EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
among
MDI HOLDINGS, LLC,
MATRIX ACQUISITION CORP.
AND
MACDERMID, INCORPORATED
Dated as of December 15, 2006
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TABLE OF CONTENTS
PAGES
ARTICLE I THE MERGER........................................................2
Section 1.1 The Merger...................................................2
Section 1.2 Closing......................................................2
Section 1.3 Effective Time...............................................2
Section 1.4 Effects of the Merger........................................2
Section 1.5 Certificate of Incorporation and By-laws of the
Surviving Corporation.......................................3
Section 1.6 Directors....................................................3
Section 1.7 Officers.....................................................3
ARTICLE II CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES...................3
Section 2.1 Effect on Capital Stock......................................3
Section 2.2 Exchange of Certificates.....................................5
Section 2.3 Effect of the Merger on Company Stock Options and
Company Restricted Shares....................................
Section 2.4 Timing of Equity Rollover....................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................8
Section 3.1 Qualification, Organization, Subsidiaries, etc...............8
Section 3.2 Capital Stock................................................9
Section 3.3 Subsidiaries................................................10
Section 3.4 Corporate Authority Relative to This Agreement; No
Violation..................................................10
Section 3.5 Reports and Financial Statements............................11
Section 3.6 Internal Controls and Procedures............................12
Section 3.7 No Undisclosed Liabilities..................................13
Section 3.8 Compliance with Law; Permits................................13
Section 3.9 Environmental Laws and Regulations..........................14
Section 3.10 Employee Benefit Plans......................................14
Section 3.11 Interested Party Transactions...............................17
Section 3.12 Absence of Certain Changes or Events........................17
Section 3.13 Investigations; Litigation..................................18
Section 3.14 Proxy Statement; Other Information..........................18
Section 3.15 Tax Matters.................................................18
Section 3.16 Labor Matters...............................................19
Section 3.17 Intellectual Property.......................................20
Section 3.18 Property....................................................20
Section 3.19 Opinion of Financial Advisor................................21
Section 3.20 Required Vote of the Company Stockholders...................21
Section 3.21 Material Contracts..........................................21
Section 3.22 Finders or Brokers..........................................22
Section 3.23 State Takeover Statutes; Charter Provisions.................22
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........23
Section 4.1 Qualification; Organization.................................23
Section 4.2 Corporate Authority Relative to This Agreement; No
Violation..................................................23
Section 4.3 Proxy Statement; Other Information..........................24
Section 4.4 Financing...................................................24
Section 4.5 Ownership and Operations of Merger Sub......................25
Section 4.6 Finders or Brokers..........................................25
Section 4.7 Ownership of Shares.........................................25
Section 4.8 Certain Arrangements........................................25
Section 4.9 Investigations; Litigation..................................26
Section 4.10 Limited Guarantees..........................................26
Section 4.11 Solvency....................................................26
Section 4.12 No Other Information........................................26
Section 4.13 Access to Information; Disclaimer...........................27
ARTICLE V COVENANTS AND AGREEMENTS.........................................27
Section 5.1 Conduct of Business.........................................27
Section 5.2 Investigation...............................................30
Section 5.3 No Solicitation.............................................31
Section 5.4 Filings; Other Actions......................................34
Section 5.5 Employee Matters............................................35
Section 5.6 Efforts.......................................................
Section 5.7 Takeover Statute............................................39
Section 5.8 Public Announcements........................................39
Section 5.9 Indemnification and Insurance...............................39
Section 5.10 Financing.....................................................
Section 5.11 Stockholder Litigation......................................42
Section 5.12 Notification of Certain Matters.............................42
Section 5.13 Rule 16b-3..................................................43
Section 5.14 Control of Operations.......................................43
Section 5.15 Certain Transfer Taxes......................................43
Section 5.16 Obligations of Merger Sub...................................43
ARTICLE VI CONDITIONS TO THE MERGER........................................44
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger.....................................................44
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger.................................................44
Section 6.3 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger..........................................45
ARTICLE VII TERMINATION....................................................45
Section 7.1 Termination or Abandonment..................................45
Section 7.2 Termination Fees............................................47
ARTICLE VIII MISCELLANEOUS.................................................50
Section 8.1 No Survival of Representations and Warranties...............50
Section 8.2 Expenses....................................................50
Section 8.3 Counterparts; Effectiveness.................................50
Section 8.4 Governing Law...............................................50
Section 8.5 Jurisdiction; Enforcement...................................50
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Section 8.6 WAIVER OF JURY TRIAL........................................51
Section 8.7 Notices.....................................................51
Section 8.8 Assignment; Binding Effect..................................52
Section 8.9 Severability................................................53
Section 8.10 Entire Agreement; No Third-Party Beneficiaries..............53
Section 8.11 Amendments; Waivers.........................................53
Section 8.12 Headings....................................................53
Section 8.13 Interpretation..............................................53
Section 8.14 No Recourse.................................................54
Section 8.15 Determinations by the Company...............................54
Section 8.16 Certain Definitions.........................................54
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AGREEMENT AND PLAN OF MERGER, dated as of December 15, 2006 (this
"AGREEMENT"), among MDI HOLDINGS, LLC, a Delaware limited liability company
("PARENT"), MATRIX ACQUISITION CORP., a Connecticut corporation and a wholly
owned subsidiary of Parent ("MERGER SUB"), and MACDERMID, INCORPORATED, a
Connecticut corporation (the "COMPANY").
W I T N E S S E T H :
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WHEREAS, the parties intend that Merger Sub be merged with and into
the Company, with the Company surviving that merger on the terms and subject to
the conditions set forth in this Agreement (the "MERGER");
WHEREAS, the Board of Directors of the Company, acting upon
the unanimous recommendation of the Special Committee, has unanimously (with two
directors abstaining) (i) determined that it is in the best interests of the
Company and its stockholders, and declared it advisable, to enter into this
Agreement, (ii) approved the execution, delivery and performance by the Company
of this Agreement and the consummation of the transactions contemplated hereby,
including the Merger and (iii) resolved to recommend adoption of this Agreement
by the stockholders of the Company;
WHEREAS, the Board of Directors of Merger Sub and the Members of
Parent have each unanimously approved this Agreement and declared it advisable
for Merger Sub and Parent, respectively, to enter into this Agreement;
WHEREAS, certain existing stockholders of the Company desire to
contribute Shares (as hereinafter defined) to Parent or one or more of its
Subsidiaries immediately prior to the Effective Time in exchange for shares of
Parent capital stock immediately prior to the merger;
WHEREAS, concurrently with the execution of this Agreement, as a
condition and inducement to Parent and Merger Sub's willingness to enter into
this Agreement, Parent, Merger Sub and a stockholder of the Company are entering
into a voting agreement, of even date herewith (the "VOTING AGREEMENT") pursuant
to which such stockholder has agreed, subject to the terms thereof, to vote its
Shares (as defined below) in favor of adoption of this Agreement;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to the Company's willingness to enter into this
Agreement, each of Court Square Capital Partners, L.P. and Weston Presidio V,
L.P. (together, the "GUARANTORS") have provided a limited guarantee (together,
the "LIMITED GUARANTEES") in favor of the Company, in the form set forth on
Section 4.10 of the Parent Disclosure Letter, with respect to the performance by
Parent and Merger Sub, respectively, of their obligations under 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 the transactions contemplated by this Agreement and also to prescribe
certain conditions to the Merger as specified herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Parent, Merger Sub and the Company hereby
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. At the Effective Time (as hereinafter
defined), upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the applicable provisions of the Connecticut
Business Corporation Act (the "CBCA"), Merger Sub shall be merged with and into
the Company, whereupon the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving company in the Merger
(the "SURVIVING CORPORATION") and a wholly owned subsidiary of Parent.
Section 1.2 CLOSING. The closing of the Merger (the "CLOSING") shall
take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd
Street, New York, New York at 10:00 a.m., local time, on a date to be specified
by the parties (the "CLOSING DATE") which shall be no later than the later of
(i) the second Business Day after the satisfaction or waiver (to the extent
permitted by applicable Law (as hereinafter defined)) of the conditions set
forth in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions) or (ii) the date of completion of the Marketing Period (or, if
Parent so notifies the Company, a date during the Marketing Period not less than
three Business Days following such notice to the Company), or at such other
place, date and time as the Company and Parent may agree in writing. For
purposes of this Agreement, "MARKETING PERIOD" shall mean the first period of 20
consecutive Business Days after the date hereof throughout which (A) Parent
shall have the Required Financial Information (as defined in Section 5.10) that
the Company is required to provide to Parent pursuant to Section 5.10, (B) the
conditions set forth in Section 6.1 and Section 6.3 (other than 6.3(c)) shall be
satisfied, and (C) the applicable auditors shall not have withdrawn their audit
opinions for any applicable Required Financial Information; PROVIDED that such
20 Business Day period shall commence no earlier than three Business Days after
the condition set forth in Section 6.1(a) has been satisfied.
Section 1.3 EFFECTIVE TIME. On the Closing Date, the Company shall
cause the Merger to be consummated by executing, delivering and filing a
certificate of merger (the "CERTIFICATE OF MERGER") with the Secretary of State
of the State of Connecticut in accordance with Sections 33-603 and 33-819(b) of
the CBCA. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Connecticut, or
at such later date or time as may be agreed by Parent and the Company in writing
and specified in the Certificate of Merger in accordance with the CBCA (such
time as the Merger becomes effective is referred to herein as the "EFFECTIVE
TIME").
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in this Agreement and the applicable provisions of the CBCA.
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Section 1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.
(a) The certificate of incorporation of the Company (the "COMPANY
CERTIFICATE") shall be amended in its entirety to be the same as set forth in
Exhibit 1.5(a) and, as so amended, shall be the certificate of incorporation of
the Surviving Corporation following the Merger until thereafter amended in
accordance with its terms, in each case consistent with the obligations set
forth in Section 5.9, and the CBCA.
(b) The by-laws of Merger Sub, as in effect at the Effective Time,
shall be the by-laws of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof, hereof and applicable Law, in each case
consistent with the obligations set forth in Section 5.9.
Section 1.6 DIRECTORS. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
Section 1.7 OFFICERS. The officers of the Company immediately prior to
the Closing Date shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Merger Sub or
the holders of any securities of the Company or Merger Sub:
(a) CONVERSION OF COMPANY COMMON STOCK. Subject to Section 2.1(b),
2.1(d) and 2.1(e), each issued and outstanding share of common stock, without
par value, of the Company outstanding immediately prior to the Effective Time
(such shares, collectively, "COMPANY COMMON STOCK", and each, a "SHARE"), other
than (i) any Shares held by any direct or indirect wholly owned subsidiary of
the Company, which Shares shall remain outstanding except that the number of
such Shares shall be appropriately adjusted in the Merger (the "REMAINING
SHARES"), (ii) any Cancelled Shares (as defined, and to the extent provided in
Section 2.1(b)) and (iii) any Dissenting Shares (as defined, and to the extent
provided in Section 2.1(e)) shall thereupon be converted automatically into and
shall thereafter represent the right to receive $35.00 in cash, without interest
(the "MERGER CONSIDERATION"). All Shares that have been converted into the right
to receive the Merger Consideration as provided in this Section 2.1 shall be
automatically cancelled and shall cease to exist, and the holders of
certificates which immediately prior to the Effective Time represented such
Shares shall cease to have any rights with respect to such Shares other than the
right to receive the Merger Consideration.
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(b) PARENT AND MERGER SUB-OWNED SHARES. Each Share that is owned,
directly or indirectly, by Parent or Merger Sub immediately prior to the
Effective Time, if any, or held by the Company immediately prior to the
Effective Time (in each case, other than any such Shares held on behalf of third
parties) (the "CANCELLED SHARES") shall, by virtue of the Merger and without any
action on the part of the holder thereof, be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in exchange for such
cancellation and retirement.
(c) CONVERSION OF MERGER SUB COMMON STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
each share of common stock, without par value, 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,
without par value, of the Surviving Corporation and shall with the Remaining
Shares constitute the only outstanding shares of capital stock of the Surviving
Corporation. From and after the Effective Time, all certificates representing
the common stock of Merger Sub shall be deemed for all purposes to represent the
number of shares of common stock of the Surviving Corporation into which they
were converted in accordance with the immediately preceding sentence.
(d) ADJUSTMENTS. If at any time during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
capital stock of the Company, or securities convertible or exchangeable into or
exercisable for shares of capital stock, shall occur as a result of any
reclassification, recapitalization, stock split (including a reverse stock
split) or subdivision or combination, exchange or readjustment of shares, or any
stock dividend or stock distribution with a record date during such period
(excluding, in each case, normal quarterly cash dividends), merger or other
similar transaction, the Merger Consideration shall be equitably adjusted to
reflect such change; PROVIDED that nothing in this Section 2.1(d) shall be
construed to permit the Company to take any action with respect to its
securities that is prohibited by the terms of this Agreement.
