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AGREEMENT AND PLAN OF MERGER
By and Among
MOTOR CARGO INDUSTRIES, INC.
UNION PACIFIC CORPORATION
and
MOTOR MERGER CO.
Dated as of October 15, 2001
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions..............................................2
ARTICLE II
THE OFFER
Section 2.1. The Offer................................................6
Section 2.2. Company Actions..........................................9
Section 2.3. Directors of the Company................................10
ARTICLE III
THE MERGER
Section 3.1. The Merger..............................................11
Section 3.2. The Closing; Effective Time.............................12
Section 3.3. Conversion of Securities................................12
Section 3.4. Exchange of Certificates................................13
Section 3.5. Options and Stock Appreciation Rights...................15
Section 3.6. Dissenting Shares.......................................15
Section 3.7. Articles of Incorporation and Bylaws....................16
Section 3.8. Directors and Officers..................................16
Section 3.9. Other Effects of Merger.................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1. Organization and Qualification..........................16
Section 4.2. Capitalization..........................................17
Section 4.3. Corporate Authorization; Validity of Agreement;
Company Action..........................................18
Section 4.4. Consents and Approvals; No Violations...................19
Section 4.5. SEC Reports and Financial Statements....................20
Section 4.6. Absence of Certain Changes..............................21
Section 4.7. No Undisclosed Liabilities..............................21
Section 4.8. Schedule 14D-9; Proxy Statement.........................22
Section 4.9. Employee Benefit Plans; ERISA...........................22
Section 4.10. Labor Matters...........................................25
Section 4.11. Litigation; Compliance with Law.........................27
Section 4.12. Taxes...................................................28
Section 4.13. Contracts...............................................30
Section 4.14. Environmental Matters...................................31
Section 4.15. Intellectual Property...................................32
Section 4.16. Title, Sufficiency and Condition of Assets..............35
Section 4.17. Transactions with Affiliates............................35
Section 4.18. Opinion of Financial Advisor............................35
Section 4.19. Broker's or Finder's Fee................................35
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 5.1. Organization and Qualification..........................36
Section 5.2. Corporate Authorization; Validity of Agreement;
Necessary Action........................................36
Section 5.3. Consents and Approvals; No Violations...................37
Section 5.4. Information To Be Supplied..............................38
Section 5.5. SEC Reports and Financial Statements....................38
Section 5.6. Financing...............................................39
Section 5.7. Taxes...................................................39
ARTICLE VI
COVENANTS
Section 6.1. Interim Operations of the Company.......................39
Section 6.2. Preparation of Proxy Statement; Company Shareholder
Meeting.................................................42
Section 6.3. Access to Information...................................44
Section 6.4. No Solicitation; Acquisition Proposals..................44
Section 6.5. Modifications to Recommendations........................47
Section 6.6. HSR Act Filings; Reasonable Best Efforts................48
Section 6.7. Litigation..............................................49
Section 6.8. Certain Benefit Matters.................................49
Section 6.9. Additional Agreements...................................49
Section 6.10. Publicity...............................................50
Section 6.11. Notification of Certain Matters.........................50
Section 6.12. Directors' and Officers' Indemnification and Insurance..50
Section 6.13. Rule 145 Affiliates.....................................51
Section 6.14. Cooperation.............................................51
Section 6.15. Tax-Free Reorganization Treatment.......................52
Section 6.16. Conveyance Taxes........................................53
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to Each Party's Obligations..................53
Section 7.2. Conditions to Obligations of Parent.....................54
Section 7.3. Frustration of Conditions...............................54
ARTICLE VIII
TERMINATION AND ABANDONMENT; EXPENSES
Section 8.1. Termination.............................................54
Section 8.2. Effect of Termination and Abandonment...................55
Section 8.3. Fees and Expenses.......................................55
ARTICLE IX
MISCELLANEOUS
Section 9.1. Amendment and Modification..............................58
Section 9.2. Waiver of Compliance; Consents..........................58
Section 9.3. Survival................................................58
Section 9.4. Notices.................................................59
Section 9.5. Binding Effect; Permitted Assignment....................60
Section 9.6. Governing Law...........................................60
Section 9.7. Submission to Jurisdiction; Waivers.....................60
Section 9.8. Waiver of Jury Trial....................................61
Section 9.9. Counterparts............................................61
Section 9.10. Interpretation..........................................61
Section 9.11. Entire Agreement........................................61
Section 9.12. Severability............................................62
Section 9.13. Third Party Beneficiaries...............................62
Section 9.14. Disclosure Schedule.....................................62
Annex A Conditions of the Offer.........................................A-1
INDEX OF DEFINED TERMS
Page
Acquisition Proposal....................................................47
affiliate...............................................................62
Agreement................................................................1
Antitrust Laws...........................................................2
Articles of Merger......................................................12
Beneficial Owner.........................................................2
Beneficially Owning......................................................2
Benefit Plans...........................................................23
Certificates............................................................14
Closing.................................................................12
Closing Date............................................................13
Code.....................................................................2
Company..................................................................1
Company Agreement.......................................................31
Company Group...........................................................28
Company Intellectual Property...........................................34
Company Material Adverse Effect..........................................2
Company Options.........................................................17
Company Plans...........................................................17
Company SEC Documents...................................................21
Company Shareholder Approval............................................19
Company Shareholder Meeting.............................................44
Company Shares...........................................................1
Confidentiality Agreement...............................................46
Consent.................................................................21
Continuing Director.....................................................11
Conveyance Taxes........................................................54
Copyrights..............................................................33
Disclosure Schedule......................................................3
Dissenting Shares.......................................................16
Drop Dead Date..........................................................56
Effective Time..........................................................13
Environmental Laws.......................................................3
Environmental Permits...................................................31
ERISA....................................................................3
ERISA Affiliate..........................................................3
Exchange Act.............................................................3
Exchange Agent..........................................................13
Exchange Offer Consideration.............................................3
Exchange Ratio...........................................................7
GAAP....................................................................22
Governmental Authority...................................................3
Hazardous Substances.....................................................4
HSR Act..................................................................4
including...............................................................62
Indebtedness.............................................................4
Intellectual Property...................................................33
IP Licenses.............................................................33
knowledge...............................................................62
Law......................................................................4
Lien.....................................................................5
Liquidated Amount.......................................................56
material................................................................62
Merger...................................................................1
Merger Consideration....................................................13
Merger Sub...............................................................1
Minimum Condition........................................................1
NASD.....................................................................5
NYSE.....................................................................5
Offer....................................................................1
Offer Documents..........................................................8
Offer Registration Statement.............................................8
Outside Date............................................................55
Parent...................................................................1
Parent Common Stock......................................................1
Parent Material Adverse Effect...........................................5
Parent SEC Documents....................................................39
Patents.................................................................33
Per Share Cash Consideration.............................................7
Permits..................................................................5
Permitted Liens..........................................................5
person..................................................................62
Preliminary Prospectus...................................................8
Proprietary Software....................................................34
RCRA....................................................................33
Recommendations..........................................................9
Release..................................................................5
Representation Letters..................................................53
Representative...........................................................6
Reverse Merger..........................................................53
Rule 145 Affiliate.......................................................6
Salary Continuation Agreements..........................................50
Schedule 14D-9..........................................................10
Schedule TO..............................................................8
SEC......................................................................6
Securities Act...........................................................6
Shareholder Agreements...................................................1
Shareholders.............................................................1
Skadden Arps............................................................53
Software................................................................34
Subsequent Determination................................................48
Subsequent Determination Notice.........................................48
subsidiary..............................................................62
Superior Proposal.......................................................47
Surviving Corporation...................................................12
Tax Opinion.............................................................53
Tax Return...............................................................6
Taxes....................................................................6
Termination Damages.....................................................58
Third Party..............................................................6
Title IV Plan...........................................................24
Trade Secrets...........................................................33
Trademarks..............................................................33
Transaction..............................................................6
Treasury Regulations....................................................30
Trigger Event...........................................................56
URBCA....................................................................1
Voting Debt.............................................................18
WARN Act................................................................27
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is
made and entered into as of October 15, 2001, by and among Motor Cargo
Industries, Inc., a Utah corporation (the "Company"), Union Pacific
Corporation, a Utah corporation ("Parent"), and Motor Merger Co., a Utah
corporation and wholly-owned subsidiary of Parent ("Merger Sub").
WITNESSETH:
WHEREAS, the respective Boards of Directors of the
Company, Parent and Merger Sub deem it advisable and in the best interests
of their respective shareholders that Parent engage in a strategic business
combination with the Company upon the terms and subject to the conditions
provided for in this Agreement;
WHEREAS, in furtherance thereof it is proposed that the
acquisition be accomplished by Parent commencing an offer (as it may be
amended from time to time as permitted by this Agreement, the "Offer") to
exchange in which each of the issued and outstanding shares of common
stock, no par value, of the Company (the "Company Shares"), upon the terms
and subject to the conditions set forth in this Agreement, may be exchanged
for the right to receive from Parent, at the election of the holder
thereof: (A) 0.26 of a share of common stock, par value $2.50 per share of
Parent ("Parent Common Stock"), or (B) $12.10 in cash;
WHEREAS, the Board of Directors of each of Parent (on its
own behalf and as the sole shareholder of Merger Sub), Merger Sub and the
Company have each approved this Agreement and the merger of the Company
with and into the Merger Sub (the "Merger"), with the Merger Sub continuing
as the surviving corporation in the Merger in accordance with the Utah
Revised Business Corporation Act (" URBCA") and upon the terms and
conditions set forth in this Agreement;
WHEREAS, contemporaneously with the execution and
delivery of this Agreement, as a condition and inducement to Parent's
willingness to enter into this Agreement, Parent is entering into
shareholder agreements with each of Harold R. Tate and Marvin L. Friedland
(together, the "Shareholders"), pursuant to which, among other things, each
Shareholder is agreeing to validly tender for exchange all Company Shares
owned by such Shareholder and elect to receive Parent Common Stock as
consideration for all of such shares (the "Shareholder Agreements"); and
WHEREAS, the Board of Directors of the Company has
unanimously approved the Offer and the Merger, this Agreement and the
transactions contemplated hereby in a manner which constitutes a directors'
action (as defined in Section 16-10a-852 of the URBCA), and has amended the
Bylaws of the Company to provide that Chapter 6 of Title 61 of the Utah
Code does not apply to control share acquisitions (as defined in Section
61-6-3 of the Utah Code) of capital stock of the Company, and such
approvals and amendment are sufficient to render Section 61-6-10 of the
Utah Code inapplicable to the Offer and the Merger, this Agreement, the
Shareholder Agreements and the transactions contemplated hereby and
thereby.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement and in the
Shareholder Agreements, the adequacy of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. When used in this Agreement,
the following terms shall have the respective meanings specified therefor
below (such meanings to be equally applicable to both the singular and
plural forms of the terms defined).
