UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
August 26, 2002
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Date of Report (Date of Earliest Event Reported)
Commission File Number: 000-29727
PARTSBASE, INC.
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(Exact Name Of Registrant As Specified In Its Charter)
Delaware 76-0604158
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
905 Clint Moore Road
Boca Raton, Florida 33487-8233
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(Address of Principal Executive Offices)
(561) 953-0700
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On August 26, 2002, the Company entered into a definitive merger agreement with
Hammond I, Inc., a corporation wholly owned and controlled by Robert A. Hammond
, Jr., the Chief Executive Officer, President Chairman of the Board of Directors
and majority stockholder of PartsBase, Hammond Acquisition Corp., a wholly owned
subsidiary of Hammond I, Inc. and Robert A. Hammond, Jr., a copy of which is
attached to this Form 8-K as Exhibit 2.1, (the "Agreement"). Under the terms of
the Agreement, Hammond Acquisition Corp. will merge with PartsBase and PartsBase
shall be the surviving corporation. The stockholders of PartsBase (other than
Mr. Hammond, those stockholders owned or controlled by Mr. Hammond and
stockholders of PartsBase who exercise their dissenters' rights under Delaware
law) will receive a cash payment of $1.41 per share of common stock.
The proposed transaction would result in the acquisition of all of the
outstanding shares of common stock of PartsBase (other than the shares owned or
controlled by Mr. Hammond). The closing of the proposed transaction is subject
to, among other things, (i) approval of the proposed transaction by the
affirmative vote of the majority of the outstanding shares of PartsBase and a
majority of the outstanding shares of Common Stock not beneficially owned or
controlled by Mr. Hammond not voting against the proposed transaction; (ii)the
financial advisor to PartsBase not revoking, modifying or changing its fairness
opinion delivered to PartsBase on August 26, 2002; (iii) receipt of any
regulatory approvals and third party consents; and (iv) the settlement of
pending class action litigation seeking to restrain the consummation of the
proposed transaction.
A copy of the Company's press releases pertaining to the Agreement included
herein as Exhibit 99.1 and is incorporated herein by reference and the foregoing
descriptions of such document is qualified in its entirety by reference to such
exhibit. The press release should be read in conjunction with the Note Regarding
Forward Looking Statements, which is included in the text of such press release.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
Exhibit Description
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2.1 Agreement and Plan of Merger dated August 26, 2002 among Hammond I,
Inc., Hammond Acquisition Corp. and Robert A. Hammond Jr.
99.1 Press Release Issued by the Company on August 26, 2002 regarding the
Company's acceptance of the Hammond Group's offer to purchase the
Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PARTSBASE, INC.
/s/ Robert A. Hammond, Jr.
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Robert A. Hammond, Jr., President
Date: August 29, 2002
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EXHIBIT INDEX
Exhibit Description
2.1 Agreement and Plan of Merger dated August 26, 2002 among Hammond I,
Inc., Hammond Acquisition Corp. and Robert A. Hammond Jr.
99.1 Press Release Issued by the Company on August 26, 2002 regarding the
Company's acceptance of the Hammond Group's offer to purchase the
Company.
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EXHIBIT 2.1
Agreement and Plan of Merger dated August 26, 2002 among Hammond I, Inc.,
Hammond Acquisition Corp. and Robert A. Hammond, Jr.
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 26, 2002
AMONG
HAMMOND I, INC., HAMMOND ACQUISITION CORP.,
ROBERT A. HAMMOND, JR.
AND PARTSBASE, INC.
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER................................................... 2
1.1 The Merger................................................. 2
1.2 Closing.................................................... 2
1.3 Effective Time of the Merger............................... 2
1.4 Effects of the Merger...................................... 2
1.5 Certificate of Incorporation; Bylaws....................... 3
1.6 Directors; Officers........................................ 3
ARTICLE II CANCELLATION OF THE CAPITAL STOCK OF THE
COMPANY AND PAYMENT WITH RESPECT THERETO.................... 3
2.1 Effect on Capital Stock.................................... 3
2.2 Delivery of Merger Consideration........................... 4
2.3 Stock Options and Warrants with
Respect to Company Common Stock........................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES............................. 6
3.1 Representations and Warranties of the Company.............. 6
3.2 Representations and Warranties of Hammond,
Hammond I, Inc. and Merger Sub............................ 11
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS................... 13
4.1 Covenants of Company....................................... 13
4.2 Covenants of Hammond, Hammond I, Inc. and Merger Sub....... 16
4.3 Competing Transactions..................................... 16
ARTICLE V ADDITIONAL AGREEMENTS........................................ 17
5.1 Preparation of the Proxy Statement and Schedule 13E-3...... 17
5.2 Stockholders' Meeting...................................... 17
5.3 Legal Conditions to Merger................................. 18
5.4 Brokers or Finders......................................... 18
5.5 Shareholder Lists.......................................... 19
5.6 Shareholder Litigation..................................... 19
5.7 Communication to Employees................................. 19
ARTICLE VI CONDITIONS PRECEDENT........................................ 19
6.1 Conditions to Each Party's Obligation To Effect the Merger. 19
6.2 Conditions to Obligations of Hammond, Hammond I, Inc. and
Merger Sub................................................ 20
6.3 Conditions to Obligations of Company....................... 21
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ARTICLE VII TERMINATION AND AMENDMENT.................................. 22
7.1 Termination................................................ 22
7.2 Effect of Termination...................................... 23
7.3 Fees, Expenses and Other Payments.......................... 23
7.4 Amendment.................................................. 24
7.5 Extension; Waiver.......................................... 25
ARTICLE VIII GENERAL PROVISIONS........................................ 25
8.1 Survival of Representations, Warranties and Agreements..... 25
8.2 Notices.................................................... 25
8.3 Certain Definitions........................................ 26
8.4 Interpretation............................................. 27
8.5 Counterparts............................................... 28
8.6 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership....................................... 28
8.7 Governing Law; Consent to Jurisdiction..................... 28
8.8 Severability; No Remedy in Certain Circumstances........... 28
8.9 Publicity.................................................. 29
8.10 Assignment................................................. 29
8.11 Adjustment................................................. 29
EXHIBIT A Certificate of Incorporation of Merger Sub................... 31
EXHIBIT B Bylaws of Merger Sub......................................... 34
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August 26,
2002, among Hammond I, Inc., a Florida corporation ("Hammond I, Inc."), Hammond
Acquisition Corp., a Delaware corporation and a wholly-owned Subsidiary of
Hammond I, Inc. ("Merger Sub"), Robert A. Hammond, Jr. ("Hammond") and
PartsBase, Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, Hammond I, Inc. together with its affiliates, including Hammond,
are the beneficial owners of 9,150,000 shares of Common Stock, par value $.001
per share, of the Company (the "Company Common Stock"), which represents
approximately 64.7% of the outstanding shares of Company Common Stock (not
including outstanding shares held by the Company in its treasury or by its
Subsidiaries).
WHEREAS, Hammond I, Inc. has proposed that Hammond I, Inc. acquire (the
"Acquisition") all of the issued and outstanding shares of the Company's Common
Stock not beneficially owned (within the meaning of Rule 13d-3 of the Exchange
Act (as defined below)) (the "Shares") by Hammond I, Inc., Merger Sub, Hammond
or any other Affiliate (as hereinafter defined), other than the Company, of
Hammond I, Inc. (collectively, the "Acquisition Group").
WHEREAS, in furtherance of the Acquisition, it is proposed that Merger Sub
shall be merged with and into the Company, with the Company continuing as the
surviving corporation (the "Merger"), in accordance with the General Corporation
Law of the State of Delaware (the "DGCL") and upon the terms and subject to the
conditions set forth herein.
WHEREAS, a special committee of the Board of Directors of the Company (the
"Board"), consisting entirely of non-management directors of the Company who are
not Affiliates (as defined below) of the Acquisition Group (the "Independent
Committee"), was established for, among other purposes, the purpose of
evaluating the Acquisition and making a recommendation to the Board with regard
to the Acquisition.
WHEREAS, the Independent Committee has received the opinion of vFinance
Capital LLC (the "Independent Advisor"), an independent financial advisor to the
Independent Committee, which was selected by it, that, as of August 26, 2002,
the consideration to be received by the holders of Shares pursuant to the Merger
is fair to such holders from a financial point of view.