(e) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to
the contrary, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and which are held by a stockholder who
did not vote in favor of the Merger (or consent thereto in writing) and who is
entitled to demand and properly demands appraisal of such shares pursuant to,
and who complies in all respects with, the applicable provisions of Section
33-861 of the CBCA (the "DISSENTING STOCKHOLDERS"), shall not be converted into
or be exchangeable for the right to receive the Merger Consideration (the
"DISSENTING SHARES," and together with the Cancelled Shares, the "EXCLUDED
SHARES"), but instead such holder shall be entitled to payment of the appraised
value of such shares in accordance with the applicable provisions of the CBCA
(and at the Effective Time, such Dissenting Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
such holder shall cease to have any rights with respect thereto, except the
right to receive the appraised value of such Dissenting Shares in accordance
with the applicable provisions of the CBCA), unless and until such holder shall
have failed to perfect or shall have effectively withdrawn or lost rights to
appraisal under the CBCA. If any Dissenting Stockholder shall have failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
shares of Company Common Stock shall thereupon be treated as if they had been
converted into and become exchangeable for the right to receive, as of the
Effective Time, the Merger Consideration
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for each such share of Company Common Stock, in accordance with Section 2.1(a),
without any interest thereon. The Company shall give Parent (i) prompt notice of
any written demands for appraisal of any shares of Company Common Stock,
attempted withdrawals of such demands and any other instruments served pursuant
to the CBCA and received by the Company relating to stockholders' rights of
appraisal and (ii) the opportunity to participate in negotiations and
proceedings with respect to demands for appraisal under the CBCA. The Company
shall not, except with the prior written consent of Parent, voluntarily make any
payment with respect to, or settle, or offer or agree to settle, any such demand
for payment. Any portion of the Merger Consideration made available to the
Paying Agent pursuant to Section 2.2 to pay for shares of Company Common Stock
for which appraisal rights have been perfected shall be returned to Parent upon
demand.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a U.S. bank or trust company that
shall be appointed by Parent and approved by the Company in writing (such
approval not to be unreasonably withheld) to act as a paying agent hereunder
(the "PAYING AGENT"), in trust for the benefit of holders of the Shares, cash in
U.S. dollars sufficient to pay the aggregate Merger Consideration in exchange
for all of the Shares outstanding immediately prior to the Effective Time (other
than the Excluded Shares and the Remaining Shares) pursuant to the provisions of
this Article II (such cash being hereinafter referred to as the "EXCHANGE
FUND").
(b) PAYMENT PROCEDURES.
(i) As soon as reasonably practicable after the Effective Time
and in any event not later than the second Business Day following the Effective
Time, the Paying Agent shall mail to each holder of record of Shares whose
Shares were converted into the Merger Consideration pursuant to Section 2.1, (A)
a letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the certificates that immediately prior to the
Effective Time represented Shares ("CERTIFICATES") shall pass, only upon
delivery of Certificates to the Paying Agent (and shall be in such form and have
such other provisions as Parent and the Company may reasonably determine prior
to the Effective Time) and (B) instructions for use in effecting the surrender
of Certificates (or effective affidavits of loss in lieu thereof) or
non-certificated Shares represented by book-entry ("BOOK-ENTRY SHARES") in
exchange for the Merger Consideration.
(ii) Upon surrender of Certificates (or effective affidavits of
loss in lieu thereof) or Book-Entry Shares to the Paying Agent together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may customarily be
required by the Paying Agent, the holder of such Certificates or Book-Entry
Shares shall be entitled to receive in exchange therefor a check in an amount
(after giving effect to any required tax withholdings) equal to the product of
(x) the number of Shares represented by such holder's properly surrendered
Certificates (or effective affidavits of loss in lieu thereof) and Book-Entry
Shares multiplied by (y) the Merger Consideration. No interest will be paid or
accrued on any amount payable upon due surrender of Certificates or Book-Entry
Shares. In the event of a transfer of ownership of Shares that is not registered
in the
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transfer or stock records of the Company, a check for any cash to be paid
upon due surrender of the Certificate formerly representing such Shares may be
paid to such a transferee if such Certificate is presented to the Paying Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer or other Taxes (as hereinafter
defined) have been paid or are not applicable.
(iii) The Surviving Corporation, Parent and the Paying Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable under this Agreement to any holder of Shares such amounts as are
required to be withheld or deducted under the Internal Revenue Code of 1986, as
amended (the "CODE"), or any provision of U.S. state, local or foreign Tax Law
with respect to the making of such payment. To the extent that amounts are so
withheld or deducted and paid over to the applicable Governmental Entity (as
hereinafter defined), such withheld or deducted 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 were made.
(c) CLOSING OF 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 on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or Parent for transfer, they shall be cancelled and
exchanged for a check in the proper amount pursuant to and subject to the
requirements of this Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
(including the proceeds of any investments thereof) that remains undistributed
to the former holders of Shares for six months after the Effective Time shall be
delivered to the Surviving Corporation upon demand, and any former holders of
Shares who have not surrendered their Shares in accordance with this Section 2.2
shall thereafter look only to the Surviving Corporation for payment of their
claim for the Merger Consideration, without any interest thereon, upon due
surrender of their Shares.
(e) NO LIABILITY. Notwithstanding anything herein to the contrary,
none of the Company, Parent, Merger Sub, the Surviving Corporation, the Paying
Agent or any other person shall be liable to any former holder of Shares for any
amount properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate shall not have
been surrendered prior to the date on which the related Merger Consideration
would escheat to or become the property of any Governmental Entity, any such
Merger Consideration shall, to the extent permitted by applicable Law,
immediately prior to such time become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest all
cash included in the Exchange Fund as reasonably directed by Parent; PROVIDED,
HOWEVER, that any investment of such cash shall in all events be limited to
direct short-term obligations of, or short-term obligations fully guaranteed as
to principal and interest by, the U.S. government and that no such investment or
loss thereon shall affect the amounts payable to holders of Certificates or
Book-Entry Shares pursuant to this Article II. Any interest and other income
resulting from such
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investments shall be paid to the Surviving Corporation on the earlier of six
months after the Effective Time or full payment of the Exchange Fund.
(g) LOST CERTIFICATES. In the case of any Certificate that has been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Paying Agent, the posting by such person of an
indemnity agreement or, at the election of Parent or the Paying Agent, a bond in
customary amount as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Certificate a check in the amount of the number of
Shares represented by such lost, stolen or destroyed Certificate multiplied by
the Merger Consideration.
Section 2.3 EFFECT OF THE MERGER ON COMPANY STOCK OPTIONS AND COMPANY
RESTRICTED SHARES.
(a) Except as otherwise agreed in writing by Parent and the applicable
holder thereof, each outstanding option to acquire shares of Company Common
Stock (each, a "COMPANY STOCK OPTION"), whether or not then vested or
exercisable, that is outstanding immediately prior to the Effective Time shall,
as of the Effective Time (i) become fully vested, (ii) unvested Company Stock
Options as of immediately prior to the Effective Time that are subject to a
performance multiplier shall be deemed to have achieved the performance
multiplier at the maximum level and have the exercise price previously
established in 2006 by the Company's Board of Directors (other than for unvested
Company Stock Options granted in 2003, 2004 or 2005, which shall have an
exercise price reflected on the list of Company Stock Options included in
Section 3.2(b) of the Company Disclosure Letter, which exercise price is based
on the specialty chemical index on October 30, 2006)) and (iii) be converted
into the right to receive a payment in cash, payable in U.S. dollars and without
interest, equal to the product of (x) the excess, if any, of (I) the Merger
Consideration over (II) the exercise price per share of Company Common Stock
subject to such Company Stock Option, multiplied by (y) the number of shares of
Company Common Stock for which such Company Stock Option shall not theretofore
have been exercised, whether or not then vested or exercisable. The Surviving
Corporation shall pay the holders of Company Stock Options the cash payments
described in this Section 2.3(a) on or as soon as reasonably practicable after
the Closing Date, but in any event within three (3) Business Days following the
Closing Date.
(b) Except as otherwise agreed in writing by Parent and the applicable
holder thereof, immediately prior to the Effective Time, each award of
restricted Company Common Stock (the "COMPANY RESTRICTED SHARES") shall vest in
full and be converted into the right to receive the Merger Consideration as
provided in Section 2.1(a).
(c) The Surviving Corporation shall be entitled to deduct and withhold
from the amounts otherwise payable pursuant to this Section 2.3 to any holder of
Company Stock Options or Company Restricted Shares such amounts as the Surviving
Corporation is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of U.S. state, local or foreign
tax Law, and the Surviving Corporation shall make any required filings with and
payments to tax authorities relating to any such deduction or withholding. To
the extent that amounts are so deducted and withheld by the Surviving
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Corporation, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Company Stock Options or
Company Restricted Shares in respect of which such deduction and withholding was
made by the Surviving Corporation.
(d) The Compensation Committee of the Board of Directors of the
Company shall make such adjustments and determinations with respect to Company
Stock Options and Company Restricted Shares to implement the foregoing
provisions of this Section 2.3.
Section 2.4 TIMING OF EQUITY ROLLOVER. For the avoidance of doubt, the
parties acknowledge and agree that the contribution of Shares to Parent or one
of its Subsidiaries pursuant to the Rollover Commitments (and any subsequent
contribution of such Shares prior to the Effective Time by Parent to one or more
of its Subsidiaries) shall be deemed to occur immediately prior to the Effective
Time and prior to any other above-described event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Company SEC Documents filed on or after
December 31, 2005 and prior to the date of this Agreement or (ii) as disclosed
in the disclosure letter delivered by the Company to Parent immediately prior to
the execution of this Agreement by reference to the appropriate Section of this
Agreement (the "COMPANY DISCLOSURE LETTER", it being agreed that disclosure of
any item in any section of the Company Disclosure Letter shall also be deemed
disclosure with respect to any other section of this Agreement to which the
relevance of such item is reasonably apparent), the Company represents and
warrants to Parent and Merger Sub as follows:
Section 3.1 QUALIFICATION, ORGANIZATION, SUBSIDIARIES, ETC.
(a) Each of the Company and its Subsidiaries is a legal entity duly
organized, validly existing and in good standing under the Laws of its
respective jurisdiction of organization. Each of the Company and its
Subsidiaries has all requisite corporate, partnership or similar power and
authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted in all material respects.
(b) Each of the Company and its Subsidiaries is qualified or licensed
to do business and is in good standing as a foreign corporation in each
jurisdiction where the ownership, leasing or operation of its assets or
properties or conduct of its business requires such qualification, except where
the failure to be so qualified, licensed or in good standing would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
organizational or governing documents of the Company and each of its
Subsidiaries are in full force and effect. Neither the Company nor any
Subsidiary is in violation of its organizational or governing documents.
(c) As used in this Agreement, any reference to any fact,
circumstance, event, change, effect or occurrence having a "COMPANY MATERIAL
ADVERSE EFFECT" means any fact, circumstance, event, change, effect or
occurrence that, individually or in the aggregate with all other facts,
circumstances, events, changes, effects or occurrences, (1) has or would be
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reasonably likely to have a material adverse effect on the assets, business,
results of operation or financial condition of the Company and its Subsidiaries
taken as a whole, or (2) that would be reasonably likely to prevent or
materially delay or materially impair the ability of the Company to consummate
the Merger or the other transactions contemplated hereby, but, in the case of
the foregoing clause (1), shall not include facts, circumstances, events,
changes, effects or occurrences (i) generally affecting the industries in which
the Company conducts its business, or the economy or the financial or securities
markets, in the United States or elsewhere in the world, including effects on
such industries, economy or markets resulting from any regulatory and political
conditions or developments, or other force majeure events, except to the extent
such changes or developments have a disproportionate impact on the Company and
its Subsidiaries, taken as a whole, relative to other participants in the
industries in which the Company conducts its businesses; (ii) resulting from any
outbreak or escalation of hostilities, declared or undeclared acts of war or
terrorism, or weather or climatic conditions, except to the extent such changes
or developments (A) have a disproportionate impact on the Company and its
Subsidiaries, taken as a whole, relative to other participants in the industries
in which the Company conducts its businesses or (B) directly affect the physical
properties of the Company and its Subsidiaries; (iii) reflecting or resulting
from changes in Law or GAAP (or the interpretation thereof); or (v) resulting
from actions or omissions of the Company or any of its Subsidiaries which Parent
has requested, to which Parent has expressly consented or that are required by
the terms of this Agreement, or arising after the date of this Agreement and
directly resulting from the announcement of the Merger(including the loss or
departure of employees or adverse developments in relationships with customers,
suppliers, distributors or other business partners).
