Additional Definitive Proxy Solicitation Material — Schedule 14A
Filing Table of Contents
Document/Exhibit Description Pages Size
1: DEFA14A Synagro Technologies, Inc. 8-K 5 25K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 57 301K
Liquidation or Succession
3: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 9 35K
Liquidation or Succession
4: EX-99.1 Miscellaneous Exhibit 4± 20K
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Exhibit Table of Contents
EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
January 28, 2007
among
SYNAGRO TECHNOLOGIES, INC.
SYNATECH HOLDINGS, INC.
and
SYNATECH, INC.
TABLE OF CONTENTS
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ARTICLE I THE MERGER.....................................................1
SECTION 1.01 The Merger...................................................1
SECTION 1.02 Closing......................................................2
SECTION 1.03 Effective Time...............................................2
SECTION 1.04 Effect of the Merger.........................................2
SECTION 1.05 Certificate of Incorporation; Bylaws.........................2
SECTION 1.06 Directors and Officers.......................................2
ARTICLE II EFFECT OF MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES....3
SECTION 2.01 Conversion of Securities.....................................3
SECTION 2.02 Exchange of Certificates.....................................3
SECTION 2.03 Stock Transfer Books.........................................6
SECTION 2.04 Company Stock Options........................................6
SECTION 2.05 Dissenting Shares............................................7
SECTION 2.06 Adjustment of Merger Consideration...........................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................7
SECTION 3.01 Organization and Qualification; Subsidiaries.................8
SECTION 3.02 Certificate of Incorporation and Bylaws......................8
SECTION 3.03 Capitalization...............................................8
SECTION 3.04 Authority Relative to this Agreement.........................9
SECTION 3.05 No Conflict; Required Filings and Consents..................10
SECTION 3.06 Company Permits; Compliance.................................11
SECTION 3.07 SEC Reports; Financial Statements; Undisclosed Liabilities..11
SECTION 3.08 Information Supplied........................................12
SECTION 3.09 Absence of Certain Changes or Events........................13
SECTION 3.10 Absence of Litigation.......................................14
SECTION 3.11 Employee Benefit Plans......................................14
SECTION 3.12 Labor and Employment Matters................................16
SECTION 3.13 Real Property; Title to Assets..............................16
SECTION 3.14 Intellectual Property.......................................17
SECTION 3.15 Taxes.......................................................18
SECTION 3.16 Environmental Matters.......................................20
SECTION 3.17 Material Contracts..........................................22
SECTION 3.18 Insurance...................................................23
SECTION 3.19 Board Approval; State Antitakeover Statutes; Rights Plan;
Vote Required..............................................23
SECTION 3.20 Corrupt Gifts and Payments..................................23
SECTION 3.21 Opinion of Financial Advisor................................24
SECTION 3.22 Brokers.....................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.......24
SECTION 4.01 Corporate Organization......................................24
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SECTION 4.02 Certificate of Incorporation and Bylaws.....................24
SECTION 4.03 Authority Relative to This Agreement........................24
SECTION 4.04 No Conflict; Required Filings and Consents..................25
SECTION 4.05 Information Supplied........................................25
SECTION 4.06 Absence of Litigation.......................................26
SECTION 4.07 Operations of Merger Sub....................................26
SECTION 4.08 Brokers.....................................................26
SECTION 4.09 Ownership of Company Capital Stock..........................26
SECTION 4.10 Cash Available or Financing Arrangements....................26
SECTION 4.11 Solvency; Operation of the Company After the Effective Time.26
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................27
SECTION 5.01 Conduct of Business by the Company Pending the Merger.......27
SECTION 5.02 Control of the Company's Operations.........................30
ARTICLE VI ADDITIONAL AGREEMENTS.........................................30
SECTION 6.01 Proxy Statement.............................................30
SECTION 6.02 Company Stockholders' Meeting...............................30
SECTION 6.03 Access to Information; Confidentiality......................31
SECTION 6.04 No Solicitation of Transactions.............................31
SECTION 6.05 Directors' and Officers' Indemnification and Insurance......33
SECTION 6.06 Notification of Certain Matters.............................35
SECTION 6.07 Further Action; Reasonable Best Efforts.....................35
SECTION 6.08 Obligations of Parent and Merger Sub........................36
SECTION 6.09 Public Announcements........................................36
SECTION 6.10 Employee Benefits...........................................36
SECTION 6.11 Takeover Statutes...........................................37
SECTION 6.12 Financing...................................................37
SECTION 6.13 Transfer Taxes..............................................38
ARTICLE VII CONDITIONS TO THE MERGER......................................38
SECTION 7.01 Conditions to the Obligations of Each Party.................38
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub......39
SECTION 7.03 Conditions to the Obligations of the Company................39
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.............................40
SECTION 8.01 Termination.................................................40
SECTION 8.02 Effect of Termination.......................................41
SECTION 8.03 Fees and Expenses...........................................41
SECTION 8.04 Amendment...................................................43
SECTION 8.05 Waiver......................................................43
ARTICLE IX GENERAL PROVISIONS............................................43
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements..43
SECTION 9.02 Notices.....................................................43
SECTION 9.03 Certain Definitions.........................................44
SECTION 9.04 Severability................................................50
SECTION 9.05 Disclaimer of Other Representations and Warranties..........50
SECTION 9.06 Entire Agreement; Assignment................................51
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SECTION 9.07 Parties in Interest.........................................51
SECTION 9.08 Specific Performance........................................51
SECTION 9.09 Governing Law...............................................51
SECTION 9.10 Waiver of Jury Trial........................................51
SECTION 9.11 Headings....................................................52
SECTION 9.12 Counterparts................................................52
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of January 28,
2007 among SYNAGRO TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
SYNATECH HOLDINGS, INC., a Delaware corporation ("Parent"), and SYNATECH, INC.,
a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company (the "Company Board") has
(i) determined that it is in the best interest of the Company and the Company's
stockholders, and declared it advisable, to enter into this Agreement providing
for the merger (the "Merger") of Merger Sub with and into the Company in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), upon the terms and subject to the conditions set forth herein, (ii)
approved the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger, in
accordance with the DGCL, upon the terms and conditions contained herein, and
(iii) resolved to recommend adoption of this Agreement by the stockholders of
the Company;
WHEREAS, the Board of Directors of Parent and Merger Sub have each (i)
unanimously approved this Agreement and declared it advisable for Parent and
Merger Sub to enter into this Agreement, and (ii) unanimously approved the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, including the Merger, in accordance with
the DGCL, upon the terms and conditions contained herein;
WHEREAS, upon consummation of the Merger, each issued and outstanding share
of common stock, par value $0.002 per share of the Company (the "Company Common
Stock"), will be converted into the right to receive $5.76 per share in cash,
without interest, upon the terms and subject to the conditions of this
Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and to prescribe certain conditions with respect to the consummation of
the transaction contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the conditions set
forth in Article VII, and in accordance with the DGCL, at the Effective Time,
Merger Sub shall be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Merger Sub shall cease and the Company shall
continue under the name "Synagro Technologies, Inc." as the surviving
corporation of the Merger under the DGCL (the "Surviving Corporation").
SECTION 1.02 Closing. Unless this Agreement shall have been terminated in
accordance with Section 8.01, and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at 11:00 a.m., New York time, on a date to be specified by the
parties, which shall be not later than the fifth business day after the
satisfaction or waiver of the conditions set forth in Article VII (other than
those that by their terms are to be satisfied or waived at the Closing), at the
offices of Locke Liddell & Sapp LLP, 600 Travis Street, Suite 3400, Houston,
Texas 77002, unless another time, date and/or place is agreed to in writing by
Parent and the Company.
SECTION 1.03 Effective Time. Upon the terms and subject to the conditions
set forth in this Agreement, simultaneously with the Closing, the parties hereto
shall (i) file a certificate of merger (the "Certificate of Merger") in such
form as is required by, and executed and acknowledged in accordance with, the
relevant provisions of the DGCL, and (ii) make all other filings or recordings
required under the DGCL to effect the Merger. The Merger shall become effective
at such date and time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or at such subsequent date and time
as Parent and the Company shall agree and specify in the Certificate of Merger.
The date and time at which the Merger becomes effective is referred to in this
Agreement as the "Effective Time".
SECTION 1.04 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in Section 259 of the DGCL.
SECTION 1.05 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with the provisions thereof and as provided by Law.
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by Law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws,
except that the references to Merger Sub's name shall be replaced by
references to Synagro Technologies, Inc..
SECTION 1.06 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until the earlier of their death,
resignation or removal.
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ARTICLE II
EFFECT OF MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities. At the Effective Time, the following
shall occur by virtue of the Merger and without any action on the part of Merger
Sub, the Company or the holders of any of the following securities:
(a) Conversion of Company Common Stock. Each share of Company Common
Stock (all issued and outstanding shares of Company Common Stock being
hereinafter collectively referred to as the "Shares") issued and
outstanding immediately prior to the Effective Time (other than any Shares
to be canceled pursuant to Section 2.01(b), Shares owned by any direct or
indirect wholly owned subsidiary of the Company and not owned on behalf on
a third person and any Dissenting Shares) shall be canceled and shall be
converted automatically into the right to receive an amount per Share
(subject to any applicable withholding Tax specified in Section 2.02(f)
hereof) equal to $5.76 in cash, without interest (the "Merger
Consideration"). At the Effective Time, each holder of a certificate
theretofore representing any such shares of Company Common Stock (other
than holders of Dissenting Shares), including any shares of restricted
stock of the Company issued under the Company's 2005 Restricted Stock Plan,
whether or not restrictions have lapsed, shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
and any declared but unpaid dividends, including the Stub Period Dividend,
if applicable, upon surrender of such certificates in accordance with
Section 2.02, without interest.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each Share
held in the treasury of the Company and each Share owned by Merger Sub,
Parent or any direct or indirect wholly owned subsidiary of Parent
immediately prior to the Effective Time and not owned on behalf of a third
person shall automatically be canceled without any conversion thereof and
no payment or distribution shall be made with respect thereto.
(c) Capital Stock of Merger Sub. Each share of common stock, par value
$0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, par value $0.002 per
share, of the Surviving Corporation and shall constitute the only shares of
capital stock of the Surviving Corporation.
SECTION 2.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall (i)
appoint a bank or trust company reasonably acceptable to the Company (the
"Paying Agent"), and (ii) enter into a paying agent agreement, in form and
substance reasonably acceptable to the Company, with such Paying Agent for
the payment of the (A) aggregate Merger Consideration, (B) the aggregate
amount of cash dividends, if any, that (x) were declared after the date
hereof and are expressly permitted hereunder to have been so declared, (y)
have a record date prior to the Effective Time, and (z) are unpaid at the
Effective Time (such dividends, including the Stub Period Dividend, the
"Outstanding Dividends") and (C) Option Payments (as defined below) in
accordance with this Article II. Parent shall provide the Paying Agent with
irrevocable instructions and authority to pay each respective holder of
record (or otherwise pursuant to
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Section 2.02(b) below) of certificates evidencing Shares (other than any
Shares cancelled pursuant to Section 2.01(b), Shares owned by any direct or
indirect wholly owned subsidiary of the Company and any Dissenting Shares),
as evidenced by a list of such holders certified by an officer of the
Surviving Corporation or the Surviving Corporation's transfer agent, the
Merger Consideration upon surrender of certificates that formerly evidenced
Shares and the amount of Outstanding Dividends due thereon. At or prior to
the Effective Time, Parent shall deposit, or cause to be deposited, with
the Paying Agent, for the benefit of the holders of Shares and Company
Stock Options and separate and apart from its other funds, as a trust fund,
cash in an amount sufficient to pay the aggregate Merger Consideration and
Outstanding Dividends required to be paid pursuant to Section 2.01(a) and
the aggregate Option Payments required to be paid pursuant to Section
2.04(b) (such cash to pay the Merger Consideration, Outstanding Dividends
and the Option Payments being hereinafter referred to as the "Exchange
Fund"). The Exchange Fund shall not be used for any other purpose. The
Exchange Fund shall be invested by the Paying Agent as directed by Parent;
provided, however, that such investments shall be in obligations of or
guaranteed by the United States of America or any agency or instrumentality
thereof and backed by the full faith and credit of the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by
Moody's Investors Service, Inc. or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
banker's acceptances of commercial banks with capital exceeding $10 billion
(based on the most recent financial statements of such bank which are then
publicly available). Any net profit resulting from, or interest or income
produced by, such investments shall be payable to the Surviving
Corporation.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each person
who was, at the Effective Time, a holder of record of Shares entitled to
receive the Merger Consideration and Outstanding Dividends pursuant to
Section 2.01(a): (i) a letter of transmittal (which shall be in customary
form and shall specify that delivery shall be effected, and risk of loss
and title to the certificates evidencing such Shares (the "Certificates")
shall pass, only upon proper delivery of the Certificates to the Paying
Agent (or effective affidavits of loss in lieu thereof)) and (ii)
instructions for use in effecting the surrender of the Certificates (or
effective affidavits of loss in lieu thereof) in exchange for payment of
the Merger Consideration and Outstanding Dividends. Upon surrender to the
Paying Agent of a Certificate (or effective affidavits of loss in lieu
thereof) for cancellation, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto,
the holder of the Shares represented by such Certificate (or effective
affidavits of loss in lieu thereof) shall be entitled to receive in
exchange therefor the Merger Consideration and Outstanding Dividends
pursuant to Section 2.01(a) in respect of the Shares formerly represented
by such Certificate (or effective affidavits of loss in lieu thereof), and
the Certificate so surrendered shall forthwith be cancelled. In the event
of a transfer of ownership of Shares that is not registered in the transfer
records of the Company, payment of the Merger Consideration and Outstanding
Dividends may be made to a person other than the person in whose name the
Certificate so surrendered is registered if the Certificate representing
such Shares shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment of the Merger Consideration
and Outstanding Dividends to a person other than the registered holder of
such Certificate or establish to the reasonable satisfaction of Parent that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each
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Certificate shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration and Outstanding Dividends to which the holder of such
Certificate is entitled pursuant to this Article II. No interest shall be
paid or will accrue on any cash payable to holders of Certificates pursuant
to the provisions of this Article II. The method of payment of cash for
Shares converted into the right to receive the Merger Consideration and
Outstanding Dividends shall be by wire transfer, bank check or other method
that will provide a holder of Shares not later than second day funds.
Parent shall instruct the Paying Agent to timely pay the Merger
Consideration and Outstanding Dividends.
(c) No Further Rights. From and after the Effective Time, holders of
Certificates shall cease to have any rights as stockholders of the Company,
except as provided herein or by Law.
(d) Termination of Exchange Fund. At any time which is more than one
year after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any Exchange Funds which had
been deposited with the Paying Agent and have not been disbursed in
accordance with this Article II (including, without limitation, interest
and other income received by the Paying Agent in respect of the funds made
available to it), and after the Exchange Funds have been delivered to the
Surviving Corporation, Persons entitled to payment in accordance with this
Article II shall be entitled to look solely to the Surviving Corporation
(subject to abandoned property, escheat or other similar Laws) for payment
of the Merger Consideration and Outstanding Dividends upon surrender of the
Certificates held by them, without any interest thereon; provided, that
such Person shall have no greater rights against the Surviving Corporation
than may be accorded to general creditors of the Surviving Corporation
under applicable Laws. Any portion of the Exchange Funds deposited with the
Paying Agent remaining unclaimed as of a date which is immediately prior to
such time as such amounts would otherwise escheat to or become property of
any government entity shall, to the extent permitted by applicable Law,
become the property of the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled thereto.
