days after the
date hereof throughout which (A) Parent shall have the Required
Information that
the Company is required to provide to Parent pursuant to Section
6.14(b) and (B)
the conditions set forth in Section 7.1 shall be satisfied and
nothing has
occurred and no condition exists that would cause any of the
conditions set
forth in Section 7.2 to fail to be satisfied assuming the
Closing were to be
scheduled for any time during such 15 day period; provided, that
if the
financial statements included in the Required Information that
is available to
Parent on the first day of any such 15 day period would not be
sufficiently
current on any day during such 15 day period to permit (i) a
registration
statement using such financial statements to be declared
effective by the SEC on
the last day of the 15 day period or (ii) the Company's
independent accounting
firm to issue a customary comfort letter to Parent (in
accordance with its
normal practices and procedures) on the last day of the 15 day
period, then a
new 15 day period shall commence upon Parent
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receiving updated Required Information that would be
sufficiently current to
permit the actions described in clauses (i) and (ii) above on
the last day of
such 15 day period.
1.3 Effective Time. Subject to the provisions of this Agreement,
as soon
as practicable on the Closing Date, the parties shall file with
the Secretary of
State of the State of Delaware a certificate of merger (the
"Certificate of
Merger") executed and acknowledged in accordance with the
relevant provisions of
the DGCL and, as soon as practicable on or after the Closing
Date, shall make
all other filings or recordings required under the DGCL. The
Merger shall become
effective upon the filing and acceptance of the Certificate of
Merger with the
Secretary of State of the State of Delaware, or at such later
time as Parent and
the Company shall agree and shall specify in the Certificate of
Merger (the time
the Merger becomes effective being the "Effective Time").
ARTICLE II
CERTIFICATE OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION
2.1 The Certificate of Incorporation. The certificate of
incorporation
of the Company, as amended and in effect immediately prior to
the Effective
Time, shall be the certificate of incorporation of the Surviving
Corporation
(the "Charter"), until duly amended as provided therein or by
applicable Law.
2.2 The Bylaws. The bylaws of the Company, as amended and in
effect
immediately prior to the Effective Time, shall be the bylaws of
the Surviving
Corporation (the "Bylaws"), until thereafter amended as provided
therein or by
applicable Law.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1 Directors. The parties hereto shall take all actions
necessary so
that the board of directors of Merger Sub at the Effective Time
shall, from and
after the Effective Time, be elected or otherwise validly
appointed as the
directors of the Surviving Corporation until their successors
have been duly
elected or appointed and qualified or until their earlier death,
resignation or
removal in accordance with the Charter and the Bylaws.
3.2 Officers. The officers of the Company at the Effective Time
shall,
from and after the Effective Time, be the officers of the
Surviving Corporation
until their successors shall have been duly elected or appointed
and qualified
or until their earlier death, resignation or removal in
accordance with the
Charter and the Bylaws.
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ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, as a result
of the
Merger and without any action on the part of the holder of any
capital stock of
the Company:
(a) Merger Consideration. Each share of the common stock,
par value $0.01 per share, of the Company (each, a "Share")
issued and
outstanding immediately prior to the Effective Time (other than
Dissenting
Shares, Shares owned by Parent, Merger Sub or any other direct
or indirect
wholly owned subsidiary of Parent and Shares owned or held in
treasury by
the Company or any direct or indirect wholly owned subsidiary of
the
Company (each, an "Excluded Share")) shall be converted into the
right to
receive $9.75 per Share in cash, less any required withholding
Taxes as
described in Section 4.2(f) and without interest (the "Per Share
Merger
Consideration"). At the Effective Time, all of the Shares shall
cease to
be outstanding, shall be cancelled and shall cease to exist, and
each
certificate formerly representing any of the Shares (each, a
"Certificate") (other than Excluded Shares and Dissenting
Shares) shall
thereafter represent only the right to receive the Per Share
Merger
Consideration, without interest.
(b) Cancellation of Excluded Shares. Each Excluded Share
referred to in Section 4.1(a) (other than Dissenting Shares,
which are
addressed in clause (d) below), by virtue of the Merger and
without any
action on the part of the holder thereof, shall cease to be
outstanding,
shall be cancelled without payment of any consideration therefor
and shall
cease to exist.
(c) Merger Sub. At the Effective Time, each share of common
stock, par value $0.01 per share, of Merger Sub issued and
outstanding
immediately prior to the Effective Time shall be converted into
one share
of common stock, par value $0.01 per share, of the Surviving
Corporation.
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and
outstanding
immediately prior to the Effective Time and that are held by a
holder
thereof who has validly demanded payment of the fair value for
such Shares
as determined in accordance with Section 262 of the DGCL (such
Shares, the
"Dissenting Shares") shall not be converted into or be
exchangeable for
the right to receive the Per Share Merger Consideration, but
instead shall
be converted into the right to receive payment from the
Surviving
Corporation with respect to such Dissenting Shares in accordance
with the
DGCL, unless and until such holder shall have failed to perfect
or shall
have effectively withdrawn or lost such holder's right under the
DGCL. If
any such holder of Shares shall have failed to perfect or shall
have
effectively withdrawn or lost such right, each Share of such
holder shall
be treated, at the Company's sole discretion, as a Share that
had been
converted as of the Effective Time into the right to receive the
Per Share
Merger Consideration in accordance with Section 4.1(a). The
Company shall
give prompt notice to Parent of any written demands (and any
written
withdrawals thereof) received by the Company for appraisal of
Shares
pursuant to
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Section 262 of the DGCL, and Parent shall have the right to
reasonably
participate in all negotiations and proceedings with respect to
such
demands. The Company shall not, except with the prior written
consent of
Parent, make any payment with respect to, or settle or waive any
rights
with respect to, any such demands. Any portion of the Per Share
Merger
Consideration made available to the Paying Agent pursuant to
this Section
4.1(d) to pay for Shares for which appraisal rights have been
perfected
shall be returned to Parent upon demand.
4.2 Exchange of Certificates.
(a) Paying Agent. At the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a paying agent
selected by
Parent with the Company's prior written approval (such approval
not to be
unreasonably withheld or delayed) (the "Paying Agent"), for the
benefit of
the holders of Shares, a cash amount in immediately available
funds
necessary for the Paying Agent to make all payments under
Section 4.1(a)
(such cash being hereinafter referred to as the "Exchange
Fund"). The
Paying Agent shall invest the Exchange Fund as directed by
Parent;
provided that such investments shall be in obligations of or
guarantied by
the United States of America, in commercial paper obligations
rated A1 or
P1 or better by Moody's Investors Service, Inc. or Standard
& Poor's
Corporation, respectively. Any interest and other income
resulting from
such investment shall become a part of the Exchange Fund, and
any amounts
in excess of the amounts payable under Section 4.1(a) shall be
promptly
returned to the Surviving Corporation. To the extent that there
are losses
with respect to any such investments, or the Exchange Fund
diminishes for
any reason below the level required to make prompt cash payment
under
Section 4.1(a), Parent shall, or shall cause the Surviving
Corporation to,
promptly replace or restore the cash in the Exchange Fund so as
to ensure
that the Exchange Fund is at all times maintained at a level
sufficient to
make such payments required under Section 4.1(a).