Section 3.2 CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of 75,000,000
shares of Company Common Stock and 2,000,000 shares of preferred stock, without
par value ("COMPANY PREFERRED STOCK"). As of December 1, 2006, (i) 47,398,488
shares of Company Common Stock were issued and outstanding, including 16,595,732
shares of Company Common Stock held in treasury, (ii) 5,818,818 shares of
Company Common Stock were reserved for issuance pursuant to the outstanding
Company Stock Options, and (iii) no shares of Company Preferred Stock were
issued or outstanding. No shares of Company Common Stock are held by any
Subsidiary of the Company. All outstanding shares of Company Common Stock, and
all shares of Company Common Stock reserved for issuance as noted in clause (ii)
of the foregoing sentence, when issued in accordance with the respective terms
thereof, are or will be duly authorized, validly issued, fully paid and
non-assessable and free of pre-emptive rights and issued in compliance with all
applicable securities Laws.
(b) Except as set forth in subsection (a) above, as of the date
hereof, (i) the Company does not have any shares of its capital stock issued or
outstanding other than shares of Company Common Stock that have become
outstanding after December 1, 2006 upon exercise of Company Stock Options
outstanding as of such date and (ii) there are no outstanding subscriptions,
options, warrants, calls, convertible securities or other similar rights,
agreements or commitments relating to the issuance of capital stock or other
equity interests to which the Company or any of its Subsidiaries is a party
obligating the Company or any of its Subsidiaries to (A) issue, transfer or sell
any shares of capital stock or other equity interests of the Company or any of
its Subsidiaries or securities convertible into or exchangeable for such shares
or equity
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interests, (B) grant, extend or enter into any such subscription,
option, warrant, call, convertible securities or other similar right, agreement
or arrangement, (C) redeem or otherwise acquire any such shares of capital stock
or other equity interests or (D) provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any Subsidiary. Set
forth in Section 3.2(b) of the Company Disclosure Letter is a true, correct and
complete list of each of the Company Stock Plans and each Company Stock Option
(such list to include the name of the Company Stock Plan under which such
options were issued, the holders thereof, the number of shares subject thereto,
the exercise prices thereof immediately prior to the date of this Agreement and
without giving effect to the adjustments contemplated by Section 2.3(a) of this
Agreement and the dates of any scheduled time-vesting thereof).
(c) Except for the awards to acquire shares of Company Common Stock
under the Company Stock Plans, neither the Company nor any of its Subsidiaries
has outstanding bonds, debentures, notes or other obligations, the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter.
(d) There are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock or other equity interest
of the Company or any of its Subsidiaries.
(e) No holder of securities in the Company or any of its Subsidiaries
has any right to have such securities or the offering or sale thereof registered
under or pursuant to any securities Laws by the Company or any of its
Subsidiaries.
Section 3.3 SUBSIDIARIES. Section 3.3 of the Company Disclosure Letter
sets forth a complete and correct list of each subsidiary of the Company (each,
a "SUBSIDIARY") . Section 3.3 of the Company Disclosure Letter also sets forth
the jurisdiction of organization of each Subsidiary. All equity interests
(including partnership interests and limited liability company interests) of the
Company's Subsidiaries held by the Company or by any other Subsidiary have been
duly and validly authorized and are validly issued, fully paid and
non-assessable and were not issued in violation of any preemptive or similar
rights, purchase option, call or right of first refusal or similar rights. All
such equity interests owned by the Company or its Subsidiaries are free and
clear of any Liens, other than restrictions imposed by applicable Law. Except
for its interests in its Subsidiaries, the Company does not own directly or
indirectly any capital stock or other equity interests in any corporation,
partnership, joint venture, association or other entity.
Section 3.4 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Company has the requisite corporate power and authority to
enter into this Agreement and, subject to receipt of the Company Stockholder
Approval (as hereinafter defined), to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company, acting upon the unanimous recommendation of
the Special Committee, and, except for (i) the Company Stockholder Approval and
(ii) the filing of the Certificate of Merger with the Secretary of State of the
State of
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Connecticut, no other corporate proceedings on the part of the Company are
necessary to authorize the consummation of the transactions contemplated hereby.
As of the date hereof, each of the Board of Directors of the Company (with 2
directors abstaining) and the Special Committee of the Board of Directors has
unanimously resolved to recommend that the Company's stockholders approve this
Agreement and the transactions contemplated hereby (including the Special
Committee's recommendation, the "RECOMMENDATION"). This Agreement has been duly
and validly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of Parent and Merger Sub,
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at Law) and any
implied covenant of good faith and fair dealing.
(b) Other than in connection with or in compliance with (i) the CBCA,
(ii) the Securities Exchange Act of 1934 (the "EXCHANGE Act"), (iii) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), (iv)
Council Regulation (EC) 139/2004 of the European Community, as amended (the
"ECMR") and any other antitrust, competition or similar laws of any foreign
jurisdiction and (v) the approvals set forth on Section 3.4(b) of the Company
Disclosure Letter (collectively, the "COMPANY APPROVALS"), no authorization,
consent or approval of, or filing with, any United States or foreign
governmental or regulatory agency, commission, court, body, entity or authority
(each, a "GOVERNMENTAL ENTITY") is necessary, under applicable Law, for the
consummation by the Company of the transactions contemplated hereby, except for
such authorizations, consents, approvals or filings that, if not obtained or
made, would not have, individually or in the aggregate, a Company Material
Adverse Effect.
(c) The execution, delivery and performance by the Company of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof by the Company will not, (i) result in
any violation of, or default (with or without notice or lapse of time, or both)
under, require consent under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of any benefit
under any loan, guarantee of indebtedness or credit agreement, note, bond,
mortgage, indenture, lease, agreement, contract, instrument, permit, Company
Permit, concession, franchise, right or license binding upon the Company or any
of its Subsidiaries or result in the creation of any liens, claims, mortgages,
encumbrances, pledges, security interests, equities or charges of any kind
(each, a "LIEN") upon any of the properties or assets of the Company or any of
its Subsidiaries, (ii) conflict with or result in any violation of any provision
of the certificate or articles of incorporation or by-laws or other equivalent
organizational document of the Company or any of its Subsidiaries or (iii)
assuming that the consents and approvals referred to in Section 3.4(b) are duly
obtained, conflict with or violate any applicable Laws or orders applicable to
the Company or any of its Subsidiaries, other than, in the case of clause (i),
as would not have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.5 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company and its Subsidiaries have filed all forms, documents,
statements and reports required to be filed prior to the date hereof by them
with the Securities
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and Exchange Commission (the "SEC") since January 1, 2004 (the forms, documents,
statements and reports filed with the SEC since January 1, 2004 and those filed
with the SEC subsequent to the date of this Agreement, if any, including any
amendments thereto, the "COMPANY SEC DOCUMENTS"). As of their respective dates,
or, if amended, as of the date of the last such amendment prior to the date
hereof, the Company SEC Documents complied, and each of the Company SEC
Documents filed subsequent to the date of this Agreement will comply, in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and the Exchange Act, as the case may be, and
the applicable rules and regulations promulgated thereunder. None of the Company
SEC Documents so filed or that will be filed subsequent to the date of this
Agreement contained or will contain, as the case may be, any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) The financial statements (including all related notes and
schedules) of the Company and its Subsidiaries included in the Company SEC
Documents (i) fairly present in all material respects the financial position of
the Company and its Subsidiaries, as at the respective dates thereof, and the
results of their operations and their cash flows for the respective periods then
ended (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) in conformity with United States generally accepted accounting
principles ("GAAP") (except, in the case of the unaudited statements or foreign
Subsidiaries, as permitted by the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and (ii) have complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto.
Section 3.6 INTERNAL CONTROLS AND PROCEDURES. The Company has
established and maintains disclosure controls and procedures and internal
control over financial reporting (as such terms are defined in paragraphs (e)
and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by
Rule 13a-15 under the Exchange Act. The Company's disclosure controls and
procedures are reasonably designed to ensure that all material information
required to be disclosed by the Company in the reports that it or they file
under the Exchange Act are recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and that all such
material information is accumulated and communicated to the management of the
Company as appropriate to allow timely decisions regarding required disclosure
and to make the certifications required pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
promulgated thereunder (the "SARBANES-OXLEY ACT"). The management of the Company
has completed its assessment of the effectiveness of the Company's internal
control over financial reporting in compliance with the requirements of Section
404 of the Sarbanes-Oxley Act for the year ended December 31, 2005, and such
assessment concluded that such controls were effective. The Company has
disclosed, based on its most recent evaluation, to the Company's outside
auditors and the audit committee of the board of directors of the Company, (A)
all significant deficiencies and material weaknesses in the design or operation
of internal controls over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) which are reasonably likely to adversely affect in any
material respect the Company's ability to record, process, summarize and report
financial data
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and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal controls over
financial reporting.
Section 3.7 NO UNDISCLOSED LIABILITIES. Except (i) as reflected or
reserved against in the Company's consolidated balance sheets (or the notes
thereto) included in the Company SEC Documents filed prior to the date hereof,
(ii) for transactions contemplated by this Agreement or the financing of such
transactions and (iii) for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since December 31, 2005,
neither the Company nor any Subsidiary of the Company has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
whether known or unknown and whether due or to become due, that would,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.8 COMPLIANCE WITH LAW; PERMITS.
(a) The Company and each of its Subsidiaries is, and since the later
of December 31, 2004 and its respective date of formation or organization has
been, in compliance with and is not in default under or in violation of any
applicable federal, state, local or foreign or provincial law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree or agency
requirement of or undertaking to or agreement with any Governmental Entity,
including common law, (collectively, "LAWS" and each, a "LAW"), except where
such non-compliance, default or violation would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) The Company and its Subsidiaries are in possession of all
franchises, tariffs, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders of any
Governmental Entity necessary for the Company and its Subsidiaries to own, lease
and operate their properties and assets or to carry on their businesses as they
are now being conducted (the "COMPANY PERMITS"), except where the failure to
have any of the Company Permits would not have, individually or in the
aggregate, a Company Material Adverse Effect. All Company Permits are in full
force and effect, except where the failure to be in full force and effect would
not have, individually or in the aggregate, a Company Material Adverse Effect.
No suspension or cancellation of any of the Company Permits is pending or, to
the Knowledge of the Company, threatened, except where such suspension or
cancellation would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company and its Subsidiaries are not, and since
December 31, 2004 have not been, in violation or breach of, or default under,
any Company Permit, except where such violation, breach or default would not,
individually or in the aggregate, have a Company Material Adverse Effect. As of
the date of this Agreement, to the Knowledge of the Company, no event or
condition has occurred or exists which would result in a violation of, breach,
default or loss of a benefit under, or acceleration of an obligation of the
Company or any of its Subsidiaries under, any Company Permit (in each case, with
or without notice or lapse of time or both), except for violations, breaches,
defaults, losses or accelerations that would not, individually or in the
aggregate, have a Company Material Adverse Effect.
-13-
Section 3.9 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as disclosed in the Company SEC Documents filed prior to
the date hereof and except as would not, individually or in the aggregate, have
a Company Material Adverse Effect, (i) the Company and each of its Subsidiaries
have conducted their respective businesses in compliance with all applicable
Environmental Laws (as hereinafter defined), (ii) there has been no Release of
any Hazardous Substance by the Company or any of its Subsidiaries in any manner
that could reasonably be expected to give rise to any remedial obligation or
corrective action requirement under applicable Environmental Laws, (iii) neither
the Company nor any of its Subsidiaries has received in writing any notices,
demand letters or requests for information from any federal, state, local or
foreign or provincial Governmental Entity or any other person asserting that the
Company or any of its Subsidiaries is in violation of, or liable under, any
Environmental Law except for any notices, demand letters or requests for
information that have been resolved, (iv) no Hazardous Substance has been
Released or transported in violation of any applicable Environmental Law, or in
a manner giving rise to any liability under Environmental Law, from any
properties while owned or operated by the Company or any of its Subsidiaries or
as a result of any operations or activities of the Company or any of its
Subsidiaries and (v) neither the Company, its Subsidiaries, to the Company's
Knowledge, its Company Joint Ventures nor any of their respective current or
former properties are, or, to the Knowledge of the Company, threatened to
become, subject to any liabilities relating to any suit, settlement, court
order, administrative order, regulatory requirement, judgment or written claim
asserted or arising under any Environmental Law or any agreement relating to
environmental liabilities.
(b) As used herein, "ENVIRONMENTAL LAW" means any Law relating to (i)
the protection, preservation or restoration of the environment (including air,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or (ii) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as in effect at the date hereof.
(c) As used herein, "HAZARDOUS SUBSTANCE" means any substance listed,
defined, designated, classified or regulated as hazardous, toxic, radioactive or
dangerous under any Environmental Law. Hazardous Substance includes any
substance to which exposure is regulated by any Governmental Entity or any
Environmental Law as a toxic waste, pollutant, contaminant, hazardous substance
or material, toxic substance, hazardous waste, special waste or petroleum or any
derivative or byproduct thereof, radon, radioactive material, asbestos or
asbestos containing material, urea formaldehyde, foam insulation or
polychlorinated biphenyls. As used herein, "RELEASE" when used as a verb, means
release, spill, leak, emit, deposit, discharge, leach, migrate or dispose of
Hazardous Substances into the environment or in any building or structure, or
any location that poses a threat thereof and, when used as a noun, has a
corresponding meaning.