(e) No Liability. None of the Paying Agent, Merger Sub, Parent or the
Surviving Corporation shall be liable to any holder of Shares for any such
Shares (or dividends or distributions with respect thereto), or cash
delivered to a public official pursuant to any abandoned property, escheat
or similar Law.
(f) Withholding Rights. Each of the Paying Agent, the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares and Company Stock Options such amounts as it is required to deduct
and withhold with respect to such payment under all applicable Tax Laws. To
the extent that amounts are so withheld by the Paying Agent, the Surviving
Corporation or Parent, as the case may be, 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 the Paying Agent, the Surviving Corporation or Parent, as the case
may be.
(g) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
5
claiming such Certificate to be lost, stolen or destroyed and, if required
by Parent, the posting by such person of a bond, in such reasonable and
customary amount as Parent may direct, as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent
shall pay in respect of such lost, stolen or destroyed Certificate the
Merger Consideration and Outstanding Dividends to which the holder thereof
is entitled pursuant to Section 2.01(a).
SECTION 2.03 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company.
From and after the Effective Time, the holders of Certificates representing
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares, except as otherwise provided in this
Agreement or by Law. At or after the Effective Time, any Certificates presented
to the Paying Agent or Parent for any reason shall be canceled against delivery
of the Merger Consideration and Outstanding Dividends to which the holders
thereof are entitled pursuant to Section 2.01(a).
SECTION 2.04 Company Stock Options.
(a) As part of the Transactions (as defined in Section 3.04), the
Company shall use its reasonable best efforts to ensure that (i)
immediately prior to the Effective Time, each outstanding option to
purchase Company Common Stock granted under any Company Stock Plan shall
become immediately vested and exercisable in full, (ii) at the Effective
Time, each option to purchase shares of Company Common Stock granted under
the Company Stock Plans (each, a "Company Stock Option") shall be canceled
as of the Effective Time in exchange for the consideration contemplated by
Section 2.04(b), and (iii) at the Effective Time, all of the Company Stock
Plans shall be terminated, in each case, in accordance with and pursuant to
the terms of the Company Stock Plans and without the creation of additional
liability to the Company or any Subsidiaries.
(b) Each holder of a Company Stock Option that is outstanding and
unexercised as of the Effective Time, whether or not exercisable at the
Effective Time, and has an exercise price per share of Company Common Stock
that is less than the per share Merger Consideration shall (subject to the
provisions of this Section 2.04) be paid out of the Exchange Fund as
promptly as practicable after the Effective Time, in exchange for the
cancellation of such Company Stock Option, an amount in cash (subject to
any applicable withholding Taxes) equal to (i) the difference between the
per share Merger Consideration and the applicable exercise price of such
Company Stock Option, multiplied by (ii) the aggregate number of Shares
issuable upon exercise, whether or not exercisable at the Effective Time,
of such Company Stock Option (the "Option Payment"). Any such payments
shall be subject to all applicable federal, state and local Tax withholding
requirements, and shall be by wire transfer, bank check or other method
that will provide a holder of Shares not later than second day funds.
Parent shall instruct the Paying Agent to timely pay the Option Payments;
provided, however that Parent may distribute at the Effective Time, or
cause the Paying Agent to distribute, the Option Payment to the Surviving
Corporation for distribution by the Surviving Corporation to holders of
Company Stock Options through the Company's normal payroll procedures.
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SECTION 2.05 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary
and to the extent available under the DGCL, Shares that are issued and
outstanding immediately prior to the Effective Time and that are held by
any stockholder who is entitled to demand and properly demands the
appraisal for such Shares (the "Dissenting Shares") pursuant to, and who
complies in all respects with, the provisions of Section 262 of the DGCL
("Section 262") shall not be converted into, or represent the right to
receive, the Merger Consideration. Any such stockholder shall instead be
entitled to receive payment of the fair value of such stockholder's
Dissenting Shares in accordance with the provisions of Section 262;
provided, however, that all Dissenting Shares held by any stockholder who
shall have failed to perfect or who otherwise shall have withdrawn or lost
such stockholder's rights to appraisal of such Shares under Section 262
shall thereupon be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration and Outstanding Dividends, without any interest thereon, upon
surrender in the manner provided in Section 2.02 of the Certificate or
Certificates that formerly evidenced such Shares. At the Effective Time,
any holder of Dissenting Shares shall cease to have any rights with respect
thereto, except the rights provided in Section 262 of the DGCL and as
provided in the preceding sentence.
(b) The Company shall give Parent (i) notice as promptly as
practicable of any demands received by the Company for appraisal of any
Shares and withdrawals of such demands and (ii) the right to participate in
and direct all negotiations and proceedings with respect to demands for
appraisal under the DGCL. The Company shall not, except with the prior
written consent of Parent, make any payment or agree to make any payment
with respect to any demands for appraisal or offer to settle or settle any
such demands, except to the extent it is expressly required to do so by
court order.
SECTION 2.06 Adjustment of Merger Consideration. Notwithstanding anything
in this Agreement to the contrary, if, between the date of this Agreement and
the Effective Time, the issued and outstanding Shares shall have been changed
into a different number of shares or a different class by reason of any stock
split, reverse stock split, stock dividend, reclassification, redenomination,
recapitalization, split-up, combination, exchange of shares or other similar
transaction, the Merger Consideration and any other dependent items shall be
appropriately adjusted to provide to the holders of Company Common Stock the
same economic effect as contemplated by this Agreement prior to such action and
as so adjusted shall, from and after the date of such event, be the Merger
Consideration or other dependent item, subject to further adjustment in
accordance with this sentence.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Parent in the schedules attached hereto
(the "Company Schedules") or as disclosed in the SEC Reports publicly available
prior to the date of this Agreement (other than forward looking statements set
forth in the "risk factors" and "management's discussion and analysis of
financial condition and results of operations" portions of the SEC Reports), the
Company hereby makes the following representations and warranties to Parent and
Merger Sub. Any disclosures in any section of the Company Schedules shall
7
qualify any other section in this Article III to the extent relevant, as long as
the applicability of such matter to such other section is reasonably apparent on
its face, and disclosure in any section of the Company Schedules shall be
effectively made whether or not expressly excepted in the corresponding section
of this Agreement.
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its Subsidiaries is duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization, and has the requisite corporate or similar
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, except where the failure to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect. Each of
the Company and each Subsidiary is duly qualified or licensed as a foreign
corporation or other entity to do business, and is in good standing (where
such concept exists), in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures
to be so qualified or licensed and in good standing that would not have a
Material Adverse Effect.
(b) Schedule 3.01(b) sets forth a true and complete list of all the
Company's Subsidiaries and the jurisdiction of organization thereof. All
the outstanding Equity Interests of each Subsidiary of the Company are
owned, directly or indirectly, by the Company free and clear of any Liens,
other than Liens securing Company indebtedness. There are no stockholder
agreements, voting trusts or other agreements or understandings to which
the Company or any of its Subsidiaries is a party or by which any of them
are bound relating to the voting of any shares of capital stock of the
Company's Subsidiaries. Except for its interests in its Subsidiaries, the
Company does not own, directly or indirectly, any Equity Interest in any
other Person.
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company has made
available to Parent a complete and correct copy of the Certificate of
Incorporation and the Bylaws, or equivalent organizational documents, in each
case as amended to date ("Organizational Documents"), of the Company and each
Material Subsidiary. Such Organizational Documents are in full force and effect
and no other organizational documents are applicable or binding upon the Company
or any of its Material Subsidiaries. Neither the Company nor any Subsidiary is,
nor has the Company been, in violation of any of the provisions of its
Organizational Documents. No Subsidiary has been in material violation of any of
the provisions of its Organizational Documents. The Company has made available
to Parent complete and correct copies of the minutes of all meetings of the
Company Board (and each committee thereof) and of the stockholders of the
Company, in each case since January 1, 2003.
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
100,000,000 shares of Company Common Stock and (ii) 10,000,000 shares of
preferred stock, par value $0.002 per share ("Preferred Stock"). As of the
date of this Agreement, (i) 77,818,096 shares of Company Common Stock are
issued and outstanding, all of which are validly issued, fully paid and
nonassessable and were issued free of preemptive (or similar) rights, (ii)
no shares of Company
8
Common Stock are held in the treasury of the Company, (iii) no shares of
Company Common Stock are held by the Subsidiaries, (iv) 5,241,548 shares of
Company Common Stock are issuable upon exercise of outstanding Company
Stock Options granted under the Company Stock Plans at a weighted average
per share exercise price of $3.16, and (v) 7,512,197 shares of Company
Common Stock are reserved for future issuance in connection with the
Company Stock Plans (including shares reserved pursuant to outstanding
Company Stock Options). All of the aforesaid shares of Company Common Stock
and Company Stock Options have been offered, sold and delivered by the
Company in compliance in all material respects with all applicable federal
and state securities laws. As of the date of this Agreement, no shares of
Preferred Stock are issued and outstanding. Except as set forth on Schedule
3.03(a), there are no (A) options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or
unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue or sell any shares of capital stock of,
or other Equity Interests in, the Company or any Subsidiary, (B)
outstanding voting securities of the Company or any Subsidiary (other than
Company Common Stock) or securities convertible, exchangeable or
exercisable for shares of capital stock or voting securities of the Company
or any Subsidiary, or (C) outstanding equity equivalents, interests in the
ownership or earnings of the Company or similar rights. All shares of
Company Common Stock subject to issuance as aforesaid, 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 (or similar) rights. There are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any issued or unissued shares of
Company Common Stock or any Equity Interests of any Subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other person. None of
the Company or any Subsidiary is a party to any stockholders' agreement,
voting trust agreement or registration rights agreement relating to any
equity securities of the Company or any Subsidiary or any other Contract
relating to the holding, disposition, voting or dividends with respect to
any issued or unissued Equity Interests of the Company or of any
Subsidiary, or that restricts the transfer of any issued or unissued Equity
Interests of the Company. All dividends on the Company Common Stock that
have been declared or have accrued prior to the date of this Agreement have
been paid in full to the Company's paying agent.
(b) Each outstanding share of capital stock or other Equity Interest
of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and was issued free of preemptive (or similar) rights, and
each such share or other Equity Interest is owned by the Company or another
Subsidiary free and clear of all options, rights of first refusal,
agreements, limitations on the Company's or any Subsidiary's voting,
dividend or transfer rights, charges and other encumbrances or Liens (other
than Liens securing Company indebtedness) of any nature whatsoever.
(c) Except as set forth on Schedule 3.03(c), neither the Company nor
any of its Subsidiaries have any outstanding indebtedness for borrowed
money not reflected in the Financial Statements.
SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
9
and, subject to the required approval and adoption of this Agreement and the
Transactions by the Company's stockholders, to perform its obligations hereunder
and to consummate the Merger and the other transactions contemplated hereby
(collectively, the "Transactions"). Subject to the required approval and
adoption of this Agreement and the Transactions by the Company's stockholders,
the execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency
(including all Laws relating to fraudulent transfers), reorganization,
moratorium or similar Laws affecting creditors' rights generally and subject to
the effect of general principles of equity.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company and the
consummation by the Company of the Transactions will not, (i) conflict with
or violate the Certificate of Incorporation or Bylaws (or similar
organizational documents) of the Company or any Subsidiary, (ii) assuming
that all consents, approvals and other authorizations described in Section
3.05(b) have been obtained and that all filings and other actions described
in Section 3.05(b) have been made or taken, materially conflict with or
violate any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, executive order, judgment, injunction, decree or
other order ("Law") applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) except as set forth on Schedule 3.05(a)(iii), result in
any breach or violation of, or constitute a default (or an event which,
with notice or lapse of time or both, would become a default) under,
require consent or result in the loss of a material benefit under, give
rise to a right or obligation to purchase or sell assets or securities
under, give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien (other than a
Permitted Lien) on any property or asset of the Company or any Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract (written or
oral), agreement, lease, license, Permit, franchise or other binding
commitment, instrument or obligation (each, a "Contract") to which the
Company or any Subsidiary is a party or by which the Company or a
Subsidiary or any property or asset of the Company or any Subsidiary is
bound or affected, except with respect to (ii) and (iii) above for those
conflicts, violations, breaches, defaults or losses, or for which the
failure to obtain such consents, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company
has not been advised of any reason why the consents required under the
contracts set forth on Schedule 3.05(a)(iii) could not be obtained prior to
the Closing.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company and the
consummation by the Company of the Transactions will not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any supranational, national, provincial, federal, state or
local government, regulatory or administrative authority, or any court,
tribunal, or judicial or
10
arbitral body (a "Governmental Authority"), except (i) as may be required
by the Exchange Act, (ii) the filing with the SEC of the Proxy Statement,
(iii) any filings required under the rules and regulations of the NASDAQ
Stock Market, Inc. ("NASDAQ"), (iv) the filing and recordation of
appropriate merger documents as required by the DGCL and appropriate
documents with the relevant authorities of other states in which the
Company or any Subsidiary is qualified to do business, (v) as may be
required pursuant to state securities, takeover and "blue sky" laws, (vi)
any filings and consents required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (vii) any other
consent, approval, authorization, permit, action, filing or notification
the failure of which to make or obtain would not have a Material Adverse
Effect, or (viii) as otherwise listed on Schedule 3.05(b).
(c) Except as set forth on Schedule 3.05(c), no Subsidiaries of the
Company are prohibited by any contractual obligations (other than the
Company's existing senior credit facilities) from guaranteeing any
obligations of the Company under its senior credit facilities (including
the Financings) or from securing such guarantees with a lien on
substantially all of their assets.
SECTION 3.06 Company Permits; Compliance Each of the Company and each
Subsidiary is in possession of all grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority necessary for each such entity to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Permits"), except where the failure to have, or the suspension or
cancellation of, any of the Permits would not have a Material Adverse Effect. No
suspension or cancellation of any of the Permits is pending or, to the knowledge
of the Company, threatened, except where the failure to have, or the suspension
or cancellation of, any of the Permits would not have a Material Adverse Effect.
Each of the Company and each Subsidiary is, and has been, in compliance with,
and has taken any necessary steps to become in compliance with: (a) any Material
Contract or Permit to which such entity is a party or by which such entity or
any property or asset of such entity is bound; and (b) any Law applicable to
such entity or by which any property or asset of such entity is bound or
affected; and all notices, reports, documents and other information required to
be filed under any Material Contract, Permit, or Law were properly filed and
were in compliance with such Material Contract, Permit, or Law, except where
such failure to file or to be in compliance would not have a Material Adverse
Effect.
SECTION 3.07 SEC Reports; Financial Statements; Undisclosed Liabilities.
(a) The Company has filed with the SEC all forms, reports, statements,
schedules and other documents required to be filed by it since January 1,
2003 (as amended to date, the "SEC Reports"). The Company has delivered or
made available to Parent copies of all such SEC Reports. As of their
respective dates, or, if amended, as of the date of the last such
amendment, the SEC Reports complied as to form in all material respects in
accordance with the then-applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act or the
Sarbanes-Oxley Act, as the case may be, in each case, the rules and
regulations promulgated thereunder. None of the SEC Reports, at the time
they were filed, or, if amended, as of the date of such amendment,
contained any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the
11
circumstances under which they were made, not misleading. No Subsidiary is
required to file any form, report or other document with the SEC. As of the
date hereof, there are no material unresolved comments issued by the staff
of the SEC with respect to any of the SEC Reports.