"Antitrust Laws" means, collectively, the HSR Act, the
Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other federal, state or foreign
statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
"Beneficial Owner" or "Beneficially Owning" shall have
the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
"Company Material Adverse Effect" shall mean any fact,
change, event or effect that, individually or together with other facts,
changes, events or effects, is, or would reasonably be expected to be,
materially adverse, in either the short-term or long-term, to the business,
operations, results of operations, financial condition, assets or
liabilities of the Company and its subsidiaries, taken as a whole, whether
related specifically to the Company or to more generally applicable facts,
changes, events or effects.
"Disclosure Schedule" means the disclosure schedule
delivered by the Company to Parent on or prior to the date hereof.
"Environmental Laws" shall mean all foreign, federal,
state and local laws, regulations, rules and ordinances relating to
pollution or protection of the environment or human health and safety,
including laws relating to releases or threatened releases of Hazardous
Substances into the indoor or outdoor environment (including ambient air,
surface water, groundwater, land, surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous Substances;
all laws and regulations with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Substances; all
laws relating to endangered or threatened species of fish, wildlife and
plants and the management or use of natural resources; and common law to
the extent it relates to or applies to exposure to or impact of Hazardous
Substances on persons or property.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder.
"ERISA Affiliate" shall mean, with respect to any person,
any trade or business, whether or not incorporated, that together with such
person would be deemed a "single employer" within the meaning of section
4001(b)(1) of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Exchange Offer Consideration" means the shares of Parent
Common Stock or the cash (including cash in lieu of fractional shares) to
be received upon consummation of the Offer pursuant to the terms set forth
in Section 2.1(a).
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof, any entity,
authority or body exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, including any
governmental or regulatory authority, agency, department, board,
commission, administration or instrumentality, any court, tribunal or
arbitrator or any self regulatory organization.
"Hazardous Substances" shall mean (a) any petrochemical
or petroleum products, radioactive materials, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls, and radon gas; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants" or "pollutants" or words of similar meaning and regulatory
effect; or (c) any other chemical, material or substance, exposure to which
is prohibited, limited, or regulated by any applicable Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as the same has been or may be amended from time
to time.
"Indebtedness" shall mean, with respect to any person,
without duplication, (a) all obligations of such person for borrowed money,
or with respect to deposits or advances of any kind to such person, (b) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person upon which interest charges
are customarily paid, (d) all obligations of such person under conditional
sale or other title retention agreements relating to property purchased by
such person, (e) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and
supplies incurred in the ordinary course of such person's business), (f)
all capitalized lease obligations of such person, (g) all obligations of
others secured by any Lien on property or assets owned or acquired by such
person, whether or not the obligations secured thereby have been assumed,
(h) all obligations of such person under interest rate or currency swap
transactions (valued at the termination value thereof), (i) all letters of
credit issued for the account of such person (excluding letters of credit
issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course of business), (j) all obligations
of such person to purchase securities (or other property) which arises out
of or in connection with the sale of the same or substantially similar
securities or property, and (k) all guarantees and arrangements having the
economic effect of a guarantee of such person of any indebtedness of any
other person.
"Law" means any federal, state, local, foreign or other
statute, law, ordinance, rule or regulation or any order, writ, decision,
injunction, judgment, award or decree.
"Lien" means any security interests, liens, claims,
pledges, options, rights of first refusal, agreements, charges or other
encumbrances of any nature or any other limitation or restriction
(including any restriction on the right to vote or sell the same, except as
may be provided under applicable federal or state securities laws).
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NYSE" shall mean the New York Stock Exchange.
"Parent Material Adverse Effect" shall mean any fact,
change, event or effect that, individually or together with other facts,
changes, events or effects, is, or would reasonably be expected to be,
materially adverse, in either the short-term or long-term, to the business,
operations, results of operations, financial condition, assets or
liabilities of Parent and its subsidiaries, taken as a whole, whether
related specifically to Parent or to more generally applicable facts,
changes, events or effects.
"Permits" means approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits, consents and rights.
"Permitted Liens" shall mean such of the following as to
which neither the Company nor any of its subsidiaries is otherwise subject
to criminal liability due to its existence: (i) Liens disclosed as such in
the financial statements of the Company SEC Documents, (ii) Liens for Taxes
not yet due and payable or, if due, (A) not delinquent or (B) being
contested in good faith by appropriate proceedings during which collection
or enforcement against the property is stayed, (iii) mechanics', workmen's,
repairmen's, warehousemen's, carriers' or other Liens, including statutory
Liens, arising or incurred in the ordinary course of business that do not
materially interfere with or materially affect the value or use of the
respective underlying asset to which such Liens relate, (iv) original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business and (v) Liens that
do not materially interfere with or materially affect the value or use in
any material respect of the respective underlying asset to which such Liens
relate.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment (including
ambient air, surface water, groundwater, and surface or subsurface strata)
or into or out of any property, including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater or
property.
"Representative" means with respect to any person, its
officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other agents, advisors or representatives.
"Rule 145 Affiliate" means an affiliate within the
meaning of Rule 145 promulgated under the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Taxes" shall mean (a) any and all taxes, charges, fees,
levies or other assessments, including income, gross receipts, excise, real
or personal property, sales, withholding, social security, occupation, use,
service, service use, license, net worth, payroll, franchise, transfer and
recording taxes, fees and charges, imposed by the Internal Revenue Service
or any taxing authority (whether domestic or foreign including any state,
county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)), including any interest
whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes,
charges, fees, levies or other assessments, (b) liability for the payment
of any amounts described in clause (a) above as a result of being a member
of an affiliated, consolidated, combined, unitary or similar group or as a
result of transferor or successor liability and (c) liability for the
payment of any amounts as a result of being a party to any tax sharing
agreement or as a result of any agreement to indemnify any other person
with respect to the payment of any amounts of the type described in clause
(a) or (b) above.
"Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including information returns, any documents with respect to or
accompanying payments of estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
"Third Party" means any person (or group of persons)
other than Parent and its respective subsidiaries.
"Transaction" means the combined series of transactions
contemplated by this Agreement, including the Offer and the Merger.
ARTICLE II
THE OFFER
Section 2.1. The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 hereof and that none of the
events set forth in paragraphs (a) through (l) of Annex A hereto shall have
occurred or be existing (and shall not have been waived by Parent), Parent
shall commence (within the meaning of Rule 14d-2 promulgated under the
Exchange Act) as promptly as reasonably practicable after the date hereof
the Offer to exchange for each Company Share, at the election of the holder
thereof, either: (i) 0.26 (the "Exchange Ratio") of a share of Parent
Common Stock; or (ii) cash in the amount of $12.10 (the "Per Share Cash
Consideration"). Shareholders who validly tender Company Shares but fail to
make an election shall be deemed to have elected to receive the Per Share
Cash Consideration for each share of Company Common Stock validly tendered.
(b) The obligation of Parent to accept for payment and
pay for Company Shares tendered pursuant to the Offer in the form and
amount specified in Section 2.1 shall be subject only to the conditions set
forth in Annex A hereto; provided, however, no certificates or scrip
representing fractional shares of Parent Common Stock shall be issued in
connection with the exchange of Parent Common Stock for Company Shares upon
consummation of the Offer, and in lieu thereof each tendering shareholder
who would otherwise be entitled to a fractional share of Parent Common
Stock in the Offer will be paid an amount in cash equal to the product
obtained by multiplying (A) the fractional share interest of such holder
(after taking into account all shares of Company Common Stock validly
tendered for exchange and not withdrawn by such holder) would otherwise be
entitled by (B) the closing price for a share of Parent Common Stock as
reported on the NYSE Composite Transaction Tape (as reported in the Wall
Street Journal, or, if not reported thereby, any other authoritative
source) on the date Parent accepts Company Shares for exchange in the
Offer. The Per Share Cash Consideration payable by Parent for each validly
tendered Company Share accepted for payment by Parent shall, subject to any
required withholding of Taxes, be net to the holder thereof in cash. The
Company agrees that no Company Shares held by the Company or any of its
subsidiaries will be tendered to Parent pursuant to the Offer. Parent
expressly reserves the right to waive any of such conditions, to increase
the Exchange Offer Consideration payable in the Offer and to make any other
changes in the terms of the Offer; provided, however, that no change may be
made without the prior written consent of the Company which (i) decreases
the amount payable per Company Share tendered pursuant to the Offer, (ii)
reduces the maximum number of Company Shares that may be exchanged in the
Offer, or (iii) imposes conditions to the Offer in addition to the
conditions set forth in Annex A hereto.