(b) Exchange Procedures. Promptly after the Effective Time,
Parent shall cause the Paying Agent to mail to each holder of
record of
Shares (other than holders of Dissenting Shares or Excluded
Shares) (i) a
letter of transmittal in customary form specifying that delivery
shall be
effected, and risk of loss and title to the Certificates shall
pass, only
upon delivery of the Certificates (or affidavits of loss in lieu
thereof
as provided in Section 4.2(e)) to the Paying Agent, such letter
of
transmittal to be in such form and to have such other provisions
as Parent
and the Company may reasonably agree, and (ii) instructions for
use in
effecting the surrender of the Certificates (or affidavits of
loss in lieu
thereof as provided in Section 4.2(e)) in exchange for the
applicable Per
Share Merger Consideration. Upon surrender of a Certificate (or
affidavit
of loss in lieu thereof as provided in Section 4.2(e)) to the
Paying Agent
in accordance with the terms of such letter of transmittal, and
such
letter of transmittal having been duly executed, the holder of
such
Certificate shall be entitled to receive in exchange therefor a
cash
amount in immediately available funds (less any required Tax
withholdings
as provided in Section 4.2(f)) equal to (A) the number of
Shares
represented by such
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Certificate (or affidavit of loss in lieu thereof as provided in
Section
4.2(e)), multiplied by (B) the Per Share Merger Consideration,
and the
Certificate so surrendered shall forthwith be cancelled and
extinguished
of no further force or effect. No interest will accrue or be
paid on any
amount payable upon due surrender of the Certificates. In the
event of a
transfer of ownership of Shares that is not registered in the
transfer
records of the Company, a check for any cash to be exchanged
upon due
surrender of the Certificate may be issued to the transferee of
such
Shares if the Certificate formerly representing such Shares is
presented
to the Paying Agent, accompanied by all documents reasonably
required to
evidence and effect such transfer and to evidence that any
applicable
stock transfer taxes or other Taxes have been paid or are not
applicable.
(c) Transfers. From and after the Effective Time, there
shall be no transfers on the stock transfer books of the Company
of the
Shares that were outstanding immediately prior to the Effective
Time. If,
after the Effective Time, any Certificate is presented to the
Surviving
Corporation, Parent or the Paying Agent for transfer, it shall
be
cancelled and extinguished and exchanged for the Per Share
Merger
Consideration (payable in cash in immediately available funds)
to which
the holder thereof is entitled pursuant to this Article IV.
(d) Termination of Exchange Fund. Any portion of the
Exchange Fund (including the proceeds of any investments
thereof) that
remains unclaimed by the stockholders of the Company for 180
days after
the Effective Time shall be delivered to the Surviving
Corporation. Any
holder of Shares (other than Dissenting Shares or Excluded
Shares) who has
not theretofore complied with this Article IV shall thereafter
look only
to the Surviving Corporation for payment of the Per Share
Merger
Consideration (less any required Tax withholdings as provided in
Section
4.2(f)) upon due surrender of each of its Certificates (or
affidavits of
loss in lieu thereof as provided in Section 4.2(e)), without any
interest
thereon. Notwithstanding the foregoing, none of the Surviving
Corporation,
Parent, the Paying Agent or any other Person shall be liable to
any former
holder of Shares for any amount properly delivered to a public
official
pursuant to applicable abandoned property, escheat or similar
Laws. For
the purposes of this Agreement, the term "Person" shall mean
any
individual, corporation, general or limited partnership, limited
liability
company, joint venture, estate, trust, association,
organization,
Governmental Entity or other entity of any kind or nature.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the
making of
an affidavit of that fact by the Person claiming such
Certificate to be
lost, stolen or destroyed and, if required by Parent, the
posting by such
Person of a bond in customary amount and upon such terms as may
be
reasonably required by Parent as indemnity against any claim
that may be
made against it or the Surviving Corporation with respect to
such
Certificate, the Paying Agent will issue a check in the amount
(less any
required Tax withholdings as provided in Section 4.2(f)) equal
to the
number of Shares represented by such lost, stolen or destroyed
Certificate
multiplied by the Per Share Merger Consideration.
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(f) Withholding Rights. Each of Parent, Merger Sub, the
Surviving Corporation and the Paying Agent shall be entitled to
deduct and
withhold from the consideration otherwise payable pursuant to
this
Agreement to any holder of Shares or holder of Company Options,
such
amounts as it is required to deduct and withhold with respect to
the
making of such payment under the Internal Revenue Code of 1986,
as amended
(the "Code"), or any other applicable Tax. To the extent that
amounts are
so deducted or withheld, such deducted or withheld amounts (i)
shall be
remitted by Parent, Merger Sub, the Surviving Corporation or the
Paying
Agent, as applicable, to the applicable Governmental Entity, and
(ii)
shall be treated for all purposes of this Agreement as having
been paid to
the holder of Shares or holder of Company Options in respect of
which such
deduction and withholding was made by the Paying Agent,
Surviving
Corporation, Merger Sub or Parent, as the case may be.
4.3 Treatment of Stock Plans.
(a) Options. At the Effective Time: (i) each outstanding
Company Option under the 1996 Stock Plan and the 2001 Stock Plan
shall
become fully vested and be cancelled in exchange for the right
to receive,
as soon as reasonably practicable after the Effective Time (but
in any
event no later than three Business Days after the Effective
Time), an
amount in cash equal to the product of (A) the total number of
Shares
subject to such Company Option immediately prior to the
Effective Time,
multiplied by (B) the excess, if any, of the Per Share
Merger
Consideration over the exercise price per Share under such
Company Option,
less any applicable Taxes required to be withheld with respect
to such
payment; and (ii) each outstanding Company Option under the
Director Stock
Plan shall become fully vested and be automatically converted
into the
right to receive, as soon as reasonably practicable after the
Effective
Time, an amount in cash equal to the product of (A) the total
number of
Shares subject to such Company Option immediately prior to the
Effective
Time, multiplied by (B) the excess, if any, of the Per Share
Merger
Consideration over the exercise price per Share under such
Company Option,
less any applicable Taxes required to be withheld with respect
to such
payment. As used herein, the term "Company Option" shall mean
any
outstanding option to purchase Shares under any Stock Plan. As
of the
Effective Time, each Company Option for which the exercise price
per Share
exceeds the Per Share Merger Consideration, other than Company
Options
outstanding under the Director Stock Plan (the "Director
Options"), shall
be canceled and have no further effect, with no right to receive
any
consideration. As of the Effective Time, all other Company
Options (other
than the Director Options) shall no longer be outstanding and
shall
automatically cease to exist and shall become only the right to
receive
the option consideration described in this Section 4.3(a), and,
without
limiting the foregoing, the board of directors of the Company or
the
appropriate committee thereof shall take all action necessary to
effect
such cancellation.
(b) Corporate Actions. At or prior to the Effective Time,
the Company, the board of directors of the Company and the
compensation
committee of the board of
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directors of the Company, as applicable, shall (to the extent
necessary)
adopt resolutions to implement the provisions of Section 4.3(a),
it being
understood that the intention of the parties is that following
the
Effective Time no holder of any Company Options or any
participant in any
Stock Plan or other employee benefit arrangement of the Company
shall have
any right thereunder to acquire any capital stock (including any
phantom
stock or stock appreciation right) of the Company, any
Subsidiary of
either the Company or Parent, or the Surviving Corporation.
Prior to the
Closing, the Company shall deliver to the holders of the Company
Options
appropriate notices setting forth such holders' rights pursuant
to this
Agreement.