(b) Each of the consolidated financial statements (collectively, and
including, in each case, any notes and schedules thereto, the "Financial
Statements") contained in the SEC Reports, fairly presents in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as at the respective dates thereof and their
consolidated results of operations and consolidated cash flows for the
respective periods indicated (subject, in the case of the unaudited
statements, to normal year-end audit adjustments and to any other
adjustments described therein including the notes thereto, which are not
expected to be significant) in conformity with United States generally
accepted accounting principles ("GAAP") (except, in the case of the
unaudited statements, as permitted by Form 10-Q or Form 8-K or any
successor forms under the Exchange Act) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the
notes thereto).
(c) Except (a) as reflected or reserved against on the consolidated
balance sheet of the Company (including the notes thereto) included in the
Company's Quarterly Report on Form 10-Q for the nine months ended September
30, 2006, (b) for liabilities or obligations incurred in the ordinary
course of business since September 30, 2006, (c) liabilities and
obligations arising under this Agreement, (d) liabilities or obligations
which have been discharged or paid in full in the ordinary course of
business and in a manner consistent with past practice, and (e) liabilities
and obligations that would not have a Material Adverse Effect, neither the
Company nor any of its Subsidiaries has 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 (or the
notes thereto) of the Company and its Subsidiaries.
(d) Except as set forth on Schedule 3.07(d), neither the Company nor
any of its Subsidiaries is indebted to any director or officer of the
Company or any of its Subsidiaries (except for amounts due as normal
salaries and bonuses or in reimbursement of ordinary business expenses and
directors' fees), and no such person is indebted to the Company or any of
its Subsidiaries, and there have been no other transactions of the type
required to be disclosed pursuant to Items 402 or 404 of Regulation S-K
promulgated by the SEC. SECTION
SECTION 3.08 Information Supplied.
(a) Each document required to be filed by the Company with the SEC in
connection with the Transactions (the "Company Disclosure Documents"),
including, without limitation, the proxy or information statement of the
Company containing information required by Regulation 14A under the
Exchange Act, and, if applicable, Rule 13e-3 and Schedule 13E-3 under the
Exchange Act (together with all amendments and supplements thereto, the
"Proxy Statement"), to be filed with the SEC in connection with the Merger,
will, when filed, comply as to form in all material respects with the
applicable requirements of the Exchange Act.
(b) None of the information included or incorporated by reference in
the Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders' Meeting or at the
time of any amendment or supplement thereof, contain any untrue statement
of a
12
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(c) The representations and warranties contained in this Section 3.08
will not apply to statements or omissions included in the Company
Disclosure Documents based upon information furnished to the Company in
writing by Merger Sub or Parent or any of their Representatives
specifically for use therein.
SECTION 3.09 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.09:
(a) Since September 30, 2006 through to the date hereof, there has not
been any Material Adverse Effect or any event or circumstance that would
reasonably be expected to have a Material Adverse Effect.
(b) Since September 30, 2006 through to the date hereof, except as
expressly contemplated by this Agreement, the Company and the Subsidiaries
have conducted their businesses only in the ordinary course of business and
in a manner consistent with past practice.
(c) Since September 30, 2006 through to the date hereof, except as
expressly contemplated by this Agreement, neither the Company nor any of
its Subsidiaries has:
(i) amended or otherwise changed its Organizational Documents;
(ii) declared, set aside, made or paid any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock; except for dividends declared and
paid in the accordance with the Company's dividend policy referenced
in the SEC Reports and consistent with past practice;
(iii) reclassified, combined, split, subdivided or redeemed, or
purchased or otherwise acquired, directly or indirectly, any of its
capital stock;
(iv) materially increased, or announced the increase of, the
compensation payable or to become payable or the benefits provided to
its directors, officers or employees, except for increases in the
ordinary course of business and in a manner consistent with past
practice, or granted any severance or termination pay to, or entered
into any employment, bonus, change of control or severance agreement
with, any director or officer or, except in the ordinary course of
business in a manner consistent with past practice, any other employee
of the Company or of any Subsidiary;
(v) suffered any damage, destruction or loss (whether or not
covered by insurance), other than in the ordinary course of business,
that has had a Material Adverse Effect;
(vi) made any change in financial or Tax accounting methods,
practices or policies other than as required by GAAP or a Governmental
Authority;
13
(vii) (A) acquired from any Person (by merger, consolidation,
acquisition of stock or assets or otherwise), or sold or disposed of
(by merger, consolidation, sale of stock or assets or otherwise) any
corporation, partnership or other business organization or division
thereof, any Equity Interests therein, or any assets of any Person
which are material to the Company and its Subsidiaries, taken as a
whole, except in connection with acquisitions or dispositions of
inventory or equipment in the ordinary course of business in a manner
consistent with past practice, (B) incurred or guaranteed, or modified
in any material respect, any material indebtedness for borrowed money
or (C) made any material loans, advances or capital contributions to
any other Person (other than a Subsidiary of the Company);
(viii) made any material tax election or settled or compromised
any material United States federal, state or local income tax
liability, except as required by applicable Law;
(ix) commenced or settled any material Action; or
(x) announced an intention, entered into any formal or informal
agreement or otherwise made a commitment to do any of the foregoing.
SECTION 3.10 Absence of Litigation. Except as set forth on Schedule 3.10,
neither the Company nor any Subsidiary is a party to any, and there is no
pending or, to the knowledge of the Company, threatened, litigation, suit,
claim, action, proceeding, hearing, petition, grievance, review, complaint or
investigation (an "Action"), the outcome of which would have a Material Adverse
Effect. There is no judgment, decree, injunction, writ or order of any
Governmental Authority outstanding against the Company or any of its
Subsidiaries (or any of their respective assets or properties) except as would
not have a Material Adverse Effect. Schedule 3.10 sets forth a list of all
Actions to which the Company or any of its Subsidiaries is subject, involving
(a) monetary claims against the Company or any of its Subsidiaries for more than
$500,000 or (b) a request for injunctive relief.
SECTION 3.11 Employee Benefit Plans.
(a) Schedule 3.11(a) lists all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and all bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts
or agreements to which the Company or any Subsidiary is a party, with
respect to which the Company or any Subsidiary has any obligation or which
are maintained, contributed to or sponsored by the Company or any
Subsidiary for the benefit of any current or former employee, consultant,
officer or director of the Company or any Subsidiary (collectively, the
"Plans"). The Company has made available to Parent a true and complete copy
of each Plan and has made available to Parent a true and complete copy of
(where applicable) (A) each trust or funding arrangement prepared in
connection with each such Plan, (B) the two most recently filed annual
reports on Internal Revenue Service ("IRS") Form 5500, (C) the most
recently received IRS determination letter for each such Plan, (D) the two
most recently prepared actuarial reports and financial statements in
14
connection with each such Plan, and (E) the most recent summary plan
description and any material written communications (or a description of
any material oral communications) by the Company or the Subsidiaries to any
current or former employees, consultants, or directors of the Company or
any Subsidiary concerning the extent of the benefits provided under a Plan.
(b) Neither the Company nor any Subsidiary has now or any time
contributed to, sponsored, maintained or had any liability with respect to
(i) a pension plan (within the meaning of Section 3(2) of ERISA) subject to
Section 412 of the Code or Title IV of ERISA; (ii) a multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a
"Multiemployer Plan"); or (iii) a single employer pension plan (within the
meaning of Section 4001(a)(15) of ERISA) for which the Company or any
Subsidiary could incur liability under Section 4063 or 4064 of ERISA.
Except as set forth on Schedule 3.11(b), no Plan exists that could result
in the payment to any present or former employee, director or consultant of
the Company or any Subsidiary of any money or other property or accelerate
or provide any other rights or benefits to any current or former employee
of the Company or any Subsidiary as a result of the consummation of the
Transactions (whether alone or in connection with any subsequent event).
Except as set forth on Schedule 3.11(b), there is no contract, plan or
arrangement (written or otherwise) covering any current or former employee
of the Company or any Subsidiary that, individually or collectively, could
give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G of the United States Internal Revenue
Code of 1986, as amended (the "Code").
(c) With respect to the Plans, no event has occurred and, to the
knowledge of the Company, there exists no condition or set of
circumstances, in connection with which the Company or any Subsidiary could
be subject to any actual or contingent material liability under the terms
of such Plan or any applicable Law.
(d) Each Plan that is intended to be qualified under Section 401(a) of
the Code or Section 401(k) of the Code has received a favorable
determination letter from the IRS covering all of the provisions applicable
to the Plan for which determination letters are currently available that
the Plan is so qualified and each trust established in connection with any
Plan which is intended to be exempt from federal income taxation under
Section 501(a) of the Code has received a determination letter from the IRS
that it is so exempt, and, to the knowledge of the Company, no circumstance
exists that could reasonably be expected to result in the revocation of
such letter.
(e) (i) Each Plan has been established and administered in accordance
with its terms and in compliance with the applicable provisions of ERISA,
the Code and other applicable Laws, and (ii) no Plan provides retiree
welfare benefits, and neither the Company nor any Subsidiary has any
obligation to provide any retiree welfare benefits other than as required
by Section 4980B of the Code.
(f) With respect to any Plan, (i) no Actions (other than routine
claims for benefits in the ordinary course) are pending or, to the
knowledge of the Company, threatened, (ii) no facts or circumstances exist
that could reasonably be expected to give rise to any such Actions, and
(iii) no administrative investigation, audit or other administrative
proceeding by the
15
Department of Labor, the IRS or other Governmental Authority is pending, in
progress or, to the knowledge of the Company, threatened that would
reasonably be expected to have a Material Adverse Effect.
SECTION 3.12 Labor and Employment Matters. Except as set forth on Schedule
3.12, neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the knowledge of the Company,
are there any activities or proceedings of any labor union to organize any such
employees. Except as set forth on Schedule 3.12, as of the date hereof, there
are no complaints or representation claims pending against the Company or any
Subsidiary before the National Labor Relations Board or any other Governmental
Authority or any current union representation questions involving employees of
the Company or any Subsidiary. As of the date hereof, there is no strike,
controversy, slowdown, work stoppage or lockout, or, to the knowledge of the
Company, threatened in writing, by or with respect to any employees of the
Company or any Subsidiary.
SECTION 3.13 Real Property; Title to Assets.
(a) Schedule 3.13(a) sets forth a true, correct and complete list of
all of the Material Real Property used in connection with the business of
the Company or any Subsidiary, or owned or leased by the Company or any
Subsidiary, including:
(i) with respect to each parcel of Material Owned Real Property,
(A) the street address of such parcel of Material Owned Real Property
and (B) the current owner of such parcel of Material Owned Real
Property; and
(ii) with respect to each lease of Material Leased Real Property,
the parties to and the date of such lease.
(b) The Company and each of its Subsidiaries has good fee simple title
to all of the Material Owned Real Property, free and clear of all Liens,
except Permitted Liens. Except as set forth on Schedule 3.13(b), there are
no outstanding options, right of first offer or rights of first refusal to
purchase the Material Owned Real Property or any portion thereof or
interest therein. There are no leases, subleases, licenses concessions or
other agreements (written or oral) granting any person the right to use or
occupy the Material Owned Real Property except as set forth on Schedule
3.13(b). The Company has previously made available to Parent a true,
correct and complete copy of each title insurance policy, title opinion,
survey and appraisal relating to the Material Owned Real Property which is
in its possession or reasonably available to it, without representation or
warranty as to the specific matters set forth therein.
(c) All Material Leased Real Property is leased by the Company and its
Subsidiaries (as the case may be) under valid and subsisting leases or
subleases. Neither the Company nor any Subsidiary has received written
notice of any material breach or default, or cancellation or termination
thereunder. The Company does not have knowledge of any condition, event or
circumstance which with notice or lapse of time, or both, would constitute
a material breach or default under such lease or sublease.
16
(d) The Company and its Subsidiaries own, lease or have the right to
use all the Material Real Property and material assets for the conduct of
their respective business free and clear of all Liens, except Permitted
Liens. In the case of material leased equipment and other material tangible
assets, the Company and its Subsidiaries hold valid leasehold interests in
such assets, free and clear of all Liens, except Permitted Liens.
(e) Schedule 3.13(e) sets forth an accurate listing of each lease of
real property pursuant to which the Company or any Subsidiary acts as
lessor and which has an annual rental amount in excess of $500,000.
SECTION 3.14 Intellectual Property.
(a) Schedule 3.14(a) sets forth an accurate and complete description
of all patents and patent applications, registered trademarks, trade names
and service marks, domain names, and registered copyrights, together with
applications to register the same, for each of the foregoing owned by the
Company and material to the business of the Company and its subsidiaries
taken as a whole ("Registered Intellectual Property"). Excluding
"shrinkwrap" or "clickwrap" agreements or agreements contained in or
pertaining to "off-the-shelf" software, the Company has not entered into
any material agreements relating to Intellectual Property. Except for such
agreements entered into by the Company in connection with the sale process
that resulted in the execution and delivery of this Agreement, the Company
has not entered into any nondisclosure or confidentiality agreements which
remain in effect under which any trade secrets or other material
confidential or proprietary information of the Company has been or will be
disclosed to a third party.
(b) Except as would not constitute a Material Adverse Effect, the
conduct of the business of the Company and the Subsidiaries as it has been,
or as it currently is conducted, does not and has not infringed upon,
misappropriated, diluted or violated the Intellectual Property rights of
any third party. There are no pending actions against the Company or the
Subsidiaries, and neither the Company nor any of its Subsidiaries has
received any written notice alleging that the conduct of the business of
the Company and the Subsidiaries, as it currently is conducted or as it has
been conducted, may or has infringed upon, misappropriated, diluted or
violated the Intellectual Property rights of any third party. Since January
1, 2003, neither the Company nor any of its Subsidiaries has received any
written communication containing an offer to license to the Company or any
of its Subsidiaries, or a request that the Company or any of its
Subsidiaries consider whether it wishes to obtain a license, under any
patent owned by a third party. With respect to each material item of
Intellectual Property that is owned by the Company or a Subsidiary,
including the Registered Intellectual Property ("Owned Intellectual
Property"), the Company or a Subsidiary is the owner of the entire right,
title and interest in and to such Owned Intellectual Property and is
entitled to use such Owned Intellectual Property in the continued operation
of its respective business in an unrestricted fashion. With respect to each
material item of Intellectual Property that is licensed to or otherwise
held or used by the Company or a Subsidiary ("Licensed Intellectual
Property"), the Company or a Subsidiary has a legally enforceable right to
use, under valid and subsisting written license agreements, the Licensed
Intellectual Property in the continued operation of its respective
business. The Owned Intellectual Property and the Licensed Intellectual
Property constitute all material Intellectual Property used in and
necessary for the operation of the businesses of the Company and the
17
Subsidiaries as currently conducted. The Registered Intellectual Property
is subsisting and, to the knowledge of the Company, valid and enforceable.
None of the Owned Intellectual Property has been adjudged invalid or
unenforceable in whole or in part. To the knowledge of the Company, no
person is engaging in any activity that infringes upon, misappropriates or
dilutes any of the Owned Intellectual Property. To the knowledge of the
Company, each license of the Licensed Intellectual Property is valid and
enforceable, is binding on all parties to such license and is in full force
and effect. To the knowledge of the Company, no party to any license of the
Licensed Intellectual Property is in breach thereof or default thereunder.
Neither the execution of this Agreement nor the consummation of any
Transaction will result in the loss or impairment of, or give rise to any
right of any third party to terminate or otherwise modify any of the
Company's rights with respect to any Owned Intellectual Property or
Licensed Intellectual Property that is material to the business of the
Company and its Subsidiaries, taken as a whole.