(c) Subject to the terms of the Offer and this Agreement
and the satisfaction or earlier waiver of all the conditions of the Offer
set forth in Annex A hereto as of any expiration date of the Offer, Parent
will accept for exchange and pay for all Company Shares validly tendered
and not withdrawn pursuant to the Offer as soon as practicable after the
expiration of the Offer. The initial expiration date of the Offer shall be
the twentieth business day following the commencement of the Offer. Parent
may, without the consent of the Company, extend the Offer (i) for one or
more periods beyond the initial expiration date but in no event ending
later than January 31, 2002 if, at the initial or extended expiration date
of the Offer, any of the conditions to the Offer set forth in Annex A
hereto shall not have been satisfied or to the extent permitted by this
Agreement, waived, and (ii) for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable Law. In
addition, Parent may elect to provide a subsequent offering period for
three business days to twenty business days after the acceptance of Company
Shares pursuant to the Offer pursuant to Rule 14d-11 promulgated under the
Exchange Act to meet the objective (which is not a condition to the Offer)
that there be validly tendered, in accordance with the terms of the Offer
and such subsequent offer, prior to the expiration date of such subsequent
offer and not withdrawn a number of Company Shares, which together with
Company Shares then owned by Parent, constitutes at least 90% of the then
outstanding Company Shares.
(d) As promptly as practicable after the date of this
Agreement, Parent shall prepare and file with the SEC a registration
statement on Form S-4 (together with any supplements or amendments thereto,
the "Offer Registration Statement") to register the offer and sale of
Parent Common Stock pursuant to the Offer. The Offer Registration Statement
will include a preliminary prospectus containing the information required
under Rule 14d-4(b) promulgated under the Exchange Act (the "Preliminary
Prospectus"). As soon as practicable on the date of commencement of the
Offer, Parent and Merger Sub shall (i) file with the SEC a Tender Offer
Statement on Schedule TO which will contain or incorporate by reference all
or part of the Preliminary Prospectus and forms of the related letter of
transmittal/election form and all other ancillary documents with respect to
the Offer (together with all supplements and amendments thereto, the
"Schedule TO") (the Schedule TO, the Offer Registration Statement and such
documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents")
and (ii) cause the Offer Documents to be disseminated to the holders of
Company Shares. Each of the Company, Parent and Merger Sub agrees promptly
to correct any information provided by it for use in the Offer Documents if
and to the extent that such information shall have become false or
misleading in any material respect. Parent and Merger Sub agree to take all
steps necessary to cause the Schedule TO and the Offer Registration
Statement as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Company Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given an opportunity to review
and comment on the Offer Documents prior to their being filed with the SEC
or disseminated to the holders of Company Shares. Each of Parent and Merger
Sub agrees to provide the Company and its counsel with any comments Parent
and Merger Sub or their counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt
of such comments and to consult with the Company and its counsel prior to
responding to any such comments.
Section 2.2. Company Actions.
(a) The Company hereby approves of and consents to the
Offer and represents and warrants that the Company's Board of Directors, at
a meeting duly called and held, has (i) amended the Bylaws of the Company
to provide that Chapter 6 of Title 61 of the Utah Code does not apply to
control share acquisitions (as defined in Section 61-6-3 of the Utah Code)
of capital stock of the Company, (ii) unanimously determined that this
Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are advisable and are fair to and in the best interests of the
shareholders of the Company, (iii) unanimously approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and
the Merger, in a manner which constitutes a directors' action (as defined
in Section 16-10a-852 of the URBCA), and (iv) unanimously resolved to
recommend that the shareholders of the Company accept the Offer, tender
their Company Shares to Parent thereunder and approve and adopt this
Agreement and the Merger (the recommendations referred to in this clause
(iv) are collectively referred to in this Agreement as the
"Recommendations"). The Company hereby consents to the inclusion in the
Offer Documents of the Recommendations and approval of the Board of
Directors described in the immediately preceding sentence, and the Company
shall not permit the Recommendations and approval of the Company's Board of
Directors or any component thereof to be modified in any manner adverse to
Parent or Merger Sub or to be withdrawn by the Company's Board or any
committee thereof, except as provided, and only to the extent set forth, in
Section 6.5 hereof.
(b) As promptly as practicable on the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") which shall
contain the Recommendations which pertain to this Agreement and the Offer.
The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be disseminated to holders of Company Shares as and to
the extent required by applicable federal securities laws. Each of the
Company, Parent and Merger Sub will promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it
shall have become false or misleading in any material respect, and the
Company will cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of Company Shares, in each case as
and to the extent required by applicable federal securities laws. Parent
and its counsel shall be given a reasonable opportunity to review and
comment upon the Schedule 14D-9 before it is filed with the SEC. In
addition, the Company agrees to provide Parent, Merger Sub and their
counsel with any comments that the Company or its counsel may receive from
time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to consult with Parent,
Merger Sub and their counsel prior to responding to any such comments.
(c) The Company shall promptly furnish Parent with
mailing labels containing the names and addresses of all record holders of
Company Shares and with security position listings of Company Shares held
in stock depositories, each as of a recent date, together with all other
available listings and computer files containing names, addresses and
security position listings of record holders and non-objecting beneficial
owners of Company Shares. The Company shall furnish Parent with such
additional information, including updated listings and computer files of
holders of Company Shares, mailing labels and security position listings,
and such other assistance as Parent or its agents may reasonably request.
Section 2.3. Directors of the Company.
(a) Effective upon the acceptance of Company Shares for
payment by Parent or any of its affiliates pursuant to the Offer, Parent
shall be entitled to designate such number of directors on the Board of
Directors of the Company as is equal to the product (rounded up to the next
whole number) obtained by multiplying the total number of directors on such
Board at that time by the percentage that the number of Company Shares then
Beneficially Owned by Parent (including such Company Shares so accepted)
bears to the total number of Company Shares then outstanding. In
furtherance thereof, the Company and its Board of Directors shall, after
the acceptance of such Company Shares by Parent or any of its affiliates
pursuant to the Offer, upon written request of Parent, immediately increase
the size of its Board of Directors or secure the resignations of such
number of incumbent directors or remove such number of incumbent directors
(to the extent permitted by applicable Law), or any combination of the
foregoing, as is necessary to enable Parent's designees to be so appointed
to the Board of Directors of the Company and shall cause Parent's designees
to be so appointed. Effective upon the acceptance of Company Shares by
Parent or any of its affiliates pursuant to the Offer, the Company shall,
if requested by Parent, also cause directors designated by Parent to
constitute at least the same percentage (rounded up to the next whole
number) of each committee of the Company's Board of Directors as is on the
Company's Board of Directors after giving effect to the foregoing changes
to the composition of the Company's Board of Directors. Notwithstanding the
foregoing, there shall be until the Effective Time at least two members of
the Company's Board of Directors who are directors of the Company prior to
consummation of the Offer (each, a "Continuing Director"). The Company and
its Board of Directors shall promptly take all legally available actions as
may be necessary to comply with their obligations under this Section
2.3(a), including all actions as may be permitted under the URBCA and the
Company's Articles of Incorporation and Bylaws.
(b) The Company shall comply with and immediately take
all actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under
Section 2.3(a), including mailing to shareholders, together with the
Schedule 14D-9, the information required by such Section 14(f) and Rule
14f-1 as is necessary to enable Parent's designees to be appointed to the
Company's Board of Directors. Parent will supply the Company and be solely
responsible for any information with respect to Parent, its designees and
its nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(c) Following the appointment of Parent's designees to
the Company's Board of Directors pursuant to this Section 2.3 and prior to
the Effective Time, (i) any amendment or termination of this Agreement by
the Company, (ii) any extension or waiver by the Company of the time for
the performance of any of the obligations or other acts of Parent or Merger
Sub under this Agreement, or (iii) any waiver of any of the Company's
rights hereunder shall, in any such case, require the concurrence of a
majority of the Continuing Directors then in office.
ARTICLE III
THE MERGER
Section 3.1. The Merger. Upon the terms and subject to
the conditions of this Agreement, the Merger shall be consummated in
accordance with the URBCA. At the Effective Time, upon the terms and
subject to the conditions of this Agreement, the Company shall be merged
with and into Merger Sub in accordance with the URBCA and the separate
existence of the Company shall thereupon cease, and Merger Sub, as the
surviving corporation in the Merger, shall continue its corporate existence
under the laws of the State of Utah as a wholly-owned subsidiary of Parent;
provided, however, that if Parent does not obtain a Tax Opinion, then, in
Parent's reasonable discretion, the Reverse Merger may be effected, and the
surviving corporation shall thereby become a wholly-owned subsidiary of
Parent. If the Reverse Merger is effected, then the separate existence of
Merger Sub shall cease and the Company shall become the surviving
corporation. The surviving corporation of the Merger or the Reverse Merger,
as the case may be, shall be herein referred to as the "Surviving
Corporation." In the event Parent elects to effect a Reverse Merger, all
references to "Merger" in this Agreement and all other ancillary or related
agreements, documents and instruments shall be deemed to be references to
the "Reverse Merger" and this Agreement and such other ancillary and
related agreements, documents and instruments shall be construed and
interpreted accordingly.
Section 3.2. The Closing; Effective Time.
(a) The closing of the Merger (the "Closing") shall take
place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four
Times Square, New York, New York 10036 at 10:00 a.m. local time as promptly
as practicable, on a date to be specified by the parties which shall be no
later than the third business day after the date that all of the closing
conditions set forth in Article VII have been satisfied or waived (if
waivable) unless another time, date and place is agreed upon in writing by
the parties hereto.
(b) Effective Time. Subject to the provisions of this
Agreement, on the Closing Date the Surviving Corporation shall deliver to
the Utah Department of Commerce, Division of Corporations and Commercial
Code, for filing articles of merger in accordance with Section 16-10a-1105
of the URBCA (the "Articles of Merger") executed in accordance with the
relevant provisions of the URBCA and shall make all other filings or
recordings required under the URBCA in order to effect the Merger. The
Merger shall become effective upon the filing of the Articles of Merger or
at such other later time as is agreed by the parties hereto and specified
in the Articles of Merger in the manner required by the URBCA. The time
when the Merger shall become effective is herein referred to as the
"Effective Time" and the date on which the Effective Time occurs is herein
referred to as the "Closing Date."