4.4 Adjustments to Prevent Dilution. In the event that the
Company
changes the number of Shares or securities convertible or
exchangeable into or
exercisable for Shares issued and outstanding prior to the
Effective Time as a
result of a reclassification, stock split (including a reverse
stock split),
division or subdivision of Shares, stock dividend or
distribution, consolidation
of Shares, reclassification, recapitalization, merger, issuer
tender or exchange
offer, or other similar transaction, the Per Share Merger
Consideration shall be
equitably adjusted to reflect such change. Prior to the
Effective Time, the
Company shall take all actions necessary to terminate the Stock
Plans, such
termination to be effective at or before the Effective Time (it
being understood
that the Company shall not be obligated hereby or otherwise to
terminate or
cancel any outstanding Director Options).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company. Except as set
forth
in the disclosure schedule delivered to Parent by the Company in
connection with
the execution and delivery of this Agreement (the "Company
Disclosure Schedule")
(it being understood that any matter disclosed in any section of
the Company
Disclosure Schedule shall be deemed to be disclosed in any other
section of the
Company Disclosure Schedule if (i) it is readily apparent from
such disclosure
that it applies to such other section or (ii) such disclosure
is
cross-referenced in such other section), the Company hereby
represents and
warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of
the Company and its Subsidiaries is a legal entity duly
organized, validly
existing and in good standing under the Laws of its
respective
jurisdiction of organization and has all requisite corporate or
similar
power and authority to own, lease and operate its properties and
assets
and to carry on its business as presently conducted and is
qualified to do
business in each jurisdiction where the ownership, leasing or
operation of
its assets or properties or conduct of its business requires
such
qualification, except where the failure to be so qualified or in
good
standing, or to have such power or authority, would not,
individually or
in the aggregate, reasonably be expected to have a Company
Material
Adverse Effect. Section 5.1(a) of the Company Disclosure
Schedule lists
each Subsidiary and every other Person in which the Company or
any
Subsidiary has any ownership interest, together
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with their respective jurisdictions of incorporation or
organization. As
used in this Agreement, the term (i) "Subsidiary" means, with
respect to
any Person, any other Person of which an amount of the
securities or
ownership interests having by their terms ordinary voting power
to elect a
majority of the board of directors or other Persons performing
similar
functions of such other Person is directly or indirectly owned
or
controlled by such Person and/or by one or more of its
Subsidiaries, (ii)
"Significant Subsidiary" shall have the meaning set forth in
Rule 1.02(w)
of Regulation S-X promulgated pursuant to the Securities
Exchange Act of
1934, as amended (the "Exchange Act") and (iii) "Company
Material Adverse
Effect" means an event, change, effect, development, condition
or
occurrence (each a "Change") that, individually or in the
aggregate with
any other Change, is or is reasonably expected to be materially
adverse to
(x) the ability of the Company to perform its obligations under,
or to
consummate the transactions contemplated by, this Agreement or
(y) the
financial condition, business, assets, liabilities or results
of
operations of the Company and its Subsidiaries taken as a whole;
provided
that no Change, to the extent resulting from any of the
following events,
changes, effects, developments, conditions or occurrences,
shall
constitute or be taken into account in determining whether there
has been
or would reasonably be expected to be a Company Material Adverse
Effect,
except, in the cases of clauses (A), (B) and (D) below, to the
extent that
any such event, change, effect, development, condition or
occurrence has a
disproportionately adverse effect on the Company or any of
its
Subsidiaries as compared to other comparable businesses:
(A) changes in the economy or financial markets generally in
the
United States or other countries in which the Company or any of
its
Subsidiaries conduct operations including, without limitation,
any such
changes that are the result of non-domestic acts of war or
terrorism (but
not including any changes that are the result of domestic acts
of war or
terrorism);
(B) general changes or developments in any industry in which
the
Company and its Subsidiaries operate;
(C) any Change caused by or resulting from the announcement of
the
transactions contemplated by this Agreement (other than with
respect to
the matters set forth in Section 5.1(a)(C) of the Company
Disclosure
Schedule);
(D) changes in any Law or GAAP or interpretation thereof after
the
date hereof;
(E) any failure by the Company to meet any estimates of
revenues
or earnings for any period; or
(F) a decline in the price or trading volume of the
Company's
common stock on the NASDAQ Global Select Market ("NASDAQ");
- 9 -
it being understood that any Change giving rise to or
contributing to such
failure by the Company to meet estimates as described in the
preceding
clause (E), or such decline in the trading price of the
Company's common
stock as described in the preceding clause (F), as the case may
be, may be
the cause of a Company Material Adverse Effect.
(b) Capital Structure. The authorized capital stock of the
Company consists of 100,000,000 Shares, of which 38,717,765
Shares were
outstanding as of the close of business on March 2, 2007, and
10,000,000
shares of preferred stock, 500,000 of which are designated as
"Series A
Junior Participating Preferred Stock" and none of which are
outstanding as
of the date hereof. All of the outstanding Shares have been
duly
authorized and are validly issued, fully paid and nonassessable.
Since
March 2, 2007, the Company has not issued, sold, or disposed of
any shares
of the Company's capital stock or equity securities, other than
upon the
exercise of outstanding options under the Stock Plans. As of
February 28,
2007, other than 2,970,525 Shares reserved for issuance under
the
Company's 1996 Stock Option Plan, as amended and restated as of
June 30,
2005 (as so amended and as further amended from time to time,
the "1996
Stock Plan"), 2001 Stock Incentive Plan, as amended and restated
as of
June 27, 2002 (as so amended and as further amended from time to
time, the
"2001 Stock Plan"), and 1994 Non-Employee Director Stock Option
Plan (the
"Director Stock Plan" and, together with the 1996 Stock Plan and
the 2001
Stock Plan, the "Stock Plans"), the Company has no Shares
reserved for
issuance. Since February 28, 2007, the Company has not granted
any options
to acquire shares of capital stock of the Company under any of
the Stock
Plans. Section 5.1(b) of the Company Disclosure Schedule
contains a
correct and complete list of options, restricted stock,
performance stock
units, restricted stock units and any other equity or
equity-based awards
(including cash-settled awards), if any, outstanding under the
Stock
Plans, including the holder, date of grant, term, number of
Shares, the
Stock Plan under which such award was granted and, where
applicable, the
exercise price. The outstanding shares of capital stock or other
equity
securities of each of the Company's Subsidiaries are duly
authorized,
validly issued, fully paid and nonassessable and owned by the
Company or
by a direct or indirect wholly owned Subsidiary of the Company,
free and
clear of any lien, charge, pledge, security interest or other
encumbrance
(each, a "Lien"). Except as set forth above, there are no
preemptive or
other outstanding rights, options, warrants, conversion rights,
stock
appreciation rights, redemption rights, repurchase rights,
agreements,
arrangements, calls, commitments or rights of any kind that
obligate the
Company or any of its Subsidiaries to issue or sell any shares
of capital
stock or other equity securities of the Company or any of its
Subsidiaries
or any securities or obligations convertible or exchangeable
into or
exercisable for, or giving any Person a right to subscribe for
or acquire,
any equity securities of the Company or any of its Subsidiaries,
or
obligations of the Company or any of its Subsidiaries to make
any payments
directly or indirectly based (in whole or in part) on the price
or value
of the Shares or preferred shares, and no securities or
obligations
evidencing such rights are authorized, issued or outstanding.
Upon any
issuance of any Shares in accordance with the terms of the Stock
Plans,
such Shares will be duly authorized, validly issued, fully paid
and
nonassessable and free and clear of any Liens. The Company does
not have
- 10 -
outstanding any bonds, debentures, notes or other obligations
for borrowed
money the holders of which have the right to vote (or
convertible into or
exercisable for securities having the right to vote) with the
stockholders
of the Company or any of its Subsidiaries on any matter. There
are no
outstanding contractual obligations of the Company or any of
its
Subsidiaries to repurchase, redeem or otherwise acquire any
capital stock
or other equity interests of the Company or any of its
Subsidiaries. For
purposes of this Agreement, a wholly owned Subsidiary of the
Company shall
include any Subsidiary of the Company of which all of the shares
of
capital stock of such Subsidiary other than director qualifying
shares are
owned by the Company (or a wholly owned Subsidiary of the
Company).
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order
to execute
and deliver this Agreement and to perform its obligations under
this
Agreement subject only, in the case of the consummation of the
Merger, to
approval of the "agreement of merger" (as such term is used in
Section 251
of the DGCL) contained in this Agreement by the holders of a
majority of
the outstanding Shares entitled to vote on such matter (the
"Requisite
Company Vote"). This Agreement has been duly executed and
delivered by the
Company and constitutes a legal, valid and binding agreement 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 equitable
principles
(collectively, the "Bankruptcy and Equity Exception").