(c) For purposes of this Agreement, "Intellectual Property" means all
rights arising from or associated with the following, whether protected,
created or arising under the laws of the United States or any other
jurisdiction: (i) patents, patent rights, patent applications and statutory
invention registrations; (ii) trademarks, service marks, trade dress,
logos, trade names, corporate names, symbols, domain names and other source
identifiers, and registrations and applications for registration thereof,
including all renewals of and goodwill associated with the same; (iii) all
registered and unregistered copyrightable works (whether published or
unpublished), copyrights, and registrations and applications for
registration thereof; and (iv) confidential and proprietary information,
including trade secrets, works of authorship, inventions, improvements,
methods, formulas, research and test data, designs, specifications,
technical data, know-how, moral rights, and all other confidential,
proprietary, or intellectual property rights.
SECTION 3.15 Taxes. Except as set forth on Schedule 3.15:
(a) The Company and the Subsidiaries (i) have timely filed or caused
to be filed (taking into account any extension of time to file granted or
obtained) all Tax Returns required to be filed by them, and all such filed
Tax Returns are true, correct and complete in all material respects; and
(ii) have timely paid in all material respects all Taxes due and payable
except to the extent that such Taxes are being contested in good faith and
for which the Company or the appropriate Subsidiary has set aside adequate
reserves in accordance with GAAP. All material amounts of Taxes required to
have been withheld by or with respect to the Company and the Subsidiaries
have been withheld and remitted to the applicable taxing authority.
(b) There are no pending or, to the knowledge of the Company,
threatened audits, examinations, investigations or other proceedings in
respect of any Tax or Tax matter of the Company or any Subsidiary. No
deficiency for any material amount of Tax has been asserted or assessed by
any taxing authority in writing against the Company or any Subsidiary,
which deficiency has not been satisfied by payment, settled or been
withdrawn or contested in good faith and for which the Company or the
appropriate Subsidiary has not set aside adequate reserves in accordance
with GAAP. There are no Tax liens on any assets of the Company or any
Subsidiary (other than any liens for Taxes not yet due and payable for
which adequate reserves have been made in accordance with GAAP or for Taxes
18
being contested in good faith). Neither the Company nor any Subsidiary is
subject to any accumulated earnings tax or personal holding company tax.
(c) Neither the Company nor any Subsidiary has made or is obligated to
make any payment that would not be deductible pursuant to Section 162(m) of
the Code.
(d) Neither the Company nor any Subsidiary has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency (other than pursuant to
extensions of time to file Tax Returns obtained in the ordinary course).
(e) No claim is pending by a taxing authority in a jurisdiction where
the Company or any Subsidiary does not file a Tax Return that the Company
or such Subsidiary is or may be subject to Tax by such jurisdiction.
(f) Neither the Company nor any Subsidiary will be required to include
any item of income in, or exclude any item of deduction from, taxable
income as a result of any (1) adjustment pursuant to Section 481 of the
Code, the regulations thereunder or any similar provision under state or
local Law, (2) "closing agreement" as described in Section 7121 of the Code
(or any corresponding or similar provision of state, local or foreign
income Tax Law) executed on or prior to the Closing, (3) intercompany
transaction or excess loss account described in the Treasury Regulations
under Section 1502 of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law), (4) installment sale or open
transaction disposition made on or prior to the Closing, or (5) prepaid
amount received on or prior to the Closing.
(g) The Company is not, and has not been, a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(h) Neither the Company nor any Subsidiary is a party to or bound by
any Tax sharing or Tax indemnity agreement or any other agreement of a
similar nature.
(i) For purposes of this Agreement:
(i) "Tax" or "Taxes" shall mean any and all federal, state, local
and foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other taxes of any kind
(together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any
governmental or Tax authority.
(ii) "Tax Returns" means any and all returns, declarations,
claims for refund, or information returns or statements, reports and
forms relating to Taxes filed with any Tax authority (including any
schedule or attachment thereto) with respect to the Company or the
Subsidiaries, including any amendment thereof.
19
SECTION 3.16 Environmental Matters. Except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect:
(a) Except as set forth on Schedule 3.16(a), the Company, its
Subsidiaries and any of their respective predecessors in interest are
in compliance with, and, to the knowledge of the Company, have not
violated, any standards or requirements imposed under any
Environmental Law. The Company and its Subsidiaries have obtained and
are in compliance with all terms and conditions of all Environmental
Permits required for the operation of their business in compliance
with Environmental Laws. Schedule 3.16(a) sets forth all material
Permits, licenses and other authorizations issued under any
Environmental Law relating to the Company, its Subsidiaries and any of
their respective predecessors in interest.
(b) There are no past or present events or conditions with
respect to the Company, any of its Subsidiaries or, to the knowledge
of the Company, any of their respective predecessors in interest that
would reasonably be expected to form the basis of any claim or
investigation (i) under any Environmental Law, or (ii) based on or
related to the Management of any Hazardous Substance.
(c) Except as set forth on Schedule 3.16(c), to the knowledge of
the Company, there is and has been no Release or threat of Release of
Hazardous Substances at, on, under or affecting: (i) any of the
properties currently or formerly owned, leased or operated by the
Company, any of its Subsidiaries or any of their respective
predecessors in interest, (ii) any property to which the Company, its
Subsidiaries or any of their respective predecessors in interest have
sent waste for disposal or (iii) any location at which Hazardous
Substances are present for which the Company or any of its
Subsidiaries is or has been alleged to be liable, under conditions in
the case of either (i) or (ii) that would reasonably be expected to
result in a liability or obligation to the Company or any of its
Subsidiaries, or, as the Company and its Subsidiaries are currently
operated, adversely affect the revenues of the Company or any of its
Subsidiaries. Except as set forth on Schedule 3.16(c), there are no
written claims or notices pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries alleging
violations of or liability or obligations under any Environmental Law
relating to the Company, its Subsidiaries or any of their respective
predecessors in interest, or otherwise concerning the presence or
release of Hazardous Substances; and none of the Company or any of its
Subsidiaries has received any written notice of, is a party to, or is
likely to be affected by any proceedings, any investigations or any
agreements concerning such matters. The Company has provided to Parent
a copy of all studies, audits, assessments or investigations
(including without limitation, Phase I and Phase II investigation
reports) concerning any facilities or real property ever owned,
operated or leased by the Company, its Subsidiaries or any of their
respective predecessors in interest or compliance with, or liability
or obligations under, Environmental Laws affecting the Company, any
Subsidiary or any of their respective predecessors in interest that
are in the possession or control of the Company or any Subsidiary.
(d) There are no liabilities of any third party arising out of or
related to Environmental Laws or Hazardous Substances that the
Company, its Subsidiaries or any of their respective predecessors in
interest have expressly agreed to assume or retain by contract or
otherwise.
20
(e) The Company and its Subsidiaries are not operating, and, to
the knowledge of the Company, are not required to be operating, under
any consent or compliance order, decree or agreement issued or entered
into, under or pertaining to any Environmental Law.
(f) For purposes of this Agreement:
(i) "Environmental Laws" means any Laws (including common
law) of the United States federal, state, local, foreign or any
other Governmental Authority, relating to (A) Releases or
threatened Releases of Hazardous Substances or materials
containing Hazardous Substances; (B) the Management or
Remediation of Hazardous Substances or materials containing
Hazardous Substances; or (C) pollution or protection of the
environment or human health, including exposure of persons to
Hazardous Substances.
(ii) "Environmental Permits" means any permit, license
registration, approval, notification, certificate, consents,
orders or any other authorization of Governmental Authorities,
required under Environmental Law.
(iii) "Hazardous Substances" means (A) those substances,
materials or wastes defined as, or regulated under, any
Environmental Laws as toxic waste, hazardous material, hazardous
waste, hazardous substances, acutely or extremely hazardous
waste, pollutants, contaminants, or words of similar import, in
or regulated under United States federal statutes and any
analogous state statutes, all as amended as of the date hereof,
and all regulations thereunder, including without limitation: the
Hazardous Materials Transportation Act, the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Water Pollution Control Act,
the Safe Drinking Water Act, the Federal Insecticide, Fungicide,
and Rodenticide Act, the Clean Air Act, and the Toxic Substances
Control Act, the Occupational Safety and Health Act, and the New
Jersey Industrial Sites Recovery Act; (B) petroleum and petroleum
products, including crude oil and any fractions thereof; (C)
natural gas, synthetic gas, and any mixtures thereof; and (D)
polychlorinated biphenyls, asbestos, molds that could reasonably
be expected to adversely affect human health, urea formaldehyde
foam insulation and radon; and (E) any substance, material or
waste regulated by any Governmental Authority pursuant to or that
would reasonably be expected to result in liability under, any
Law in addition to those identified in (A) above the primary
purpose of which is the protection of the environment or human
health and safety as affected by environmental media.
(iv) "Management" means with respect to any substance or
material, the use, possession, distribution, processing,
manufacturing, generation, treatment, storage, recycling,
transportation, Release, Remediation or disposal of such
substance or material.
(v) "Release" when used in connection with Hazardous
Substances, shall have the meaning ascribed to that term in 42
U.S.C. 9601(22), but not subject to the exceptions in Subsection
(A) and (D) of 42 U.S.C. 9601(22).
21
(vi) "Remediation" means (A) any remedial action, response
or removal as those terms are defined in 42 U.S.C. ss. 9601; or
(B) any "corrective action" as that term has been construed by
governmental authorities pursuant to 42 U.S.C. ss. 6924.
SECTION 3.17 Material Contracts.
(a) Schedule 3.17(a) contains a list of each contract (collectively,
together with all contracts and other documents listed on the Exhibit Index
to the Company's most recent Annual Report on Form 10-K, the "Material
Contracts") to which the Company or any Subsidiary is a party or by which
it is bound that:
(i) contains unfulfilled obligations of the Company to provide
services to customers with aggregate annual revenues to the Company or
any of its Subsidiaries likely to be in excess of $1,000,000 or more
and which has a term of more than one (1) year;
(ii) requires an aggregate annual payment by the Company or any
of its Subsidiaries of $1,000,000 or more which has a term of more
than one (1) year and that cannot be cancelled or otherwise terminated
on less than 120 days notice;
(iii) contains covenants limiting the freedom of the Company of
any of its Subsidiaries to engage in any line of business in any
geographic area or to compete with any Person or restricting the
ability of the Company or any of its Subsidiaries to acquire equity
securities of any Person;
(iv) is an employment, severance, retention, consulting, loan or
indemnification contract applicable to any current or former employee
of the Company or any of its Subsidiaries, including contracts to
employ executive officers and other contracts with officers and
directors of the Company or any of its Subsidiaries, other than any
such contract that is terminable by the Company or any of its
Subsidiaries before and after the Effective Time on not more than 60
days' notice without penalty or cost to the Company or any Subsidiary;
(v) relates to indebtedness for borrowed money, notes payable,
debt securities, letters of credit or surety bonds or guaranties of
debt of any third party (other than Subsidiaries of the Company);
(vi) is with any director, officer or Affiliate; or
(vii) is a material joint venture or partnership, merger, asset
or stock purchase or divestiture Contract relating to the Company or
any of its Subsidiaries and entered into on or after January 1, 2004.
(b) Except as set forth in Section 3.17(b) and except as would not
have a Material Adverse Effect, (i) neither the Company nor any of its
Subsidiaries is, and, to the Company's knowledge, no other party is, in
breach or violation of, or default under, any Material Contract, (ii)
neither the Company nor any of its Subsidiaries has received any written
claim of default under any Material Contract, and (iii) to the Company's
22
knowledge, no event has occurred which would result in a breach or
violation of, or a default under, any Material Contract (in each case, with
or without notice or lapse of time or both). Except as would not have a
Material Adverse Effect, each Material Contract is valid, binding and
enforceable in accordance with its terms and is in full force and effect.
The Company has made available to Parent true and complete copies of all
Material Contracts, including any schedules and amendments thereto.
SECTION 3.18 Insurance. The business operations and all insurable
properties and assets of the Company and its Subsidiaries are insured for their
benefit against all risks which, in the reasonable judgment of the management of
the Company, should be insured against, in such amounts with such deductibles
and against such risks and losses as are, in the reasonable opinion of the
management of the Company, adequate for the business engaged in by the Company
and its Subsidiaries.
SECTION 3.19 Board Approval; State Antitakeover Statutes; Vote Required.
(a) The Company Board, by resolutions duly adopted at a meeting duly
called and held, has duly (i) approved this Agreement, (ii) determined that
the Merger Consideration is fair to the Company's stockholders and (iii)
recommended that the stockholders of the Company adopt this Agreement and
directed that this Agreement be submitted for consideration by the
Company's stockholders at the Company Stockholders' Meeting (collectively,
the "Company Board Recommendation").
(b) The Company Board has taken all actions so that no "fair price",
"moratorium", "control share acquisition" or other similar antitakeover
statute or regulation enacted under state or federal laws in the United
States (including Section 203 of the DGCL) applicable to the Company
(collectively, "Takeover Laws") shall be applicable to the Merger or the
other Transactions as currently contemplated by the Agreement.
(c) The only vote of the holders of any class or series of capital
stock or other securities of the Company necessary to approve this
Agreement, the Merger and the other Transactions is the affirmative vote of
the holders of a majority of the outstanding shares of the Company Common
Stock in favor of the adoption of this Agreement (the "Stockholder
Approval").
SECTION 3.20 Corrupt Gifts and Payments. To the knowledge of the Company,
neither the Company, nor any of its Subsidiaries, nor any of their Affiliates or
any other Persons acting on their behalf has, in connection with the operation
of their respective businesses, (i) used any corporate or other funds for
unlawful contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, or established or maintained
any unlawful or unrecorded funds in violation of Section 104 of the Foreign
Corrupt Practices Act of 1977, as amended, or any other similar applicable
foreign, Federal or state law, (ii) paid, accepted or received any unlawful
contributions, payments, expenditures or gifts, or (iii) violated or operated in
noncompliance in any material respect with any export restrictions, anti-boycott
regulations, embargo regulations or other applicable domestic or foreign laws
and regulations.
23
SECTION 3.21 Opinion of Financial Advisor. The Company Board shall receive
a written opinion from Lehman Brothers Inc. dated as of the date of this
Agreement and addressed to the Company Board to the effect that, as of the date
thereof and based upon and subject to the limitations, qualifications and
assumptions set forth therein, that, from a from a financial point of view, the
Merger Consideration to be offered to the stockholders of the Company in the
Merger is fair to such stockholders. An executed copy of the opinion has been
delivered to Parent for informational purposes only.
SECTION 3.22 Brokers. Except for Lehman Brothers Inc., no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has furnished to Parent a complete and
correct copy of any engagement letter between the Company and Lehman Brothers
Inc. pursuant to which Lehman Brothers Inc. could be entitled to any payment
from the Company relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company that:
SECTION 4.01 Corporate Organization. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has the requisite corporate 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, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, prevent or materially delay consummation of any of the
Transactions or otherwise prevent or materially delay Parent or Merger Sub from
performing their obligations under this Agreement.
SECTION 4.02 Certificate of Incorporation and Bylaws. Parent has heretofore
furnished to the Company complete and correct copies of the Certificate of
Incorporation and Bylaws (or similar organizational documents) of Parent and
Merger Sub, each as amended to date. Such Certificates of Incorporation and
Bylaws (or similar organizational documents) are in full force and effect.
Neither Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws (or similar organizational documents).
SECTION 4.03 Authority Relative to This Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution, delivery and performance of this Agreement by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize this Agreement or to consummate the Transactions.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming due authorization, execution and delivery by the
Company, constitutes a legal, valid
24
and binding obligation of each of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency (including all Laws relating to
fraudulent transfers), reorganization, moratorium or similar Laws affecting
creditors' rights generally and subject to the effect of general principles of
equity.