Section 3.3. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of the
holders of any securities of Merger Sub or the Company:
(a) Each Company Share that is owned by Parent, the
Company or any of their respective subsidiaries shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(b) Each issued and outstanding Company Share (other than
Company Shares to be cancelled in accordance with Section 3.3(a) hereof and
Dissenting Shares) shall automatically be converted into the right to
receive the Per Share Cash Consideration in cash (the "Merger
Consideration"), payable, without interest, to the holder of such Company
Share upon surrender, in the manner provided in Section 3.4 hereof, of the
certificate that formerly evidenced such Company Share. All such Company
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Company Shares shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 3.4 hereof.
(c) Each issued and outstanding share of common stock of
Merger Sub shall remain outstanding and be one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
Section 3.4. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent
shall designate a bank or trust company reasonably acceptable to the
Company to act as agent for the holders of Company Shares (other than
Company Shares held by Parent, the Company and any of their respective
subsidiaries and Dissenting Shares) in connection with the Merger (the
"Exchange Agent") to receive in trust, the aggregate Merger Consideration
to which holders of Company Shares shall become entitled pursuant to
Section 3.3(b) hereof. Parent shall deposit such aggregate Merger
Consideration with the Exchange Agent promptly following the Effective
Time. Such aggregate Merger Consideration shall be invested by the Exchange
Agent as directed by Parent. Any interest and other income resulting from
such investment shall be paid to Parent.
(b) Exchange Procedures. Promptly after the Effective
Time, Parent and the Surviving Corporation shall cause to be mailed to each
holder of record, as of the Effective Time, of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Company Shares (the "Certificates"), whose Company Shares were
converted pursuant to Section 3.3(b) hereof into the right to receive the
Merger Consideration, 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 proper delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent
may reasonably specify) and instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, properly completed and duly executed in
accordance with the instructions thereto, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration
for each Company Share formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled. No interest will
be paid or accrued on the cash payable upon the surrender of the
Certificates. Until surrendered as contemplated by this Section 3.4, each
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration for each
Company Share in cash as contemplated by Section 3.3(b) hereof.
(c) Transfer Books; No Further Ownership Rights in the
Shares. At the Effective Time, the stock transfer books of the Company
shall be closed, and thereafter there shall be no further registration of
transfers of the Company Shares on the records of the Company. From and
after the Effective Time, the holders of Certificates evidencing ownership
of the Company Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Company Shares, except
as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this
Article III.
(d) Termination of Fund; No Liability. At any time
following the one-year anniversary of the Effective Time, the Surviving
Corporation shall be entitled to require the Exchange Agent to deliver to
it any funds (including any interest received with respect thereto) which
had been made available to the Exchange Agent, and holders of Company
Shares not theretofore exchanged for the Merger Consideration shall be
entitled to look to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) only as general creditors thereof
with respect to the Merger Consideration payable upon due surrender of
their Certificates without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Exchange Agent nor any
party hereto shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Lost, Stolen or Destroyed Certificates. In the event
any Certificates shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Certificate(s) to
be lost, stolen or destroyed and, if required by Parent, the posting by
such person of a bond in such sum as Parent may reasonably direct as
indemnity against any claim that may be made against any party hereto or
the Surviving Corporation with respect to such Certificate(s), the Exchange
Agent will issue the Merger Consideration pursuant to Section 3.3(b)
deliverable in respect of the Shares represented by such lost, stolen or
destroyed Certificates.
(f) Withholding Taxes. Parent and Merger Sub shall be
entitled to deduct and withhold, or cause the Exchange Agent to deduct and
withhold, from the Exchange Offer Consideration or the Merger Consideration
payable to a holder of Company Shares pursuant to the Offer or the Merger,
or from the cash payments provided for in Section 3.5 of this Agreement,
any such amounts as are required under the Code, or any applicable
provision of state, local or foreign Tax law. To the extent that amounts
are so withheld by Parent or Merger Sub, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the
holder of the Company Shares or Company Options in respect of which such
deduction and withholding was made by Parent or Merger Sub.
(g) Transfer Taxes. If payment of the Exchange Offer
Consideration or the Merger Consideration payable to a holder of Company
Shares pursuant to the Offer or the Merger is to be made to a person other
than the person in whose name the surrendered Certificate is registered, it
shall be a condition of payment that the Certificate so surrendered shall
be properly endorsed or shall be otherwise in proper form for transfer and
that the person requesting such payment shall have paid all transfer and
other Taxes required by reason of the issuance to a person other than the
registered holder of the Certificate surrendered or shall have established
to the satisfaction of Parent that such Tax either has been paid or is not
applicable.
Section 3.5. Options. Parent acknowledges that in
connection with the transactions contemplated hereby, each Company Option
granted to an employee, officer or director of the Company under the
Company Plans shall become fully vested and exercisable in accordance with
the terms of the Company Plans. At the Effective Time, each such
then-outstanding Company Option shall be cancelled and the holder thereof
shall be entitled to receive as consideration for such cancellation, an
amount in cash (net of applicable withholdings) equal to the excess of (i)
the Per Share Cash Consideration over (ii) the per share exercise or strike
price of such Company Option multiplied by (iii) the number of shares
subject to such Company Option.
Section 3.6. Dissenting Shares. Notwithstanding any
provision of this Agreement to the contrary, each outstanding Company
Share, the holder of which has demanded and perfected such holder's right
to dissent from the Merger and to be paid the fair value of such Company
Shares in accordance with Part 13 of the URBCA and, as of the Effective
Time, has not effectively withdrawn or lost such dissenters' rights
("Dissenting Shares"), shall not be converted into or represent a right to
receive the Merger Consideration into which Company Shares are converted
pursuant to Section 3.3(b) hereof, but the holder thereof shall be entitled
only to such rights as are granted by the URBCA. Notwithstanding the
immediately preceding sentence, if any holder of Company Shares who demands
dissenters' rights with respect to its Shares under the URBCA effectively
withdraws or loses (through failure to perfect or otherwise) its
dissenters' rights, then as of the Effective Time or the occurrence of such
event, whichever later occurs, such holder's Company Shares will
automatically be converted into and represent only the right to receive the
Merger Consideration as provided in Section 3.3(b) hereof, without interest
thereon, upon surrender of the certificate or certificates formerly
representing such Company Shares. After the Effective Time, Parent shall
cause the Surviving Corporation to make all payments to holders of Company
Shares with respect to such demands in accordance with the URBCA. The
Company shall give Parent (i) prompt written notice of any notice of intent
to demand fair value for any Company Shares, withdrawals of such notices,
and any other instruments served pursuant to the URBCA and received by the
Company, and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for fair value for Company Shares under
the URBCA. The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any such demands for
fair value for Company Shares or offer to settle or settle any such
demands.
Section 3.7. Articles of Incorporation and Bylaws.
Subject to Section 6.12 hereof, at and after the Effective Time until the
same have been duly amended, (i) the Articles of Incorporation of the
Surviving Corporation shall be in the form set forth in Exhibit A hereto
and (ii) the Bylaws of the Surviving Corporation shall be identical to the
Bylaws of Merger Sub.
Section 3.8. Directors and Officers. At and after the
Effective Time, the directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be
the officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective
Time, a vacancy shall exist on the Board of Directors or in any office of
the Surviving Corporation, such vacancy may thereafter be filled in the
manner provided by law.
Section 3.9. Other Effects of Merger. The Merger shall
have all further effects as specified in the applicable provisions of the
URBCA.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Company hereby represents and warrants to Parent and
Merger Sub as follows:
Section 4.1. Organization and Qualification. Each of the
Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company and its subsidiaries has
the requisite corporate power and corporate authority and any necessary
material governmental authority, franchise, license, certificate or permit
to own, operate or lease the properties that it purports to own, operate or
lease and to carry on its business as it is now being conducted, and is
duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities makes such qualification
necessary, except for such failures to be so qualified and in good standing
which are not, or would not be reasonably expected to be, material to the
Company. Exhibit 21 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 sets forth (by incorporation by
reference) a complete list of the Company's active subsidiaries. The
Company's inactive subsidiaries have no operations or liabilities.
Section 4.2. Capitalization. (a) The authorized capital
stock of the Company consists of (A) 100,000,000 shares of common stock, no
par value, of which, as of the date hereof, 6,473,140 shares are issued and
outstanding and (B) 25,000,000 shares of preferred stock, no par value, of
which, as of the date hereof, none are issued and outstanding. As of the
date hereof, there are no treasury shares of the Company and only options
(the "Company Options") to purchase in the aggregate 350,400 Company Shares
are outstanding all of which were granted under either the Company's 1997
Stock Option Plan or the Company's 1999 Stock Option Plan for Non-Employee
Directors (the "Company Plans"). All the outstanding shares of the
Company's capital stock are, and all shares which may be issued pursuant to
the exercise of outstanding Company Options or pursuant to the Company
Plans will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable. There are
no bonds, debentures, notes or other indebtedness having voting rights (or
convertible into securities having such rights) ("Voting Debt") of the
Company or any of its subsidiaries issued and outstanding. Except as set
forth above and except for the transactions provided for in this Agreement,
as of the date hereof, (i) there are no shares of capital stock of the
Company authorized, issued or outstanding and (ii) there are no existing
options, warrants, calls, pre-emptive rights, subscriptions or other
rights, convertible securities, agreements, arrangements or commitments of
any character, relating to the issued or unissued capital stock of the
Company or any of its subsidiaries, obligating the Company or any of its
subsidiaries to issue, transfer or sell or cause to be issued, transferred
or sold any shares of capital stock or Voting Debt of, or other equity
interest in, the Company or any of its subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company or any of its subsidiaries to grant, extend or
enter into any such option, warrant, call, subscription or other right,
convertible security, agreement, arrangement or commitment. There are no
outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Company Shares
or other capital stock of the Company or any of its subsidiaries or
affiliates of the Company or to provide funds to make any investment (in
the form of a loan, capital contribution or otherwise) in any of its
subsidiaries or any other entity nor has the Company or any of its
subsidiaries granted or agreed to grant to any person any stock
appreciation rights or similar equity-based rights. Except as permitted by
this Agreement, following the Merger, neither the Company nor any of its
subsidiaries will have any obligation to issue, transfer or sell any shares
of its capital stock pursuant to any employee benefit plan or otherwise.