(ii) The board of directors of the Company has: (A)
determined that the Merger and the Voting Agreements are fair to
and in
the best interests of the Company and its stockholders, has
adopted and
declared advisable this Agreement, the Voting Agreements and the
Merger
and the other transactions contemplated hereby and has resolved
to
recommend approval of this Agreement and the "agreement of
merger" (as
such term is used in Section 251 of the DGCL) contained in this
Agreement
to the holders of Shares (the "Company Recommendation"); (B)
authorized
and approved the execution, delivery and performance of this
Agreement,
the Voting Agreements and the transactions contemplated hereby,
(C)
directed that this Agreement be submitted to the holders of
Shares for
their approval of the "agreement of merger" contained in this
Agreement at
a stockholders' meeting duly called and held for such purpose;
(D) taken
all actions necessary to provide that restrictions applicable to
business
combinations contained in Section 203 of the DGCL are not, and
will not
be, applicable to the Merger; (E) irrevocably resolved to elect,
to the
extent permitted by Law, for the Company not to be subject to
any Takeover
Statute; and (F) received a written opinion of its financial
advisor to
the effect that, as of the date of such opinion, the
consideration to be
received by the holders of the Shares in the Merger is fair from
a
financial point of view to such holders (it being agreed and
understood
that such opinion is solely for the benefit of the
- 11 -
Company's board of directors and may not be relied upon by
Parent, Merger
Sub or any of their respective, directors, officers,
employees,
Affiliates, advisor or representatives). As used herein, the
term
"Affiliate" means, with respect to any Person, (A) each Person
that,
directly or indirectly, owns or controls such Person, and (B)
each Person
that controls, is controlled by or is under common control with
such
Person or any Affiliate of such Person, provided that, for the
purpose of
this definition, "control" of a Person shall mean the
possession, directly
or indirectly, of the power to direct or cause the direction of
its
management or policies, whether through the ownership of
voting
securities, by contract or otherwise.
(d) Governmental Filings; No Violations; Certain Contracts.
(i) Other than the filings and/or notices (A) pursuant
to Section 1.3, (B) under the Hart-Scott-Rodino Antitrust
Improvements Act
of 1976, as amended (the "HSR Act") and any other applicable
merger
control laws, (C) under the Exchange Act, and (D) under the
rules of
NASDAQ (the "Company Approvals"), no notices, reports or other
filings are
required to be made by the Company with, nor are any
consents,
registrations, approvals, permits or authorizations required to
be
obtained by the Company from, any domestic or foreign
governmental or
regulatory authority, agency, commission, body, court or
other
legislative, executive or judicial governmental entity (each,
a
"Governmental Entity"), in connection with the execution,
delivery and
performance of this Agreement by the Company and the
consummation of the
Merger and the other transactions contemplated hereby, except
those that
the failure to make or obtain would not, individually or in the
aggregate,
reasonably be expected to have a Company Material Adverse Effect
or to
prevent, materially delay or materially impair the consummation
of the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this
Agreement by the Company do not, and the consummation of the
Merger and
the other transactions contemplated hereby will not, directly
or
indirectly (with or without the giving of notice or lapse of
time, or
both) constitute or result in (A) a breach or violation of, or a
default
under, or conflict with, the certificate of incorporation or
bylaws of the
Company or the comparable governing instruments of any of its
Subsidiaries
(B) with or without notice, lapse of time or both, a breach or
violation
of, a termination (or right of termination) or a default under,
the
creation or acceleration of any obligations or the creation of a
Lien on
any of the assets of the Company or any of its Significant
Subsidiaries
pursuant to any material agreement, lease, license, contract,
note,
mortgage, indenture, arrangement or other obligation (each, a
"Contract")
binding upon the Company or any of its Subsidiaries or, (C)
assuming
compliance with the matters referred to in Section 5.1(d)(i), a
violation
of any Law to which the Company or any of its Subsidiaries is
subject,
except, in the case of clause (B) or (C) above, for any such
breach,
violation, termination (or right thereof), default, creation,
acceleration
or change that would not, individually or in the aggregate,
reasonably be
expected to have a Company Material Adverse Effect or to
prevent,
- 12 -
materially delay or materially impair the consummation of the
transactions
contemplated by this Agreement.
(e) Company Reports; Financial Statements.
(i) The Company has filed with or furnished to (as
applicable) the Securities and Exchange Commission (the "SEC")
on a timely
basis all forms, statements, certifications, reports and
documents
required to be filed with or furnished to the SEC by the Company
under the
Exchange Act or the Securities Act of 1933, as amended (the
"Securities
Act") since January 1, 2004 (the "Applicable Date") (such
forms,
statements, certifications, reports and documents, including all
exhibits,
appendices and attachments included or incorporated therein,
filed or
furnished since the Applicable Date through the date hereof,
including any
amendments thereto, the "Company Reports"). None of the
Company's
Subsidiaries is required to file any documents with the SEC.
Each of the
Company Reports, at the time of its filing or being furnished,
complied in
all material respects with the applicable requirements of the
Securities
Act, the Exchange Act and the Sarbanes-Oxley Act of 2002
(the
"Sarbanes-Oxley Act"), and any rules and regulations
promulgated
thereunder applicable to the Company Reports. As of their
respective dates
(or, if amended, as of the date of such amendment), the Company
Reports
did not contain any untrue statement of a material fact or omit
to state a
material fact required to be stated therein or necessary to make
the
statements made therein, in light of the circumstances in which
they were
made, not misleading.
(ii) The Company is in compliance in all material
respects with the applicable listing and corporate governance
rules and
regulations of NASDAQ.
(iii) Each of the consolidated balance sheets included in
or incorporated by reference into the Company Reports (including
the
related notes and schedules) fairly presents in all material
respects the
consolidated financial position of the Company and its
consolidated
Subsidiaries as of its date and each of the consolidated
statements of
operations, stockholders' equity and cash flows included in
or
incorporated by reference into the Company Reports (including
any related
notes and schedules) fairly presents in all material respects
the
consolidated results of operations, retained earnings and
changes in
financial position, as the case may be, of the Company and
its
consolidated Subsidiaries for the periods set forth therein
(subject, in
the case of unaudited statements, to notes and year-end
adjustments), and
in each case have been prepared in accordance with U.S.
generally accepted
accounting principles ("GAAP") applied on a consistent basis,
except as
may be noted otherwise therein. All of the Company's
Subsidiaries are
consolidated for accounting purposes.
(iv) The Company and its Subsidiaries have implemented
and maintained a system of internal accounting controls and
financial
reporting (as required by Rule 13a-15(a) under the Exchange Act)
that are
designed to provide reasonable assurances regarding the
reliability of
financial reporting and the preparation of financial
- 13 -
statements in accordance with GAAP. The Company maintains
disclosure
controls and procedures required by Rule 13a-15 or 15d-15 under
the
Exchange Act. Such disclosure controls and procedures (i) are
designed to
ensure that information required to be disclosed by the Company
is
recorded and reported on a timely basis to the individuals
responsible for
the preparation of the Company's filings with the SEC and other
public
disclosure documents, and (ii) have been evaluated for
effectiveness in
accordance with the Sarbanes-Oxley Act and the results of such
evaluations
have been disclosed in the Company Reports to the extent
required by the
Sarbanes-Oxley Act. The Company has disclosed, based on its most
recent
evaluation prior to the date of this Agreement, to the Company's
outside
auditors and the audit committee of the board of directors of
the Company
and identified in Section 5.1(e)(iv) of the Company Disclosure
Schedule
any significant deficiencies and material weaknesses in the
design or
operation of its internal controls over financial reporting (as
defined in
Rule 13a-15(f) of the Exchange Act) that would reasonably be
likely to
adversely affect the Company's ability to record, process,
summarize and
report financial information. The Company has changed its
internal
controls to correct such deficiencies and material weaknesses,
and other
than such corrections, since the date of such evaluation, there
have been
no significant changes in internal controls or in other factors
that could
significantly affect the Company's internal controls. The
Company has no
Knowledge of any fraud, whether or not material, that involves
management
or other employees who have a significant role in the Company's
internal
controls over financial reporting.