SECTION 4.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub
and the consummation by Parent and Merger Sub of the Transactions will not,
(i) conflict with or violate the Certificate of Incorporation or Bylaws (or
similar organizational documents) of Parent or Merger Sub, (ii) assuming
that all consents, approvals, authorizations and other actions described in
Section 4.04(b) have been obtained and all filings and obligations
described in Section 4.04(b) have been made, materially conflict with or
violate any Law applicable to Parent or Merger Sub or by which any property
or asset of either of them is bound or affected, or (iii) result in any
breach or violation of, or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any property or asset of Parent
or Merger Sub pursuant to, any Contract to which Parent or Merger Sub is a
party or by which Parent or Merger Sub or any property or asset of either
of them is bound or affected, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, prevent or
materially delay consummation of any of the Transactions or otherwise
prevent or materially delay Parent and Merger Sub from performing their
obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub
and the consummation by Parent and Merger Sub of the Transactions will not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority, except (i) as may be
required by the Exchange Act, (ii) the filing and recordation of
appropriate merger documents as required by the DGCL and appropriate
documents with the relevant authorities of other states in which the
Company or any of the Subsidiaries is qualified to do business, (iii) as
required pursuant to state securities, takeover and "blue sky" laws, (iv)
any filing required under the rules and regulations of NASDAQ, (v) any
filings and consents required under the HSR Act, and (vi) any other
consent, approval, authorization, permit, action, filing or notification
the failure of which to make or obtain would not reasonably be expected to,
prevent, materially delay or materially impede the ability of Parent and
Merger Sub to consummate the transactions contemplated by this Agreement.
SECTION 4.05 Information Supplied. None of the information supplied or to
be supplied by Parent or Merger Sub or any of their directors, officers,
employees, Affiliates, agents or other representatives for inclusion in the
Proxy Statement will, on the date the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Company Stockholders' Meeting or at
the time of any amendment or supplement thereof, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
25
SECTION 4.06 Absence of Litigation. As of the date of this Agreement, there
is no Action pending or, to the knowledge of the officers of Parent, threatened,
against Parent or any of its affiliates before any Governmental Authority that
could or seeks to materially delay or prevent the consummation of any of the
Transactions. As of the date of this Agreement, neither Parent nor any of its
affiliates is subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the knowledge of the
officers of Parent, continuing investigation by, any Governmental Authority, or
any order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority that could or seeks to materially delay or prevent the
consummation of any of the Transactions.
SECTION 4.07 Operations of Merger Sub. Merger Sub is a direct, wholly owned
subsidiary of Parent, and was formed solely for the purpose of engaging in the
Transactions, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
SECTION 4.08 Brokers. Except for Merrill Lynch & Co., Inc. the Company will
not be responsible for any brokerage, finder's or other fee or commission to any
broker, finder or investment banker in connection with the Transactions based
upon arrangements made by or on behalf of Parent or Merger Sub.
SECTION 4.09 Ownership of Company Capital Stock. Neither Parent nor Merger
Sub (nor any of their respective Affiliates), is nor at any time during the last
three years have any of them been, an "interested stockholder" of the Company as
defined in Section 203 of the DGCL (other than as contemplated by this
Agreement). SECTION
4.10 Cash Available or Financing Arrangements. Parent shall have cash
available or will have Financing Commitments (as defined below) sufficient to
pay the aggregate Merger Consideration, aggregate Option Payments and
Outstanding Dividends at the Effective Time. To the extent Parent utilizes
Financing Commitments:
(a) Parent has delivered to the Company true and correct copies of
financing letters with respect to financing of US$540,000,000 (the
"Financing Commitments").
(b) No event (including, without limitation, the failure to pay any
and all commitment fees and other fees required by the Financing
Commitments) has occurred which, with or without notice, lapse of time or
both, would constitute a default or breach on the part of Parent or Merger
Sub under any term or condition of the Financing Commitments.
(c) Parent does not have any reason to believe that any of the terms
of or conditions to the Financing Commitments will not be satisfied on a
timely basis or that the full amount of financing contained in the
Financing Commitments will not be available to the Parent at the Effective
Time.
SECTION 4.11 Solvency; Operation of the Company After the Effective Time. As of
the Effective Time, assuming satisfaction of the conditions to Parent's
obligation to consummate the Merger, or waiver of such conditions, and after
giving effect to all of the transactions contemplated by this Agreement,
including without limitation the payment of the aggregate Merger Consideration,
26
Option Payments and payment of all related fees and expenses, each of the Parent
and the Surviving Corporation will be Solvent.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger. The
Company agrees that, between the date of this Agreement and the Effective Time,
except as expressly contemplated by this Agreement or unless Parent shall
otherwise consent (which consent will not be unreasonably withheld or delayed),
the businesses of the Company and the Subsidiaries shall be conducted only in,
and the Company and the Subsidiaries shall not take any action except in, the
ordinary course of business and in compliance with applicable Law, and the
Company shall, and shall cause each of the Subsidiaries to, use its commercially
reasonable efforts to preserve substantially intact the business organization of
the Company and the Subsidiaries, to preserve the assets and properties of the
Company and the Subsidiaries in good repair and condition and to preserve the
current relationships of the Company and the Subsidiaries with customers,
suppliers and other persons with which the Company or any Subsidiary has
material business relations, in each case in the ordinary course of business and
in a manner consistent with past practice. Except as expressly contemplated by
any other provision of this Agreement, the Company agrees that neither the
Company nor any Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or propose to do, any of the
following without the prior consent of Parent (which consent will not be
unreasonably withheld or delayed):
(a) amend or otherwise change its Certificate of Incorporation or
Bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber or otherwise
subject to any Lien (other than a Permitted Lien), or authorize such
issuance, sale, pledge, disposition, grant or encumbrance of or subjection
to such Lien (other than a Permitted Lien), any properties or other assets
of the Company or any Subsidiary, except assets and properties that are not
material in the ordinary course of business and in a manner consistent with
past practice;
(c) issue, sell, pledge, dispose of, grant, encumber or otherwise
subject to any Lien or authorize such issuance, sale, pledge, disposition,
grant or encumbrance of or subjection to such Lien, any shares of any class
of capital stock of the Company or any Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including
any phantom interest), of the Company or any Subsidiary, other than (i) the
issuance of Shares issuable pursuant to employee stock options outstanding
on the date hereof and granted under Company Stock Plans as in effect on
the date hereof, (ii) issuance by a wholly owned Subsidiary of the Company
of capital stock to such Subsidiary's parent or another wholly-owned
Subsidiary of the Company) or (iii) the issuance of restricted stock to
members of the Board of Directors and management of the Company and its
Subsidiaries pursuant to existing Company Stock Plans to the extent such
issuances are made in the ordinary course of business and in a manner
consistent with past practice;
27
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except for (i) dividends by any direct or
indirect wholly owned Subsidiary to the Company or any other Subsidiary,
(ii) dividends declared and paid pursuant to the Company's dividend policy
and consistent with past practice, and (iii) the Stub Period Dividend;
(e) reclassify, combine, split, subdivide or redeem, or purchase or
otherwise acquire, directly or indirectly, any capital stock or other
Equity Interests of the Company or any Subsidiary;
(f) (i) acquire (including by merger, consolidation, or acquisition of
stock or assets or any other business combination) any corporation,
partnership, other business organization (or any division thereof) or any
property or asset, except assets (other than real property) in the ordinary
course of business and in a manner consistent with past practice that do
not exceed $10,000,000 in the aggregate; (ii) repurchase, repay or incur
any indebtedness (other than in the ordinary course of business), or issue
any debt securities or assume or endorse, or otherwise become responsible
for, the obligations of any person, or make any loans or advances, or grant
any security interest in any of its assets except under those facilities
listed on Schedule 3.03(c), or in the ordinary course of business and
consistent with past practice; (iii) except as contemplated by the
Company's capital expenditures budget for 2007, a copy of which the Company
has made available to Parent, authorize, or make any commitment with
respect to, any single capital expenditure in excess of $1,000,000 or
capital expenditures that are, in the aggregate, in excess of $5,000,000;
(iv) acquire, enter into or extend any option to acquire, or exercise an
option to acquire, real property or commence construction of, or enter into
any Contract to develop or construct, other real estate projects, other
than in connection with the continued development of the projects set forth
on Schedule 5.01(f); (v) enter into any material new line of business; or
(vi) make material investments in persons other than wholly owned
subsidiaries;
(g) (i) increase the compensation payable or to become payable or the
benefits provided to its current or former directors, officers or
employees, except for merit increases in compensation in the ordinary
course of business and in a manner consistent with past practice; (ii)
grant any retention, severance or termination pay to, or enter into any
employment, bonus, change of control or severance agreement with, any
current or former director, officer or other employee of the Company or of
any Subsidiary other than in the ordinary course of business and in a
manner consistent with past practices; (iii) establish, adopt, enter into,
terminate or amend any Plan or establish, adopt or enter into any plan,
agreement, program, policy, trust, fund or other arrangement that would be
a Plan if it were in existence as of the date of this Agreement for the
benefit of any director, officer or employee except as required by Law;
(iv) loan or advance any money or other property to any current or former
director, officer or employee of the Company or the Subsidiaries (other
than in connection with any indemnification obligations of the Company or
any Subsidiary); or (v) grant any equity or equity based awards (provided
that equity awards may be transferred in accordance with the terms of the
applicable plan document or agreement and restricted stock grants may
continue in accordance with Section 5.01(c)(iii));
(h) change any of the material accounting policies, practices or
procedures (including material Tax accounting policies, practices and
procedures) used by the Company and its Subsidiaries as of the date hereof,
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except as may be required or permitted as a result of a change in
applicable Law or in United States generally accepted accounting
principles;
(i) settle or dismiss any Action threatened against, relating to or
involving the Company and any of its Subsidiaries in connection with any
business, asset or property of the Company and any of its Subsidiaries,
other than in the ordinary course of business but not, in any individual
case, in excess of $1,000,000 and $5,000,000 in the aggregate, or in a
manner that would prohibit or materially restrict in any material respect
the operation of the Company or (ii) commence any Action reasonably
expected to result in a cost to the Company in excess of $1,000,000;
(j) fail to maintain in full force and effect insurance policies
covering the Company and the Subsidiaries and their respective properties,
assets and businesses with comparable coverage to the Company's insurance
policies in effect on the date of this Agreement;
(k) except as set forth on Schedule 5.01(k), enter into, make any
proposal for, renew, extend or amend or modify in any material respect,
terminate, cancel, waive, release or assign any right or claim under, any
contract or agreement which is or, if applicable, would be, a Material
Contract, other than in the ordinary course of business and on terms not
materially adverse to the Company and its Subsidiaries taken as a whole and
except as required under the terms of a Material Contract;
(l) amend, modify or waive any term of any outstanding security of the
Company or any of its Subsidiaries, except (i) as required by this
Agreement, (ii) in connection with accelerating the vesting schedules of
the Company Stock Options, or (iii) in connection with terminating the
Company Stock Options and the Company Stock Plans;
(m) except in connection with the projects listed in Schedules
5.01(f), enter into, or amend, any labor or collective bargaining
agreement, memorandum or understanding, grievance settlement or any other
agreement or commitment to or relating to any labor union, except as
required by Law or in the ordinary course of business;
(n) adopt or put into effect a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than any transaction specifically contemplated by this
Agreement);
(o) fail to exercise any rights of renewal with respect to any
Material Leased Real Property that by its terms would otherwise expire;
(p) except in connection with the projects listed in Schedules
5.01(f), enter into any contract, agreement or arrangement that would be a
Material Contract if entered into prior to the date hereof, other than any
such contracts, agreements or arrangements entered into in the ordinary
course of business (including contracts, agreements or arrangements with
customers, vendors or clients);
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(q) make any material tax election or settle or compromise any
material United States federal, state or local income tax liability, except
as required by applicable Law; or
(r) announce an intention, enter into any formal or informal agreement
or otherwise make a commitment, to do any of the foregoing.
SECTION 5.02 Control of the Company's Operations. Nothing contained in this
Agreement shall give to Parent, directly or indirectly, the right to control or
direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Proxy Statement. As promptly as reasonably practicable
following the date of this Agreement, the Company shall prepare and file with
the SEC the preliminary Proxy Statement; provided that Parent shall have the
opportunity to review and comment on the Proxy Statement (and any amendments
thereto) before it is filed. Each of the Company and Parent shall furnish all
information concerning itself and its affiliates that is required to be included
in the Proxy Statement or that is customarily included in proxy statements
prepared in connection with transactions of the type contemplated by this
Agreement. Each of the Company and Parent shall use its reasonable efforts to
respond as promptly as practicable to any comments of the SEC with respect to
the Proxy Statement, and the Company shall use its reasonable efforts to cause
the definitive Proxy Statement to be mailed to the Company's stockholders as
promptly as reasonably practicable after the date of this Agreement. The Company
and Parent shall promptly notify each other upon the receipt of any comments
from the SEC or its staff or any request from the SEC or its staff for
amendments or supplements to the Proxy Statement and shall provide each other
with copies of all correspondence between it and its Representatives, on the one
hand, and the SEC and its staff, on the other hand relating to the Proxy
Statement. If at any time prior to the Company Stockholders' Meeting, any
information relating to the Company, Parent or any of their respective
affiliates, officers or directors, should be discovered by the Company or Parent
that should be set forth in an amendment or supplement to the Proxy Statement so
that the Proxy Statement shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, the party which discovers such
information shall promptly notify the other parties, and an appropriate
amendment or supplement describing such information shall be filed with the SEC
and, to the extent required by applicable Law, disseminated to the stockholders
of the Company.
SECTION 6.02 Company Stockholders' Meeting. As promptly as practicable
after the SEC indicates that it has no further comments on the Proxy Statement,
the Company, acting through the Company Board, and in accordance with applicable
Law, shall duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the purpose of obtaining
the Stockholder Approval. Unless this Agreement shall have been terminated in
accordance with Section 8.01, the Company shall hold the Company Stockholders'
Meeting regardless of whether the Company Board has effected a Change in Board
30
Recommendation. The Company Board shall (a) recommend to holders of the Shares
that they adopt this Agreement, (b) include such recommendation in the Proxy
Statement and (c) use its reasonable efforts to solicit and obtain the
Stockholder Approval (including, without limitation, if requested by Parent,
engaging a proxy solicitation firm), except to the extent the Company Board
determines in its reasonable judgment that the making of, or failure to
withdraw, qualify or modify such recommendation would violate the fiduciary
duties of the Company Board under applicable Law.
SECTION 6.03 Access to Information; Confidentiality.
(a) Except as otherwise prohibited by applicable Law, from the date of
this Agreement until the Effective Time, the Company shall (and shall cause
the Subsidiaries to): (i) provide to Parent and to the officers, directors,
employees, accountants, consultants, legal counsel, financing sources,
agents and other representatives (collectively, "Representatives") of
Parent reasonable access, during normal business hours and upon reasonable
prior notice by Parent and without undue disruption of normal business
activity, to the officers, employees, agents, properties, offices and other
facilities of the Company and the Subsidiaries and to the books and records
thereof, and (ii) use commercially reasonable efforts to furnish promptly
to Parent such information concerning the business, properties, Contracts,
assets, liabilities, personnel and other aspects of the Company and the
Subsidiaries as Parent or its Representatives may reasonably request.
(b) All information obtained by Parent or its Representatives pursuant
to this Section 6.03 shall be kept confidential in accordance with the
confidentiality agreement, dated November 8, 2006 (the "Confidentiality
Agreement"), between Carlyle Investment Management, L.L.C. and the Company.
SECTION 6.04 No Solicitation of Transactions.