(b) All of the outstanding shares of capital stock of
each of the subsidiaries are owned beneficially by the Company, directly or
indirectly, and all such shares have been validly issued and are fully paid
and nonassessable and are owned by either the Company or one of its
subsidiaries free and clear of all Liens.
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its subsidiaries is a party
with respect to the voting of the capital stock of the Company or any of
its subsidiaries. None of the Company or its subsidiaries is required to
redeem, repurchase or otherwise acquire shares of capital stock of the
Company, or any of its subsidiaries, respectively, as a result of the
transactions contemplated by this Agreement.
Section 4.3. Corporate Authorization; Validity of
Agreement; Company Action. The Company has the requisite corporate power
and corporate authority to enter into this Agreement, to perform its
obligations hereunder and, subject to obtaining the Company Shareholder
Approval (unless, pursuant to the URBCA, such approval is not required to
effectuate the Merger) with respect to the Merger, to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of the Company, subject, in the
case of the Merger, if required by the URBCA, to obtaining the Company
Shareholder Approval. This Agreement has been duly executed and delivered
by the Company and, assuming this Agreement constitutes a valid and binding
obligation of Parent and the Merger Sub, constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that such enforcement may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and by general equitable principles.
(a) The affirmative vote of the holders (including Parent
following its acceptance of Company Shares for payment under the Offer) of
a majority of the outstanding Company Shares (the "Company Shareholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve the Merger and the
transactions contemplated hereby (other than the Offer and the Shareholder
Agreements and the transactions contemplated thereby, in respect of which
no approval is required from the holders of capital stock of the Company)
unless, pursuant to the URBCA, such approval is not required to effectuate
the Merger.
(b) Neither the Company nor any of its subsidiaries
Beneficially Owns, either directly or indirectly, any shares of capital
stock of the Company.
(c) The Company has duly and validly approved and taken
all actions required to be taken by the Company's Board of Directors under
the URBCA to approve the Offer, the Merger and the other transactions
contemplated by this Agreement. The Bylaws of the Company have been duly
amended and adopted to provide that Chapter 6 of Title 61 of the Utah Code
does not apply to control share acquisitions (as defined in Section 61-6-3
of the Utah Code) of capital stock of the Company. The Company has
furnished to Parent a certified copy of resolutions of the Board of
Directors of the Company (i) approving this Agreement, the Offer, the
Merger and the other transactions contemplated hereby, (ii) effecting the
amendment to the Bylaws of the Company described in the second sentence of
this Section 4.3(c) and (iii) providing that all Company Options
outstanding as of the Effective Time will be cancelled at the Effective
Time and that holders of such cancelled Company Options shall be entitled
to receive an amount of cash as consideration for such cancellation in
accordance with Section 3.5 hereof. The approvals and determinations and
Bylaw amendment described in this Section and Section 2.2 hereof are (i)
sufficient to render Section 61-6-10 of the Utah Code inapplicable to the
Offer, the Merger, this Agreement, the Shareholder Agreements and the other
transactions contemplated hereby and thereby and (ii) in accordance with
Section 16-10a-1103 of the URBCA. No "fair price," "merger moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation applies or purports to apply to this Agreement, the Offer or the
Merger, the Shareholder Agreements or the other transactions contemplated
hereby and thereby.
(d) Prior to any action being taken by the Board of
Directors of the Company with respect to the approval and adoption of this
Agreement and the transactions contemplated hereby, the qualified directors
of the Company (as defined in Section 16-10a-850 of the URBCA) received the
required disclosure (as defined in Section 16-10a-850 of the URBCA),
including disclosure of the existence and nature of this Agreement, the
Shareholder Agreements and the transactions contemplated hereby and
thereby, by each director who has a conflicting interest (as defined in
Section 16-10a-850 of the URBCA) with respect to the approval and adoption
of this Agreement and the transactions contemplated hereby. All facts known
to such directors with conflicting interests in respect of the subject
matter of such transactions that an ordinarily prudent person would
reasonably believe to be material to a judgment about whether or not to
proceed with the transactions were disclosed. The action of the Company's
Board of Directors described in Section 2.2 hereof constitute a directors'
action (as defined in Section 16-10a-852 of the URBCA) with respect to this
Agreement, the Shareholder Agreements and the transactions contemplated
hereby and thereby.
Section 4.4. Consents and Approvals; No Violations.
Except as disclosed in Section 4.4 of the Disclosure Schedule and for
filings and other Permits, as may be required under, and other applicable
requirements of, the Exchange Act, the approval of this Agreement and the
Merger by the Company's shareholders and the filing and recordation of the
Articles of Merger as required by the URBCA, neither the execution,
delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the articles of
incorporation or bylaws or similar organizational documents of the Company
or of any of its subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any Company Agreement or (iii) violate any Law
applicable to the Company, any of its subsidiaries or any of their
properties or assets, except in the case of (ii) or (iii) for such
violations, breaches or defaults which do not have, and would not
reasonably be expected to have, a Company Material Adverse Effect and which
will not materially impair the ability of the Company to consummate, or
prevent or materially delay the consummation of, the transactions
contemplated hereby.
(a) No consent, approval, waiver or authorization of,
notice to, declaration by, or filing with ("Consent") a Governmental
Authority is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the HSR Act,
and any applicable filings under other Antitrust Laws, (ii) the filing with
the SEC of (A) the Schedule 14D-9 and the information required by Rule
14f-1, (B) the Proxy Statement, and (C) such reports under the Exchange Act
and the Securities Act, as may be required in connection with this
Agreement and the transactions contemplated hereby, (iii) such filings as
may be required under state securities or "blue sky" laws, (iv) the filing
of the Articles of Merger with the Utah Department of Commerce, Division of
Corporations and Commercial Code, and appropriate documents with the
relevant authorities of other states in which the Company is qualified to
do business, and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, the failure of
which to be made or obtained, do not have, and would not reasonably be
expected to have, a Company Material Adverse Effect, and which will not
materially impair the ability of the Company to consummate, or to prevent
or materially delay the consummation of, the transactions contemplated
hereby.
Section 4.5. SEC Reports and Financial Statements. The
Company has filed with the SEC, and has heretofore made available to Parent
true and complete copies of, all forms, reports, schedules, statements and
other documents required to be filed or furnished by it and its
subsidiaries since December 31, 1998 under the Exchange Act or the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "Company SEC Documents"). As of their respective
dates or, if amended, as of the date of the last such amendment, the
Company SEC Documents, including any financial statements or schedules
included therein (a) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (b) complied
in all material respects with the applicable requirements of the Exchange
Act and the Securities Act, as the case may be, and the applicable rules
and regulations of the SEC thereunder. Each of the consolidated financial
statements included in the Company SEC Documents have been prepared from,
and are in accordance with, the books and records of the Company and its
consolidated subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position
and the consolidated results of operations and cash flows (and changes in
financial position, if any) of the Company and its consolidated
subsidiaries as at the dates thereof or for the periods presented therein.
The financial results set forth in the financial statements and schedules
set forth in the Company's Form 10-Q for the quarterly period ended
September 30, 2001 shall be no less favorable than the results furnished in
writing by the Company to Parent as of the date hereof.
Section 4.6. Absence of Certain Changes. Except as
disclosed in Section 4.6 of the Disclosure Schedule, since December 31,
2000, the Company and its subsidiaries have conducted their respective
businesses and operations consistent with past practice only in the
ordinary and usual course thereof and there has not occurred (i) any
events, changes, or effects (including the incurrence of any liabilities of
any nature, whether or not accrued, contingent or otherwise) which have, or
would reasonably be expected to have, a Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the
equity interests of the Company or of any of its subsidiaries other than
dividends paid by wholly-owned subsidiaries; or (iii) any change by the
Company or any of its subsidiaries in accounting principles or methods,
except insofar as may be required by a change in GAAP. Since December 31,
2000, neither the Company nor any of its subsidiaries has taken any of the
actions prohibited by Section 6.1 hereof.
Section 4.7. No Undisclosed Liabilities. Except (a) to
the extent disclosed in Section 4.7 of the Disclosure Schedule and (b) for
liabilities and obligations incurred in the ordinary and customary course
of business and consistent with past practice, since December 31, 2000,
neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, which have, or would reasonably be expected to
have, a Company Material Adverse Effect, or would be required to be
reflected or reserved against on a consolidated balance sheet of the
Company and its subsidiaries (including the notes thereto) prepared in
accordance with GAAP as applied in preparing the consolidated balance sheet
of the Company and its subsidiaries as of December 31, 2000. Section 4.7 of
the Disclosure Schedule sets forth the amount of principal and unpaid
interest outstanding under each instrument evidencing Indebtedness of the
Company and its subsidiaries which will accelerate or become due or result
in a right of redemption or repurchase on the part of the holder of such
Indebtedness (with or without due notice or lapse of time) as a result of
this Agreement, the Merger or the other transactions contemplated hereby.
Section 4.8. Schedule 14D-9; Proxy Statement. Neither the
Schedule 14D-9, nor any of the information supplied or to be supplied by
the Company or its subsidiaries or representatives for inclusion or
incorporation by reference in the Offer Registration Statement or the Offer
Documents will, at the respective times any such documents or any
amendments or supplements thereto are filed with the SEC, are first
published, sent or given to shareholders of the Company or become effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Proxy
Statement will not, at the time the Proxy Statement is mailed to the
Company's shareholders or, at the time of the Company Shareholder 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. The Schedule 14D-9 and the Proxy Statement will
comply as to form in all material respects with the requirements of all
applicable Laws, including the Exchange Act and the rules and regulations
thereunder. No representation or warranty is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied by Parent or Merger Sub specifically for inclusion or
incorporation by reference therein. The Company represents that it has
obtained all necessary consents to permit the inclusion in its entirety of
the fairness opinion of Morgan Keegan & Company, Inc. in the Schedule 14D-9
and, if necessary, the Proxy Statement.