WHEREAS, the Independent Committee, has, after consultation with the
Independent Advisor and Epstein Becker & Green, P.C., independent legal counsel
selected by the Independent Committee, and in light of and subject to the terms
and conditions set forth herein, (i) determined that (x) the Merger
Consideration (as defined below), is fair to the holders of Shares and (y) the
Merger is advisable and in the best interests of the Company and the holders of
Shares; (ii) approved, and declared the advisability of, this Agreement and
(iii) determined to recommend that the Board and the stockholders of the Company
vote to adopt this Agreement.
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WHEREAS, the Board, based on the unanimous recommendation and approval of
the Independent Committee, has, in light of and subject to the terms and
conditions set forth herein, (i) determined that (x) the Merger Consideration
(as defined below), is fair to the holders of Shares and (y) the Merger is
advisable and in the best interests of the Company and the holders of Shares;
(ii) approved, and declared the advisability of, this Agreement and (iii)
determined to recommend that the stockholders of the Company vote to adopt this
Agreement. The Board also has consulted with Epstein Becker & Green, P.C., as
counsel for the Independent Committee.
WHEREAS, the respective boards of directors of Hammond I, Inc. and Merger
Sub have approved this Agreement; and Hammond I, Inc. as the sole stockholder of
Merger Sub, has adopted this Agreement.
WHEREAS, the Company, Hammond I, Inc. and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged
with and into the Company at the Effective Time. At the Effective Time, the
separate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation (the "Surviving Corporation") and shall continue under
the name "PartsBase, Inc."
1.2 Closing. Unless this Agreement shall have been terminated pursuant
to Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
as promptly as practicable (and in any event within five business days)
following satisfaction or waiver of the conditions set forth in Article VI (the
"Closing Date"), at the offices of Adorno & Yoss, P.A., 350 East Las Olas
Boulevard, Suite 1700, Fort Lauderdale, Florida 33301, unless another date, time
or place is agreed to in writing by the parties hereto.
1.3 Effective Time of the Merger. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the Surviving
Corporation shall file a certificate of merger conforming to the requirements of
Subchapter IX of the DGCL (the "Certificate of Merger") with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by the DGCL in connection with the Merger. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware, or such other time thereafter as is provided in the
Certificate of Merger in accordance with the DGCL (the "Effective Time").
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1.4 Effects of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the DGCL.
1.5 Certificate of Incorporation; Bylaws.
(a) The certificate of incorporation of Merger Sub which is
attached as Exhibit A hereto, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law;
provided that Article I of the certificate of incorporation of the Surviving
Corporation shall be amended by the Certificate of Merger to read as follows:
"The name of the corporation is: PartsBase, Inc."
(b) The bylaws of Merger Sub which are attached as Exhibit B
hereto shall be the bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.6 Directors; Officers.
(a) The directors of Merger Sub at the Effective Time shall be
the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(b) The officers of Merger Sub at the Effective Time shall be
the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
ARTICLE II
CANCELLATION OF THE CAPITAL STOCK OF THE COMPANY
AND PAYMENT WITH RESPECT THERETO
2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger, and without any action on the part of the holder thereof:
(a) subject to Section 2.1(e), each Share issued and outstanding
immediately prior to the Effective Time, shall be converted into the right to
receive an amount in cash, without interest, equal to $1.41 (the "Merger"
Consideration") in the manner provided in Section 2.2 hereof;
(b) each share of Company Common Stock issued and held in the
Company's treasury or held by any Subsidiary of the Company immediately prior to
the Effective Time, shall, by virtue of the Merger, cease to be outstanding and
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shall be cancelled and retired without payment of any consideration therefor;
(c) each share of Company Common Stock held by any member of the
Acquisition Group immediately prior to the Effective Time shall remain
outstanding;
(d) each shar e of common stock, par value $.001 per share, of
Merger Sub ("Merger Sub Common Stock") issued and outstanding immediately prior
to the Effective Time shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation; and
(e) notwithstanding anything in this Agreement to the contrary, to
the extent provided by the DGCL, Hammond I, Inc. will not make any payment of
Merger Consideration with respect to Shares held by any person (a "Dissenting
Stockholder") who elects to demand appraisal of such Dissenting Stockholder's
Shares and duly and timely complies with all the provisions of the DGCL
concerning the right of holders of Shares to require appraisal of their shares
("Dissenting Shares"), but such Dissenting Stockholders shall have the right to
receive such consideration as may be determined to be due such Dissenting
Stockholders pursuant to the laws of the State of Delaware. If, after the
Effective Time, a Dissenting Stockholder withdraws such Dissenting Stockholder's
demand for appraisal or fails to perfect or otherwise loses such Dissenting
Stockholder's right of appraisal, in any case pursuant to the DGCL, such
Dissenting Stockholder's Shares will be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration pursuant to
Section 2.1(a). The Company will give Hammond I, Inc. (i) prompt notice of any
demands for appraisal of Dissenting Shares received by the Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
any such demands. The Company will not, without the prior written consent of
Hammond I, Inc., make any payment with respect to, or enter into any
negotiations or discussions or a binding settlement agreement or make an offer,
written or oral, to settle, any such demands.
2.2 Delivery of Merger Consideration.
(a) Payment Agent. As of the Effective Time, Hammond I, Inc. shall
deposit, or shall cause to be deposited, with a bank or trust company designated
by Hammond I, Inc. (the "Payment Agent"), and reasonably acceptable to the
Company, for the benefit of the holders of Shares, for payment in accordance
with this Article II through the Payment Agent, the Merger Consideration to be
paid in respect of all Shares (such funds deposited with the Payment Agent, the
"Payment Fund"). If requested in writing by Hammond I, Inc., the Payment Fund
shall be made available by the Company to the Payment Agent from Company
available cash.
(b) Payment Procedures. Within five (5) business days after the
Effective Time, the Payment Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented Shares (the "Certificates"), the following documents: (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Payment Agent and shall be in such form and have such other
provisions as Hammond I, Inc. may reasonably specify); and (ii) instructions for
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use in effecting the surrender of the Certificates in exchange for payment with
respect thereto. Upon surrender of a Certificate for cancellation to the Payment
Agent together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration payable with respect to the Shares represented by such Certificate
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be cancelled. In the event that a holder has lost or
misplaced a Certificate, an affidavit of loss thereof (together with an
appropriate indemnity and/or bond if Hammond I, Inc. so requires by notice in
writing to the holder of such Certificate) satisfactory in form and substance to
the Company's transfer agent and the Payment Agent shall accompany such letter
of transmittal in lieu of the applicable Certificate. In the event of a transfer
of ownership of Shares which is not registered in the transfer records of the
Company, payment of the applicable Merger Consideration may be made to a
transferee if the Certificate representing such Shares is presented to the
Payment Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the Merger Consideration with respect thereto as
contemplated by this Section 2.2. No interest shall accrue or be paid to any
beneficial owner of Shares or any holder of any Certificate with respect to the
Merger Consideration payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in the Shares. The Merger
Consideration paid with respect to the cancellation of Shares in accordance with
the terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time. 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 II,
subject to applicable law in the case of Dissenting Shares.
(d) Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed to the stockholders of the Company for one (1) year
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation for
payment of their claim for the Merger Consideration. Upon termination of the
Payment Fund pursuant to this subsection and upon delivery to the Surviving
Corporation of the balance thereof, the Surviving Corporation shall have the
right to invest any such amount delivered to it in its sole discretion.
(e) None of the Surviving Corporation, Hammond I, Inc. or the
Payment Agent shall be liable to any holder of a Certificate or the shares
represented thereby for any Merger Consideration delivered in respect of such
Certificate or the shares represented thereby to a public official pursuant to
any abandoned property, escheat or other similar law.
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(f) Investment of Payment Fund. The Payment Agent shall invest any
cash included in the Payment Fund as directed by the Surviving Corporation, in
(i) obligations of or guaranteed by the United States, and (ii) certificates of
deposit, bank repurchase agreements and bankers' acceptances of any bank or
trust company organized under federal law or under the law of any state of the
United States or of the District of Columbia that has capital, surplus and
undivided profits of at least $500 million or in money market funds which are
invested substantially in such investments, none of which shall have maturities
of greater than one year. Any interest or other income resulting from such
investments shall be paid to the Surviving Corporation.
(g) Withholding Rights. Hammond I, Inc. or the Payment Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates or Shares represented
thereby such amounts (if any) as Hammond I, Inc. or the Payment Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Hammond I, Inc. or the Payment Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the Shares
in respect of which such deduction and withholding was made by Hammond I, Inc.
or the Payment Agent.