(a) The Company agrees that neither it nor any Subsidiary shall, nor
shall it authorize or permit the Representatives of the Company or the
Subsidiaries to, directly or indirectly, (i) solicit or initiate or
knowingly encourage or otherwise knowingly facilitate (including by way of
furnishing information) any inquiries or the implementation or submission
of any Acquisition Proposal or (ii) participate in discussions or
negotiations regarding, or furnish to any person any non-public information
in connection with, any Acquisition Proposal; provided, however, that,
prior to obtaining the Shareholder Approval, nothing contained in this
Agreement shall prevent the Company or the Company Board from furnishing
information to, or engaging in negotiations or discussions with, any person
in connection with an unsolicited bona fide written Acquisition Proposal by
such person, if (i) prior to taking such action the Company Board
determines in good faith (after consultation with its advisors) that such
Acquisition Proposal is, or could reasonably be expected to result in, a
Superior Proposal and (ii) such person executes a confidentiality agreement
that is not less restrictive of such Person than the Confidentiality
Agreement. The parties agree that the press release to be issued pursuant
to Section 6.09 upon the execution of this Agreement shall not be deemed to
be a solicitation of any Acquisition Proposal or otherwise in violation of
this Agreement, and that any inquiries or proposals made as a result of or
in connection with such press release shall not be deemed to have been
solicited by or on behalf of the Company.
31
(b) The Company shall notify Parent as promptly as practicable (and in
any event within 48 hours) of the receipt by the Company or any of the
Subsidiaries, or any of its or their respective Representatives, of any
bona fide inquiries, proposals or offers, requests for information or
requests for discussions or negotiations regarding any Acquisition
Proposal. The Company shall keep Parent reasonably informed of the status
of any such discussions or negotiations. The Company shall, and shall cause
the Subsidiaries and its and their Representatives to, immediately cease
discussions or negotiations with any parties that may be ongoing with
respect to any Acquisition Proposal as of the date hereof, shall take
reasonable steps to inform its and the Subsidiaries' Representatives of the
obligations undertaken in this Section 6.04 and shall request that all
confidential information previously furnished to any such third parties be
returned promptly.
(c) Notwithstanding the foregoing, prior to obtaining the Stockholder
Approval, in response to the receipt of an unsolicited bona fide written
Acquisition Proposal, if the Company Board determines in good faith (after
consultation with its advisors) that such Acquisition Proposal is a
Superior Proposal, then the Company Board may approve and recommend such
Superior Proposal and, in connection with such Superior Proposal, withdraw
or modify the Company Board Recommendation (a "Change in Board
Recommendation"), if the Company Board determines in good faith (after
consultation with its outside legal counsel) that the Acquisition Proposal
is a Superior Proposal.
(d) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if the Company Board (or any
committee thereof) determines in good faith (after consultation with its
outside legal counsel) that it is required to do so under applicable Law;
provided, however, that neither the Company nor the Company Board (nor any
committee thereof) shall (i) recommend that the stockholders of the Company
tender their Shares in connection with any such tender or exchange offer
(or otherwise approve or recommend any Acquisition Proposal), (ii) withdraw
or modify the Company Board Recommendation, (iii) waive any standstill
provisions applicable to any third party or (iv) enter into any definitive
agreement with any third party with respect to an Acquisition Proposal,
unless, in case of clauses (i) or (ii), the requirements of Section 6.04(c)
shall have been satisfied.
(e) The Company shall not take any action to exempt any person from
the restrictions on "business combinations" contained in Section 203 of the
DGCL (or any similar provision) or otherwise cause such restrictions not to
apply, unless the requirements of Section 6.04(c) shall have been
satisfied.
(f) For purposes of this Agreement:
(i) "Acquisition Proposal" means any proposal or offer (including
any proposal from or to the Company's stockholders) from any person or
related group other than Parent or Merger Sub relating to (1) any
direct or indirect acquisition of more than 20% of the assets of the
Company and its consolidated Subsidiaries, taken as a whole, or (2)
(A) any direct or indirect acquisition by such person or related group
of over 20% of any class of equity securities of the Company or (B)
any tender offer, exchange offer, as defined pursuant to the Exchange
32
Act, merger, consolidation, business combination, recapitalization or
other similar transaction involving the Company that if consummated
would result in such person or related group beneficially owning 20%
or more of any class of equity securities of the Company.
(ii) "Superior Proposal" means any bona fide unsolicited written
Acquisition Proposal that (1) relates to at least a majority of the
outstanding Shares or all or substantially all of the assets of the
Company and the Subsidiaries taken as a whole, (2) is on terms that
the Company Board determines in its good faith judgment (after
consultation with its financial advisor and after taking into account
all the terms and conditions of the Acquisition Proposal) are more
favorable to the Company's stockholders (in their capacities as
stockholders) from a financial point of view than this Agreement
(including any alterations to this Agreement agreed to in writing by
Parent in response thereto) and (3) which the Company Board determines
is reasonably capable of being consummated; provided, however, that
for purposes of the definition of "Superior Proposal", the references
to "20%" in the definitions of Acquisition Proposal shall be deemed to
be references to "50%".
SECTION 6.05 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification
than are set forth in the Certificate of Incorporation of the Company and
set forth in any indemnification agreement currently in effect between the
Company and any officer, director, employee or former officer, former
director, or former employee, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective
Time in any manner that would affect adversely the rights thereunder of
individuals who, at or prior to the Effective Time, were directors,
officers, employees, fiduciaries or agents of the Company or any of the
Subsidiaries; and provided, that, in the event that any claim for
indemnification is asserted or made within such six year period, all rights
to indemnification in respect of such claim shall continue until the final
disposition of such claim.
(b) After the Effective Time, the Surviving Corporation and Parent
shall, to the fullest extent permitted under applicable Law, indemnify and
hold harmless, each present and former director and officer of the Company
and each Subsidiary (collectively, the "Indemnified Parties") against all
costs and expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with
any claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action
or omission in their capacity as an officer, director, employee, fiduciary
or agent, occurring on or before the Effective Time, to the same extent as
provided in the Certificate of Incorporation of the Company or any other
applicable contract or agreement in effect on the date hereof. In the event
of any such claim, action, suit, proceeding or investigation, (i) the
Surviving Corporation shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Surviving Corporation, promptly after statements
therefor are received (provided the applicable Indemnified Party provides
an undertaking to repay all advanced expenses if it is finally judicially
determined that such Indemnified Party is not entitled to indemnification)
33
and (ii) the Surviving Corporation shall cooperate in the defense of any
such matter; provided, however, that the Surviving Corporation shall not be
liable for any settlement effected without the Surviving Corporation's
written consent (which consent shall not be unreasonably withheld or
delayed); and provided, further, that the Surviving Corporation shall not
be obligated pursuant to this Section 6.05(b) to pay the fees and expenses
of more than one counsel (selected by a plurality of the applicable
Indemnified Parties) for all Indemnified Parties in any jurisdiction with
respect to any single action except to the extent that two or more of such
Indemnified Parties shall have conflicting interests in such action.
(c) The Surviving Corporation shall either (i) cause to be obtained at
the Effective Time "tail" insurance policies with a claims period of at
least six years from the Effective Time with respect to directors' and
officers' liability insurance in amount and scope at least as favorable as
the Company's existing policies for claims arising from facts or events
that occurred on or prior to the Effective Time from an insurer with an
insurer financial strength rating by A.M. Best Co. of at least "A"; or (ii)
maintain in effect for six years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by
the Company (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and
conditions that are not less favorable) with respect to matters occurring
prior to the Effective Time; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section
6.05(c) more than an amount per year equal to 250% of the current annual
premiums paid by the Company for such insurance; provided, however, that in
the event of an expiration, termination or cancellation of such current
policies, the Surviving Corporation shall be required to obtain as much
coverage as is possible under substantially similar policies for such
maximum annual amount in aggregate annual premiums.
(d) This Section 6.05 shall survive the consummation of the Merger and
is intended to be for the benefit of, and shall be enforceable by, present
or former directors and, officers of the Company or its Subsidiaries, their
respective heirs and personal representatives and shall be binding on the
Surviving Corporation and its successors and assigns. In the event that the
Parent or Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other Person and is not
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person (including by dissolution), then, and
in each such case, Parent shall cause proper provision to be made so that
the successors and assigns of the Parent or Surviving Corporation assume
and honor the obligations set forth in this Section 6.05. The agreements
and covenants contained herein shall not be deemed to be exclusive of any
other rights to which any such present or former director or officer is
entitled, whether pursuant to Law, contract or otherwise. Nothing in this
Agreement is intended to, shall be construed to or shall release, waive or
impair any rights to directors' and officers' insurance claims under any
policy that is or has been in existence with respect to the Company or any
of its Subsidiaries or their respective officers, directors and employees,
it being understood and agreed that the indemnification provided for in
this Section 6.05 is not prior to or in substitution for any such claims
under any such policies.
(e) From and after Closing, Parent shall cause the Surviving
Corporation to perform all of the obligations of the Surviving Corporation
under this Section 6.05.
34
SECTION 6.06 Notification of Certain Matters. The Company shall give prompt
written notice to Parent, and Parent shall give prompt written notice to the
Company, of (i) any material written notice or other written communication (A)
from any person (and the written response thereto of the Company or the
Subsidiaries or Parent, as the case may be, or its or their Representatives)
alleging that the consent of such person is or may be required in connection
with this Agreement or the Transactions, (B) from any Governmental Authority
(and the written response thereto of the Company or the Subsidiaries or Parent,
as the case may be, or its or their Representatives) in connection with this
Agreement or the Transactions, and (C) except in the event the Company Board
shall have effected a Change of Board Recommendation, from or to the SEC, (ii)
the existence of any event or circumstance that would be likely to cause any
condition to the obligations of any Party to effect the Merger and the other
Transactions not to be satisfied and (iii) the failure of the Company, Merger
Sub or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would reasonably be expected to result in any condition to the
obligations of any Party to effect the Merger and the other transactions
provided for in this Agreement not to be satisfied
SECTION 6.07 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions of this Agreement,
each of the parties hereto agrees to use its reasonable best efforts to (i)
take, or cause to be taken, all appropriate action, and to do, or cause to
be done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the Transactions and (ii) obtain
from Governmental Authorities and third parties any consents, licenses,
permits, waivers, approvals, authorizations or orders set forth on Schedule
3.05. Subject to appropriate confidentiality protections, each of Parent
and the Company shall have the right to review and comment on advance
drafts of all applications, notices, petitions, filings and other documents
made or prepared in connection with the items described in clauses (i) and
(ii) above, shall cooperate with each other in connection with the making
of all such filings, shall furnish to the other party such necessary
information and assistance as such other party may reasonably request with
respect to the foregoing and shall provide the other party with copies of
all filings made by such party with any applicable Government Authority,
and, upon request, any other information supplied by such party to a
Governmental Authority in connection with this Agreement and the
Transactions.
(b) Merger Sub, the Company and Parent shall use their respective
reasonable best efforts to obtain any third party consents required to
prevent a Material Adverse Effect from occurring prior to the Effective
Time. In the event that the Company shall fail to obtain any third party
consent described above, the Company shall use its reasonable best efforts,
and shall take such actions as are reasonably requested by Parent, to
minimize any adverse effect upon the Company and Parent and their
respective businesses resulting, or which could reasonably be expected to
result, after the Effective Time from the failure to obtain such consent.
(c) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable, and in any
event prior to fifteen (15) days after the date hereof, a Notification and
Report Form under the HSR Act with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "Antitrust
35
Division"). Each of Parent and the Company shall (i) respond as promptly as
practicable to any inquiries received from the FTC or the Antitrust
Division for additional information or documentation and to all inquiries
and requests received from any State Attorney General or other governmental
authority in connection with antitrust matters and (ii) not extend any
waiting period under the HSR Act or enter into any agreement with the FTC
or the Antitrust Division not to consummate the transactions contemplated
by this Agreement, except with the prior written consent of the other
parties hereto. Parent shall take all steps necessary to avoid or eliminate
impediments under any antitrust, competition or trade regulation law that
may be asserted by the FTC, the Antitrust Division, any State Attorney
General or any other Governmental Authority with respect to the Merger so
as to enable the Closing to occur as soon as reasonably possible. Without
limiting the foregoing, Parent shall propose, negotiate, commit to and
effect, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of such assets or businesses of Parent or,
effective as of the Effective Time, the Surviving Corporation as may be
required in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order or other order in any Action,
which would otherwise have the effect of preventing or delaying the
Closing.
(d) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is commenced,
whether before or after the date hereof, the parties hereto agree to
cooperate and use their reasonable best efforts to defend vigorously
against it and respond thereto.
SECTION 6.08 Obligations of Parent and Merger Sub. Parent shall take all
action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Transactions on the terms and subject to the
conditions set forth in this Agreement. If requested by the Company's Board,
Parent shall, and shall cause Merger Sub to, use commercially reasonable efforts
to change the structure of the transaction and the Financing to reflect that the
Transactions shall be consummated by a tender offer followed by a Merger,
including, if the structure is so changed, by executing and delivering an
amendment to the Agreement reflecting such changes as may become reasonably
necessary to implement such restructuring.
SECTION 6.09 Public Announcements. The Company and Parent agree that no
public release or announcement concerning the transactions contemplated by this
Agreement shall be issued by any party without the prior written consent of the
Company and Parent (which consent shall not be unreasonably withheld or
delayed), except as such release or announcement may be required by Law or the
rules or regulations of any applicable United States securities exchange or
regulatory or governmental body to which the relevant party is subject or
submits, wherever situated, in which case the party required to make the release
or announcement shall use its reasonable efforts to allow the other party or
parties hereto reasonable time to comment on such release or announcement in
advance of such issuance (it being understood that the final form and content of
any such release or announcement, as well as the timing of any such release or
announcement, shall be at the final discretion of the disclosing party).
SECTION 6.10 Employee Benefits. After the Effective Time, Parent shall make
or cause the Surviving Corporation to make all payments due under any and all
applicable bonus or other agreements between the Company and any of its
employees, including, without limitation, all management stability agreements,
36
long-term incentive bonus agreements and incentive bonus agreements. From and
after the Effective Time, Parent (a) shall, for a period of one (1) year
following the Effective Time, provide the employees of the Surviving Corporation
and its Subsidiaries with compensation and benefits substantially comparable in
the aggregate to those provided by the Company immediately prior to the
Effective Time and shall credit each employee of the Company or any Subsidiary
at the Effective Time with the portion of such employee's service that is
recognized as of the Effective Time under the Company's Plans (including for
vacation purposes) for all purposes under Parent's plans or programs, except for
benefit accrual service under any defined benefit pension plan or to the extent
that such crediting would result in duplication of benefits, and (b) shall waive
any exclusion or limitation with respect to pre-existing conditions under
Parent's group health plan and shall provide that any out-of-pocket health
expenses incurred by an employee of the Company or any Subsidiary or his or her
covered dependents prior to the Effective Time in the plan year in which the
Closing occurs shall be taken into account under Parent's group health plan for
purposes of satisfying applicable deductible coinsurance and maximum covered
health benefit claims for services rendered on and after the Effective Time.
SECTION 6.11 Takeover Statutes. The parties shall use their respective
reasonable best efforts (i) to take all action necessary so that no Takeover Law
is or becomes applicable to the Merger or any of the other transactions
contemplated by this Agreement and (ii) if any such Takeover Law is or becomes
applicable to any of the foregoing, to take all action necessary so that the
Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Takeover Law on the
Merger and the other transactions contemplated by this Agreement.
SECTION 6.12 Financing.