(f) Absence of Certain Changes. Since February 25, 2006, the
Company and its Subsidiaries have conducted their respective
businesses in
the ordinary and usual course of such businesses consistent with
past
practice and there has not been:
(i) Changes that individually or in the aggregate
constitute or would reasonably be expected to have a Company
Material
Adverse Effect;
(ii) other than any cash dividend on Shares disclosed in
the Company Reports filed with the SEC on or before the date
hereof, any
declaration, setting aside or payment of any dividend or
other
distribution with respect to any shares of capital stock of the
Company or
any of its Subsidiaries (except for dividends or other
distributions by
any direct or indirect wholly owned Subsidiary to the Company or
to any
wholly owned Subsidiary of the Company);
(iii) any material change in any method of accounting or
accounting practice by the Company or any of its Subsidiaries,
except as
may be appropriate to conform to changes in statutory or
regulatory
accounting rules or GAAP or regulatory requirements with respect
thereto;
(iv) other than any stock repurchases or buybacks, or
pursuant to any stock repurchase or buyback program, disclosed
in the
Company Reports filed with the SEC on or before the date hereof
and
identified in the Company Disclosure Schedule, any
reclassification,
combination, split, subdivision, redemption, repurchase or
other
- 14 -
acquisition of any shares of capital stock or other securities
of or other
ownership interests in the Company or of any of its Subsidiaries
or any
amendment of any material terms of any outstanding equity
security of the
Company or any of its Subsidiaries;
(v) except as disclosed in the Company Reports filed
with the SEC as of the date hereof, required pursuant to the
Benefit Plans
or the Stock Plans in effect on the date of this Agreement and
disclosed
on Section 5.1(f)(v) of the Company Disclosure Schedule,
required pursuant
to any employment, separation or collective bargaining agreement
disclosed
on Section 5.1(f)(v) of the Company Disclosure Schedule, or as
otherwise
required by applicable Law, any (A) grant or provision for
severance or
termination payments or benefits to any director or officer of
the Company
or employee, independent contractor or consultant of the Company
or any of
its Subsidiaries, except for grants or provisions for such
payments or
benefits with respect to employees who are not also executive
officers in
the ordinary course of business consistent with past practice,
(B)
increase (or commitment to increase) in the compensation,
perquisites or
benefits payable to any director, officer, employee,
independent
contractor or consultant of the Company or any of its
Subsidiaries, except
for increases with respect to employees who are not also
executive
officers in the ordinary course of business consistent with past
practice,
(C) grant of equity or equity-based awards that may be settled
in Shares
or any other equity securities of the Company or any of its
Subsidiaries
or the value of which is linked directly or indirectly, in whole
or in
part, to the price or value of any Shares or other equity
securities of
the Company or any of its Subsidiaries, (D) acceleration in the
vesting or
payment of compensation payable or benefits provided or to
become payable
or provided to any current or former director, officer,
employee,
independent contractor or consultant, (E) change in the terms of
any
outstanding Company Option, or (F) establishment or adoption of
any new
arrangement that would be a Benefit Plan or would terminate or
materially
amend any existing Benefit Plan (other than changes necessary to
comply
with applicable Law or the Company's obligations under this
Agreement);
(vi) any material Tax election made, altered or revoked
by the Company or any of its Subsidiaries or any settlement or
compromise
of any material Tax liability made by the Company or any of
its
Subsidiaries;
(vii) any action which, if it had been taken after the
date hereof, would have required Parent's consent under Section
6.1; or
(viii) any agreement (other than this Agreement) or
commitment to take any of the actions specified in this Section
5.1(f).
(g) Litigation and Liabilities.
(i) All of the actions, suits, claims, hearings,
arbitrations or proceedings pending, or, to the Knowledge of the
Company,
threatened, against the Company or any of its Subsidiary or any
of their
respective assets or properties before
- 15 -
any arbitrator or Governmental Entity (excluding office actions
issued by
the U.S. Patent and Trademark Office or similar offices
pertaining to
Owned Intellectual Property that is not material to the conduct
of the
business of the Company and its Subsidiaries) are set forth in
Section
5.1(g)(i) of the Company Disclosure Schedule. There are no
civil, criminal
or administrative actions, suits, claims, hearings, arbitrations
or other
proceedings pending or, to the Knowledge of the Company,
threatened
against or directly involving the Company or any of its
Subsidiaries,
which would, individually or in the aggregate, reasonably be
expected to
have a Company Material Adverse Effect. Neither the Company nor
any of its
Subsidiaries is a party to or subject to the provisions of any
material
judgment, order, writ, injunction, decree or award of any
arbitrator or
Governmental Entity. To the Company's Knowledge, no officer,
director or
other key employee of the Company or any of its Subsidiaries is
(i)
subject to any order, writ, injunction, judgment or decree that
prohibits
such officer, director or key employee from engaging in or
continuing any
conduct, activity or practice relating to the business of the
Company or
any of its Subsidiaries or (ii) a defendant in any material
civil,
criminal or administrative action, suit, claim, hearing,
arbitration,
investigation or other proceeding in connection with his or her
status as
an officer or director of the Company or any of its
Subsidiaries.
(ii) Neither the Company nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued,
absolute,
contingent or otherwise) required by GAAP to be set forth on
a
consolidated balance sheet of the Company and its Subsidiaries
or in the
notes thereto, other than liabilities and obligations (A) set
forth in the
Company's consolidated balance sheet as of November 25, 2006
included in
the Company Reports, (B) incurred in the ordinary course of
business
consistent with past practice since November 25, 2006 and that
would not,
individually or in the aggregate, reasonably be expected to have
a Company
Material Adverse Effect or (C) incurred in connection with the
Merger or
the transactions contemplated by this Agreement.
The term "Knowledge" when used in this Agreement with respect to
the
Company shall mean the actual knowledge of those persons set
forth in Section
5.1(g) of the Company Disclosure Schedule, and does not include
information of
which they or any of them may be deemed to have constructive
knowledge.
(h) Employee Benefits.
(i) All employee benefit plans covering current or
former officers, directors, employees of the Company or its
Subsidiaries
(collectively, the "Employees") or current or former
independent
contractors or consultants of the Company or its Subsidiaries,
or under
which there is a financial obligation of the Company or any of
its
Subsidiaries, including, but not limited to, "employee benefit
plans"
within the meaning of Section 3(3) of the Employee Retirement
Income
Security Act of 1974, as amended ("ERISA"), whether or not
subject to
ERISA, and deferred compensation, stock option, stock purchase,
stock
appreciation rights, other stock or stock based, incentive and
bonus,
employment, retention, consulting, change in control, salary
continuation
or disability,
- 16 -
pension, insurance, vacation, health, dental, welfare,
profit-sharing,
retirement, termination or severance plan, or other benefit
program,
policy, practice, arrangement or agreement (the "Benefits
Plans") that are
material to the Company and its Subsidiaries, taken as whole,
other than
Benefit Plans maintained outside of the United States primarily
for the
benefit of Employees working outside of the United States (such
plans
hereinafter being referred to as "Non-U.S. Benefit Plans"), are
listed in
Section 5.1(h)(i) of the Company Disclosure Schedule. True and
complete
copies of all Benefit Plans listed in Section 5.1(h)(i) of the
Company
Disclosure Schedule have been made available to Parent.
(ii) The Company has furnished or made available to
Parent copies of the two most recent annual reports (Form 5500
series) for
each Benefit Plan covered by ERISA, the most recent summary
plan
description for each Benefit Plan covered by ERISA; if the
Benefit Plan is
funded through a trust, insurance or any funding vehicle, the
trust,
insurance contract or other funding agreement; any agreement
providing for
the provision of administrative or investment management
services with
respect to the Benefit Plan.