Section 3.10 EMPLOYEE BENEFIT PLANS.
(a) Section 3.10(a)(i) of the Company Disclosure Letter lists all
Company Benefit Plans with respect to which the Company or any of its
Subsidiaries has or could
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reasonably be expected to have any material liabilities. "COMPANY BENEFIT PLANS"
means all compensation or employee benefit plans, programs, policies, agreements
or other arrangements, whether or not "employee benefit plans" (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not subject to ERISA), providing cash- or
equity-based incentives, health, medical, dental, disability, accident or life
insurance benefits or vacation, severance, retirement, pension or savings
benefits, that are sponsored, maintained or contributed to by the Company or any
of its Subsidiaries for the benefit of employees, directors or consultants
employed or formerly employed by, or providing services to, the Company or its
Subsidiaries in the United States and all employment agreements providing
compensation, vacation, severance or other benefits to any employee or
consultant employed or formerly employed by, or providing services to, the
Company or its Subsidiaries in the United States. For purposes of this
Agreement, the term "COMPANY FOREIGN PLAN" shall refer to each material plan,
program or contract that is subject to or governed by the laws of any
jurisdiction other than the United States, and which would have been treated as
a Company Benefit Plan had it been a United States plan, program or contract.
Section 3.10(a)(ii) of the Company Disclosure Letter lists all Company Foreign
Plans with respect to which the Company or any of its Subsidiaries has or could
reasonably be expected to have any material liabilities. The Company shall use
its reasonable best efforts to make available to Parent within thirty (30) days
following the date of this Agreement copies of the Company Foreign Plans. Except
as would not, individually or in the aggregate, have a Material Adverse Effect,
there does not now exist, and there are no existing circumstances that would
reasonably be expected to result in, any Controlled Group Liability that would
be a liability of the Company or any of its Subsidiaries following the Closing.
"CONTROLLED GROUP LIABILITY" means any and all liabilities (i) under Title IV of
ERISA (as defined in Section 4.15(a)(ii)), (ii) under Section 302 of ERISA,
(iii) under Sections 412 and 4971 of the Code, (iv) resulting from a violation
of the continuation coverage requirements of Section 601 ET SEQ. of ERISA and
Section 4980B of the Code or the group health plan requirements of Sections 601
ET SEQ. of the Code and Section 601 ET SEQ. of ERISA and (v) under corresponding
or similar provisions of foreign laws or regulations, other than liabilities
that arise solely out of, or relate solely to, the Company Benefit Plans or the
Company Foreign Plans.
(b) The Company has made available to Parent correct and complete
copies of (i) all plan documents related to the Company Benefit Plans, (ii) all
trust agreements or other funding media related to the Company Benefit Plans,
(iii) the three most recent annual reports, including audited financial
statements, for all Company Benefit Plans required to file such reports, (iv) to
the extent applicable, the most recent actuarial valuation performed with
respect to each Company Benefit Plan and (v) if any Company Benefit Plan is
intended to be "qualified" under Section 401 of the Code, the most recent
determination letter issued by the Internal Revenue Service with respect to that
Plan.
(c) Except for such claims which would not have, individually or in
the aggregate, a Company Material Adverse Effect, no action, dispute, suit,
claim, arbitration, or legal, administrative or other proceeding or governmental
action (other than claims for benefits in the ordinary course) is pending or, to
the Knowledge of the Company, threatened with respect to any Company Benefit
Plan (other than a "multiemployer plan" (within the meaning of Section
4001(a)(3) of ERISA) (a "MULTIEMPLOYER PLAN")) by any current or former
employee, officer or director of the Company or any of its Subsidiaries.
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(d) Each Company Benefit Plan (other than a Multiemployer Plan) has
been maintained and administered in compliance with its terms and with
applicable Law, including ERISA and the Code to the extent applicable thereto,
except for such non-compliance which would not have, individually or in the
aggregate, a Company Material Adverse Effect. Any Company Benefit Plan (other
than a Multiemployer Plan) intended to be qualified under Section 401(a) or
401(k) of the Code has received a favorable determination letter from the United
States Internal Revenue Service that has not been revoked and to the Knowledge
of the Company, no fact or event has occurred since the date of such
determination letter or letters from the Internal Revenue Service that would
reasonably be expected to affect adversely the qualified status of any such
Company Benefit Plan. Neither the Company nor any of its Subsidiaries maintains
or contributes to any plan or arrangement which provides medical benefits to any
employee or former employee following his retirement, except as required by
applicable Law or as provided in individual agreements upon a severance event.
(e) With respect to each Company Benefit Plan (other than a
Multiemployer Plan) that is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code, (i) there does not exist any accumulated
funding deficiency within the meaning of Section 412 of the Code or Section 302
of ERISA, (ii) all premiums to the Pension Benefit Guaranty Corporation (the
"PBGC") have been timely paid in full, (iii) the PBGC has not instituted
proceedings to terminate any such Company Benefit Plan, (iv) there has been no
"reportable event" as defined in Section 4043 of ERISA for which the 30-day
notice requirement has not been waived, (v) except as disclosed in Section
3.10(e) of the Company Disclosure Letter the fair market value of the assets of
each such Company Benefit Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such Company
Benefit Plan's actuary with respect to such Company Benefit Plan, are at least
equal to the actuarial present value of all benefits accrued under such Company
Benefit Plan, and (vi) other than the payment of premiums described above in
this Section 3.10(e) no liability to the PBGC with respect to any such Company
Benefit Plan has been incurred or is reasonably likely to be incurred by reason
of the transactions contemplated by this Agreement.
(f) All contributions required to be made to any Company Benefit Plan
by applicable Law or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any
Company Benefit Plan, for any period through the date hereof have been timely
made or paid in full or, to the extent not required to be made or paid on or
before the date hereof, have been fully reflected on the financial statements
included in the Company SEC Documents.
(g) Neither the Company nor its Subsidiaries has, at any time for
which any relevant statute of limitations remains open, contributed to or been
required to contribute to any Multiemployer Plan other than as listed in Section
3.10(g) of the Company Disclosure Letter. Neither the Company nor any Subsidiary
has incurred any material liability to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan (as those terms are
defined in part I of Subtitle E of Title IV of ERISA) nor has the Company or any
Subsidiary received any written notice that any such Multiemployer Plan is in
reorganization, has been terminated, is insolvent or may reasonably be expected
to be in reorganization, terminated or insolvent.
-16-
(h) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee, consultant or officer of the Company or
any of its Subsidiaries to severance pay, retention bonuses, non-competition
payments, unemployment compensation or any other payment, except as expressly
provided in this Agreement or as required by applicable Law, (ii) accelerate the
time of payment or vesting, or increase the amount of compensation due any such
employee, consultant or officer, except as expressly provided in this Agreement,
(iii) result in any forgiveness of indebtedness or obligation to fund benefits
with respect to any such employee, director or officer, (iv) result in any
payment that would reasonably be expected to constitute an "excess parachute
payment" as defined in Section 280G (b)(i) of the Code or (v) entitle any
current or former officer or employee of the Company to any gross up payment
with respect to any excise tax imposed under Section 4999 of the Code.
(i) All Company Foreign Plans (i) have been maintained in all material
respects in accordance with all applicable requirements, (ii) if they are
intended to qualify for special Tax treatment meet all material requirements for
such treatment, and (iii) if they are required to be funded and/or book-reserved
are funded and/or book-reserved, as appropriate, based upon reasonable actuarial
assumptions and in accordance with applicable Law.
Section 3.11 INTERESTED PARTY TRANSACTIONS. Except for employment
Contracts filed or incorporated by reference as an exhibit to a Company SEC
Document filed prior to the date hereof, this Agreement and the Limited
Guarantees, or Company Benefit Plans, Section 3.11 of the Company Disclosure
Letter sets forth a correct and complete list of the contracts or arrangements
that are in existence as of the date of this Agreement under which the Company
has any existing or future liabilities that would be required to be reported by
the Company pursuant to Item 404 of Regulation S-K promulgated by the SEC
between the Company or any of its Subsidiaries, on the one hand, and, on the
other hand, any (A) present officer or director of either the Company or any of
its Subsidiaries or any person that has served as such an officer or director
within the past two years or any of such officer's or director's immediate
family members, (B) record or beneficial owner of more than 5% of the Shares as
of the date hereof, or (C) to the Knowledge of the Company, any Affiliate of any
such officer, director or owner (other than the Company or any of its
Subsidiaries) (each, an "AFFILIATE TRANSACTION"). The Company has provided to
Parent correct and complete copies of each Contract or other relevant
documentation (including any amendments or modifications thereto) available as
of the date hereof providing for each Affiliate Transaction.
Section 3.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
2005, except as otherwise required or contemplated by this Agreement, (a) the
business of the Company and its Subsidiaries has been conducted, in all material
respects, in the ordinary course of business consistent with past practice, (b)
prior to the date hereof, no event has occurred and no action has been taken
that would be prohibited by the terms of Section 5.1(b) hereof if such section
had been in effect as of and at all times since December 31, 2005 except for
such events or actions that would not have, individually or in the aggregate, a
Company Material Adverse Effect and (c) there have not been any facts,
circumstances, events, changes, effects or occurrences that have had or would
have, individually or in the aggregate, a Company Material Adverse Effect.
-17-
Section 3.13 INVESTIGATIONS; LITIGATION. There are no (i)
investigations or proceedings pending (or, to the Knowledge of the Company,
threatened) by any Governmental Entity with respect to the Company or any of its
Subsidiaries or (ii) actions, suits or proceedings pending (or, to the Knowledge
of the Company, threatened) against or affecting the Company or any of its
Subsidiaries, or any of their respective properties, at Law or in equity before,
and there are no orders, judgments or decrees of, any Governmental Entity
against the Company or any of its Subsidiaries, in each case of clause (i) or
(ii), which have had or would have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.14 PROXY STATEMENT; OTHER INFORMATION. The information
included or incorporated by reference to the Proxy Statement (as hereinafter
defined) will not at the time of the mailing of the Proxy Statement to the
stockholders of the Company, at the time of the Company Meeting, and at the time
of any amendments thereof or supplements thereto, and the information supplied
or to be supplied by the Company for inclusion or incorporation by reference in
the Schedule 13E-3 (as hereinafter defined) to be filed with the SEC
concurrently with the filing of the Proxy Statement, will not, at the time of
its filing with the SEC, and at the time of any amendments thereof or
supplements thereto, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED that no representation is made by the Company
with respect to information supplied by Parent or any Affiliate of Parent. The
Proxy Statement and the Schedule 13E-3 will comply as to form in all material
respects with the Exchange Act, except that no representation is made by the
Company with respect to information supplied by Parent or any Affiliate of
Parent. The letter to stockholders, notice of meeting, proxy statement and forms
of proxy to be distributed to stockholders in connection with the Merger to be
filed with the SEC in connection with seeking the adoption and approval of this
Agreement are collectively referred to herein as the "PROXY STATEMENT." The Rule
13E-3 Transaction Statement on Schedule 13E-3 to be filed with the SEC in
connection with seeking the adoption and approval of this Agreement is referred
to herein as the "SCHEDULE 13E-3."
Section 3.15 TAX MATTERS.
(a) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, (i) the Company and each of its Subsidiaries
have prepared and timely filed (taking into account any extension of time within
which to file) all Tax Returns required to be filed by any of them and all such
Tax Returns are complete and accurate, (ii) the Company and each of its
Subsidiaries have timely paid all Taxes that are required to be paid by any of
them (whether or not shown on any Tax Return), except with respect to matters
contested in good faith and for which adequate reserves have been established on
the financial statements of the Company and its Subsidiaries in accordance with
GAAP, (iii) the U.S. consolidated federal income Tax Returns of the Company
through the Tax year ending 2002 have been examined or are currently being
examined by the Internal Revenue Service (or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired), (iv) all assessments for Taxes due with respect to completed and
settled examinations or any concluded litigation have been fully paid, (v) there
are no audits, examinations, investigations or other proceedings pending or
threatened in writing in respect of Taxes or Tax matters of the Company or any
of its Subsidiaries, (vi) there are no Liens for Taxes on any of the assets of
the Company
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or any of its Subsidiaries other than statutory Liens for Taxes not yet due and
payable or Liens for Taxes that are being contested in good faith and for which
adequate reserves have been established on the financial statements of the
Company and its Subsidiaries in accordance with GAAP, (vii) none of the Company
or any of its Subsidiaries has been a "controlled corporation" or a
"distributing corporation" in any distribution that was purported or intended to
be governed by Section 355 of the Code (or any similar provision of state, local
or foreign Law) (A) occurring during the two-year period ending on the date
hereof, or (B) that otherwise constitutes part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) that includes
the Merger, (viii) the Company and each of its Subsidiaries has timely withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor,
shareholder or other third party and is in compliance with all applicable rules
and regulations regarding the solicitation, collection and maintenance of any
forms, certifications and other information required in connection therewith,
(ix) neither the Company nor any of its Subsidiaries is a party to any agreement
or arrangement relating to the apportionment, sharing, assignment or allocation
of any Tax or Tax asset (other than an agreement or arrangement solely among
members of a group the common parent of which is the Company) or has any
liability for Taxes of any Person (other than the Company or any of its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any predecessor or
successor thereof or any analogous or similar provision of Law), by contract,
agreement or otherwise, (x) no waivers or extensions of any statute of
limitations have been granted or requested with respect to any Taxes of the
Company or any of its Subsidiaries, and (xi) no Taxing authority with respect to
which the Company and its Subsidiaries do not file Tax Returns has delivered
written notice to the Company or any of its Subsidiaries that the they are or
may be subject to Taxes by that Taxing authority.