(a) Notwithstanding any other provision in this Agreement, it is
expressly understood and agreed that Parent's and Merger Sub's obligations
to consummate the Merger on the terms and conditions specified herein are
not subject to a financing condition or the results of Parent's efforts to
obtain the full amount of the financing required to effect the Closing and
to satisfy their obligations under Article II hereof, including paying and
depositing (or causing to be deposited) with the Paying Agent sufficient
funds to make all payments pursuant to Article II hereof. The failure, for
any reason, of the Parent and the Merger Sub to have sufficient cash
available at the Effective Time to pay the aggregate Merger Consideration,
Option Payments, and Outstanding Dividends in accordance with Article II
hereof and/or the failure to so pay the aggregate Merger Consideration,
Option Payments, and Outstanding Dividends at the Effective Time shall
constitute a willful and material breach of this Agreement.
(b) Parent will keep Company reasonably informed of the status of the
Financing Commitments and any material developments with respect thereto.
(c) The Company agrees to provide, and to cause its Subsidiaries to
provide, Parent and Merger Sub with such cooperation and assistance in
connection with the arrangement of the financings contemplated by the
Financing Commitments (the "Financings") as may be reasonably requested by
Parent, including (i) participating in meetings, presentations, due
37
diligence sessions and sessions with rating agencies, (ii) assisting with
the preparation of materials for rating agency presentations, bank
information memoranda, and similar documents required in connection with
the Financings, (iii) furnishing Parent and its debt financing sources with
financial statements, audit reports, projections and other information
regarding the Company and its Subsidiaries and (iv) use reasonable efforts
to take any corporate or other actions necessary to permit the consummation
of the Financings and to permit the proceeds thereof, together with the
cash at the Company and its Subsidiaries, to be made available to the
Company on the Closing Date to consummate the Merger; provided that (A)
such requested cooperation does not unreasonably interfere with the ongoing
operations of the Company and its Subsidiaries and (B) neither the Company
nor any of its Subsidiaries shall be required to pay any commitment or
other similar fee or incur any other liability in connection with the
Financings except to the extent conditioned on the occurrence of the
Effective Time. The Company hereby consents to the use of its and its
Subsidiaries' logos in connection with the Financings.
(d) Nothing contained in this Agreement shall prohibit Parent or
Merger Sub from entering into agreements relating to the financing or the
operation of Parent, Merger Sub or the Surviving Corporation, including
adding other equity providers or operating partners.
(e) Prior to the Closing, the Company shall deliver to Parent an
executed payoff letter that is contingent upon the Closing with respect to
the Company's existing senior credit facilities, including the release of
all related guarantees and collateral. The Company shall cooperate with and
provide reasonable assistance to Parent prior to the Closing to back or to
replace, as necessary, any outstanding letters of credit or surety bonds
maintained or provided by the Company or its Subsidiaries effective as of
the Effective Time.
SECTION 6.13 Transfer Taxes. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any sales, transfer, stamp, stock transfer, value
added, use, real property transfer or gains and any similar Taxes which become
payable in connection with the transactions contemplated by this Agreement. Each
of Parent and the Surviving Corporation agrees to assume liability for and pay
any sales, transfer, stamp, stock transfer, value added, use, real property
transfer or gains and any similar Taxes, as well as any transfer, recording,
registration and other fees that may be imposed upon, payable or incurred in
connection with this Agreement and the Transactions.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party. The obligations
of the Company, Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver (where permissible) of the following conditions:
(a) Company Stockholder Approval. This Agreement shall have been
adopted by the requisite affirmative vote of the stockholders of the
Company in accordance with the DGCL and the Company's Certificate of
Incorporation.
38
(b) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, judgment,
decree, executive order or award which is then in effect that makes the
Merger illegal or otherwise prohibits consummation of the Merger.
(c) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the consummation of the Merger shall have expired or
terminated.
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct
(without giving effect to any limitation as to materiality or Material
Adverse Effect set forth therein except for the limitation set forth in
Section 3.09(a)) as of the Effective Time, as though made on and as of the
Effective Time (except to the extent expressly made as of an earlier date,
in which case as of such earlier date), except where the failure of such
representations and warranties to be so true and correct (without giving
effect to any limitation as to materiality or Material Adverse Effect set
forth therein except for the limitation set forth in the first sentence of
Section 3.09) would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time.
(c) Officer's Certificate. The Company shall have delivered to Parent
a certificate, dated the date of the Closing, signed by an officer on
behalf of the Company and certifying as to the satisfaction of the
conditions specified in Sections 7.02(a) and 7.02(b).
(d) No Material Adverse Effect. No effect, event or change shall have
occurred since the date of this Agreement and is continuing which has a
Material Adverse Effect.
(e) FIRPTA Certificate. The Company shall have delivered to Parent a
duly executed certificate consistent with the requirements of Treasury
Regulation Section 1.1445-2(c)(3) in a form reasonably acceptable to
Parent.
SECTION 7.03 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction or
waiver (where permissible) of the following additional conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub that are qualified by materiality shall be true
and correct in all respects, and the representations and warranties of
Parent and Merger Sub contained in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case as of the
date of this Agreement and as of the Effective Time, as though made on and
as of the Effective Time, except to the extent expressly made as of an
earlier date, in which case as of such earlier date.
39
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
on or prior to the Effective Time.
(c) Officer's Certificate. Parent shall have delivered to the Company
a certificate, dated the date of the Closing, signed by an officer on
behalf of Parent, certifying as to the satisfaction of the conditions
specified in Sections 7.03(a) and 7.03(b).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
and the other Transactions may be abandoned at any time prior to the Effective
Time by action taken or authorized by the Board of Directors of the terminating
party or parties, notwithstanding any requisite adoption of this Agreement and
the Transactions by the stockholders of the Company, and whether before or after
the stockholders of the Company have approved this Agreement at the Company
Stockholders' Meeting, as follows (the date of any such termination, the
"Termination Date"):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time shall not
have occurred on or before August 31, 2007; provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date;
(c) by either Parent or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any
injunction, order, decree or ruling (whether temporary, preliminary or
permanent) or taken any other action (including the failure to have taken
an action) which has become final and non-appealable and has the effect of
making consummation of the Merger illegal or otherwise preventing or
prohibiting consummation of the Merger;
(d) by Parent, if neither Parent nor Merger Sub is in material breach
of its obligations under this Agreement, and if (i) any of the
representations and warranties of the Company herein become untrue or
inaccurate such that Section 7.02(a) would not be satisfied, or (ii) there
has been a breach on the part of the Company of any of its covenants or
agreements herein such that Section 7.02(b) would not be satisfied, and, in
either such case, such breach (if curable) has not been cured within thirty
(30) days after notice to the Company;
(e) by the Company, if the Company is not in material breach of its
obligations under this Agreement, and if (i) any of the representations and
warranties of Parent or Merger Sub herein become untrue or inaccurate such
that Section 7.03(a) would not be satisfied, or (ii) there has been a
breach on the part of Parent or Merger Sub of any of its covenants or
agreements herein such that Section 7.03(b) would not be satisfied, and, in
either such case, such breach (if curable) has not been cured within thirty
(30) days after notice to Parent;
40
(f) by either Parent or the Company, if this Agreement shall fail to
receive the Stockholder Approval at the Company Stockholders' Meeting (as
adjourned or rescheduled);
(g) by Parent, if the Company Board shall have (i) effected a Change
of Board Recommendation or (ii) recommended or approved any Acquisition
Proposal; or
(h) by the Company, if, prior to obtaining the Stockholder Approval,
the Company Board determines (after consultation with its advisors), in the
exercise of its fiduciary duties, that an unsolicited bona fide Acquisition
Proposal is a Superior Proposal, but only (i) after providing written
notice to Parent (a "Notice of Superior Proposal") advising Parent that the
Company Board has received a Superior Proposal and (ii) if Parent does not,
within three (3) business days of Parent's receipt of the Notice of
Superior Proposal, make an offer that the Company Board determines, in its
good faith judgment (after consultation with its advisors), to be at least
as favorable to the Company's stockholders as such Superior Proposal;
provided that during such three (3) business day period, the Company shall
negotiate in good faith with Parent (to the extent Parent wishes to
negotiate) to enable Parent to make such an offer; and provided, further,
that Parent and Merger Sub acknowledge and agree that concurrently with
such termination or thereafter the Company may enter into a definitive
agreement providing for implementation of such Superior Proposal.
SECTION 8.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement shall forthwith become void,
and there shall be no liability under this Agreement on the part of any party
hereto (except that the provisions of Sections 6.03(b) and 6.09, this Article
XIII and Article IX shall survive any such termination); provided, however, that
nothing in this Section 8.02 shall relieve any party from liability for any
willful breach of this Agreement prior to such termination.
SECTION 8.03 Fees and Expenses.
(a) Except as otherwise set forth in this Section 8.03, all Expenses
incurred in connection with this Agreement and the Transactions shall be
paid by the party incurring such expenses, whether or not the Merger or any
other Transaction is consummated. "Expenses", as used in this Agreement,
shall include all reasonable out-of-pocket expenses (including all fees and
expenses of counsel, accountants, investment bankers, financing sources,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Proxy Statement, the
solicitation of stockholder approvals and all other matters related to the
closing of the Merger and the other Transactions.
(b) The parties agree that if this Agreement shall be terminated:
(i) by Parent pursuant to Section 8.01(d), then the Company shall
pay Parent the Termination Expenses; or
(ii) by Parent pursuant to Section 8.01(g) (so long as neither
Parent nor Merger Sub was in breach of any of its representations,
warranties or covenants in this Agreement as of the Termination Date)
or by the Company pursuant to Section 8.01(h), then the Company shall
41
pay Parent the Termination Expenses and, further, if within 12 months
of the Termination Date an Acquisition Proposal is consummated, then
the Company will also pay Parent the Break-Up Fee; or
(iii) by the Company pursuant to Section 8.01(e), then Parent
shall pay to the Company the Termination Expenses and the Parent
Liquidated Damage Amount unless a Material Adverse Effect has occurred
and is continuing such that Section 7.02(d) would not be satisfied; or
(iv) by Parent or the Company pursuant to Section 8.01(f), and,
at or prior to the date of the Company Stockholders' Meeting, an
Acquisition Proposal shall have been publicly announced, then (A) the
Company shall pay to Parent the Termination Expenses and (B) if,
concurrently with such termination or within 12 months of the
Termination Date an Acquisition Proposal (which need not be the same
Acquisition Proposal as the Acquisition Proposal described above that
shall have been publicly announced at or prior to the Termination
Date) is consummated, then the Company shall pay Parent the Break-Up
Fee.
(c) The Break-Up Fee shall be paid to Parent or its designee in
immediately available funds within three (3) business days of the
occurrence of the event giving rise to the obligation to pay the Break-Up
Fee (i.e., the closing of the respective Acquisition Proposal). The Parent
Liquidated Damage Amount shall be paid by Parent to Company in immediately
available funds within three (3) business days of the occurrence of the
event giving rise to the obligation under Section 8.03(b)(iii) (i.e., the
termination of this Agreement by the Company pursuant to Section 8.01(e)).
The Termination Expenses shall be paid to the appropriate party or its
designee in immediately available funds within three (3) business days
after receipt from such party of reasonable documentation with respect to
such Expenses.
(i) For purposes of this Agreement, "Break-Up Fee" means an
amount equal to $13,900,000.
(ii) For purposes of this Agreement, "Parent Liquidated Damage
Amount" means an amount equal to $13,900,000.
(iii) For purposes of this Agreement, "Termination Expenses"
means an amount, not to exceed $1,500,000, equal to the reasonably
documented Expenses of the appropriate party.
(d) Nature of Fees. The parties agree that the agreements contained in
this Section 8.03 are an integral part of the transactions contemplated by
this Agreement and constitute liquidated damages and not a penalty. The
parties further agree that if one party is or becomes obligated to pay a
fee pursuant to this Section 8.03, the right to receive such fee shall be
the sole remedy of the other party with respect to the facts and
circumstances giving rise to such payment obligation. Notwithstanding
anything to the contrary contained in this Section 8.03, in the event that
the Company shall fail to pay the Break-Up Fee or any Termination Expenses
when due, the Company shall reimburse Parent and Merger Sub for all
reasonable costs and expenses actually incurred or accrued by Parent or
Merger Sub (including legal fees and expenses) in connection with any
42
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee
from the date such fee was required to be paid at the prime rate as
reported in the Wall Street Journal on the date such fee was required to be
paid. In the event that Parent shall fail to pay the Parent Liquidated
Damage Amount or any Termination Expenses when due, Parent shall reimburse
the Company for all reasonable costs and expenses actually incurred or
accrued by the Company (including legal fees and expenses) in connection
with any action, including the filing of any lawsuit or other legal action,
taken to collect payment, together with interest on the amount of any
unpaid fee from the date such fee was required to be paid at the prime rate
as reported in the Wall Street Journal on the date such fee was required to
be paid.
SECTION 8.04 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after the Stockholder
Approval has been obtained, no amendment shall be made except as allowed under
applicable Law. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
SECTION 8.05 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties of any other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement of any other party
or any condition to its own obligations contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby. The failure of any party to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements in this Agreement and
in any instrument delivered pursuant hereto, including any rights arising out of
any breach or such representations, warranties, covenants and agreements, shall
terminate at the Effective Time, except for (i) those covenants and agreements
contained herein that by their terms apply or are to be performed in whole or in
part at or after the Effective Time and (ii) this Article IX.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing in the English language and shall
be given (a) on the date of delivery if delivered personally, (b) on the first
business day following the date of dispatch if delivered by a nationally
recognized next-day courier service, (c) on the fifth business day following the
date of mailing if delivered by registered or certified mail (postage prepaid,
return receipt requested) or (d) if sent by facsimile transmission, when
transmitted and receipt is confirmed. All notices hereunder shall be delivered
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 9.02):
43
if to Parent or Merger Sub:
The Carlyle Group
520 Madison Avenue, 28th floor
New York, NY 10022
Facsimile No: (212) 381-4968
Attention: Barry P. Gold
with copies (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue, 47th Floor
New York, New York 10166
Facsimile No: (212) 351-4035
Attention: E. Michael Greaney
if to the Company:
Synagro Technologies, Inc.
1800 Bering Drive, Suite 1000
Houston, Texas 77057
Facsimile No: (713) 369-1751
Attention: Alvin L. Thomas II
with a copy (which shall not constitute notice) to:
Locke Liddell & Sapp LLP
600 Travis Street
3400 JPMorgan Chase Tower
Houston, Texas 77002
Facsimile No: (713) 223-3717
Attention: Michael T. Peters
SECTION 9.03 Certain Definitions.
(a) For purposes of this Agreement:
(i) "affiliate" of a specified person means a person who,
directly or indirectly through one or more intermediaries, controls,
is controlled by or is under common control with, such specified
person.
(ii) "beneficial owner", with respect to any Shares, has the
meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.
(iii) "business day" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which
banks are not required or authorized to close in The City of New York.
44
(iv) "Company Stock Plans" means stock option plans, restricted
stock plans and other agreements to grant options to purchase Company
Common Stock or receive shares of restricted stock of the Company, as
amended through the date of this Agreement.
(v) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise.
(vi) "Equity Interest" means (a) with respect to a corporation,
any and all classes or series of shares of capital stock, (b) with
respect to a partnership, limited liability company, trust or similar
Person, any and all classes or series of units, interests or other
partnership/limited liability company interests and (c) with respect
to any other Person, any other security representing any ownership
interest or participation in such Person.
(vii) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
(viii) "knowledge of the Company" or "Company's knowledge" means
the actual knowledge after due inquiry of the executive officers and
employees of the Company listed on Schedule 9.03(viii).
(ix) "Liens" means, with respect to any asset, mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset.