(iii) Except for such matters that would not, individually
or in the aggregate, reasonably be expected to have a Company
Material
Adverse Effect:
(A) (i) all Benefit Plans, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA (each, a
"Multiemployer
Plan") and Non U.S. Benefit Plans, (collectively, "U.S. Benefit
Plans"),
have been established, maintained and operated in compliance
with their
terms, ERISA and the Code and all other applicable Laws and each
Benefit
Plan that is intended to qualify under Section 401 of the Code
has
received a favorable determination letter from the Internal
Revenue
Service and nothing has occurred since the date of such letter
that has or
is, to the Knowledge of the Company, likely to adversely affect
such
qualification, (ii) the consolidated financial statements of the
Company
and its Subsidiaries fully reflect all expenses accrued under
GAAP with
respect to each Benefit Plan, and all contributions required
with respect
to each Benefit Plan have been made on a timely basis, and (iii)
no
"prohibited transaction," within the meaning of Section 4975 of
the Code
or Sections 406 and 407 of ERISA, and not otherwise exempt under
Section
408 of ERISA, has occurred with respect to any Benefit Plan and,
to the
Knowledge of the Company (except with respect to the Company),
no
fiduciary (within the meaning of Section 3(21) of ERISA) of any
Benefit
Plan subject to Part 4 of Title I of ERISA has committed a
breach of
fiduciary duty that could subject the Company or any Subsidiary
to any
liability;
(B) neither the Company nor any of its Subsidiaries has
engaged
in a transaction that, assuming the taxable period of such
transaction
expired as of the date hereof, could subject the Company or any
Subsidiary
to a tax, fine, lien (against the Company, any of its
Subsidiaries, or the
assets of Benefit Plan or related trusts), penalty or other
liability
imposed by either Section 4975 of the Code or Section 502(i) of
ERISA or
any other similar provision of non-U.S. Law, and neither the
Company nor
any ERISA
- 17 -
Affiliate has ever incurred any penalty or tax with respect to
any Benefit
Plan under Chapter 43 of the Code;
(C) there are no actions, suits or claims pending, or to the
Knowledge of the Company, threatened (other than routine claims
for
benefits) relating to any Benefit Plan, and there are no
audits,
inquiries, or proceedings pending or, to the Knowledge of the
Company,
threatened by any governmental authority with respect to any
Benefit Plan;
(D) neither the Company nor any of its Subsidiaries has or
is
expected to incur any liability under Title IV of ERISA with
respect to
any "single-employer plan", within the meaning of Section
4001(a)(15) of
ERISA, any Multiemployer Plan or any "multiple employer plan",
within the
meaning of Section 4063/4064 of ERISA or section 413(c) of the
Code, or
any "multiemployer welfare arrangement" within the meaning of
Section
3(40)(A) of ERISA, in each case currently or formerly maintained
or
contributed to by any of them or any other entity which is
considered one
employer with the Company under Section 4001 of ERISA or Section
414 of
the Code (an "ERISA Affiliate");
(E) the Company and its Subsidiaries do not have any
unsatisfied withdrawal liability with respect to a Multiemployer
Plan
under Subtitle E of Title IV of ERISA;
(F) with respect to each Benefit Plan that is a "single
employer plan" within the meaning of Section 4001(15) of ERISA,
(i) no
liability to the Pension Benefit Guaranty Corporation (the
"PBGC") has
been incurred (other than for premiums not yet due); (ii) no
notice of
intent to terminate any such Benefit Plan has been filed with
the PBGC or
distributed to participants and no amendment terminating any
such Benefit
Plan has been adopted; (iii) no proceedings to terminate any
such Benefit
Plan have been instituted by the PBGC and no event or condition
has
occurred which might constitute grounds under Section 4042 of
ERISA for
the termination of, or the appointment of a trustee to
administer, any
such plan; (iv) no "accumulated funding deficiency" or
"liquidity
shortfall" within the meaning of Section 302 of ERISA or Section
412 of
the Code, whether or not waived, has been incurred; (v) no
"reportable
event" within the meaning of Section 4043 of ERISA (for which
the 30-day
notice requirement has not been waived by the PBGC) has occurred
within
the last six years; (vi) no Lien has arisen under ERISA or the
Code, or is
likely to arise, on the assets of the Company or any ERISA
Affiliate;
(vii) there has been no cessation of operations at a facility
subject to
the provisions of Section 4062(e) of ERISA within the last six
years;
(viii) the value of the assets and liabilities thereof as stated
in the
Company's most recent Financial Statements is accurate and
correct and
nothing has occurred since the date of such most recent
Financial
Statements that would adversely effect such valuation; (ix) none
of the
Company or any of its ERISA Affiliates are required to provide
security to
a Benefit Plan under Section 401(a)(29) of the Code, and (x) no
event has
occurred that places participants on actual or constructive
notice of such
a Benefit Plan's voluntary, involuntary, or distress
termination;
- 18 -
(G) each Benefit Plan that is a "welfare plan" within the
meaning of Section 3(2) of ERISA may be terminated at any
time
unilaterally by the Company or its Subsidiaries without any
material
liability to them, and all claims incurred by the Company or any
of its
Subsidiaries or ERISA Affiliates are (i) insured pursuant to a
Contract of
insurance whereby the insurance company bears any risk of loss
with
respect to such claims, (ii) covered under a contract with a
health
maintenance organization (an "HMO") pursuant to which the HMO
bears the
liability for claims or (iii) reflected as a liability or
accrued for on
the consolidated financial statements for the Company and
its
Subsidiaries; and
(H) all Non-U.S. Benefit Plans have been established,
maintained and operated in compliance with their terms and all
applicable
Laws and each Non-U.S. Benefit Plan intended to qualify for
favorable tax
treatment outside the United States is so qualified.
(iv) All Non-U.S. Benefit Plans are listed in Section
5.1(h)(iv) of the Company Disclosure Schedule. The Company has
made
available true and complete copies of all material Non-U.S.
Benefit Plans.
With respect to each Non-U.S. Benefit Plan that is an "employee
pension
benefit plan" within the meaning of Section 3(2) of ERISA,
whether or not
subject to ERISA, the liabilities of such Non-U.S. Benefit Plan
do not
exceed the assets of such Non-U.S. Benefit Plan by a material
amount.
(v) Neither the execution or delivery of this Agreement
nor the consummation of the transactions contemplated by this
Agreement
will, alone or in conjunction with any other event (whether
contingent or
otherwise), (i) result in any material payment or benefit
becoming due or
payable, or required to be provided, to any Employee,
independent
contractor or consultant (ii) materially increase the amount or
value of
any benefit or compensation otherwise payable or required to be
provided
to any Employee, independent contractor or consultant (whether
or not such
payment would constitute a "parachute payment" or "excess
parachute
payment" within the meaning of Section 280G of the Code), (iii)
result in
the acceleration of the time of payment, vesting or funding of
any such
benefit or compensation or (iv) result in any amount failing to
be
deductible by reason of Section 280G of the Code.
(vi) Section 5.1(h)(vi) of the Company Disclosure
Schedule sets forth a list of all (A) employment agreements,
arrangements
and other such contracts with current or former officers,
directors,
employees and agents, in each case providing for annual payments
by the
Company, the Surviving Corporation or any of the Company's
Subsidiaries
from and after the Closing of more than $200,000, and (B) all
severance,
change in control or similar arrangements with any current or
former
directors, officers, employees, or agents that will result in
any
obligation (absolute or contingent) of the Company, the
Surviving
Corporation or any of the Company's Subsidiaries to make any
payment to
any current or former directors, officers, employees, or agents
following
either the consummation of the transactions contemplated
hereby,
termination of employment (or the relevant relationship), or
both, and
true, correct and complete copies
- 19 -
of all such agreements, arrangements and contracts referred to
in the
preceding clauses (A) and (B) have been delivered or made
available to
Parent.