(b) As used in this Agreement, (i) "TAX" or "TAXES" means (A) any and
all federal, state, local or foreign or provincial taxes, imposts, levies or
other assessments, including all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, including any and
all interest, penalties, fines, additions to tax or additional amounts imposed
by any Governmental Entity with respect thereto, and (B) any liability in
respect of any items described in clause (A) payable by reason of contract,
assumption, transferee liability, operation of Law, Treasury Regulation Section
1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar
provision of Law) or otherwise, and (ii) "TAX RETURN" means any return, report
or similar filing (including any attached schedules, supplements and additional
or supporting material) filed or required to be filed with respect to Taxes,
including any information return, claim for refund, amended return or
declaration of estimated Taxes (and including any amendments with respect
thereto).
Section 3.16 LABOR MATTERS. Except for such matters which would not
have, individually or in the aggregate, a Company Material Adverse Effect,
neither the Company nor any of its Subsidiaries has received written notice
during the past two years of the intent of any Governmental Entity responsible
for the enforcement of labor, employment, occupational health and safety or
workplace safety and insurance/workers compensation Laws to conduct an
investigation of the Company or any of its Subsidiaries and, to the Knowledge of
the Company,
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no such investigation is in progress. Except as set forth in Section 3.16 of the
Company Disclosure Letter, none of the Company or any of its Subsidiaries is a
party to, or is bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. Except for
such matters which would not have, individually or in the aggregate, a Company
Material Adverse Effect, (i) there are no (and have not been during the two year
period preceding the date hereof) strikes or lockouts with respect to any
employees of the Company or any of its Subsidiaries, (ii) to the Knowledge of
the Company, there is no (and has not been during the two year period preceding
the date hereof) union organizing effort pending or threatened against the
Company or any of its Subsidiaries, (iii) there is no (and has not been during
the two year period preceding the date hereof) unfair labor practice, labor
dispute (other than routine individual grievances) or labor arbitration
proceeding pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries and (iv) there is no (and has not been during
the two year period preceding the date hereof) slowdown, or work stoppage in
effect or, to the Knowledge of the Company, threatened with respect to
employees. Except for such non-compliance which would not have, individually or
in the aggregate, a Company Material Adverse Effect, the Company and each of its
Subsidiaries is in compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment, wages and hours and
occupational safety and health (including, without limitation, classifications
of service providers as employees and/or independent contractors).
Section 3.17 INTELLECTUAL PROPERTY. Except as would not have,
individually or in the aggregate, a Company Material Adverse Effect, either the
Company or a Subsidiary of the Company owns, or is licensed or otherwise
possesses adequate rights to use, all trademarks, trade names, service marks,
service names, logos, assumed names, copyrights (including copyrights in
computer software), patents, inventions, trade secrets, proprietary processes,
methodologies and know-how, and any registrations and applications for
registration of any of the foregoing used in their respective businesses as
currently conducted (collectively, the "INTELLECTUAL PROPERTY"). Except as would
not have, individually or in the aggregate, a Company Material Adverse Effect,
(i) there are no pending or, to the Knowledge of the Company, threatened claims
by any person alleging that the conduct of the business of the Company or any of
its Subsidiaries infringes, misappropriates or dilutes the intellectual property
rights of any third party, (ii) to the Knowledge of the Company, the conduct of
the business of the Company and its Subsidiaries does not infringe any
intellectual property rights of any person, (iii) neither the Company nor any of
its Subsidiaries has made any claim of a violation or infringement by others of
its rights to or in connection with the Intellectual Property of the Company or
any of its Subsidiaries and (iv) to the Knowledge of the Company, no person is
infringing any Intellectual Property of the Company or any of its Subsidiaries.
Except as would not have, individually or in the aggregate, a Company Material
Adverse Effect, all trademark registrations and applications for trademark
registration, patents and patent applications, copyright registrations and
applications for copyright registration held in the name of the Company or any
of its Subsidiaries are subsisting and in good standing, and, to the Knowledge
of the Company, with respect to issued patents, trademark and copyright
registrations held in the name of the Company or any of its Subsidiaries, valid
and enforceable.
Section 3.18 PROPERTY. Section 3.18 of the Company Disclosure Letter
contains a complete and accurate listing of all material real property owned or
leased by the Company and
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its Subsidiaries. Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, the Company or a Subsidiary of the Company owns
and has good and indefeasible title to all of its owned real property and good
title to all its personal property and has valid leasehold interests in all of
its leased properties, sufficient to conduct their respective businesses as
currently conducted, free and clear of all Liens (except in all cases for Liens
permissible under all applicable loan agreements and indentures and for title
exceptions, defects, encumbrances, liens, charges, restrictions, restrictive
covenants and other matters, whether or not of record, which in the aggregate do
not materially affect the continued use of the property for the purposes for
which the property is currently being used), assuming the timely discharge of
all obligations owing under or related to the owned real property, the personal
property and the leased property. Except as would not have, individually or in
the aggregate, a Company Material Adverse Effect, all leases under which the
Company or any of its Subsidiaries lease any real or personal property are valid
and effective against the Company or any of its Subsidiaries and, to the
Company's Knowledge, the counterparties thereto, in accordance with their
respective terms, and there is not, under any of such leases, any existing
default by the Company or any of its Subsidiaries or, to the Company's
Knowledge, the counterparties thereto, or, to the Company's Knowledge, event
which, with notice or lapse of time or both, would become a default by the
Company or any of its Subsidiaries or, to the Company's Knowledge, the
counterparties thereto.
Section 3.19 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company and the Special Committee have received the opinion of Merrill
Lynch, Pierce, Fenner & Smith Incorporated, dated as of the date hereof, to the
effect that, as of the date hereof, the Merger Consideration is fair to the
holders of the Company Common Stock (other than those holders that are parties
to a Rollover Commitment, Parent and Merger Sub) from a financial point of view.
The Company has provided to Parent a correct and complete copy of such opinion
or, if such opinion has not been delivered to the Special Committee or the
Company in written form as of the execution of this Agreement, then the Special
Committee or the Company shall make a correct and complete copy of any such
opinion received by it available to Parent or any of its Affiliates promptly
following its delivery to the Special Committee or the Company in written form.
Section 3.20 REQUIRED VOTE OF THE COMPANY STOCKHOLDERS. The only vote
of holders of securities of the Company which is required to approve this
Agreement, the Merger and the other transactions contemplated hereby (the
"COMPANY STOCKHOLDER APPROVAL") is the affirmative vote of the holders of
outstanding shares of Company Common Stock, voting together as a single class,
representing at least a majority of all the votes then entitled to vote at a
meeting of stockholders.
Section 3.21 MATERIAL CONTRACTS.
(a) Except for this Agreement, the Company Benefit Plans or as filed
with the SEC prior to the date hereof, neither the Company nor any of its
Subsidiaries is a party to or bound by, as of the date hereof, any Contract
(whether written or oral) (i) which is a "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) to the Company; (ii)
which constitutes a contract or commitment relating to indebtedness for borrowed
money or the deferred purchase price of property (in either case, whether
incurred, assumed, guaranteed or secured by any asset) in excess of $5,000,000;
(iii) which contains any provision
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that prior to or following the Effective Time would by its terms restrict or
alter the conduct of business of, or purport to restrict or alter the conduct of
business of, the Company, any of its Subsidiaries, Parent or, to the Company's
Knowledge, any Affiliate of the Parent; and (iv) which by its terms calls for
aggregate payments by the Company or any of its Subsidiaries of more than
$5,000,000 over the remaining term of such Contract, except for any such
Contract that may be canceled, without any material penalty or other liability
to the Company or any of its Subsidiaries, upon notice of 90 days or less (all
contracts of the type described in this Section 3.21(a), whether or not set
forth in the Company Disclosure Letter or the Company SEC Documents, being
referred to herein as "COMPANY MATERIAL CONTRACTS"). Neither the Company nor any
of its Subsidiaries is a party to any Contract (other than any Contracts to
which Parent or any Affiliate of Parent is a party) that purports to be binding
on, or imputes any obligations on, Parent or, to the Company's Knowledge, any
Affiliate of Parent other than (i) the Company or its Subsidiaries or (ii) any
employee, officer or director of the Company or any of its Subsidiaries (in such
capacity).
(b) (i) Each Company Material Contract is valid and binding on the
Company and any of its Subsidiaries to the extent such Subsidiary is a party
thereto, as applicable, and in full force and effect, except where the failure
to be valid, binding and in full force and effect, either individually or in the
aggregate, would not have a Company Material Adverse Effect, (ii) the Company
and each of its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each Company Material
Contract, except where such noncompliance, either individually or in the
aggregate, would not have a Company Material Adverse Effect, and (iii) neither
the Company nor any of its Subsidiaries has received written notice of, or
otherwise has Knowledge of, the existence of any event or condition which
constitutes, or, after notice or lapse of time or both, will constitute, a
material default on the part of the Company or any of its Subsidiaries under any
such Company Material Contract, except where such default, either individually
or in the aggregate, would not have a Company Material Adverse Effect.
Section 3.22 FINDERS OR BROKERS. Except for Merrill Lynch, Pierce,
Fenner & Smith Incorporated, neither the Company nor any of its Subsidiaries has
engaged any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement who might be entitled to any fee or
any commission in connection with or upon consummation of the Merger or the
other transactions contemplated hereby. The Company has provided to Parent a
correct and complete copy of all agreements between the Company and Merrill
Lynch, Pierce, Fenner & Smith Incorporated under which Merrill Lynch, Pierce,
Fenner & Smith Incorporated would be entitled to any payment relating to the
transactions contemplated by this Agreement.
Section 3.23 STATE TAKEOVER STATUTES; CHARTER PROVISIONS. The Board of
Directors of the Company has approved this Agreement, the Merger and the other
transactions contemplated hereby as required to render inapplicable to such
agreements and transactions Article Seventh of the Company's Restated
Certificate of Incorporation and Sections 33-840 ET. SEQ. of the CBCA and, to
the Knowledge of the Company, any similar anti-takeover statute, rule or
regulation.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the disclosure letter delivered by Parent to
the Company immediately prior to the execution of this Agreement (the "PARENT
DISCLOSURE LETTER"), Parent and Merger Sub jointly and severally represent and
warrant to the Company as follows:
Section 4.1 QUALIFICATION; ORGANIZATION.
(a) Each of Parent and Merger Sub is a corporation or limited
liability company duly organized, validly existing and in good standing under
the Laws of its respective jurisdiction of organization. Each of Parent and
Merger Sub has all requisite corporate or limited liability company power and
authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted, except where the failure to have such power
or authority would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
(b) Each of Parent and Merger Sub is qualified to do business and is
in good standing as a foreign corporation or limited liability company in each
jurisdiction where the ownership, leasing or operation of its assets or
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing would not, individually or in
the aggregate, prevent or materially delay or materially impair the ability of
Parent or Merger Sub to consummate the Merger and the other transactions
contemplated hereby (a "PARENT MATERIAL ADVERSE EFFECT"). The organizational or
governing documents of the Parent and Merger Sub, as previously provided to the
Company, are in full force and effect. Neither Parent nor Merger Sub is in
violation of its organizational or governing documents.
Section 4.2 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) Each of Parent and Merger Sub has all corporate or limited
liability company requisite power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Managers of Parent and the
Board of Directors of Merger Sub and no other corporate or limited liability
company proceedings on the part of Parent or Merger Sub are necessary to
authorize the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming this Agreement constitutes the valid and binding agreement of
the Company, this Agreement constitutes the valid and binding agreement of
Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at Law) and any
implied covenant of good faith and fair dealing.
(b) Other than in connection with or in compliance with (i) the
provisions of the CBCA, (ii) the Exchange Act, (iii) the HSR Act, (iv) the ECMR
and any other antitrust,
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competition or similar laws of any foreign jurisdiction and (v) the approvals
set forth on Section 4.2(b) of the Parent Disclosure Letter (collectively, the
"PARENT APPROVALS"), no authorization, consent or approval of, or filing with,
any Governmental Entity is necessary for the consummation by Parent or Merger
Sub of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals or filings, that, if not obtained or made,
would not have, individually or in the aggregate, a Parent Material Adverse
Effect.