2.3 Stock Options and Warrants with Respect to Company Common Stock. The
Company shall take all actions necessary pursuant to the terms and provisions of
any outstanding options and warrants to acquire shares of Company Common Stock,
to cause the following: except as specifically disclosed in the Company
Disclosure Letter (as hereinafter defined), all outstanding options and warrants
to acquire shares of Company Common Stock granted under the Company Stock Option
Plans (the "Company Stock Plan") or otherwise (the "Company Stock Options") will
terminate and expire as of the Effective Time. The Company shall give written
notice to the holders of all Company Stock Options of the foregoing and each
such Company Stock Option shall thereafter be canceled. All actions required to
be taken pursuant to this Section 2.3(a) with respect to Company Stock Options
has been, or prior to the Effective Time will be, taken by the Company. The
Company may permit holders of Company Stock Options to exercise such Company
Stock Options prior to the Effective Time by accepting as payment therefor a
portion of the number of shares issuable upon such exercise with a value equal
to the aggregate exercise price of such Company Stock Options valued at the
merger consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company represents
and warrants to Hammond I, Inc. and Merger Sub that, except as specifically
disclosed in the letter dated the date hereof and delivered by the Company to
Hammond I, Inc. simultaneously with the execution and delivery of this Agreement
(the "Company Disclosure Letter"):
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(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted and is duly qualified and in good corporate standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties and assets makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
would not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect on the Company. The Company has made available to
Hammond I, Inc. true and complete copies of its certificate of incorporation and
bylaws and the certificate of incorporation and bylaws (or equivalent
organizational documents) of each Subsidiary of the Company, each as amended to
date. Such certificates of incorporation, bylaws or equivalent organizational
documents are in full force and effect, and neither the Company nor any
Subsidiary of the Company is in violation of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents.
(b) Subsidiaries. The Company owns, directly or indirectly, all of
the outstanding capital stock or other equity interests in each of its
Subsidiaries free and clear of any claim, lien, encumbrance, security interest
or agreement with respect thereto. Other than the capital stock or other
interests held by the Company in such Subsidiaries, neither the Company nor any
such Subsidiary owns any direct or indirect equity interest in any person,
domestic or foreign. All of the outstanding shares of capital stock in each of
its corporate Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and were issued free of preemptive rights and in compliance with
applicable securities laws and regulations. There are no irrevocable proxies or
similar obligations with respect to such capital stock of such Subsidiaries and
no equity securities or other interests of any of its Subsidiaries are or may
become required to be issued or purchased by reason of any options, warrants,
rights to subscribe to, puts, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock or any other equity interest of any such Subsidiary,
and there are no agreements, contracts, commitments, understandings or
arrangements by which any such Subsidiary is bound to issue additional shares of
its capital stock or other equity interests, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or other equity
interests or securities convertible into or exchangeable for such shares or
other equity interests.
(c) Capital Structure.
(i) The authorized capital stock of the Company consists
of 30,000,000 shares of Company Common Stock, 2,000,000 shares of Preferred
Stock, none of which are outstanding. As of the date hereof, (A) 13,977,920
shares of Company Common Stock were outstanding, (B) 1,007,938 Company Stock
Options were outstanding, each such option entitling the holder thereof to
purchase one share of Company Common Stock, (C) 1,839,887 shares of Company
Common Stock are authorized and reserved for issuance upon the exercise of
outstanding Company Stock Options, and (D) no shares of Company Common Stock
were held by the Company in its treasury or by its Subsidiaries.
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(ii) No bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders may vote ("Voting Debt") of
the Company are issued or outstanding.
(iii) All outstanding shares of the Company's capital stock
are validly issued, fully paid and nonassessable and free of preemptive rights.
All shares of Company Common Stock subject to issuance upon the exercise of
Company Stock Options, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights.
(iv) Except for this Agreement, the Company Stock Plans, as
set forth in the Company's annual report on Form10-K for the fiscal year ended
December 31, 2001 and as disclosed in the Company Disclosure Letter, there are
no options, warrants, calls, rights, convertible securities, subscriptions,
stock appreciation rights, phantom stock plans or stock equivalents, or other
rights, commitments or agreements of any character to which the Company or any
Subsidiary of the Company is a party or by which it is bound obligating the
Company or any Subsidiary of the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or any Voting
Debt of the Company or of any Subsidiary of the Company or obligating the
Company or any Subsidiary of the Company to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement for consideration per
share of less than the Merger Consideration. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries.
(d) Authority.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by the
stockholders of the Company, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, other than such approval by the
stockholders of the Company. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law). The
affirmative vote of holders of a majority of the outstanding shares of Company
Common Stock entitled to vote at a duly called and held meeting of stockholders
(the "Stockholders' Meeting") is the only vote of the Company's stockholders
necessary to approve this Agreement, the Merger and the other transactions
contemplated by this Agreement, provided that a majority of the Shares do not
vote against approval of this Agreement, the Merger and the transactions
contemplated thereby. The Independent Committee has been duly authorized and
constituted and the Board, based on the approval and recommendation of the
Independent Committee at a meeting duly called and held, has (A) determined that
(x) the Merger Consideration is fair to the holders of Shares and (y) the Merger
8
is advisable and in the best interests of the Company and the holders of Shares,
and (B) approved and declared the advisability of this Agreement in accordance
with the provisions of the DGCL. The Independent Committee has received the
written opinion (the "Fairness Opinion") of the Independent Advisor to the
effect that, as of the date of this Agreement the Merger Consideration to be
paid to holders of Shares is fair to such holders from a financial point of
view, and, as of the date hereof, such Fairness Opinion has not been withdrawn.
(ii) Subject to compliance with the applicable requirements
of the Exchange Act and the filing of the Certificate of Merger as contemplated
by Section 1.3, the execution and delivery of this Agreement and the Certificate
of Merger, the consummation of the transactions contemplated hereby and thereby,
and compliance of the Company with any of the provisions hereof or thereof will
not breach, constitute an ultra vires act under, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or the loss of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on assets (any such breach, ultra
vires act, violation, default, right of termination, cancellation, acceleration,
loss or creation, a "Violation") pursuant to, (x) any provision of the
certificate of incorporation or bylaws of the Company or the governing
instruments of any Subsidiary of the Company or (y) subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below or in the Company
Disclosure Letter, any loan or credit agreement, note, mortgage, indenture,
lease, or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any Subsidiary of the Company or their
respective properties or assets except Violations under clause (y) which would
not be reasonably expected to have a Material Adverse Effect on the Company.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to the Company
or any Subsidiary of the Company in connection with the execution and delivery
of this Agreement and the Certificate of Merger by the Company, the consummation
by the Company of the transactions contemplated hereby and thereby, and
compliance of the Company with any of the provisions hereof or thereof, the
failure to obtain which would be reasonably expected to have a Material Adverse
Effect on the Company, except for (A) the filing with the Securities and
Exchange Commission (the "SEC") of (1) a Proxy Statement in definitive form
relating to the meeting of the Company's stockholders to be held in connection
with the Merger, (2) a Transaction Statement on Schedule 13E-3 (as hereinafter
defined) and (3) such other filings under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby, (B) the
filing of the Certificate of Merger as contemplated by Section 1.1 and
appropriate documents with the relevant authorities of states in which the
Company is qualified to do business, and (c) filings pursuant to the rules of
the NASDAQ Stock Market.
9
(e) SEC Documents. All the documents (other than preliminary
material) that the Company was required to file with the SEC for the past three
years including, without limitation, each report, schedule, registration
statement and definitive proxy statement filed by the Company (as such documents
have since the time of their filing been amended, the "Company SEC Documents"),
have been timely filed. As of their respective dates, (i) the Company SEC
Documents complied as to form in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act") or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and (ii) none of the Company SEC
Documents at the time of filing contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent such statements have
been modified or superseded by later Company SEC Documents filed on a
non-confidential basis as of the date of this Agreement. The consolidated
financial statements of the Company included in the Company SEC Documents
(including, without limitation, the audited balance sheet and related statements
of operations, stockholders' equity and cash flows of the Company and its
Subsidiaries for the fiscal year ended December 31, 2001, as audited by Deloitte
& Touche, LLP (such balance sheet is referred to hereinafter as the "Balance
Sheet" and the Balance Sheet and related statements are referred to hereinafter
as the "Year-End Financial Statements")), complied 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 generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their operations, stockholders'
equity and cash flows for the periods then ended in accordance with GAAP. As of
December 31, 2001, neither the Company nor any of its Subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by GAAP to be reflected on a consolidated
balance sheet of the Company and its Subsidiaries (including the notes thereto)
and which were not reflected on the Balance Sheet. Since December 31, 2001,
except as and to the extent set forth in the Company's SEC Documents and except
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice and of substantially the same character, type and
magnitude as incurred in the past, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that would be reasonably expected to
have a Material Adverse Effect on the Company. All agreements, contracts and
other documents required to be filed as exhibits to any of the Company SEC
Documents have been so filed. No Subsidiary of the Company is required to file
any form, report or other document with the SEC.