Section 4.9. Employee Benefit Plans; ERISA.
(a) There have been, since January 1, 1995, no employee
benefit plans, programs, arrangements, contracts or agreements (including
pension, health, life insurance, cash-or equity-based incentive, deferred
compensation, stock purchase or restricted stock plans or agreements and
employment, change of control and severance plans or agreements) of any
type (including plans described in section 3(3) of ERISA), maintained,
contributed to or required to be contributed to, or entered into by the
Company, any of its subsidiaries or any of their respective ERISA
Affiliates, or with respect to which the Company or any of its subsidiaries
has, may have, or may have had, a liability, other than those disclosed in
Section 4.9 of the Disclosure Schedule (the "Benefit Plans"). Except as set
forth in documents delivered to Parent in accordance with Section 4.9(h),
there have been no amendments to any Benefit Plan resulting in an increase
of costs to the Company or any ERISA Affiliate of the Company and/or an
increase of benefits provided under such Benefit Plan to any current or
former employee of the Company or any of its subsidiaries. Neither the
Company nor any ERISA Affiliate of the Company has any formal plan or
commitment, whether legally binding or not, to create any additional
Benefit Plan or modify or change any existing Benefit Plan that would
affect any current or former employee of the Company or any of its
subsidiaries.
(b) With respect to each Benefit Plan: (i) if intended to
qualify under section 401(a) of the Code, such plan so qualifies, and its
trust is exempt from taxation under section 501(a) of the Code and no
condition exists that could adversely affect such qualification or tax
exemption, except for amendments that must be made to such plan for which
the remedial amendment period is still open; (ii) such plan has been
administered in all material respects in accordance with its terms and
applicable Law; (iii) no breaches of fiduciary duty have occurred which
might be expected to give rise to a material liability on the part of the
Company or any ERISA Affiliate of the Company; (iv) no disputes are
pending, threatened or, to the knowledge of the Company, anticipated that
might be expected to give rise to a material liability on the part of the
Company or any ERISA Affiliate of the Company; (v) no prohibited
transaction (within the meaning of section 406 or 407 of ERISA) has
occurred that might be expected to give rise to a material liability on the
part of the Company or any ERISA Affiliate of the Company; (vi) all
contributions and premiums due as of the date hereof (including any
extensions for such contributions and premiums) have been made in full;
(vii) no Tax has been imposed under section 4976, 4977, 4978, 4979, 4980 or
5000 of the Code; and (viii) all relevant reports and other filings
(including form 5500 Annual Reports, Summary Annual Reports and Summary
Plan Descriptions) have been timely made. Section 4.9(b) of the Disclosure
Schedule sets forth, to the knowledge of the Company, a description of each
failure to administer any Benefit Plan intended to be qualified under
Section 401(a) of the Code in accordance with its terms and applicable Law
which occurred after January 1, 1995.
(c) Full payment has been made, or will be made in
accordance with section 404(a)(6) of the Code, of all amounts which the
Company or any ERISA Affiliate of the Company is required to pay under the
terms of each of the Benefit Plans as of the last day of the most recent
plan year thereof ended prior to the date of this Agreement, and all such
amounts which become due through the Effective Time will be satisfied by
the Company or its ERISA Affiliates at or prior to the Effective Time.
(d) With respect to each Benefit Plan that is, or has
been since January 1, 1995, subject to section 302 or Title IV of ERISA
(each such plan, a "Title IV Plan") (i) neither the Company nor any ERISA
Affiliate of the Company has incurred any liability under Title IV of ERISA
that has not been satisfied in full; (ii) the Pension Benefits Guaranty
Corporation has not instituted proceedings to terminate any such plan and
no condition exists that presents a material risk that such proceedings
will be instituted, (iii) the present value of accrued benefits under such
plan, based upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such plan's actuary with respect
to such plan did not exceed, as of its latest valuation date, the then
current value of the assets of such plan allocable to such accrued
benefits; and (iv) no such plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, as of the last
day of the most recent fiscal year of each Title IV Plan ended prior to the
Closing Date. With respect to clauses (i) - (iv) of this Section 4.9(d),
insofar as such representations apply to section 4064, 4069 or 4204 of
ERISA, they are made with respect to any Title IV Plan to which the Company
or any ERISA Affiliate of the Company made, or was required to make,
contributions during the period commencing January 1, 1995 and ending on
the last day of the most recent plan year ended prior to the Closing Date.
(e) With respect to each Benefit Plan that is a "welfare
plan" (as defined in section 3(1) of ERISA), no such plan provides medical
or death benefits with respect to current or former employees of the
Company or any of its subsidiaries beyond their termination of employment,
other than (i) coverage mandated by applicable Law; (ii) death benefits
under any "pension plan"; or (iii) benefits the full cost of which is now,
and shall be in the future, borne by the current or former employee (or his
beneficiary). No condition exists that would prevent the Company or any of
its subsidiaries from amending or terminating any Benefit Plan providing
health or medical benefits in respect of any active or former employee of
the Company or any subsidiaries other than limitations imposed under the
terms of collective bargaining agreements. There has been no material
failure of a Benefit Plan that is a group health plan (as defined in
section 5000(b)(1) of the Code) to meet the requirements of section
4980B(f) of the Code with respect to a qualified beneficiary (as defined in
section 4980B(g) of the Code).
(f) The consummation of the transactions contemplated by
this Agreement will not, alone or in combination with a related event, (i)
entitle any individual to severance pay or accelerate the time of payment
or vesting, or increase the amount, of compensation or benefits due to any
individual; (ii) constitute or result in a prohibited transaction under
section 4975 of the Code or section 406 or 407 of ERISA; or (iii) subject
the Company, any of its subsidiaries, any ERISA Affiliate of the Company,
any of the Benefit Plans, any related trust, any trustee or administrator
thereof, or any party dealing with the Benefit Plans or any such trust to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to section 4976 or 4980B of the Code.
(g) Except as set forth in Section 4.9(g) of the
Disclosure Schedule, there is no Benefit Plan that is a "multiemployer
plan," as such term is defined in section 3(37) of ERISA or a "multiple
employer welfare arrangement" as such term is defined in Section 3(40) of
ERISA. Except for contributions required to be made in the ordinary course
to such multiemployer plans pursuant to the relevant collective bargaining
agreements, no additional costs would be incurred by Parent, the Company,
the Surviving Corporation or any of their respective ERISA Affiliates in
connection with the withdrawal from such plans by Parent, the Company, the
Surviving Corporation or any of their respective ERISA Affiliates. None of
the Benefit Plans set forth in Section 4.9(g) of the Disclosure Schedule is
a "pension plan" as such term is defined in Section 3(2) of ERISA.
(h) With respect to each Benefit Plan, the Company has
delivered to Parent accurate and complete copies of all plan texts, summary
plan descriptions, summaries of material modifications, trust agreements
and other related agreements including all amendments to the foregoing; the
two most recent annual reports; the most recent annual and periodic
accounting of plan assets; the most recent determination letter received
from the United States Internal Revenue Service; and the two most recent
actuarial reports (including all attachments), to the extent any of the
foregoing may be applicable to a particular Benefit Plan.
Section 4.10. Labor Matters.
(a) Except as specifically set forth in Section 4.10 of
the Disclosure Schedule, (i) neither the Company nor any of the
subsidiaries is party to any collective bargaining or other agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company
or any of its subsidiaries; (ii) to the knowledge of the Company, no union
claims to represent the employees of the Company or any of its
subsidiaries; (iii) none of the employees of the Company or any of its
subsidiaries is represented by any labor organization and the Company has
no knowledge of any current union organizing activities among the employees
of the Company or any of its subsidiaries, nor, to the knowledge of the
Company, does any question concerning representation exist concerning such
employees; and (iv) there are no written personnel policies, rules or
procedures applicable to employees of the Company or any of its
subsidiaries. There is no labor strike, dispute, slowdown, stoppage or
lockout actually pending or, to the knowledge of the Company, threatened
against or affecting the respective business activities of the Company or
any of its subsidiaries and during the past five years there has not been
any such action. There is no unfair labor practice charge or complaint
against the Company or any of its subsidiaries pending or, to the knowledge
of the Company, threatened before the National Labor Relations Board or any
similar state or foreign agency. To the knowledge of the Company, no
charges with respect to or relating to the Company or any of its
subsidiaries are pending before the Equal Employment Opportunity Commission
or any other Governmental Authorities responsible for the prevention of
unlawful employment practices or any Governmental Authorities responsible
for the enforcement of employee health and safety (including under the
Occupational Safety and Health Act and the regulations thereunder). The
Company has not received written notice, or to the knowledge of the Company
any verbal notice, of the intent of any federal, state, local or foreign
agency responsible for the enforcement of labor or employment laws or
employee health and safety laws to conduct an investigation with respect to
or relating to the Company or any of its subsidiaries and, to the knowledge
of the Company, no such investigation is in progress. There are no
complaints, lawsuits or other proceedings pending or, to the knowledge of
the Company, threatened in any forum by or on behalf of any present or
former employee of the Company or any of its subsidiaries, any applicant
for employment or classes of the foregoing alleging any breach by the
Company or any of its subsidiaries of any express or implied contract of
employment, any laws governing employment or the termination thereof or
other discriminatory, wrongful or tortious conduct in connection with the
employment relationship or any employee health and safety laws.
(b) The Company and each of its subsidiaries has paid in
full, or fully accrued for in the financial statements of the Company, all
wages, salaries, commissions, bonuses, severance payments, vacation
payments, holiday pay, sick pay, pay in lieu of compensatory time and other
compensation due or to become due to all current and former employees of
the Company and each of its subsidiaries for all services performed by any
of them on or prior to the date hereof. The Company and each of its
subsidiaries has withheld and paid in a timely manner all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee or independent contractor. The Company and each of its
subsidiaries are, and at all times have been, in all material respects, in
compliance with all applicable federal, state and local and foreign laws,
rules and regulations relating to the employment of labor including laws,
rules and regulations relating to payment of wages, employment and
employment practices, terms and conditions of employment, hours,
immigration, equal employment opportunity, discrimination, child labor,
occupational health and safety, collective bargaining and the payment and
withholding of taxes and other sums required by Governmental Authorities.