(c) The execution and delivery by Parent and Merger Sub of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not (i) result in any violation
of, or default (with or without notice or lapse of time, or both) under, require
consent under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of any benefit under any loan,
guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture,
lease, agreement, contract, instrument, permit, concession, franchise, right or
license binding upon Parent or any of its Subsidiaries or result in the creation
of any Lien upon any of the properties or assets of Parent or any of its
Subsidiaries, (ii) conflict with or result in any violation of any provision of
the certificate of incorporation or by-laws or other equivalent organizational
document, in each case as amended, of Parent or any of its Subsidiaries or (iii)
conflict with or violate any applicable Laws, other than, in the case of clauses
(i) and (iii), any such violation, conflict, default, termination, cancellation,
acceleration, right, loss or Lien that would not have, individually or in the
aggregate, a Parent Material Adverse Effect.
Section 4.3 PROXY STATEMENT; OTHER INFORMATION. None of the
information supplied or to be supplied by Parent or Merger Sub in writing for
inclusion or incorporation by reference in the Proxy Statement will at the time
of the mailing of the Proxy Statement to the stockholders of the Company, at the
time of the Company Meeting, and at the time of any amendments thereof or
supplements thereto, and none of the information supplied or to be supplied by
Parent or Merger Sub and contained in the Schedule 13E-3 to be filed with the
SEC concurrently with the filing of the Proxy Statement, will, at the time of
its filing with the SEC, and at the time of any amendments thereof or
supplements thereto, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 4.4 FINANCING. True, accurate and complete copies of the
following documents have been delivered to the Company prior to the date hereof:
(i) executed equity commitment letters to provide equity financing to Parent
and/or Merger Sub, (ii) the Rollover Commitments, (iii) executed debt commitment
letters and related term sheets (the "DEBT COMMITMENT LETTERS" and together with
the equity commitment letters described in clause (i), the "FINANCING
COMMITMENTS") pursuant to which, and subject to the terms and conditions
thereof, certain lenders have committed to provide Parent or the Surviving
Corporation with loans in the amounts described therein, the proceeds of which
may be used to consummate the Merger and the other transactions contemplated
hereby (the "DEBT FINANCING" and, together with the equity financing referred to
in clause (i) and the Rollover Commitments, the "FINANCING"). As of the date
hereof, each of the Financing Commitments, in the form so delivered, is a legal,
valid and binding obligation of Parent or Merger Sub and, to the Parent's
Knowledge, of the other parties thereto. As of the date hereof, the Financing
Commitments are in full force and effect and have
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not been withdrawn or terminated (and no party thereto has indicated an intent
to so withdraw or terminate) or otherwise amended or modified in any respect and
neither Parent nor Merger Sub is in breach of any of the terms or conditions set
forth therein and no event has occurred which, with or without notice, lapse of
time or both, could reasonably be expected to constitute a material breach or
failure to satisfy a condition precedent set forth therein or a default
thereunder. As of the date hereof, and assuming the satisfaction of the
conditions set forth in Section 6.3(a) and (b), neither Parent nor Merger Sub
has any reason to believe that it will be unable to satisfy on a timely basis
any term or condition contemplated to be satisfied by it contained in the
Financing Commitments. Giving effect to the Rollover Commitments together with
cash on hand at the Company, the proceeds from the Financing constitute all of
the financing required for the consummation of the Merger and the other
transactions contemplated hereby, and are sufficient for the satisfaction of all
of Parent's and Merger Sub's obligations under this Agreement, including the
payment of the Merger Consideration and the consideration in respect of the
Company Stock Options and the Company Restricted Shares under Section 2.3.
Parent or Merger Sub has fully paid any and all commitment fees or other fees on
the dates and to the extent required by the Financing Commitments. The Financing
Commitments contain all of the conditions precedent to the obligations of the
parties thereunder to make the Financing available to Parent on the terms
therein. Notwithstanding anything in this Agreement to the contrary, the Debt
Commitment Letters may be superseded at the option of Parent or Merger Sub after
the date of this Agreement but prior to the Effective Time by the New Financing
Commitments in accordance with Section 5.10. In such event, the term "Financing
Commitment" as used herein shall be deemed to include the New Financing
Commitments to the extent then in effect.
Section 4.5 OWNERSHIP AND OPERATIONS OF MERGER SUB. As of the date of
this Agreement, the authorized capital stock of Merger Sub consists of 1000
shares of common stock, without par value, all of which are validly issued and
outstanding. All of the issued and outstanding capital stock of Merger Sub is,
and at the Effective Time will be, owned by Parent or a direct or indirect
wholly owned Subsidiary of Parent. Merger Sub has not conducted any business
other than incident to its formation and pursuant to this Agreement, the Merger
and the other transactions contemplated hereby and the financing of such
transactions.
Section 4.6 FINDERS OR BROKERS. Except for Credit Suisse Securities
(USA) LLC, neither Parent nor any of its Subsidiaries has engaged any investment
banker, broker or finder in connection with the transactions contemplated by
this Agreement who might be entitled to any fee or any commission in connection
with or upon consummation of the Merger or the other transactions contemplated
hereby.
Section 4.7 OWNERSHIP OF SHARES. Neither Parent nor Merger Sub owns
any Shares, beneficially, of record or otherwise, as of the date hereof or at
any time prior to the time that is immediately prior to the Effective Time;
PROVIDED that immediately prior to the Effective Time, Parent or Merger Sub will
only own those Shares subject to the Rollover Commitments as of the date hereof.
Section 4.8 CERTAIN ARRANGEMENTS. Other than the Voting Agreement and
the Rollover Commitments entered into on the date of this Agreement, there are
no Contracts between Parent, Merger Sub or the Guarantors, on the one hand, and
any member of the Company's management or directors, on the other hand, as of
the date hereof that relate in any
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way to the Company or the transactions contemplated by this Agreement. Parent
has provided the Special Committee with true, correct and complete copies of the
Voting Agreement and the Rollover Commitments entered into on the date of this
Agreement. Prior to the Board of Directors of the Company approving this
Agreement, the Voting Agreement, the Rollover Commitments entered into on the
date of this Agreement, the Merger and the other transactions contemplated
thereby for purposes of Section 33-840 ET. SEQ. of the CBCA, neither Parent nor
Merger Sub, alone or together with any other person, was at any time, or became,
an "Interested shareholder" thereunder or has taken any action that would cause
Section 33-840 ET SEQ. of the CBCA to be applicable to this Agreement, the
Merger, or any transactions contemplated by this Agreement.
Section 4.9 INVESTIGATIONS; LITIGATION. There are no suits, claims,
actions, proceedings, arbitrations, mediations or investigations pending or, to
the Knowledge of Parent, threatened against Parent or any of its Subsidiaries,
other than any such suit, claim, action, proceeding or investigation that would
not have, individually or in the aggregate, a Parent Material Adverse Effect. As
of the date hereof, neither Parent nor any of its Subsidiaries nor any of their
respective properties is or are subject to any order, writ, judgment,
injunction, decree or award that would have, individually or in the aggregate, a
Parent Material Adverse Effect.
Section 4.10 LIMITED GUARANTEES. Concurrently with the execution of
this Agreement, each of the Guarantors has delivered to the Company the Limited
Guarantees, dated as of the date hereof, in favor of the Company, in the form
set forth in Section 4.10 of the Parent Disclosure Letter, with respect to the
performance by Parent and Merger Sub, respectively, of their obligations under
this Agreement.
Section 4.11 SOLVENCY. As of the Effective Time, assuming satisfaction
of the conditions to Parent's obligation to consummate the Merger as set forth
herein, or the waiver of such conditions, and after giving effect to all of the
transactions contemplated by this Agreement, including, without limitation, the
Financing, any alternative financing and the payment of the aggregate Merger
Consideration and the consideration in respect of the Company Stock Options and
the Company Restricted Shares under Section 2.3 and any other repayment or
refinancing of debt that may be contemplated in the Financing Commitments, and
payment of all related fees and expenses, the Surviving Corporation will be
Solvent. For purposes of this Section 4.11, the term "Solvent" with respect to
any Person means that, as of any date of determination, (a) the amount of the
"fair saleable value" of the assets of such Person exceeds, as of such date, (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 solvency
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 business 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.
Section 4.12 NO OTHER INFORMATION. Parent and Merger Sub acknowledge
that the Company makes no representations or warranties as to any matter
whatsoever except as expressly set forth in Article III. The representations and
warranties set forth in Article III are
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made solely by the Company, and no Representative of the Company shall have any
responsibility or liability related thereto.
Section 4.13 ACCESS TO INFORMATION; DISCLAIMER. Parent and Merger Sub
each acknowledges and agrees that it (a) has had an opportunity to discuss the
business of the Company and its Subsidiaries with the management of the Company,
(b) has had reasonable access to the books and records of the Company and its
Subsidiaries, (c) has been afforded the opportunity to ask questions of and
receive answers from officers of the Company and (d) has conducted its own
independent investigation of the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, and has not relied on any
representation, warranty or other statement by any Person on behalf of the
Company or any of its Subsidiaries, other than the representations and
warranties of the Company expressly contained in Article III of this Agreement
and that all other representations and warranties are specifically disclaimed.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 CONDUCT OF BUSINESS.
(a) From and after the date hereof and prior to the Effective Time or
the date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1 (the "TERMINATION DATE"), and except (i) as may be otherwise
required by applicable Law, (ii) with the prior written consent of Parent, (iii)
as expressly contemplated or permitted by this Agreement or (iv) as disclosed in
Section 5.1 of the Company Disclosure Letter, the Company shall, and shall cause
each of its Subsidiaries to, (1) conduct its business in all material respects
in the ordinary course consistent with past practices, (2) use reasonable best
efforts to maintain and preserve intact its business organization and
advantageous business relationships and to retain the services of its key
officers and key employees and (3) take no action which is intended to or which
would reasonably be expected to materially adversely affect or materially delay
the ability of any of the parties hereto from obtaining any necessary approvals
of any regulatory agency or other Governmental Entity required for the
transactions contemplated hereby, performing its covenants and agreements under
this Agreement or consummating the transactions contemplated hereby or otherwise
materially delay or prohibit consummation of the Merger or other transactions
contemplated hereby.