(f) Information Supplied. None of the information included or
incorporated by reference in the Proxy Statement or the Schedule 13E-3 (other
than information concerning Hammond, Hammond I, Inc. or Merger Sub provided in
writing by Hammond I, Inc. or Merger Sub or their counsel specifically for
inclusion or incorporation by reference therein) will, at the date of mailing to
stockholders of the Company and at the time of the meeting of stockholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
10
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement and Schedule
13E-3 (except for information concerning Hammond, Hammond I, Inc. or Merger Sub
provided in writing by Hammond, Hammond I, Inc. or Merger Sub or their counsel
specifically for inclusion or incorporation by reference therein) will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
(g) Absence of Certain Changes or Events. Except as contemplated by
this Agreement or as disclosed in the Company Disclosure Letter or in the
Company SEC Documents, since December 31, 2001, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course and
consistent with prior practice and there has not been any event, occurrence,
fact, condition, change, development or effect that has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.
(h) Litigation. Except as set forth on the Company Disclosure
Letter, there are no material claims, actions, suits or legal or administrative
arbitrations or other proceedings or investigations ("Litigation") pending
against the Company or any of its Subsidiaries, or, to the Company's knowledge,
threatened against or affecting the Company or any of its Subsidiaries, or to
which the Company or any of its Subsidiaries is a party, before or by any
Federal, foreign, state, local or other governmental or non-governmental
department, commission, board, bureau, agency, court or other instrumentality,
or by any private person or entity. There are no existing or, to the best
knowledge of the Company, threatened material orders, judgments or decrees of
any court or other Governmental Entity which specifically apply to the Company,
any of its Subsidiaries or any of their respective properties or assets.
(i) Section 203 of the DGCL and the Certificate of Incorporation.
The Board and the Independent Committee has approved the Merger and this
Agreement, and such approval is sufficient to comply with or render inapplicable
to the Merger and this Agreement, and the transactions contemplated by this
Agreement, the provisions of Section 203 of the DGCL. No other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or the transactions contemplated by this Agreement. No
provision of the certificate of incorporation, bylaws and/or other governing
instruments of the Company or any of its Subsidiaries would restrict or impair
the ability of Hammond I, Inc. to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of the Company and any of its Subsidiaries
that may be acquired or controlled by Hammond I, Inc.
(j) Opinion of Financial Advisor. The Independent Committee has
received the opinion of the Independent Advisor dated as of August 26, 2002, to
the effect that, as of such date, the consideration to be received by the
holders of the Shares pursuant to this Agreement is fair to holders of the
Shares from a financial point of view, a signed copy of which opinion has been
delivered to Hammond I, Inc.
11
(k) Merger Consideration. If requested to do so in writing by
Hammond I, Inc., the Company will provide to the Payment Agent, for deposit into
the Payment Fund, funds in an amount equal to the Merger Consideration to be
paid in respect of all Shares.
3.2 Representations and Warranties of Hammond, Hammond I, Inc. and Merger
Sub. Hammond, Hammond I, Inc. and Merger Sub jointly and severally represent and
warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Hammond I, Inc. and
Merger Sub is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Hammond
I, Inc. or Merger Sub.
(b) Authority.
(i) Hammond I, Inc. and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Hammond I, Inc. or
Merger Sub, as the case may be. This Agreement has been duly executed and
delivered by Hammond, Hammond I, Inc. and Merger Sub and constitutes a valid and
binding obligation of Hammond, Hammond I, Inc. or Merger Sub, as the case may
be, enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(ii) Subject to compliance with the applicable requirements
of the Exchange Act and the filing of the Certificate of Merger, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in any Violation pursuant to (x) any
provision of the certificate of incorporation or bylaws of Hammond I, Inc., any
provision of the certificate of incorporation or bylaws of Merger Sub, or the
governing instruments of any other Subsidiary of Hammond I, Inc. or (y) except
as disclosed in the letter dated the date hereof and delivered by Hammond I,
Inc. to the Company simultaneously with the execution and delivery of this
Agreement (the "Hammond I, Inc. Disclosure Letter") and subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below or in the Hammond
I, Inc. Disclosure Letter, any loan or credit agreement, note, mortgage,
indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
12
ordinance, rule or regulation applicable to Hammond, Hammond I, Inc., Merger Sub
or any other Subsidiary of Hammond I, Inc. or their respective properties or
assets except Violations under clause (y) above which do not or would not
reasonably be expected to have a Material Adverse Effect on Hammond I, Inc.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Hammond, Hammond I, Inc., Merger Sub or any other Subsidiary
of Hammond I, Inc. in connection with the execution and delivery of this
Agreement by Hammond, Hammond I, Inc. and Merger Sub, the consummation by
Hammond, Hammond I, Inc. or Merger Sub, as the case may be, of the transactions
contemplated hereby, and compliance by Hammond, Hammond I, Inc. and Merger Sub
with any of the provisions hereof, the failure to obtain which would reasonably
be expected to have a Material Adverse Effect on Hammond I, Inc. except for (A)
such filings under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, including the filing of the
Schedule 13E-3, and (B) the filing of the Certificate of Merger as contemplated
by Section 1.3 and appropriate documents with the relevant authorities of states
in which Hammond I, Inc. and Merger Sub are qualified to do business.
(c) Information Supplied. None of the information concerning
Hammond, Hammond I, Inc. or Merger Sub provided by or on behalf of Hammond I,
Inc. or Merger Sub specifically for inclusion or incorporation by reference in
the Proxy Statement or the Schedule 13E-3 will, at the date of mailing to
stockholders and at the times of the meetings of stockholders to be held in
connection with the Merger, 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 were made, not misleading.
(d) Interim Operations of Merger Sub. Merger Sub was incorporated
on May 15, 2002, has engaged in no other business activities and has conducted
its operations only as contemplated hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or to the extent that Hammond I, Inc. shall otherwise consent
in writing):
(a) Ordinary Course. The Company and its Subsidiaries shall carry
on their respective businesses in the usual, regular and ordinary course and use
commercially reasonable efforts to preserve intact their present business
organizations, maintain their rights and preserve their relationships with
employees, officers, customers, suppliers and others having business dealings
with them. The Company and its Subsidiaries shall maintain in force all
insurance policies and Consents (as defined in Section 6.1) with respect to the
13
Company and its Subsidiaries and shall maintain all assets and properties of the
Company and its Subsidiaries in customary repair, order and condition,
reasonable wear and tear excepted. The Company shall not, nor shall it permit
any of its Subsidiaries to, (i) enter into any new material line of business or
(ii) incur or commit to any significant capital expenditures or any obligations
or liabilities other than capital expenditures and obligations or liabilities
incurred or committed to as disclosed in the Company Disclosure Letter. The
Company and its Subsidiaries will comply with all applicable laws and
regulations wherever its business is conducted, including without limitation the
timely filing of all reports, forms or other documents with the SEC required
pursuant to the Securities Act or the Exchange Act, except where such
noncompliance would not be reasonably expected to have a Material Adverse Effect
on the Company.
(b) Dividends; Changes in Stock. The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall the Company propose to, (i)
declare or pay any dividends on or make other distributions in respect of any of
its capital stock, other than cash dividends payable by a Subsidiary of the
Company to the Company or one of its Subsidiaries, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) except as set forth on the Company
Disclosure Schedule, repurchase, redeem or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock.
(c) Issuance of Securities. The Company shall not, nor shall it
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any Voting Debt or any securities convertible into or exercisable for
(including any stock appreciation rights, phantom stock plans or stock
equivalents), or any rights, warrants or options to acquire, any such shares or
Voting Debt, or enter into any agreement with respect to any of the foregoing,
other than issuances of Company Common Stock pursuant to exercises of Company
Stock Options or Company Common Stock awards to directors listed in the Company
Disclosure Letter.
(d) Governing Documents. The Company shall not amend or propose to
amend, nor shall it permit any of its Subsidiaries to amend, their respective
certificates of incorporation, bylaws or other governing instruments.
(e) No Acquisitions. The Company shall not, nor shall it permit
any of its Subsidiaries to, (i) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, limited liability company, partnership, association or other
business organization or division thereof or (ii) other than in the ordinary
course of business, otherwise acquire or agree to acquire any assets which, in
the case of this clause (ii), are material, individually or in the aggregate, to
the Company.