To the knowledge of the Company, the Company and its subsidiaries are not
engaged in any unfair labor practices as defined in the National Labor
Relations Act or other applicable law or regulation, and there is no
grievance pending or, to the knowledge of the Company, threatened which
arises out of any collective bargaining agreement or other grievance
procedure.
(c) Except as set forth in Section 4.10(c) of the
Disclosure Schedule, since the enactment of the Worker Adjustment and
Retraining Notification Act (the "WARN Act"), neither the Company nor any
of its subsidiaries has effectuated (i) a "plant closing" (as defined in
the WARN Act) affecting any site of employment or one or more facilities
(as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or
facility of the Company or any of its subsidiaries; or (ii) a "mass-layoff"
(as defined in the WARN Act) affecting any site of employment or facility
of the Company or any of its subsidiaries; nor has the Company or any of
its subsidiaries effected any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation. Except as disclosed in
Section 4.10(c) of the Disclosure Schedule, none of the employees of the
Company or any of its subsidiaries has suffered an "employment loss" (as
defined in the WARN Act) during the six month period prior to the date of
this Agreement. The listing in Section 4.10(c) of the Disclosure Schedule
shall be updated at the Closing Date for employment losses occurring during
the 90 day period prior to the Closing Date.
Section 4.11. Litigation; Compliance with Law.
(a) Except as disclosed in Section 4.11 of the Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or
affecting, the Company or any of its subsidiaries which has, or would
reasonably be expected to have, a Company Material Adverse Effect, or
materially impair the ability of the Company to consummate or prevent or
materially delay the consummation of, the transactions contemplated hereby.
(b) The Company and its subsidiaries have complied in a
timely manner and in all material respects, with all Laws of any
Governmental Authority relating to any of the property owned, leased or
used by them, or applicable to their business, including but not limited
to, equal employment opportunity, discrimination, occupational safety and
health, environmental, interstate commerce and antitrust laws. The
Company's and its subsidiaries' assets and properties (in each case,
tangible and intangible) have been operated and maintained, in all material
respects, in accordance with the Rules and Regulations of the U.S.
Department of Federal Highway Act and the Rules and Regulations of the U.S.
Department of Transportation, as applicable.
Section 4.12. Taxes. (a) Except as set forth in Section
4.12 of the Disclosure Schedule:
(i) the Company and its subsidiaries and each
affiliated, combined, consolidated or unitary group of
which the Company or any of its subsidiaries is or has
been a member (a "Company Group") have (x) duly and
timely filed (or there have been filed on their behalf)
with the appropriate Governmental Authorities all Tax
Returns required to be filed by them on or prior to the
date hereof, and such Tax Returns are true, correct and
complete, and (y) duly paid in full, or made provision in
accordance with GAAP (or there has been paid or provision
has been made on their behalf) for the payment of, all
Taxes for all periods ending through the date hereof;
(ii) there are no Liens for Taxes upon any property
or assets of the Company or any of its subsidiaries,
except for Liens for Taxes not yet due and payable;
(iii) the Company and its subsidiaries have
complied in all respects with all applicable laws, rules
and regulations relating to the payment and withholding
of Taxes (including withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions
under any foreign laws) and have, within the time and the
manner prescribed by law, withheld from employee wages
and paid over to the proper Governmental Authorities all
amounts required to be so withheld and paid over under
applicable laws;
(iv) no federal, state, local or foreign audits or
other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns
of the Company or its subsidiaries or any Company Group
and neither the Company nor any of its subsidiaries has
received notice of any pending audits or proceedings with
regard to any Taxes or Tax Returns of the Company or its
Subsidiaries or any Company Group;
(v) the federal income Tax Returns of the Company
and its subsidiaries and any Company Group have been
examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of
federal income Taxes for such periods have expired) for
all periods through and including December 31, 1997, and
no material deficiencies were asserted as a result of
such examinations which have not been resolved and fully
paid;
(vi) neither the Company nor any of its
subsidiaries is a party to any agreement, contract or
arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code;
(vii) neither the Company nor any of its
subsidiaries has made any change in Tax accounting
methods since January 1, 1990;
(viii) there are no outstanding requests,
agreements, consents or waivers to extend the statutory
period of limitations applicable to the assessment of any
Taxes or deficiencies against the Company or any of its
subsidiaries, and no power of attorney granted by either
the Company or any of its subsidiaries with respect to
any Taxes is currently in force;
(ix) neither the Company nor any of its
subsidiaries is a party to any agreement providing for
the allocation or sharing of Taxes;
(x) neither the Company nor any of its subsidiaries
has, with regard to any assets or property held, acquired
or to be acquired by any of them, filed a consent to the
application of Section 341(f) of the Code, or agreed to
have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the
Company or any of its subsidiaries; and
(xi) all transactions that could give rise to an
understatement of the federal income tax liability of the
Company or any of its subsidiaries within the meaning of
Section 6662(d) of the Code are adequately disclosed on
Tax Returns in accordance with Section 6662(d)(2)(B) of
the Code if there is or was no substantial authority for
the treatment giving rise to such understatement.
(b) No excess loss accounts exist as described in Section
1.1502-19 of the regulations promulgated under the Code (the "Treasury
Regulations") with respect to the Company or its subsidiaries.
(c) There are no net operating loss carryovers available
to the Company or its subsidiaries.
(d) Neither the Company nor any of its subsidiaries has
taken or agreed to take any action or knows of any fact, circumstance, plan
or intention that will, or would be reasonably likely to, prevent the
Transaction from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
Section 4.13. Contracts. Except as disclosed in Section
4.13 of the Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral), (a) any of the
benefits of which will be increased, or the vesting 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, (b) (1) which is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or
(2) which involves expenditures in excess of $100,000, (c) which contains
any non-compete or exclusivity provisions with respect to any material line
of business or material geographic area with respect to the Company or any
of its subsidiaries, or which restricts the conduct of any material line of
business by the Company or any of its subsidiaries or any material
geographic area in which the Company or any of its subsidiaries may conduct
business, in each case in any material respect or (d) which would prohibit
or materially delay the consummation of the Offer, the Merger or any of the
transactions contemplated in this Agreement. The Company has previously
made available to Parent true and complete copies of all (A) material
agreements with customers and suppliers listed in Section 4.13 of the
Disclosure Schedule to which the Company or any of its subsidiaries is a
party and (B) employment and deferred compensation agreements with
directors, executive officers and key employees, and material agreements
with consultants, which are in writing and to which the Company or any of
its subsidiaries is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.13, whether or not
set forth in Section 4.13 of the Disclosure Schedule, is referred to herein
as a "Company Agreement." Each Company Agreement is valid and binding on
the Company or its subsidiaries, as applicable, and in full force and
effect, and the Company and each of its subsidiaries have performed all
obligations required to be performed by them until the date hereof under
each Company Agreement, except those that are not, and would not reasonably
be expected to be, material to the Company. Neither the Company nor any of
its subsidiaries knows of, or has received written notice, or to the
knowledge of the Company, verbal notice, of, any violation or default under
(or any condition which with the passage of time or the giving of notice
would case such a violation of or default under) any Company Agreement or
any other loan or credit agreement, note, bond, mortgage, indenture or
lease, or any other contract, agreement, arrangement or understanding to
which it is a party or by which it or any of its properties or assets is
bound, except for violations or defaults that are not, or would not
reasonably be expected to be, material to the Company.
Section 4.14. Environmental Matters.
(a) The Company and each of its subsidiaries has been and
is in material compliance with all applicable Environmental Laws, including
possessing all material permits, authorizations, licenses, exemptions and
other governmental authorizations required for its operations under
applicable Environmental Laws, (all of the foregoing, whether material or
not, the "Environmental Permits"). All such Environmental Permits are in
effect, no appeal nor any other action is pending to revoke any such
Environmental Permit, and the Company and each of its subsidiaries are in
compliance in all material respects with all terms and conditions of such
Environmental Permits. To the extent required by applicable Environmental
Laws, the Company and each of its subsidiaries have filed (or will have
filed by the Closing Date) all applications necessary to renew or obtain
any Environmental Permits in a timely fashion so as to allow the Company
and each of its subsidiaries to continue to operate their businesses in
compliance with applicable Environmental Laws, and the Company does not
expect such new or renewed Environmental Permits to include any terms or
conditions that will have a material impact on the Company or any of its
subsidiaries.
(b) There is no pending or threatened written claim,
lawsuit, or administrative proceeding against the Company or any of its
subsidiaries, under or pursuant to any Environmental Law, that has, or
would reasonably be expected to have, a Company Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received written notice
from any person, including any Governmental Authority, alleging that the
Company or any of its subsidiaries has been or is in violation or
potentially in violation of any applicable Environmental Law or otherwise
may be liable under any applicable Environmental Law, which violation or
liability is unresolved. Neither the Company nor any of its subsidiaries
has received any written request for information from any person, including
but not limited to any Governmental Authority, related to liability under
or compliance with any applicable Environmental Law, except for such
matters, if they matured into a claim against the Company or any of its
subsidiaries, that do not have, or would not reasonably be expected to have
a Company Material Adverse Effect.
(c) With respect to the real property that is currently
owned, leased or operated by the Company or any of its subsidiaries, there
have been no Releases of Hazardous Substances on or underneath any of such
real property that have, or would reasonably be expected to have, a Company
Material Adverse Effect.
(d) With respect to real property that was formerly
owned, leased or operated by the Company or any of its subsidiaries or any
of their predecessors in interest, there were no Releases of Hazardous
Substances on or underneath any of such real property during or prior to
the Company's or any of its subsidiaries' ownership or operation of such
real property that have, or would reasonably be expected to have, a Company
Material Adverse Effect.