(b) Without limiting the generality of the provisions set forth in
Section 5.1(a) above, the Company agrees with Parent that between the date
hereof and the Effective Time, except as set forth in Section 5.1(b) of the
Company Disclosure Letter or as otherwise expressly contemplated or expressly
permitted by this Agreement, the Company shall not, and shall not permit any of
its Subsidiaries to, without the prior written consent of Parent:
(i) adjust, split, combine or reclassify any capital stock
or otherwise amend the terms of its capital stock;
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(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire or encumber, any shares of its capital stock or any
securities or obligations convertible (whether currently convertible
or convertible only after the passage of time or the occurrence of
certain events) into or exchangeable for any shares of its capital
stock, except in connection with cashless exercises or similar
transactions pursuant to the exercise of stock options or other awards
issued and outstanding as of the date hereof under the Company Stock
Plans or permitted hereunder to be granted after the date hereof;
PROVIDED that the Company may continue to pay its quarterly cash
dividends in the ordinary course of its business consistent with past
practices (but in no event in an amount in excess of $0.06 per
quarter) and that this Section 5.1(b)(ii) shall not apply dividends or
distributions paid in cash by Subsidiaries to the Company or to other
Subsidiaries in the ordinary course of business consistent with past
practice;
(iii) grant any person any right to acquire any shares of
its capital stock;
(iv) issue any additional shares of capital stock or any
other voting securities or any securities convertible into rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units
except pursuant to the exercise of stock options or other awards
issued under the Company Stock Plans issued and outstanding as of the
date hereof and in accordance with the terms of such instruments;
(v) purchase, sell, transfer, mortgage, encumber or
otherwise dispose of any properties or assets having a value in excess
of $10 million in the aggregate (other than sales of inventory, or
commodity, purchase, sale or hedging agreements, in each case in the
ordinary course of business), except as disclosed in Section 5.1(b)(v)
of the Company Disclosure Letter;
(vi) authorize or make any capital expenditures (A) not
contemplated by the capital expenditure budget previously made
available to Parent in writing and (B) otherwise in an aggregate
amount for all such capital expenditures made pursuant to this clause
(B) not to exceed $2 million;
(vii) incur, assume, guarantee, or become obligated with
respect to (x) any debt, excluding intercompany debt, other than
pursuant to the Company's revolving credit facility or under
short-term debt or overdraft facilities, in each case as in effect as
of the date hereof, or (y) any debt which contains covenants that
restrict the Merger or that are inconsistent with the Financing
Commitments in effect as of the date hereof as previously disclosed to
the Company;
(viii) make any loans, advances or capital contributions to
or investments in, any other Person in excess of $3 million in the
aggregate for all such loans, advances, contributions and investments,
other than loans, advances or capital contributions to or among wholly
owned Subsidiaries or as required by customer Contracts entered in the
ordinary course of business consistent with past practice;
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(ix) make any investment in excess of $3 million in the
aggregate, whether by purchase of stock or securities, contributions
to capital, property transfers, or entering into binding agreements
with respect to any such investment or acquisition;
(x) make any acquisition of another Person or business in
excess of $3 million in the aggregate, whether by purchase of stock or
securities, contributions to capital, property transfers, or entering
into binding agreements with respect to any such investment or
acquisition; (xi) except in the ordinary course of business consistent
with past practice, enter into, renew, extend, materially amend or
terminate any Company Material Contract or Contract which if entered
into prior to the date hereof would be a Company Material Contract, in
each case, other than any Contract relating to indebtedness that would
not be prohibited under clause (vii) of this Section 5.1(b);
(xii) except to the extent required by Law (including
Section 409A of the Code) or by Contracts in existence as of the date
hereof or by Company Benefit Plans or by Foreign Plan or as disclosed
in Section 5.1(b)(xi) of the Company Disclosure Letter, (A) increase
in any manner the compensation or benefits of any of its employees,
directors, consultants, independent contractors or service providers
except in the ordinary course of business consistent with past
practice (the ordinary course including, for this purpose, the
employee salary, bonus and equity compensation review process and
related adjustments substantially as conducted each year), (B) pay any
pension, severance or retirement benefits not required by any existing
plan or agreement to any such employees, directors, consultants,
independent contractors or service providers, (C) enter into, amend,
alter (other than amendments that do not materially increase the cost
to the Company or any of its Subsidiaries of maintaining the
applicable compensation or benefit program, policy, arrangement or
agreement), adopt, implement or otherwise commit itself to any
compensation or benefit plan, program, policy, arrangement or
agreement including any pension, retirement, profit-sharing, bonus,
collective bargaining or other employee benefit or welfare benefit
plan, policy, arrangement or agreement or employment or consulting
agreement with or for the benefit of any employee, director,
consultant, independent contractor or service provider, or (D)
accelerate the vesting of, or the lapsing of restrictions with respect
to, any stock options or other stock-based compensation or otherwise
accelerate any rights or benefits, or make any determinations that
would result in a material increase in liabilities under any Company
Benefit Plan;
(xiii) waive, release, assign, settle or compromise any
claim, action or proceeding, other than waivers, releases,
assignments, settlements or compromises that involve only the payment
of monetary damages not in excess of $5 million with respect to any
individual case or series of related cases or $5 million in the
aggregate or otherwise pay, discharge or satisfy any claims,
liabilities or obligations in excess of such amount, in any case
without the imposition of any material restrictions on the business
and operations of the Company or any of its Subsidiaries;
(xiv) amend or waive or propose to amend or waive any
provision of its certificate of incorporation or its by-laws or other
equivalent organizational documents
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or, in the case of the Company, enter into any agreement with any of
its stockholders in their capacity as such;
(xv) take any action that is intended or would reasonably be
expected to, individually or in the aggregate with other such actions,
result in any of the conditions to the Merger set forth in Article VI
not being satisfied;
(xvi) enter into any "non-compete" or similar agreement that
would by its terms materially restrict the businesses of the Surviving
Corporation or its Subsidiaries following the Effective Time or that
the Company has reason to believe would materially restrict the
businesses of Parent or its Affiliates other than the Surviving
Corporation and its Subsidiaries;
(xvii) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of such entity;
(xviii) implement or adopt any change in its Tax or
financial accounting principles, practices or methods, other than as
required by GAAP, applicable Law or regulatory guidelines;
(xix) enter into any closing agreement with respect to
material Taxes, settle or compromise any material liability for Taxes,
make, revoke or change any material Tax election, agree to any
adjustment of any material Tax attribute, file or surrender any claim
for a material refund of Taxes, execute or consent to any waivers
extending the statutory period of limitations with respect to the
collection or assessment of material Taxes, file any material amended
Tax Return or obtain any material Tax ruling, in each case other than
in the ordinary course consistent with past practice; or
(xx) agree to take, make any commitment to take, or adopt
any resolutions of its Board of Directors in support of, any of the
actions prohibited by this Section 5.1(b).
(c) From and after the date hereof and prior to the Effective Time or
the Termination Date, if any, and except (i) as may be otherwise required by
applicable Law or (ii) as expressly contemplated or permitted by this Agreement,
Parent and Merger Sub shall take no action which is intended to or which would
reasonably be expected to materially adversely affect or materially delay the
ability of any of the parties hereto from obtaining any necessary approvals of
any regulatory agency or other Governmental Entity required for the transactions
contemplated hereby, performing its covenants and agreements under this
Agreement or consummating the transactions contemplated hereby or otherwise
materially delay or prohibit consummation of the Merger or other transactions
contemplated hereby.
Section 5.2 INVESTIGATION.
(a) From the date hereof until the Effective Time and subject to the
requirements and prohibitions of applicable Laws, the Company shall, or shall
cause its Subsidiaries to, (i) provide to Parent, its counsel, financial
advisors, auditors and other authorized representatives reasonable access during
normal business hours to the officers,
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management, employees, offices, properties, books and records of the Company and
its Subsidiaries, (ii) furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such persons may reasonably request and (iii) instruct
the employees, counsel, financial advisors, auditors and other authorized
representatives (other than directors who are not employees) of the Company and
its Subsidiaries to cooperate reasonably with Parent in its investigation of the
Company and its Subsidiaries, except that nothing herein shall require the
Company or any of its Subsidiaries to disclose any information that would
reasonably be expected, after consultation with and upon the advice of counsel
to cause a violation of any agreement to which the Company or any of its
Subsidiaries is a party or would cause a risk of a loss of privilege to the
Company or any of its Subsidiaries. Any investigation pursuant to this Section
5.2(a) shall be conducted in such manner as not to interfere unreasonably with
the conduct of the business of the Company and its Subsidiaries. No information
or knowledge obtained by Parent or Merger Sub in any investigation pursuant to
this Section 5.2(a) shall affect or be deemed to modify any representation or
warranty made by the Company in Article III.
(b) Parent hereby agrees that all information provided to it or its
counsel, financial advisors, auditors and other authorized representatives in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be deemed to be "Evaluation Materials" as such term is
used in and for all purposes of, and shall be treated in accordance with, the
Confidentiality Agreement, dated as of August 24, 2006, between the Company and
Court Square Capital Partners, L.P. (the "CONFIDENTIALITY AGREEMENT") as if it
had been provided prior to the date of this Agreement.
Section 5.3 NO SOLICITATION.
(a) Subject to Section 5.3(b)-(f), the Company agrees that neither it
nor any Subsidiary of the Company shall, and that it shall direct its and their
respective officers, directors, employees, agents and representatives, including
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries ("REPRESENTATIVES") not to, directly or indirectly, (i) initiate,
solicit, knowingly encourage (including by providing information) or facilitate
any inquiries, proposals or offers with respect to, or the making or completion
of, an Alternative Proposal, (ii) engage or participate in any negotiations
concerning, or provide or cause to be provided any non-public information or
data relating to the Company or any of its Subsidiaries in connection with, or
have any discussions with any person relating to, an actual or proposed
Alternative Proposal, or otherwise knowingly encourage or facilitate any effort
or attempt to make or implement an Alternative Proposal, (iii) approve, endorse
or recommend, or propose publicly to approve, endorse or recommend, any
Alternative Proposal, (iv) approve, endorse or recommend, or propose to approve,
endorse or recommend, or execute or enter into, any letter of intent, agreement
in principle, merger agreement, acquisition agreement, option agreement or other
similar agreement relating to any Alternative Proposal, (v) amend, terminate,
waive or fail to enforce, or grant any consent under, any confidentiality,
standstill or similar agreement of the Company with respect to an Alternative
Proposal (except that references in the definition thereof to "20%" shall be
deemed to be references to "50%" for purposes of this clause (v)), or (vi)
resolve to propose or agree to do any of the foregoing. Without limiting the
foregoing, it is understood that any action of any Subsidiary of the Company or
Representative of the Company
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that would be a violation if taken by the Company shall be deemed to be a breach
of this Section 5.3 by the Company.
(b) The Company shall, shall cause each of its Subsidiaries to, and
shall direct each of its Representatives to, immediately cease any
solicitations, discussions or negotiations with any Person (other than the
parties hereto) that has made or indicated an intention to make an Alternative
Proposal, in each case that exist as of the date hereof. The Company shall
promptly inform its Representatives of the Company's obligations under this
Section 5.3.
(c) Notwithstanding anything to the contrary in Section 5.3(a) or (b),
at any time prior to satisfying the condition set forth in Section 6.1(a), the
Company may, in response to an unsolicited Alternative Proposal which did not
result from or arise in connection with a breach of Section 5.3(a) and which the
Board of Directors of the Company (acting through its Special Committee)
determines, in good faith, after consultation with its outside counsel and
financial advisors, (1) may reasonably be expected to lead to a Superior
Proposal, and (2) the failure to take action on such unsolicited Alternative
Proposal would be inconsistent with its fiduciary obligations to the
stockholders of the Company under applicable Laws, (i) furnish non-public
information with respect to the Company and its Subsidiaries to the person who
has made a written Alternative Proposal and its Representatives pursuant to a
customary confidentiality agreement no less restrictive of the other party than
the Confidentiality Agreement, and which shall include an acknowledgment by such
other party that the Company is obligated to comply with the provisions of
Section 5.3(e) hereof, and (ii) participate in discussions or negotiations with
such person and its Representatives regarding such Alternative Proposal;
PROVIDED, HOWEVER, (i) that Parent shall be entitled to receive an executed copy
of such confidentiality agreement prior to or substantially simultaneously with
the Company furnishing information to the person making such Alternative
Proposal or its Representatives and (ii) that the Company shall simultaneously
provide or make available to Parent any material non-public information
concerning the Company or any of its Subsidiaries that is provided to the person
making such Alternative Proposal or its Representatives which was not previously
provided or made available to Parent.
(d) Subject to the permitted actions contemplated by Section
7.1(c)(ii), neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify in a manner adverse to Parent or Merger
Sub, or publicly propose to withdraw or modify in a manner adverse to Parent or
Merger Sub, the Recommendation, (ii) approve any letter of intent, agreement in
principle, acquisition agreement or similar agreement relating to any
Alternative Proposal or (iii) approve or recommend, or publicly propose to
approve, endorse or recommend, any Alternative Proposal. Notwithstanding the
foregoing, but subject to Section 5.4(b), if, prior to receipt of the Company
Stockholder Approval, the Board of Directors of the Company or the Special
Committee determines in good faith, after consultation with outside counsel,
that failure to so withdraw or modify its Recommendation would be inconsistent
with the Board of Directors of the Company's or the Special Committee's exercise
of its fiduciary duties, the Board of Directors of the Company or any committee
thereof may withdraw or modify its Recommendation.
(e) The Company promptly (and in any event within 48 hours) shall
advise Parent orally and in writing of (i) any Alternative Proposal after the
date hereof or indication or
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inquiry after the date hereof with respect to or that would reasonably be
expected to lead to any Alternative Proposal, (ii) any request after the date
hereof for non-public information relating to the Company or its Subsidiaries,
other than requests for information not reasonably expected to be related to an
Alternative Proposal, or (iii) any inquiry or request after the date hereof for
discussion or negotiation regarding an Alternative Proposal, including in each
case the identity of the person making any such Alternative Proposal or
indication or inquiry and the material terms of any such Alternative Proposal or
indication or inquiry (including copies of any document or correspondence
evidencing such Alternative Proposal or inquiry). The Company shall keep Parent
reasonably informed on a current basis (and in any event within 48 hours of the
occurrence of any changes, developments, discussions or negotiations) of the
status (including the material terms and conditions thereof and any material
change thereto) of any such Alternative Proposal or indication or inquiry
including furnishing copies of any written revised proposals. Without limiting
the foregoing, the Company shall promptly (and in any event within 24 hours)
notify Parent orally and in writing if it determines to begin providing
information or to engage in discussions or negotiations concerning an
Alternative Proposal. The Company shall not, and shall cause its Subsidiaries
not to, enter into any confidentiality agreement with any Person subsequent to
the date of this Agreement which prohibits the Company from providing such
information to Parent as required by this Section 5.3(e).
(f) Nothing contained in this Agreement shall prohibit the Company or
its Board of Directors (or the Special Committee) from (i) disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any required disclosure to the Company's
stockholders if, in the good faith judgment of such Board of Directors (or the
Special Committee), after consultation and the receipt of advice from its
outside counsel, failure to disclosure such information would reasonably be
expected to violate its obligations under applicable Law; PROVIDED, HOWEVER,
that any such disclosure, other than a "stop, look and listen" letter or similar
communication of the type contemplated by Rule 14d-9(f) under the Exchange Act,
shall be deemed to be a modification, amendment or withdrawal of the
Recommendation for the purposes of Section 5.3(d) unless the Board of Directors
of the Company (acting through the Special Committee if such committee still
exists) in connection with such communication publicly reaffirms the
Recommendation.