(x) "Material Adverse Effect" means any effect, event, change or
state of facts that, individually or in the aggregate, (i) is or would
reasonably be expected to be materially adverse to the business,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, other than any such
effect, event or change arising out of or related to any Excluded
Matters, or (ii) prevents or materially delays the ability of the
Company and its Subsidiaries to perform their obligations under this
Agreement or to consummate the Transactions in accordance with the
terms hereof. As used in this Agreement, "Excluded Matters" means any
one or more of the following effects, events, changes or state of
facts: (a) general changes in economic conditions which do not have a
materially disproportionate effect on the Company and its
Subsidiaries, taken as a whole, (b) changes in or events affecting the
Company's industry generally which do not have a materially
disproportionate effect on the Company and its Subsidiaries, taken as
a whole, (c) a change in the market price or trading volume of the
Company Common Stock in and of itself (it being understood that the
facts and circumstances giving rise to such decline may be taken into
account in determining whether there has been a Material Adverse
Effect if such facts are not included in any other subsection of this
definition of "Excluded Matters"), (d) any change in the financial or
securities markets generally which does not have a disproportionate
impact on the Company and its Subsidiaries, taken as a whole, (e) the
45
effect of any change arising in connection with any "act of God"
including, without limitation, weather, natural disasters and
earthquakes or hostilities, acts of war, sabotage or terrorism or
military actions or any escalation or material worsening of any such
hostilities, acts of war, sabotage or terrorism or military actions
(except to the extent the effect of such change has a materially
disproportionate effect on the Company and its Subsidiaries, taken as
a whole, as compared to other persons in the industry in which the
Company and its Subsidiaries conduct their business), (f) changes,
effects or events resulting from or arising out of the public
announcement of the execution of this Agreement or changes, effects or
events resulting from compliance with this Agreement or from the
consummation of the transactions contemplated in this Agreement,
including the loss or departure of officers or other employees of the
Company and any of its Subsidiaries, or the termination, reduction (or
potential reduction) or any other negative development (or potential
negative development) in the Company's relationships with any of its
customers, suppliers, distributors or other business partners, (g) any
change or effect resulting from a change in accounting rules or
procedures announced by the Financial Accounting Standards Board, the
Securities and Exchange Commission ("SEC") or any other accounting
body with authority to promulgate U.S. generally accepted accounting
principles, (h) any effect, event or change resulting from a breach of
this Agreement by Parent or Merger Sub; (i) any legal proceedings made
or brought by any of the current or former stockholders of the Company
(on their own behalf or on behalf of the Company) arising out of or
related to this Agreement or any of the transactions contemplated
hereby; (j) any downgrade in the rating of any debt of the Company or
its Subsidiaries by any nationally recognized rating agency in and of
itself (it being understood that the facts and circumstances giving
rise to such downgrade may be deemed to constitute, and may be taken
into account in determining whether there has been, a Material Adverse
Effect if such facts are not included in any other subsection of this
definition of "Excluded Matters") or (k) any effect, event or change
resulting from or arising out of any change in any applicable Law that
does not have a materially disproportionate effect on the Company and
its Subsidiaries, taken as a whole, as compared to the effect on the
other companies in the Company's industry.
(xi) "Material Leased Real Property" shall mean the real property
leased by the Company or any Subsidiary, as tenant or subtenant (as
the case may be), together with, to the extent leased by Company or
any Subsidiary, all buildings and other structures, facilities or
improvements currently located thereon and all fixtures, systems and
equipment attached or appurtenant thereto, that (A) is material to the
business, operations, assets, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, (B)
has an annual rental amount in excess of $500,000 per year or (C) is
listed on Schedule 9.03(a)(xi).
(xii) "Material Owned Real Property" shall mean the real property
owned by the Company or any Subsidiary, together with all buildings
and other structures, facilities or improvements currently located
thereon, all fixtures, systems and equipment of Company or any
Subsidiary attached or appurtenant thereto and all easements,
licenses, rights and appurtenances relating to the foregoing, that (A)
is material to the business, operations, assets, financial condition
or results of operations of the Company and its Subsidiaries, taken as
46
a whole (B) has a fair market value in excess of $500,000 or (C) is
listed on Schedule 9.03(a)(xii).
(xiii) "Material Real Property" shall mean, collectively, the
Material Owned Real Property and the Material Leased Real Property.
(xiv) "Permitted Lien" means: (i) Liens for Taxes, assessments
and governmental charges or levies either not yet due and payable or
which are being contested in good faith and by appropriate proceedings
and for which appropriate reserves have been established to the extent
required by GAAP; (ii) mechanics, carriers', workmen's,
warehouseman's, repairmen's, materialmen's or other Liens or security
interests arising in the ordinary course of business in a manner
consistent with past practice that are not yet due or that are being
contested in good faith and by appropriate proceedings; (iii) leases,
subleases and licenses (other than capital leases and leases
underlying sale and leaseback transactions); (iv) Liens imposed by
applicable Law (other than Tax Law); (v) Liens disclosed on Schedule
9.03(a)(xiv); (vi) pledges or deposits to secure obligations under
workers' compensation Laws or similar legislation or to secure public
or statutory obligations; (vii) pledges and deposits to secure the
performance of bids, trade contracts, leases, surety and appeal bonds,
performance bonds and other obligations of a similar nature, in each
case in the ordinary course of business; (viii) Liens of record; (ix)
defects, imperfections or irregularities in title, easements,
covenants and rights of way (unrecorded and of record) and other
similar restrictions with respect to any Material Real Property that,
in each case, do not adversely affect in any material respect the
current use of the applicable Material Owned Real Property, and
zoning, building and other similar codes or restrictions, in each
case, that do not adversely affect in any material respect the current
use of the Material Real Property; (x) Liens the existence of which
are disclosed in the notes to the consolidated financial statements of
the Company included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2005 or the Company's Quarterly Reports on
Form 10-Q for the periods ended March 31, 2006, June 30, 2006 or
September 30, 2006; or (xi) any other Liens that do not secure a
liquidated amount, that have been incurred or suffered in the ordinary
course of business and that would not, individually or in the
aggregate, have a material affect on the Company and statutory, common
law or contractual liens of landlords.
(xv) "Person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including a "person" as defined in Section 13(d)(3) of the Exchange
Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
(xvi) "properties" means any real property owned or leased by the
Company or any Subsidiary (including, without limitation the Material
Real Property).
(xvii) "Sarbanes-Oxley Act" means the Sarbanes-Oxley Act of 2002.
(xviii) "Solvent" when used with respect to any Person, means
that, as of any date of determination, (a) the amount of the "fair
47
saleable value" of the assets of such Person will, as of such date,
exceed (i) the value of all "liabilities of such Person, including
contingent and other liabilities", as of such date, as such quoted
terms are generally determined in accordance with applicable federal
laws governing determinations of the insolvency of debtors, and (ii)
the amount that will be required to pay the probable liabilities of
such Person on its existing debts (including contingent liabilities)
as such debts become absolute and matured, (b) such Person will not
have, as of such date, an unreasonably small amount of capital for the
operation of the businesses in which it is engaged or proposed to be
engaged following such date, and (c) such Person will be able to pay
its liabilities, including contingent and other liabilities, as they
mature. For purposes of this definition, "not have an unreasonably
small amount of capital for the operation of the businesses in which
it is engaged or proposed to be engaged" and "able to pay its
liabilities, including contingent and other liabilities, as they
mature" means that such Person will be able to generate enough cash
from operations, asset dispositions or refinancing, or a combination
thereof, to meet its obligations as they become due.
(xix) "Stub Period Dividend" means a dividend (in addition to
regular quarterly dividends) declared by the Company Board after the
date of this Agreement and prior to the Effective Time in an amount
equal to the then most recent dividend paid by the Company multiplied
by a fraction, the numerator of which is the number of days beginning
on the date of payment by the Company of such most recent dividend and
ending on the Effective Date, and the denominator of which is 90 days.
(xx) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more
intermediaries, and, without limiting the foregoing, includes any
entity in respect of which such person, directly or indirectly,
beneficially owns 50% or more of the voting securities or equity.
(b) The following terms have the meaning set forth in the Sections set
forth below:
Defined Term Location of Definition
Acquisition Proposal...........................SECTION 6.04(f)(i)
Action...............................................SECTION 3.10
Agreement................................................PREAMBLE
Antitrust Division................................SECTION 6.07(c)
Break-Up Fee...................................SECTION 8.03(c)(i)
Certificate of Merger................................SECTION 1.03
Certificates......................................SECTION 2.02(b)
Change in Board Recommendation....................SECTION 6.04(c)
Closing..............................................SECTION 1.02
Code..............................................SECTION 3.11(b)
Company..................................................PREAMBLE
Company Board............................................RECITALS
Company Board Recommendation......................SECTION 3.19(a)
48
Company Common Stock.....................................RECITALS
Company Disclosure Documents......................SECTION 3.08(a)
Company Schedules.....................................ARTICLE III
Company Stock Option .............................SECTION 2.04(a)
Company Stockholders' Meeting........................SECTION 6.02
Confidentiality Agreement.........................SECTION 6.03(b)
Contract..........................................SECTION 3.05(a)
DGCL.....................................................RECITALS
Dissenting Shares.................................SECTION 2.05(a)
Effective Time.......................................SECTION 1.03
Environmental Laws.............................SECTION 3.16(f)(i)
Environmental Permits.........................SECTION 3.16(f)(ii)
ERISA.............................................SECTION 3.11(a)
Exchange Fund.....................................SECTION 2.02(a)
Expenses..........................................SECTION 8.03(a)
Financial Statements..............................SECTION 3.07(b)
Financing Commitments.............................SECTION 4.10(a)
FTC...............................................SECTION 6.07(c)
GAAP..............................................SECTION 3.07(b)
Governmental Authority............................SECTION 3.05(b)
Hazardous Substances.........................SECTION 3.16(f)(iii)
HSR Act...........................................SECTION 3.05(b)
Indemnified Parties...............................SECTION 6.05(b)
Intellectual Property.............................SECTION 3.14(c)
IRS...............................................SECTION 3.11(a)
Law...............................................SECTION 3.05(a)
Licensed Intellectual Property ...................SECTION 3.14(a)
Management....................................SECTION 3.16(f)(ii)
Material Contracts................................SECTION 3.17(a)
Merger...................................................RECITALS
Merger Consideration..............................SECTION 2.01(a)
Merger Sub...............................................PREAMBLE
Multiemployer Plan................................SECTION 3.11(b)
NASDAQ............................................SECTION 3.05(b)
Option Payment....................................SECTION 2.04(b)
Organizational Documents.............................SECTION 3.02
Outstanding Dividends.............................SECTION 2.02(a)
Owned Intellectual Property.......................SECTION 3.14(a)
Parent...................................................PREAMBLE
Paying Agent......................................SECTION 2.02(a)
Permits..............................................SECTION 3.06
Plans.............................................SECTION 3.11(a)
Preferred Stock...................................SECTION 3.03(a)
Proxy Statement...................................SECTION 3.08(a)
Registered Intellectual Property..................SECTION 3.14(a)
Release.......................................SECTION 3.16(f)(ii)
49
Remediation...................................SECTION 3.16(f)(ii)
Representatives...................................SECTION 6.03(a)
SEC Reports.......................................SECTION 3.07(a)
Section 262.......................................SECTION 2.05(a)
Securities Act....................................SECTION 3.07(a)
Shares............................................SECTION 2.01(a)
Stockholder Approval..............................SECTION 3.19(c)
Superior Proposal.............................SECTION 6.04(f)(ii)
Surviving Corporation................................SECTION 1.01
Takeover Laws.....................................SECTION 3.19(b)
Tax or Taxes...................................SECTION 3.15(i)(i)
Tax Returns...................................SECTION 3.15(i)(ii)
Termination Expenses..........................SECTION 8.03(c)(ii)
Termination Date.....................................SECTION 8.01
Transactions.........................................SECTION 3.04
(c) When a reference is made in this Agreement to Sections, Schedules
or Exhibits, such reference shall be to a Section, Schedule or Exhibit of
this Agreement, respectively, unless otherwise indicated. 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 words
"hereof," "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of
such terms. References to a person are also to its permitted successors and
assigns. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
SECTION 9.04 Severability. If any term or other provision of this Agreement
is determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Transactions
is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.05 Disclaimer of Other Representations and Warranties. Parent,
Merger Sub and the Company each acknowledges and agrees that, except for the
representations and warranties expressly set forth in this Agreement, (a) no
party makes, and has not made, any representations or warranties relating to
itself or its businesses or otherwise in connection with the Transactions, (b)
no person has been authorized by any party to make any representation or
warranty relating itself or its businesses or otherwise in connection with the
Transactions and, if made, such representation or warranty must not be relied
upon as having been authorized by such party, and (c) any estimates,
projections, predictions, data, financial information, memoranda, presentations
or any other materials or information provided or addressed to any party or any
of its Representatives are not and shall not be deemed to be or to include
50
representations or warranties except to the extent any such materials are
expressly addressed in such representation or warranty set forth in this
Agreement.
SECTION 9.06 Entire Agreement; Assignment. This Agreement and the
Confidentiality Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, among the parties
hereto, or any of them, with respect to the subject matter hereof and thereof.
This Agreement shall not be assigned (whether pursuant to a merger, by operation
of law or otherwise), except that Parent and Merger Sub may assign all or any of
their rights and obligations hereunder (but not under the Confidentiality
Agreement) to any direct or indirect wholly owned subsidiary of Parent,
provided, however, that no such assignment shall relieve the assigning party of
its obligations hereunder if such assignee does not perform such obligations.
SECTION 9.07 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement other
than (a) as specifically provided in Section 6.05; (b) after the Effective Time,
the rights of holders of shares of the Company Common Stock to receive the
Merger Consideration specified in Section 2.01; and (c) after the Effective
Time, the rights of holders of Company Stock Options to receive the Options
Payments specified in Section 2.04.
SECTION 9.08 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that, prior to the
termination of this Agreement pursuant to Section 8.01, the Company, Parent and
Merger Sub shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
SECTION 9.09 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State. All Actions arising out
of or relating to this Agreement shall be heard and determined exclusively in
the Delaware Court of Chancery. The parties hereto hereby (a) submit to the
exclusive jurisdiction of the Delaware Court of Chancery for the purpose of any
Action arising out of or relating to this Agreement brought by any party hereto
and (b) irrevocably waive, and agree not to assert by way of motion, defense or
otherwise, in any such Action, any claim that any of them is not subject
personally to the jurisdiction of the above-named court, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper or that this
Agreement or the Transactions may not be enforced in or by the above-named
court.
SECTION 9.10 Waiver of Jury Trial. Each of the parties hereto hereby waives
to the fullest extent permitted by applicable Law any right it may have to a
trial by jury with respect to any litigation directly or indirectly arising out
of, under or in connection with this Agreement or the Transactions. Each of the
parties hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce that foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
51
into this Agreement and the Transactions, as applicable, by, among other things,
the mutual waivers and certifications in this Section 9.10.
SECTION 9.11 Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.12 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
52
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SYNAGRO TECHNOLOGIES, INC.
By: /s/ Robert C. Boucher, Jr.
----------------------------------
Name: Robert C. Boucher, Jr.
------------------------------
Title: Chief Executive Officer
-----------------------------
SYNATECH HOLDINGS, INC.
By: /s/ Barry P. Gold
----------------------------------
Name: Barry P. Gold
------------------------------
Title: Vice President and Secretary
-----------------------------
SYNATECH, INC.
By: /s/ Barry P. Gold
----------------------------------
Name: Barry P. Gold
------------------------------
Title: Vice President and Secretary
-----------------------------
Dates Referenced Herein and Documents Incorporated by Reference
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