(f) No Dispositions. The Company shall not, nor shall it permit
any of its Subsidiaries to, sell, lease, encumber or otherwise dispose of, or
agree to sell, lease, encumber or otherwise dispose of any of its assets
(including capital stock of Subsidiaries), except as disclosed in the Company
14
Disclosure Letter and for dispositions in the ordinary course of business and
consistent with past practice and of substantially the same character, type and
magnitude as dispositions in the past.
(g) Indebtedness. The Company shall not, nor shall it permit any of
its Subsidiaries to, (i) incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or warrants or rights
to acquire any long-term debt securities of the Company or any of its
Subsidiaries or guarantee any long-term debt securities of others or enter into
or amend any contract, agreement, commitment or arrangement with respect to any
of the foregoing, other than (x) in replacement for existing or maturing debt,
(y) indebtedness of any Subsidiary of the Company to the Company or to another
Subsidiary of the Company or (z) other borrowing under existing lines of credit
in the ordinary course of business consistent with prior practice and of
substantially the same character, type and magnitude as borrowings made in the
past or (ii) make any loans, advances or capital contributions to any person
other than a Subsidiary, except for advances to Company employees for travel or
other business expenses in accordance with past practice.
(h) Other Actions. The Company shall not, nor shall it permit any
of its Subsidiaries to, take any action that would, or might reasonably be
expected to, result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VI not being satisfied, or
which would adversely affect the ability of any of them to obtain any of the
Requisite Regulatory Approvals without imposition of a condition or restriction
of the type referred to in Section 6.2(e) and the Company shall, in the event
of, or promptly after the occurrence of, or promptly after obtaining knowledge
of the occurrence of or the impending or threatened occurrence of, any fact or
event which would cause or constitute a breach of any of the representations and
warranties set forth in this Agreement, the non-satisfaction of any of the
conditions to the Merger set forth in Article VI or the failure to obtain the
Requisite Regulatory Approvals, in each case at any time after the date hereof
and through the Closing Date, give detailed notice thereof to Hammond I, Inc.,
and the Company shall use its best efforts to prevent or promptly to remedy such
breach, non-satisfaction or failure, as the case may be.
(i) Advice of Changes; Government Filings. The Company shall confer
on a regular basis with Hammond I, Inc., report on operational matters and
promptly advise Hammond I, Inc., orally and in writing, of any material change
or event or any change or event which would cause or constitute a material
breach of any of the representations, warranties or covenants of the Company
contained herein. The Company shall file all reports required to be filed by the
Company with the SEC between the date of this Agreement and the Effective Time
and shall deliver to Hammond I, Inc. copies of all such reports promptly after
the same are filed. The Company shall cooperate with Hammond I, Inc. in
determining whether any filings are required to be made with, or consents
required to be obtained from, or fees or expenses required to be paid to, any
third party or Governmental Entity prior to the Effective Time in connection
with this Agreement or the transactions contemplated hereby, and shall cooperate
in making any such filings promptly and in seeking to obtain timely any such
consents and, subject to Hammond I, Inc.'s approval, paying any such fees or
15
expenses. The Company shall promptly provide Hammond I, Inc. with copies of all
other filings made by the Company with any Governmental Entity in connection
with this Agreement, the Merger or the other transactions contemplated hereby.
(j) Accounting Methods. The Company shall not change its methods
of accounting in effect at December 31, 2001, except as required by changes in
GAAP as concurred in by the Company's independent auditors.
(k) Benefit Plans. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that it will not, without the prior written consent
of Hammond I, Inc. except as set forth in the Company Disclosure Letter or
contemplated by this Agreement, (i) enter into, adopt, amend (except as may be
required by law) or terminate any employee benefit plan or any agreement,
arrangement, plan or policy between the Company or any of its Subsidiaries, on
the one hand, and one or more of its or their directors or officers, on the
other hand, (ii) except for normal increases in the ordinary course of business
and consistent with past practice and of substantially the same character, type
and magnitude as increases in the past that in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company or any of
its Subsidiaries, increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any plan
and arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or shares) or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing, or
(iii) enter into or renew any contract, agreement, commitment or arrangement
providing for the payment to any director, officer or employee of the Company or
any of its Subsidiaries of compensation or benefits contingent, or the terms of
which are materially altered, upon the occurrence of any of the transactions
contemplated by this Agreement.
(l) Tax Elections. Except in the ordinary course of
business and consistent with past practice and of substantially the same
character, type and magnitude as elections made in the past, the Company shall
not make any material tax election or settle or compromise any material federal,
state, local or foreign income tax claim or liability or amend any previously
filed tax return in any respect.
4.2 Covenants of Hammond, Hammond I, Inc. and Merger Sub. Except as
expressly contemplated by this Agreement, after the date hereof and prior to the
Effective Time, without the prior written consent of the Company:
(a) Other Actions. Neither Hammond, Hammond I, Inc. nor Merger Sub
shall, nor shall Hammond I, Inc. or Merger Sub permit any of their respective
Subsidiaries to, take any action that would, or might reasonably be expected to,
result in any of their or the Company's representations and warranties set forth
in this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VI not being satisfied, or
which would adversely affect the ability of any of them or of the Company to
obtain any of the Requisite Regulatory Approvals without imposition of a
16
condition or restriction of the type referred to in Section 6.2(e). Without
limiting the generality of the foregoing, Hammond I, Inc. and Hammond agree to
vote all shares of Company Common Stock held by them in favor of the Merger.
(b) Government Filings. Hammond I, Inc. shall cooperate with the
Company in determining whether any filings are required to be made with, or
consents required to be obtained from, any third party or Governmental Entity
prior to the Effective Time in connection with this Agreement or the
transactions contemplated hereby, and shall cooperate in making any such filings
promptly and in seeking to obtain timely any such consents. Hammond I, Inc.
shall promptly provide the Company with copies of all other filings made by the
Hammond I, Inc. with any state or Federal Governmental Entity in connection with
this Agreement, the Merger or the other transactions contemplated hereby.
4.3 Competing Transactions. Nothing contained in this Agreement shall
prohibit the Company from, prior to the date of the Stockholder's Meeting (i)
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited written, bona fide proposal to the Company
with respect to a Competing Transaction which could reasonably be expected to
result in a Superior Proposal, if, (A) the failure to take such action would be
inconsistent with the Board's and the Independent Committee's fiduciary duties
to the Company's stockholders under applicable law, and (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
person, the Company (x) provides at least two (2) business days prior notice to
Hammond I, Inc. to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person and (y) receives from such
person a fully executed confidentiality agreement, (ii) complying with Rule
14d-9 or Rule 14e-2 promulgated under the Exchange Act with regard to a tender
or exchange offer, or (iii) failing to make or withdrawing or modifying its
recommendation referred to in Section 5.2, or recommending an unsolicited, bona
fide proposal with respect to a Competing Transaction which could reasonably be
expected to result in a Superior Proposal, following the receipt of such a
proposal, if the failure to take such action would be inconsistent with the
Board's and the Independent Committee's fiduciary duties to the Company's
stockholders under applicable law.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of the Proxy Statement and Schedule 13E-3.
(a) The Company shall as promptly as practicable prepare and file
a proxy or information statement relating to the Stockholders' Meeting (together
with all amendments, supplements and exhibits thereto, the "Proxy Statement")
with the SEC and will use its best efforts to respond to the comments of the SEC
and to cause the Proxy Statement to be mailed to the Company's stockholders at
the earliest practical time. The Company will notify Hammond I, Inc. promptly of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Hammond I, Inc. with copies of all
17
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders' Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will promptly prepare and mail to its
stockholders such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which Hammond I,
Inc. reasonably objects. The Company hereby consents to the inclusion in the
Proxy Statement of the recommendation of the Board described in Section 5.2,
subject to any modification, amendment or withdrawal thereof, and represents
that the Independent Advisor has, subject to the terms of its engagement letter
with the Company, consented to the inclusion of references to its opinion in the
Proxy Statement.
(b) The Company, Hammond I, Inc., and Merger Sub shall together
prepare and file a Transaction Statement on Schedule 13E-3 (together with all
amendments and exhibits thereto, the "Schedule 13E-3") under the Exchange Act.
Each of Hammond, Hammond I, Inc. and Merger Sub shall furnish all information
concerning it, its affiliates and the holders of its capital stock required to
be included in the Schedule 13E-3 and, after consultation with each other, shall
respond promptly to any comments made by the SEC with respect to the Schedule
13E-3.