(i) Compliance with Laws; Licenses. The businesses of each
of
the Company and its Subsidiaries have not been since the
Applicable Date,
and are not being, conducted in violation of any federal, state,
local or
foreign law, statute or ordinance, common law, or any rule or
regulation
of any Governmental Entity (collectively, "Laws") or of any
arbitrator,
except for violations that, individually or in the aggregate,
have not had
or would not reasonably be expected to have a Company Material
Adverse
Effect. To the Knowledge of the Company, no investigation or
review by any
Governmental Entity with respect to the Company or any of its
Subsidiaries
is pending or threatened. None of the Company, any of its
Subsidiaries or,
to the Knowledge of the Company, any of their respective
directors,
officers, agents or employees (on behalf of the Company or any
of its
Subsidiaries) has made any payments, including without
limitation, using
funds for contributions or expenses related to political
activity and
making payments to foreign or domestic government officials or
employees
or to foreign or domestic political parties or campaigns, in
violation of
applicable Law, including the Foreign Corrupt Practices Act of
1977. The
Company and its Subsidiaries have each obtained and are in
compliance with
all permits, certifications, approvals, registrations,
consents,
authorizations, franchises, variances, exemptions and orders
issued or
granted by a Governmental Entity ("Licenses") necessary to
conduct their
respective businesses as presently conducted, except for those
the absence
of which would not, individually or in the aggregate, reasonably
be
expected to have a Company Material Adverse Effect.
(j) Takeover Statutes; Absence of Rights Plan. No "fair
price,"
"moratorium," "control share acquisition" or other similar
anti-takeover
Law (each, a "Takeover Statute") or any anti-takeover provision
in the
Company's certificate of incorporation or bylaws is applicable
to the
Merger or the other transactions contemplated by this Agreement.
The
adoption of this Agreement and the Merger by the Company's board
of
directors represents all the actions necessary to render
inapplicable to
this Agreement, the Merger and the other transactions
contemplated by this
Agreement, the restrictions on "business combinations" (as used
in Section
203 of the DGCL) set forth in Section 203 of the DGCL to the
extent, if
any, such restrictions would otherwise be applicable to this
Agreement,
the Merger, the other transactions contemplated by this
Agreement or
Parent or Merger Sub or any of their Affiliates. Neither the
Company nor
any of its Subsidiaries is party to any rights agreement,
stockholder
rights plan (or similar plan commonly referred to as a "poison
pill") or
Contract (in each case other than the Stock Plans existing on
the date
hereof and Company Options issued thereunder) under which the
Company or
any of its Subsidiaries is or may become obligated to sell or
otherwise
issue, register, redeem, repurchase, vote, transfer or dispose
of any
shares of its capital stock or any other securities.
- 20 -
(k) Environmental Matters.
(i) With respect to the real property owned by the
Company that is located in Scranton, Pennsylvania ("Scranton"),
as of the
Applicable Date: (A) the Company and each of its Subsidiaries
has complied in
all material respects with all Environmental Laws and has not
received written
notice of any pending or threatened Environmental Action
relating to the Company
or any of its Subsidiaries relating to Scranton; (B) neither the
Company nor any
of its Subsidiaries has received any written notice from any
Governmental Entity
indicating that Scranton, or any real property adjacent thereto,
has been or may
be placed on any federal, state, or local list as a result of
the presence of
Hazardous Materials or violations of Environmental Law; (C) no
Hazardous
Materials have spilled, discharged, released, emitted, injected
or leaked from,
in, on, or migrated to or from Scranton in material violation of
applicable
Environmental Law; and (D) the Company has made available to
Parent copies of
all reports, audits, studies or analyses of any kind whatsoever
of the Company
or any of its Subsidiaries that are in the Company's possession,
custody or
control relating to Hazardous Materials at or on Scranton or any
Environmental
Action directly involving Scranton.
(ii) With respect to all real property other than
Scranton that is owned, leased or controlled by the Company or
any Subsidiary,
except in each case for such matters that would not,
individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect: (A)
the Company and its Subsidiaries have complied at all times
since the Applicable
Date with all applicable Environmental Laws; and (B) the Company
and its
Subsidiaries possess all permits, licenses, registrations,
identification
numbers, authorizations and approvals required under applicable
Environmental
Laws for the operation of their respective businesses as
presently conducted.
Neither the Company nor any Subsidiary has (i) received any
written claim,
request for information, notice of violation or citation
concerning any material
violation or potential or alleged material violation of any
applicable
Environmental Law or concerning any potential, actual or alleged
material
responsibility or liability of the Company or any of its
Subsidiaries arising
under or pursuant to any Environmental Law or (ii) created or
assumed any
material liabilities, guarantees or obligations under any
Environmental Law,
consent decree or contract with any third party, including any
Governmental
Entity, related to any property currently or formerly owned,
operated or leased
by the Company or any of its Subsidiaries. There are no writs,
injunctions,
decrees, orders or judgments outstanding, or any actions, suits
or proceedings
pending or, to the Knowledge of the Company, threatened,
concerning material
noncompliance by, or actual or potential material liability of,
the Company or
any Subsidiary with any Environmental Law. The Company has made
available to
Parent copies of all reports, audits, studies or analyses of any
kind whatsoever
of the Company or any of its Subsidiaries that are in the
Company's possession,
custody or control relating to Hazardous Materials at or on such
real property
or any Environmental Action directly involving such real
property.
As used herein, (A) the term "Environmental Law" means, as
currently in effect, any applicable law, regulation, code,
license, permit,
order, judgment, decree or injunction from any Governmental
Entity (1)
concerning the protection of the environment, (including,
without limitation,
air, water, soil and natural resources) or (2) the use, storage,
handling,
release or disposal of Hazardous Substances, (B) the term
"Hazardous Substance"
means any substance
- 21 -
presently listed, defined, designated or classified as
hazardous, toxic or
radioactive under any applicable Environmental Law including,
without
limitation, petroleum and any derivative or by-products thereof
and (C) the term
"Environmental Action" means any action, suit, claim, hearing,
arbitration or
proceeding (whether judicial or administrative) by or before any
Governmental
Entity involving violations of Environmental Laws or releases,
discharges, leaks
of Hazardous Materials in, on, or migrating to or from the any
real property
owned, leased or controlled by the Company.
(l) Taxes.
(i) The Company and each of its Subsidiaries: (A) have
prepared in good faith and duly and timely filed (taking into
account any
extension of time within which to file) all income and other
material Tax
Returns required to be filed by any of them, and all such Tax
Returns
were, at the time they were filed, true, correct and complete in
all
material respects, (B) have timely paid all material Taxes that
are
required to be paid by any of them (whether or not shown on any
Tax
Return), (C) have established adequate reserves in accordance
with GAAP
for all Taxes not yet due and payable, in respect of taxable
periods (or
portions thereof) ending on or prior to the Closing Date, (D)
have timely
withheld and paid over to the appropriate Governmental Entity
all amounts
that the Company or any of its Subsidiaries is obligated to
withhold from
amounts paid or owing to any employee, independent contractor,
creditor,
stockholder, affiliate or third party except where the failure
to so
withhold and pay such amounts would not, individually or in the
aggregate,
reasonably be expected to have a Company Material Adverse
Effect, and are
in compliance in all material respects with all applicable rules
and
regulations regarding the solicitation, collection and
maintenance of any
forms, certifications and other information required in
connection
therewith, and (E) have not requested or been granted any
waivers or
extensions of any statute of limitations with respect to any
material
amount of Taxes or agreed to any extension of time with respect
to any
material amount of Tax assessment or deficiency.
(ii) Neither the Company nor any of its Subsidiaries has
been a member of an affiliated group of corporations (within the
meaning
of Section 1504 of the Code) or any similar group defined under
a similar
provision of state, local or foreign Law, other than a group of
which the
Company is the common parent, for any taxable period for which
the statute
of limitations has not expired. Neither the Company nor any of
its
Subsidiaries (A) is a party to any agreement or arrangement
relating to
the indemnification, apportionment, sharing, separation,
assignment or
allocation of any material Tax or material Tax asset (other than
an
agreement or arrangement solely among members of a group the
common parent
of which is the Company) or any closing agreement with any Tax
Authority
or (B) has any material liability for Taxes of any Person (other
than the
Company or any of its Subsidiaries) under Treasury Regulations
section
1.1502-6 (or any predecessor or successor thereof or any
analogous or
similar provision of state, local or foreign Tax Law), by
contract,
agreement or otherwise. No
- 22 -
power of attorney with respect to any material Taxes of the
Company or any
of its Subsidiaries will be in force on the Closing Date.