(e) Neither the Company nor any of its subsidiaries has
entered into any agreement that may require them to pay to, reimburse,
guarantee, pledge, defend, indemnify or hold harmless any person from or
against any liabilities or costs arising out of or related to the
generation, manufacture, use, transportation or disposal of Hazardous
Substances, or otherwise arising in connection with or under Environmental
Laws.
(f) Except as set forth in Section 4.14(f) of the
Disclosure Schedule, the Company and each of its subsidiaries have never
engaged in any activities that have required or should have required the
Company or any of its subsidiaries to obtain a permit as a transporter of
hazardous waste (as such term is defined pursuant to the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. ("RCRA") or any
similar state statute), or as the owner or operator of a facility that
treated, stored or disposed of hazardous waste, in accordance with the
requirements of RCRA or any similar state statute.
(g) Except as set forth in Section 4.14 of the Disclosure
Schedule, or except with respect to former underground storage tanks that
have been removed or closed in place in accordance with applicable Law and
as to which no further action (including no further environmental
investigation or cleanup) is required and no further costs or liability is
involved, neither the Company nor any of its subsidiaries currently owns or
operates or formerly owned or operated any underground storage tanks
subject to regulation pursuant to Subchapter IX of RCRA (42 U.S.C. ss.ss.
6991-6991i) or similar statute statutes.
(h) To the knowledge of the Company, neither the Company
nor any of its subsidiaries, within the next five years, will be required
to expend monies for capital improvements in order to (1) comply or
maintain compliance with applicable Environmental Laws or (2) comply with
regulatory requirements that are not now effective, but to the knowledge of
the Company, will be or are reasonably expected to become effective after
the Closing Date, except for such expenditures that are reasonably expected
to be less than $60,000 per annum and $200,000 in the aggregate.
Section 4.15. Intellectual Property.
(a) As used herein: (i) "Intellectual Property" means all
U.S. and foreign (a) trademarks, service marks, trade names, Internet
domain names, designs, logos, slogans and general intangibles of like
nature, together with goodwill, registrations and applications relating to
the foregoing ("Trademarks"); (b) patents and pending patent applications,
patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and any extensions
thereof, any counterparts claiming priority therefrom, utility models,
patents of importation/confirmation, certificates of invention and like
statutory rights ("Patents"), (c) registered and unregistered copyrights
(including those in Software), rights of publicity and all registrations
and applications to register the same ("Copyrights"); and (d) confidential
information, technology, know-how, inventions, processes, formulae,
algorithms, models and methodologies ("Trade Secrets"); (ii) "IP Licenses"
means all licenses and agreements (excluding "click-wrap" or "shrink-wrap"
agreements or agreements contained in "off-the-shelf" Software or the terms
of use or service for any Web site) pursuant to which the Company and its
subsidiaries have acquired rights in (including usage rights) to any
Intellectual Property, or licenses and agreements pursuant to which the
Company and its subsidiaries have licensed or transferred the right to use
any Intellectual Property, including license agreements, settlement
agreements and covenants not to sue; (iii) "Software" means all computer
programs, including any and all software implementations of algorithms,
models and methodologies whether in source code or object code form,
databases and compilations, including any and all data and collections of
data, all documentation, including user manuals and training materials,
related to any of the foregoing and the content and information contained
on any Web site; and (iv) "Company Intellectual Property" means the
Intellectual Property and Software held for use or used in the business of
Company or its subsidiaries as presently conducted or as currently proposed
to be conducted.
(b) Section 4.15(b) of the Disclosure Schedule sets
forth, for the following Intellectual Property owned by the Company and its
subsidiaries, a complete and accurate list of all U.S., state and foreign:
(i) Patents; (ii) Trademarks (including Internet domain name registrations)
and material unregistered trademarks and service marks; and (iii)
Copyrights and material unregistered copyrights.
(c) Section 4.15(c) of the Disclosure Schedule lists all
material Software which is owned by the Company or its subsidiaries
("Proprietary Software"), and all material IP Licenses.
(d) The Company, or one of its subsidiaries, owns or
possesses licenses or other legal rights to use, sell or license all
Company Intellectual Property, free and clear of all Liens, except
Permitted Liens.
(e) All Trademarks, Patents and Copyrights owned by the
Company and its subsidiaries and to the knowledge of the Company, all
Trademarks, Patents and Copyrights used by but not owned by the Company and
its subsidiaries are valid and subsisting, in full force and effect and
have not lapsed, expired or been abandoned, and are not the subject of any
opposition filed with the United States Patent and Trademark Office or any
other intellectual property registry.
(f) The Company Intellectual Property and the IP Licenses
constitute all the Intellectual Property, Software and IP Licenses that are
necessary for the continuing conduct and operation of the Company's
business (as described in the Company's Annual Report filed with the SEC on
Form 10-K for the period ending December 31, 2000) in all material respects
as conducted and operated by the Company immediately prior to the date
hereof.
(g) Except as set forth in Section 4.15(g) of the
Disclosure Schedule:
(i) no claims, or to the knowledge of Company,
threat of claims, have been asserted by any Third Party
against the Company or any of its subsidiaries related to
the use in the conduct of the businesses of the Company
and its subsidiaries of any Intellectual Property or
Software, or challenging or questioning the validity or
effectiveness of any IP License;
(ii) no settlement agreements, consents, judgments,
orders, forebearances to sue or similar obligations limit
or restrict the Company's or any subsidiary's rights in
and to any Company Intellectual Property ;
(iii) to the knowledge of the Company, the conduct
of the businesses of the Company and its subsidiaries
does not infringe, misappropriate, dilute or otherwise
violate any Intellectual Property rights of any Third
Party.
(iv) the Company and its subsidiaries have not
licensed or sublicensed their rights in any Company
Intellectual Property, or received or been granted any
such rights, other than pursuant to the IP Licenses;
(v) to the knowledge of the Company, no Third Party
is misappropriating, infringing, diluting or violating
any Intellectual Property owned by the Company or its
subsidiaries;
(vi) the IP Licenses are valid and binding
obligations of the Company and/or the relevant
subsidiary, enforceable in accordance with their terms,
and there is no material default thereof by the Company
or any of its subsidiaries or, to the knowledge of the
Company, of the other party thereto;
(vii) the Company and its subsidiaries have taken
all reasonable measures to protect the confidentiality of
their Trade Secrets; and
(viii) the consummation of the transactions
contemplated hereby will not result in the loss or
impairment of the Company's and its subsidiaries' rights
to own or use any of the Company Intellectual Property,
nor will such consummation require the consent of any
Third Party in respect of any Intellectual Property.
Section 4.16. Title, Sufficiency and Condition of Assets.
(a) The Company and its subsidiaries, in each case, have
good and valid title to their owned assets and properties (in each case,
tangible and intangible) or, in the case of assets and properties which
they lease, license or have other rights in, valid leasehold, license or
other interests in such, assets and properties, in each case, free and
clear of all Liens, except for Permitted Liens.
(b) The Company and its subsidiaries have good and valid
title to, or rights by lease, license or other agreement to use, all assets
and properties (in each case, tangible and intangible) necessary to permit
the Company and its subsidiaries to conduct their business as currently
conducted. The assets and properties (in each case, tangible and
intangible) owned or used by the Company are in satisfactory condition and
repair for their continued use as they have been used and adequate in all
material respects for their current use.
Section 4.17. Transactions with Affiliates. Except as
disclosed in Section 4.17 of the Disclosure Schedule, since December 31,
2000, there has been no transaction, or series of similar transactions,
agreements, arrangements or understandings, nor are there any currently
proposed transactions, or series of similar transactions, agreements,
arrangements or understandings to which the Company or any of its
subsidiaries was or is to be a party, that would be required to be
disclosed under Item 404 of Regulation S-K promulgated under the Securities
Act.
Section 4.18. Opinion of Financial Advisor. The Company
has received an opinion from Morgan Keegan & Company, Inc. to the effect
that the consideration to be received by the shareholders of the Company
pursuant to the Offer and the Merger is fair to such shareholders from a
financial point of view, a copy of which opinion has been delivered to
Parent.
Section 4.19. Broker's or Finder's Fee. Except for the
fees of Morgan Keegan & Company, Inc. (whose fees and expenses will be paid
by the Company in accordance with the Company's agreement with such firm, a
true and correct copy of which has been previously delivered to Parent by
the Company), no agent, broker, person or firm acting on behalf of the
Company or its subsidiaries is, or will be, entitled to any fee, commission
or broker's or finder's fees from any of the parties hereto, or from any
person controlling, controlled by, or under common control with, any of the
parties hereto, in connection with this Agreement, the Shareholder
Agreements or any of the transactions contemplated hereby or thereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and the Merger Sub represent and warrant to the
Company as follows:
Section 5.1. Organization and Qualification. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Utah. Each of Parent and
Merger Sub has the requisite corporate power and corporate authority and
any necessary material governmental authority, franchise, license,
certificate or permit to own, operate or lease the properties that it
purports to own, operate or lease and to carry on its business as it is now
being conducted, and is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased or the nature of its activities
makes such qualification necessary, except for such failures to be so
qualified and in good standing which are not, and would not be reasonably
likely to be, material to Parent.
Section 5.2. Corporate Authorization; Validity of
Agreement; Necessary Action. Each of Parent and Merger Sub has the
requisite corporate power and corporate authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by each of Parent and Merger Sub and the consummation by
each of Parent and Merger Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of each of Parent and Merger Sub. This Agreement has been duly
executed and delivered by each of Parent and Merger Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Company,
constitutes a valid and binding obligation of each of Parent and Merger Sub
enforceable against each of Parent and Merger Sub in accordance with its
terms, except to the extent that such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and by general equitable principles. The authorized capital
stock of Parent consists of (A) 500,000,000 shares of common stock, par
value $2.50 per share and (B) 20,000,000 shares of preferred stock, no par
value, of which no shares are outstanding. As of Septemb