5.2 Stockholders' Meeting. Subject to the Committee's receipt of the
written opinion of the Independent Advisor dated as of the date of the mailing
of the Proxy Statement to the stockholders of the Company, that the
consideration to be received by such stockholders pursuant to this Agreement is
fair, from a financial point of view, to such stockholders (the "Updated
Fairness Opinion"), the Company shall call the Stockholders' Meeting to be held
as promptly as practicable for the purpose of voting upon the approval of this
Agreement, the Merger and the other transactions contemplated hereby. The
Company will, through its Board and the Independent Committee, recommend to its
stockholders approval of such matters, unless the taking of such action would be
inconsistent with the Board's and the Independent Committee's fiduciary duties
to stockholders under applicable laws. The Company shall solicit from Company
stockholders entitled to vote at the Stockholders' Meeting proxies in favor of
such approval and shall take all other action necessary or, in the reasonable
judgment of Hammond I, Inc., helpful to secure the vote or consent of such
holders required by the DGCL or this Agreement to effect the Merger. The Company
shall coordinate and cooperate with Hammond I, Inc. with respect to the timing
of such meeting.
5.3 Legal Conditions to Merger. Each of the Company, Hammond and Hammond
I, Inc. shall, and shall cause its Subsidiaries to, use all reasonable best
efforts (i) to take, or cause to be taken, all actions necessary to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and to consummate the transactions
contemplated by this Agreement, subject to the approval of stockholders of the
Company described in Section 6.1 (a), and (ii) to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity and of any other public or private
third party which is required to be obtained or made by such party or any of its
Subsidiaries in connection with the Merger and the transactions contemplated by
this Agreement. Each of the Company and Hammond I, Inc. will promptly cooperate
18
with and furnish information to the other in connection with any such burden
suffered by, or requirement imposed upon, any of them or any of their
Subsidiaries in connection with the foregoing.
5.4 Brokers or Finders. Except as disclosed to the other party in writing
prior to the date hereof, each of Hammond I, Inc. and the Company represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except the Independent Advisor, whose fees and expenses will be paid by the
Company in accordance with the Company's agreement with such firm (a copy of
which has been delivered by the Company to Hammond I, Inc. prior to the date of
this Agreement), and each party agrees to indemnify the other party and hold the
other party harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such first party or its affiliates.
5.5 Shareholder Litigation. The Company shall give Hammond I, Inc. the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that no such settlement shall
be agreed to without the Company's and Hammond I, Inc.'s consent, which shall
not be unreasonably withheld.
5.6 Communication to Employees. The Company and Hammond I, Inc. will
cooperate with each other with respect to, and endeavor in good faith to agree
in advance upon the method and content of, all written or oral communications or
disclosure to employees of the Company or any of its Subsidiaries with respect
to the Merger and any other transactions contemplated by this Agreement. Upon
reasonable notice, the Company shall provide Hammond I, Inc. access to the
Company's and its Subsidiaries' employees and facilities.
5.7 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation
shall provide exculpation, indemnification and advancement of expenses for each
person who is now or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer or director of the Company or
any of its Subsidiaries (the "Indemnified Parties") which is the same as the
exculpation, indemnification and advancement of expenses provided to the
Indemnified Parties by the Company (including advancement of expenses, if so
provided) immediately prior to the Effective Time in its Certificate of
Incorporation, Bylaws and existing contractual agreements as in effect at the
close of business on the date hereof; provided, that such exculpation,
indemnification and advancement of expenses covers actions on or prior to the
Effective Time, including, without limitation, all transactions contemplated by
this Agreement.
(b) The Surviving Corporation shall maintain in effect for a period
of five (5) years from the Effective Time "tail" directors' and officers'
liability insurance with a term, coverage amount and other terms and conditions
19
as are at least as favorable as those of the directors' and officers' liability
insurance presently maintained by the Company (the "Tail Policy"). The Surviving
Corporation shall provide the Company with a true and complete copy of a binder
with respect to the Tail Policy prior to the Effective Time, and shall use its
best efforts to provide to the Company a true and complete copy of the Tail
Policy as proposed to be issued prior to the Effective Time. The premium for the
Tail Policy shall be paid in full prior to the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon and a
majority of the Shares entitled to vote thereon shall not have voted against
adoption of this Agreement.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations or early
terminations of waiting periods imposed by, any Governmental Entity (all the
foregoing, "Consents") which are necessary for the consummation of the Merger
shall have been filed, occurred or been obtained (all such permits, approvals,
filings and consents and the lapse of all such waiting periods being referred to
as the "Requisite Regulatory Approvals") and all such Requisite Regulatory
Approvals shall be in full force and effect.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding by any Governmental Entity seeking any of the foregoing be pending.
There shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger illegal.
6.2 Conditions to Obligations of Hammond, Hammond I, Inc. and Merger Sub.
The obligations of Hammond, Hammond I, Inc. and Merger Sub to effect the Merger
are subject to the satisfaction of the following conditions unless waived by
Hammond, Hammond I, Inc. and Merger Sub:
(a) Representations and Warranties. The representations and
20
warranties of the Company set forth in this Agreement shall be true and correct
in all respects as of the Effective Time as though made on or as of such time,
except for those representations and warranties that address matters only as of
a particular date or only with respect to a specific period of time which need
only be true and correct in all respects as of such date or with respect to such
period.
(b) Performance of Obligations of Company. The Company shall have
performed and complied in all material respects with all obligations required to
be performed or complied with by it under this Agreement at or prior to the
Closing Date, and Hammond I, Inc. shall have received a certificate signed on
behalf of the Company by an officer of the Company and by the Chief Financial
Officer of the Company to such effect.
(c) Appraisal Rights. Dissenting Shares shall constitute less than
5% of all shares of Company Common Stock outstanding immediately prior to the
Effective Time.
(d) Consents Under Agreements. The Company shall have obtained the
consent or approval of, except for those consents or approvals for which failure
to obtain such consents or approvals could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, each Person (other than the Requisite Regulatory Approvals) whose
consent or approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of the Company or any Subsidiary of the Company under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument.
(e) Burdensome Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Governmental Entity which, in connection with
the grant of a Requisite Regulatory Approval, imposes any requirement upon
Hammond I, Inc., the Surviving Corporation or their respective Subsidiaries
which would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render uneconomic the
consummation of the Merger, or which would require Hammond I, Inc. or any of its
Subsidiaries to dispose of any asset which is material to Hammond I, Inc. prior
to the Effective Time.
(f) Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect with respect to the
Company and no facts or circumstances arising after the date of this Agreement
shall have occurred which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company.
(g) Proceedings. All proceedings to be taken on the part of the
Company in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Hammond I, Inc., and Hammond I, Inc. shall have received copies of
all such documents and other evidences as Hammond I, Inc. may reasonably request
in order to establish the consummation of such transactions and the taking of
all proceedings in connection therewith.
21
(h) No Action. As of the Effective Time, no action, suit or
proceeding shall be pending (i) seeking to restrain in any material respect or
prohibit the consummation of the Merger, (ii) seeking to obtain from the
Company, Hammond I, Inc. or Merger Sub any damages which would reasonably be
expected to result in a Material Adverse Effect or (iii) seeking to impose the
restrictions, prohibitions or limitations referred to in subsection (e) above,
except such actions, suits or proceedings, the settlement of which shall be
effective as of the Effective Time.
6.3 Conditions to Obligations of Company. The obligation of the Company
to effect the Merger is subject to the satisfaction of the following conditions
unless waived by the Company:
(a) Representations and Warranties. The representations and
warranties of Hammond, Hammond I, Inc. and Merger Sub set forth in this
Agreement shall be true and correct in all respects as of the Effective Time as
though made on or as of such time, except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and correct in all
respects as of such date or with respect to such period.
(b) Performance of Obligations of Hammond, Hammond I, Inc. and
Merger Sub. Hammond, Hammond I, Inc. and Merger Sub shall have performed and
complied in all material respects with all obligations required to be performed
by them under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Hammond I, Inc. by the
President and Chief Executive Officer of Hammond I, Inc. or a Corporate Vice
President of Hammond I, Inc., and by the Senior Vice President and Chief
Financial Officer of Hammond I, Inc. or the Corporate Vice President and
Treasurer of Hammond I, Inc. to such effect.