(iii) To the Knowledge of the Company, as of the date
hereof, there are not pending or threatened in writing any
audits,
examinations, investigations or other proceedings in respect of
any
material amount of Taxes or material Tax matters of the Company
or any of
its Subsidiaries. The Company has made available to Parent (A)
true and
correct copies of the income and other material Tax Returns
filed by the
Company and its Subsidiaries for the 2003, 2004, 2005 and 2006
fiscal
years and (B) a list of all audits, examinations, investigations
or other
proceedings relating to such Tax Returns.
(iv) Neither the Company nor any of its Subsidiaries has
been a "controlled corporation" or a "distributing corporation"
in any
distribution that was purported or intended to be governed by
Section 355
of the Code (or any similar provision of state, local or foreign
Law) (A)
occurring during the two-year period ending on the date hereof,
or (B)
that otherwise constitutes part of a "plan" or "series of
related
transactions" (within the meaning of Section 355(e) of the Code)
that
includes the Merger.
(v) Neither the Company nor its Subsidiaries have
engaged in any "reportable transaction" (as such term is defined
in
Treasury Regulations section 1.6011-4(b)(1)) or any similar
provision of
state, local or foreign Tax Law.
As used in this Agreement, (A) the term "Tax" (including,
with
correlative meaning, "Taxes") includes all federal, state, local
and foreign
income, profits, franchise, gross receipts, gains, capital
gains, customs duty,
capital stock, escheat, severances, stamp, payroll, sales,
employment, social
security, unemployment, disability, use, real property, personal
property,
withholding, excise, production, recording, value added,
transfer, occupancy,
alternative or add-on minimum, estimated and other taxes, duties
or assessments
of any nature whatsoever, together with all interest, penalties
and additions ,
whether disputed or not, any liability for an amount of such
Taxes as a
successor, transferee or indemnitor, and any liability pursuant
to Treasury
Regulations section 1.1502-6 or any similar provision of state,
local or foreign
Law, imposed with respect to such amounts and any interest in
respect of such
penalties and additions, (B) the term "Tax Return" includes all
returns and
reports (including forms, elections, declarations, disclosures,
claims for
refunds, schedules, attachments, estimates and information
returns or
statements) filed or required to be supplied to a Tax authority
relating to
Taxes (including any amendments thereof), and (C) "Treasury
Regulations" means
those final, temporary and proposed regulations promulgated by
the United States
Department of the Treasury or any agency thereunder and any
successor
regulations.
(m) Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective
bargaining
agreement with a labor union or labor organization, nor are
there any
employees of the Company or any of its Subsidiaries represented
by a labor
union, representative body, works council, or other labor
organization,
and there are, to the Knowledge of the Company, no activities
or
- 23 -
proceedings of any labor union, representative body, works
council, or
other organization to organize any employees of the Company or
any of its
Subsidiaries or compel the Company or any of its Subsidiaries to
bargain
with any such union or representative body. Since the Applicable
Date,
neither the Company nor any of its Subsidiaries is the subject
of any
material proceeding asserting that the Company or any of its
Subsidiaries
has committed an unfair labor practice and there is no pending
or, to the
Knowledge of the Company, threatened, nor has there been since
the
Applicable Date, any labor strike, boycott, dispute, walk-out,
work
stoppage, slow-down, lockout or any other similar event
involving the
Company or any of its Subsidiaries. Set forth in Section 5.1(m)
of the
Company Disclosure Schedule is a listing of all of the
arbitration
decisions since the Applicable Date affecting the employees
subject to the
collective bargaining agreement detailed in Section 5.1(m) of
the Company
Disclosure Schedule. The Company has complied in all material
respects
with all applicable laws with respect to employment and
employment
practices, terms and conditions of employment, wages and hours
and
occupational health and safety. Neither the Company nor any of
its
Subsidiaries has any liability under the WARN Act or any other
similar Law
requiring advance notification for the termination of employees.
There
have been no "mass layoff(s)" or "plant closing(s)" as defined
by the WARN
Act or any other similar Law requiring advance notification for
the
termination of employees during the prior twenty-four (24)
months. All
employees working for the Company or any of its Subsidiaries are
listed in
Section 5.1(m) of the Disclosure Schedule, which includes for
each
employee his or her (1) name, (2) job title, (3) salary, (4)
location and
(5) union status. Neither the Company nor any of its
Subsidiaries has
assigned any employment contract or other employment agreement
to which
the Company and/or any of its Subsidiaries is a party.
(n) Intellectual Property.
(i) Set forth on Section 5.1(n)(i) of the Company
Disclosure Schedule is a true and complete list of all domestic
and
foreign (A) issued patents and pending patent applications, (B)
trademark
and service mark registrations and applications for registration
thereof,
(C) copyright registrations and applications for registration
thereof, and
(D) internet domain name registrations, in each case that are
owned by the
Company or any of its Subsidiaries. With respect to each item
of
Intellectual Property required to be identified in Section
5.1(n)(i) of
the Company Disclosure Schedule, (x) the Company or a Subsidiary
of the
Company is the sole record owner of such item, free and clear of
any Lien,
and (y) such item is subsisting and has not been adjudged
invalid or
unenforceable and, to the Knowledge of the Company, such item is
valid and
enforceable.
(ii) Set forth on Section 5.1(n)(ii) of the Company
Disclosure Schedule is a true and complete list of all Company
IP
Agreements.
(iii) The Company and its Subsidiaries own or have
sufficient rights to use all Intellectual Property actually used
in and
material to, or necessary for the operation of, their businesses
as
presently conducted. Except as would not reasonably be
- 24 -
expected to have a Company Material Adverse Effect, all of such
rights
shall survive unchanged by the consummation of the
transactions
contemplated by this Agreement. No written claim has been
asserted or, to
the Knowledge of the Company, threatened against the Company or
its
Subsidiaries (A) seeking to deny or restrict the use by the
Company or any
Subsidiary of the Company of any of the Intellectual Property
owned by the
Company or any of its Subsidiaries (the "Owned Intellectual
Property"),
(B) alleging that the Intellectual Property licensed to the
Company or any
of its Subsidiaries (the "Licensed Intellectual Property") is
being
licensed or sublicensed in conflict with the terms of any
license or other
agreement, or (C) challenging the ownership, validity,
registerability or
enforceability, of any Owned Intellectual Property or
Licensed
Intellectual Property.
(iv) To the Knowledge of the Company, (A) no Person is
infringing or misappropriating in any material respect any
Owned
Intellectual Property, and (B) the operation of the business of
the
Company and its Subsidiaries as currently conducted and the use
by the
Company and its Subsidiaries of the Owned Intellectual Property
and the
Licensed Intellectual Property in connection therewith does not
infringe,
misappropriate or otherwise violate the Intellectual Property of
any other
Person.
For purposes of this Agreement "Company IP Agreements" means
all
material agreements pertaining to Owned Intellectual Property or
Licensed
Intellectual Property, excluding any agreement with respect
to
commercially-available, off-the-shelf software.
For purposes of this Agreement, the term "Intellectual
Property"
means all: (i) trademarks, service marks, brand names, Internet
domain names,
logos, symbols, trade dress, trade names, and similar indicia of
origin, all
applications and registrations for the foregoing, and all
goodwill associated
therewith, including all renewals of same; (ii) all inventions
(whether or not
patentable and whether or not reduced to practice), invention
disclosures,
patents, and applications therefor, including provisionals,
reissues, revisions,
divisions, continuations, continuations-in-part and renewal
applications; (iii)
trade secrets and confidential bus
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