(c) No Action. As of the Effective Time, no action, suit or
proceeding shall be pending (i) seeking to restrain in any material respect or
prohibit the consummation of the Merger, (ii) seeking to obtain from the
Company, Hammond I, Inc. or Merger Sub any damages which would reasonably be
expected to result in a Material Adverse Effect or (iii) seeking to impose the
restrictions, prohibitions or limitations referred to in Section 6.2(e) above,
except such actions, suits or proceedings, the settlement of which shall be
effective as of the Effective Time; provided, however, that the parties hereto
acknowledge that certain other actions, suits or proceedings not of the type
described in this section may be pending as of the Effective Time.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
22
(a) by mutual consent of Hammond I, Inc. and the Company in a
written instrument, whether or not the Merger has been approved by the
stockholders of the Company;
(b) by Hammond I, Inc. on behalf of itself, Hammond and Merger Sub,
upon a material breach of any representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, which breach is not cured
within ten (10) days after written notice of such breach from Hammond I, Inc. to
the Company, or if any representation or warranty of the Company shall have
become untrue such that the conditions set forth in Section 6.2, would be
incapable of being satisfied by January 31, 2003 (or such later date as Hammond
I, Inc. may agree to in writing), in each case only if Hammond did not have
actual knowledge of, and did not cause, such breach or untruth;
(c) by the Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Hammond I, Inc. or Merger Sub set
forth in this Agreement, which breach is not cured within ten (10) days after
written notice of such breach from the Company to Hammond I, Inc., or if any
representation or warranty of Hammond I, Inc. or Merger Sub shall have become
untrue such that the conditions set forth in Section 6.3, would be incapable of
being satisfied by January 31, 2003;
(d) by either Hammond I, Inc. or the Company, if any permanent
injunction or action by any Governmental Entity preventing the consummation of
the Merger shall have become final and nonappealable;
(e) by either Hammond I, Inc. or the Company if the Merger shall
not have been consummated on or prior to January 31, 2003 (or such later date as
may be agreed to in writing by the Company and Hammond I, Inc.) (other than due
to the failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to the
Effective Time);
(f) by either Hammond I, Inc. or the Company, if any approval of
the stockholders of the Company required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a Stockholders' Meeting or at any adjournment thereof;
(g) by Hammond I, Inc., if the Independent Committee or the Board
shall have (i) withdrawn, modified or changed its approval or recommendation of
this Agreement, the Merger or any of the other transactions contemplated herein
in any manner which is adverse to Hammond I, Inc. or Merger Sub or shall have
resolved to do the foregoing; or (ii) approved or have recommended to the
stockholders of the Company a Competing Transaction or a Superior Proposal,
entered into an agreement with respect to a Competing Transaction or Superior
Proposal or shall have resolved to do the foregoing;
(h) by Hammond I, Inc., if (i) a tender offer or exchange offer or
a proposal by a third party to acquire the Company or the Shares pursuant to a
merger, consolidation, share exchange, business combination, tender or exchange
23
offer or similar transaction shall have been commenced or publicly proposed
which contains a proposal as to price (without regard to the specificity of such
price proposal) and (ii) the Company shall not have made a recommendation to the
stockholders of the Company to reject such proposal within 10 business days of
its commencement or the date such proposal first becomes publicly disclosed, if
sooner;
(i) by the Company, if the Independent Committee and the Board
authorize the Company to enter into a written agreement with respect to a
Competing Transaction that the Independent Committee and the Board have
determined is a Superior Proposal; provided however, that, the Company shall not
terminate this Agreement pursuant to this Section 7.1(i) and enter into an
agreement for such a Competing Transaction until the expiration of five business
days following Hammond I, Inc.'s receipt of a written notice advising Hammond I,
Inc. that the Company has received a Superior Proposal specifying the material
terms and conditions of such Superior Proposal (and including a copy thereof
with all accompanying written documentation) and identifying the Person making
such Superior Proposal. After providing such notice, the Company shall provide a
reasonable opportunity to Hammond I, Inc. during such five business day period
to agree to such adjustments in the terms and conditions of this Agreement as
would enable Hammond I, Inc. and the Company to proceed with the Merger on such
adjusted terms.
7.2 Effect of Termination. In the event of termination of this Agreement
and abandonment of the Merger by either the Company or Hammond I, Inc. as
provided in Section 7.1, this Agreement shall forthwith terminate and there
shall be no liability or obligation on the part of Hammond I, Inc., Merger Sub,
Hammond or the Company or their respective officers or directors except with
respect to the Sections 5.5 and 7.3; provided, however, that, subject to the
provisions of Section 8.8, nothing herein shall relieve any party of liability
for any breach hereof, except that in the event of a termination of this
Agreement, no party shall have any right to the recovery of expenses except as
provided in Section 7.3.
7.3 Fees, Expenses and Other Payments.
(a) Except as otherwise provided in this Section 7.3, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants) shall be borne solely and entirely by the party which has incurred
such costs and expenses (with respect to such party, its "Expenses").
(b) The Company agrees that if this Agreement shall be terminated
pursuant to:
(i) Section 7.1(f) because the Agreement and the Merger
shall fail to receive the requisite vote for approval and adoption by the
stockholders of the Company at a meeting of the stockholders of the Company
called to vote thereon, and at the time of such meeting there shall exist a
proposal with respect to a Competing Transaction which either (x) the Board or
the Independent Committee has not publicly opposed or (y) is consummated, or a
24
definitive agreement with respect to which is entered into, at any time during
the period commencing on the date hereof and ending twelve months after the date
of termination of this Agreement; or
(ii) Section 7.1(g), Section 7.1(h) or Section 7.1(i);
then in each such event the Company shall pay to Hammond I, Inc. an amount equal
to Hammond Inc.'s actual out-of-pocket expenses incurred in connection with this
Agreement or the transactions contemplated hereby.
(c) Any payment required to be made pursuant to this Section 7.3
shall be made as promptly as practicable but not later than five business days
after termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by Hammond I, Inc., except
that any payment to be made as the result of an event described in Section
7.3(b)(i) or clause (y) of Section 7.3(b)(i) shall be made as promptly as
practicable but not later than five business days after the date on which a
Competing Transaction shall have been consummated.
7.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors and the
Independent Committee, at any time before or after approval of the matters
presented in connection with the Merger by the stockholders of the Company or of
Hammond I, Inc., but, after any such approval, no amendment shall be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
7.5 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors and the Independent Committee, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations, Warranties and Agreements. The
representations and warranties made by the parties contained in this Agreement
and any other agreement delivered pursuant hereto or made in writing by or on
behalf of the parties shall not survive beyond the Effective Time.
25
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Hammond, Hammond I, Inc. or Merger Sub, to:
Hammond I, Inc.
905 Clint Moore Road
Boca Raton, Florida 33487
Attention: Robert A. Hammond, Jr.
Facsimile: (561) 953-0787
With a copy to:
Adorno & Yoss, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
Attention: Joel D. Mayersohn, Esq.
Facsimile: (954) 766-7800
(b) if to the Company, to:
PartsBase, Inc.
905 Clint Moore Road
Boca Raton, Florida 33487
Attention: Chief Financial Officer
Facsimile: (561) 953-0787
With copies to:
Epstein Becker & Green, P.C.
111 Huntington Avenue
Boston, Massachusetts 02199
Attention: Paul D. Broude, Esq.
Facsimile: (617) 342-4001
8.3 Certain Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
26
(b) "Beneficially Own" or "Beneficial Ownership" with respect to
any securities, means having "beneficial ownership" of such securities in
accordance with the provisions of Rule 13d-3 under the Exchange Act. Without
duplicative counting of the same securities by the same holder, securities
beneficially owned by a person include securities beneficially owned by all
other persons with whom such person would constitute a group;
(c) "Competing Transaction" shall mean any of the following (other
than the transactions contemplated by this Agreement) involving the Company: (i)
any merger, consolidation, share exchange, exchange offer, business combination,
recapitalization, liquidation, dissolution or other similar transaction
involving the Company resulting in the Company's current shareholders owning
less than a majority of the capital stock of the surviving corporation in such
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets representing 20% or more of the total assets of the
Company and its Subsidiaries, in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 20% or more of the outstanding
Shares or the filing of a registration statement under the Securities Act in
connection therewith; (iv) any person or group acquiring Beneficial Ownership of
15% or more, or such person or group having increased its Beneficial Ownership
beyond 15%, of the outstanding Shares; or (v) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing;
(d) "Group" means two or more persons acting together for the
purpose of acquiring, holding, voting or disposing of any securities, which
persons would be required to file a Schedule 13D or Schedule 13G with the SEC as
a "person" within the meaning of Section 13(d)(3) of the Exchange Act if such
persons beneficially owned a sufficient amount of such securities to require
such a filing under the Exchange Act;
(e) "Material" with respect to any entity means an event, change or
effect which is material in relation to the condition (financial or otherwise),
properties, assets, liabilities, businesses or operations of such entity and its
Subsidiaries taken as a whole;
(f) "Material Adverse Effect" means, with respect to the Company or
Hammond I, Inc., any change, event or effect shall have occurred that, when
taken together with all other adverse changes, events or effects that have
occurred would or would reasonably be expected to (i) be materially adverse to
the business, assets, properties, results of operations or condition (financial
or otherwise) of such party and its Subsidiaries taken as a whole, or (ii)
prevent or materially delay the consummation, or increase the cost to Hammond I,
Inc. or Merger Sub, of the Merger;
(g) "Person" means an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other legal entity;
(h) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
27
the equity interests of which) is owned directly or indirectly by such first
person;
(i) "Superior Proposal" means any bona fide written proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, all of the shares of Company Common Stock then outstanding or all or
substantially all of the assets of the Company and the assumption of the
liabilities and obligations of the Company to be followed by a pro rata
distribution of the sale proceeds to stockholders of the Company, that (i) is
not subject to any condition that the party making the proposal obtain financing
for the proposed transaction, (ii) provides holders of Company Common Stock with
per share consideration that the Independent Committee determines in good faith,
after receipt of advice of its financial advisor, is more favorable from a
financial point of view than the consideration to be received by holders of
Company Common Stock in the Merger, (iii) is determined by the Independent
Committee in its good faith judgment, after receipt of advice of its financial
advisor and outside legal counsel, to be likely of being completed (taking into
account all legal, financial, regulatory and other aspects of the proposal, the
Person making the proposal and the expected timing to complete the proposal),
(iv) does not, in the definitive agreement, contain any "due diligence"
conditions, and (v) has not been obtained by or on behalf of the Company in
violation of Section 4.3 hereof; and
(j) Any accounting term that is used in the context of describing
or referring to an accounting concept and that is not specifically defined
herein shall be construed in accordance with GAAP as applied in the preparation
of the financial statements of the Company included in the Company SEC Documents
(including, without limitation, the Year-End Financial Statements and the
Balance Sheet).
8.4 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this Agreement. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof' and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
August 26, 2002.
8.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.6 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and the instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
28
subject matter hereof; and (b) except as provided in Sections 2.2, 2.3 and 5.5,
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder. The parties hereby acknowledge that, except as
hereinafter agreed to in writing, no party shall have the right to acquire or
shall be deemed to have acquired shares of common stock of the other party
pursuant to the Merger until consummation thereof.
8.7 Governing Law; Consent to Jurisdiction.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of laws thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
exclusive personal jurisdiction of any Delaware state court or any federal court
located in the State of Florida in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (ii)
agrees that it shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.
8.8 Severability ; No Remedy in Certain Circumstances. Any term or
provision of this Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction declares that any
term or provision hereof is invalid or unenforceable, the parties agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. Except as
otherwise contemplated by this Agreement, to the extent that a party hereto took
an action inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an order or judgment of a court or other competent
authority, such party shall incur no liability or obligation unless such party
did not in good faith seek to resist or object to the imposition or entering of
such order or judgment.
8.9 Publicity. Except as otherwise required by any applicable law or
rules or regulations promulgated thereunder, or by the rules of the NASDAQ Stock
Market, so long as this Agreement is in effect, neither the Company, Hammond nor
Hammond I, Inc. shall, or shall permit any of its Subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld or delayed.
8.10 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
29
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
8.11 Adjustment. All dollar amounts and share numbers set forth herein,
including without limitation the Merger Consideration, shall be subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Company Common Stock, between the
date of this Agreement and the Effective Time, to the extent appropriate.
30
IN WITNESS WHEREOF, Hammond I, Inc., Merger Sub, Hammond and the Company
have caused this Agreement, to be signed by their respective officers thereunto
duly authorized, all as of August 26, 2002.
HAMMOND I, INC.
By:/s/Robert A.Hammond, Jr.
------------------------
Name: Robert A. Hammond, Jr.
Title: President
HAMMOND ACQUISITION CORP.
By:/s/Robert A. Hammond, Jr.
-------------------------
Name:Robert A. Hammond, Jr.
Title:President
PARTSBASE, INC.
By:/s/Mark Weicher
---------------
Name:Mark Weicher
Title:C.F.O.
/s/Robert A. Hammond, Jr.
-------------------------
Robert A. Hammond, Jr.
31
EXHIBIT 99.1
Company Press Release
PartsBase Accepts Hammond Group's Offer to Purchase Company
Boca Raton, FL, August 26, 2002 -- PartsBase, Inc. (Nasdaq: PRTS), today
announced that it has entered into a definitive merger agreement with Hammond I,
Inc., a corporation wholly owned and controlled by Robert A. Hammond Jr., the
Chief Executive Officer, President, Chairman of the Board and majority
stockholder of PartsBase, Hammond Acquisition Corp., a wholly owned subsidiary
of Hammond I, Inc. and Robert A. Hammond Jr. (the"Agreement"). Under the terms
of the Agreement, Hammond Acquisition Corp. will merge with PartsBase and
PartsBase shall be the surviving corporation. The stockholders of PartsBase
(other than Mr. Hammond, those stockholders owned or controlled by Mr. Hammond
and stockholders of PartsBase who exercise their dissenters' rights under
Delaware law) will receive a cash payment of $1.41 per share of common stock.
The proposed transaction would result in the acquisition of all of the
outstanding shares of common stock of PartsBase (other than the shares owned or
controlled by Mr. Hammond). The closing of the proposed transaction is subject
to, among other things, (i) approval of the proposed transaction by the
affirmative vote of the majority of the outstanding shares of PartsBase and a
majority of the outstanding shares of Common Stock not beneficially owned or
controlled by Mr. Hammond not voting against the proposed transaction; (ii)the
financial advisor to PartsBase not revoking, modifying or changing its fairness
opinion delivered to PartsBase on August 26, 2002; (iii) receipt of any
regulatory approvals and third party consents; and (iv) the settlement of
pending class action litigation seeking to restrain the consummation of the
proposed transaction.
The proposed transaction may only be completed in accordance with applicable
state and federal laws including the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended.
This press release shall not constitute an offer or a solicitation of an offer
to buy or sell any securities of PartsBase or a solicitation regarding the
proposed transaction.
About PartsBase, Inc.
PartsBase, Inc. core business is as an online provider of Internet
business-to-business e-commerce services for the aviation industry.
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RNpartners, Inc., a newly formed, wholly owned subsidiary, is a provider of
critical care registered nurses for temporary assignment to hospitals in
Miami/Dade, Hillsborough, Orange, Palm Beach and Broward counties of the State
of Florida.
This announcement contains forward-looking statements that involve risks and
uncertainties, including those relating to competition from other service
providers, the Companys ability to grow its subscriber and hospital base, to
offer new functionality so that it will be accepted by the aviation marketplace
and to attract a sufficient number of registered nurses in a limited talent
pool. Actual results may differ materially from the results predicted and
reported results should not be considered as an indication of future
performance. The potential risks and uncertainties include, among others, the
increasingly competitive and constantly changing nature of the
business-to-business e-commerce market. More information about potential factors
that could affect the Company's business and financial results is included in
the Company's Registration Statement on Form S-1 (SEC File No. 333-94337), as
amended, and the Company's reports filed pursuant to the Securities Exchange Act
of 1934, including, without limitation, under the captions, "Management's
Discussion and Analysis of Financial Condition and Results of Operations", "Risk
Factors", and "Competition", which are on file with the SEC
(http://www.sec.gov).
SOURCE PartsBase, Inc.
It is expected that PartsBase will file, among other things, a Proxy Statement
with the SEC in connection with the proposed transaction and will mail the Proxy
Statement to stockholders of PartsBase. Stockholders are urged to read the Proxy
Statement carefully when it is available. The Proxy Statement will contain
important information about PartsBase, the proposed transaction and related
matters. Stockholders will be able to obtain free copies of these documents
through the website maintained by the SEC at http://www.sec.gov. Free copies of
the Proxy Statement, when available, may be also obtained from PartsBase by
contacting the person identified below.
In addition to the Proxy Statement, PartsBase files annual, quarterly and
special reports, proxy statements and other information with the SEC. You may
read and copy any reports, statements, and other information filed by PartsBase
at the SEC public reference room at 450 Fifth Street, N.W. Washington, D.C.
20549. PartsBase's filings with the SEC are also available to the public from
commercial document-retrieval services and at the website maintained by the SEC
at http://www.sec.gov.
Contact: For more information on PartsBase:
Mark Weicher, Chief Financial Officer (mweicher@partsbase.com)
Phone: 561.953.0702 Fax: 561.953.0786
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