(g) As used in this Agreement, "ALTERNATIVE PROPOSAL" shall mean any
inquiry, proposal or offer from any Person or group of Persons other than Parent
or one of its Subsidiaries for (i) a merger, reorganization, consolidation,
share exchange, business combination, recapitalization, liquidation, dissolution
or similar transaction involving an acquisition of the Company (or any
Subsidiary or Subsidiaries of the Company whose business constitutes 20% or more
of the net revenues, net income or assets of the Company and its Subsidiaries,
taken as a whole) or (ii) the acquisition in any manner, directly or indirectly,
of over 20% of the equity securities, net revenue, net income or consolidated
assets of the Company and its Subsidiaries, in each case other than the Merger.
(h) As used in this Agreement, "SUPERIOR PROPOSAL" shall mean any
written Alternative Proposal (i) on terms which the Board of Directors of the
Company (or the Special Committee) determines in good faith, after consultation
with the Company's outside legal counsel and financial advisors, to be more
favorable from a financial point of view to the holders of Company Common Stock
than the Merger (other than those holders of Company Common
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Stock who are party to a Rollover Commitment), taking into account all the terms
and conditions of such Alternative Proposal, and this Agreement (including any
proposal or offer by Parent to amend the terms of this Agreement and the Merger
during the 5 Business Day period referred to herein) and (ii) that the Board of
Directors (or Special Committee) believes is reasonably capable of being
completed, taking into account all financial, regulatory, legal, timing and
other aspects of such proposal; PROVIDED that the Board of Directors of the
Company (or the Special Committee) shall not so determine that any such proposal
is a Superior Proposal prior to the time that is 5 Business Days after the time
at which the Company has complied in all respects with Section 5.3(e) with
respect to such proposal, and PROVIDED that for purposes of the definition of
"Superior Proposal", the references to "20%" in the definition of Alternative
Proposal shall be deemed to be references to "50%."
Section 5.4 FILINGS; OTHER ACTIONS.
(a) As promptly as reasonably practicable following the date of this
Agreement, the Company shall prepare and file with the SEC the Proxy Statement,
and the Company and Parent shall prepare and file with the SEC the Schedule
13E-3. Parent and the Company shall cooperate with each other in connection with
the preparation of the foregoing documents. The Company will use its reasonable
best efforts to have the Proxy Statement, and Parent and the Company will use
their reasonable best efforts to have the Schedule 13E-3, cleared by the staff
of the SEC as promptly as practicable after such filing. The Company will use
its reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after the Proxy Statement is
cleared by the staff of the SEC. The Company shall as promptly as practicable
notify Parent of the receipt of any oral or written comments from the staff of
the SEC relating to the Proxy Statement. The Company shall cooperate and provide
Parent with a reasonable opportunity to review and comment on the draft of the
Proxy Statement (including each amendment or supplement thereto), and Parent and
the Company shall cooperate and provide each other with a reasonable opportunity
to review and comment on the draft Schedule 13E-3 (including each amendment or
supplement thereto) and all responses to requests for additional information by
and replies to comments of the staff of the SEC, prior to filing such with or
sending such to the SEC, and Parent and the Company will provide each other with
copies of all such filings made and correspondence with the SEC or its staff
with respect thereto. If at any time prior to the Effective Time, any
information should be discovered by any party hereto which should be set forth
in an amendment or supplement to the Proxy Statement or the Schedule 13E-3 so
that the Proxy Statement or the Schedule 13E-3 would not include any
misstatement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and,
to the extent required by applicable Law, an appropriate amendment or supplement
describing such information shall be promptly filed by the Company with the SEC
and disseminated by the Company to the stockholders of the Company.
(b) Subject to the other provisions of this Agreement, the Company
shall (i) take all action necessary in accordance with the CBCA (including, not
less than 20 days prior to the Company Meeting, notifying each stockholder of
record entitled to vote at such meeting that appraisal rights are available
under Section 33-855 ET SEQ. of the CBCA) and its certificate of incorporation
and by-laws to duly call, give notice of, convene and hold a meeting of its
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stockholders as promptly as reasonably practicable following the mailing of the
Proxy Statement for the purpose of obtaining the Company Stockholder Approval
(such meeting or any adjournment or postponement thereof, the "COMPANY
MEETING"), and (ii) subject to the Board of Directors of the Company's or the
Special Committee's withdrawal or modification of its Recommendation in
accordance with Section 5.3(d), use reasonable best efforts to solicit or cause
to be solicited from its stockholders proxies in favor of the approval of this
Agreement, the Merger and the other transactions contemplated hereby. The Proxy
Statement will include the Recommendation unless the Board of Directors (acting
through the Special Committee, if then in existence) has withdrawn, modified or
amended the Recommendation to the extent permitted under Section 5.3(d).
Notwithstanding anything in this Agreement to the contrary, unless this
Agreement is terminated in accordance with Section 7.1 and subject to compliance
with Section 7.2, the Company, regardless of whether the Board of Directors
(whether or not acting through the Special Committee, if then in existence) has
approved, endorsed or recommended an Alternative Proposal or has withdrawn,
modified or amended the Recommendation, but in compliance with Section 33-817(2)
of the CBCA, will submit this Agreement for adoption by the stockholders of the
Company at the Company Meeting.
Section 5.5 EMPLOYEE MATTERS.
(a) Employee Matters.
(i) From and after the Effective Time, Parent shall honor all
Company Benefit Plans and Foreign Plans and compensation arrangements and
agreements in accordance with their terms as in effect immediately before the
Effective Time, PROVIDED that nothing herein shall limit the right of the
Company or Parent from amending or terminating such plans, arrangements and
agreements in accordance with their terms. For a period of two (2) years
following the Effective Time, Parent shall provide, or shall cause to be
provided, to each Person who is a current employee of the Company and its
Subsidiaries at the Effective Time (other than such employees covered by
collective bargaining agreements, which shall be adhered to in accordance with
their terms) who continue employment with the Surviving Corporation ("COMPANY
EMPLOYEES") compensation and benefits that are no less favorable, in the
aggregate, than the compensation and benefits (excluding equity-based programs)
provided to Company Employees immediately before the Effective Time (it being
understood that discretionary incentive programs will remain discretionary).
Notwithstanding any other provision of this Agreement to the contrary, (A)
Parent shall or shall cause the Surviving Corporation to provide Company
Employees whose employment terminates during the two-year period following the
Effective Time with severance benefits at the levels and pursuant to the terms
of the Company's severance plans and policies as in effect immediately prior to
the Effective Time and (B) during such two-year period following the Effective
Time, severance benefits offered to Company Employees shall be determined
without taking into account any reduction after the Effective Time in
compensation paid to Company Employees.
(ii) For all purposes (including purposes of vesting, eligibility
to participate and level of benefits) under the employee benefit plans of Parent
and its Subsidiaries providing benefits to any Company Employees after the
Effective Time as required pursuant to this Section 5.5(a) (the "NEW PLANS"),
each Company Employee shall be credited with his or her years of service with
the Company and its Subsidiaries and their respective predecessors before
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the Effective Time, to the same extent as such Company Employee was entitled,
before the Effective Time, to credit for such service under any similar Company
employee benefit plan in which such Company Employee participated or was
eligible to participate immediately prior to the Effective Time, PROVIDED that
the foregoing shall not apply with respect to benefit accrual under any defined
benefit pension plan or to the extent that its application would result in a
duplication of benefits with respect to the same period of service. In addition,
and without limiting the generality of the foregoing, to the extent permitted by
such plans, (A) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan is comparable to a Company Benefit Plan in which
such Company Employee participated immediately before the consummation of the
Merger (such plans, collectively, the "OLD PLANS"), and (B) for purposes of each
New Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Company Employee, Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for such Current
Employee and his or her covered dependents, unless such conditions would not
have been waived under the comparable plans of the Company or its Subsidiaries
in which such Current Employee participated immediately prior to the Effective
Time and Parent shall cause any eligible expenses incurred by such Current
Employee and his or her covered dependents during the portion of the plan year
of the Old Plan ending on the date such Current Employee's participation in the
corresponding New Plan begins to be taken into account under such New Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such Current Employee and his or her covered
dependents for the applicable plan year as if such amounts had been paid in
accordance with such New Plan.
(iii) Nothing contained herein shall be construed as requiring
Parent or the Surviving Corporation to continue the employment of any specific
person.
(iv) For a period of two (2) years following the Effective Time,
Parent agrees to continue or cause the Surviving Corporation to continue the
Company's retiree welfare programs, including medical prescription drugs and
retiree life insurance program (the "COMPANY RETIREE WELFARE PROGRAMS") on terms
and conditions no less favorable in duration, scope, value, participant cost,
vesting and otherwise than those in effect as of the Effective Time with respect
to all Company Employees who (A) as of the time immediately prior to the
Effective Time are receiving benefits under the Company Retiree Welfare Programs
or (B) as of the time immediately prior to the Effective Time would be eligible
to receive benefits under the Company Retiree Welfare Programs as of immediately
prior to the Effective Time.
Section 5.6 EFFORTS.
(a) Subject to the terms and conditions set forth in this Agreement,
each of the parties hereto shall use its reasonable best efforts to take
promptly, or to cause to be taken, all actions, and to do promptly, or to cause
to be done, and to assist and to cooperate with the other parties in doing, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the Merger and the other transactions contemplated hereby,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents, clearances, approvals, and expirations or terminations of waiting
periods, including the Company Approvals and the Parent Approvals, from
Governmental Entities and the making of all necessary registrations and filings
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and the taking of all steps as may be necessary to obtain an approval,
clearance, or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the Merger and the other transactions contemplated hereby
and (iv) the execution and delivery of any additional instruments reasonably
necessary to consummate the transactions contemplated hereby; PROVIDED, HOWEVER,
that in no event shall Parent, Merger Sub, the Company or any of its
Subsidiaries be required to pay prior to the Effective Time any fee, penalties
or other consideration to any third party to obtain any consent or approval
required for the consummation of the Merger under any Contract.
(b) Subject to the terms and conditions herein provided and without
limiting the foregoing, the Company and Parent shall (i) promptly, but in no
event later than fifteen (15) Business Days after the date hereof, file any and
all Notification and Report Forms required under the HSR Act with respect to the
Merger and the other transactions contemplated hereby, and use reasonable best
efforts to cause the expiration or termination of any applicable waiting periods
under the HSR Act, (ii) if required, promptly make an appropriate filing under
the ECMR, and use reasonable best efforts to obtain a decision from the European
Commission allowing the consummation of the Merger and the other transactions
contemplated hereby, (iii) use reasonable best efforts to cooperate with each
other in (x) determining whether any filings are required to be made with, or
consents, permits, authorizations, waivers, clearances, approvals, and
expirations or terminations of waiting periods are required to be obtained from,
any third parties or other Governmental Entities in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (y) timely making all such filings and
timely obtaining all such consents, permits, authorizations or approvals, (iv)
supply to any Governmental Entity as promptly as practicable any additional
information or documents that may be requested pursuant to any Regulatory Law or
by such Governmental Entity, and (v) use reasonable best efforts to take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective the
Merger and the other transactions contemplated hereby, including taking all such
further action as may be necessary to resolve such objections, if any, as the
United States Federal Trade Commission, the Antitrust Division of the United
States Department of Justice, state antitrust enforcement authorities or
competition authorities of any other nation or other jurisdiction or any other
person may assert under Regulatory Law with respect to the Merger and the other
transactions contemplated hereby, and to avoid or eliminate each and every
impediment under any Law that may be asserted by any Governmental Entity with
respect to the Merger so as to enable the Closing to occur as soon as reasonably
possible (and in any event no later than the End Date), including, without
limitation (x) proposing, negotiating, committing to and effecting, by consent
decree, hold separate order or otherwise, the sale, divestiture or disposition
of any assets or businesses of Parent or its Subsidiaries or Affiliates or of
the Company or its Subsidiaries and (y) otherwise taking or committing to take
any actions that after the Closing Date limits the freedom of Parent or its
Subsidiaries' (including the Surviving Corporation's) or Affiliates' freedom of
action with respect to, or its ability to retain, one or more of its or its
Subsidiaries' (including the Surviving Corporation's) businesses, product lines
or assets, in each case 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 suit or proceeding which would otherwise have the effect of
preventing the Closing, materially delaying the Closing or delaying the Closing
beyond the End
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Date; PROVIDED that neither the Company nor any of its Subsidiaries shall become
subject to, or consent or agree to or otherwise take any action with respect to,
any requirement, condition, understanding, agreement or order of a Governmental
Authority to sell, to hold separate or otherwise dispose of, or to conduct,
restrict, operate, invest or otherwise change the assets or business of the
Company or any of its Affiliates, unless such requirement, condition,
understanding, agreement or order is binding on the Company only in the event
that the Closing occurs.
(c) Subject to applicable legal limitations and the instructions of
any Governmental Entity, the Company and Parent shall keep each other apprised
of the status of matters relating to the completion of the Merger and the other
transactions contemplated thereby, including promptly furnishing the other with
copies of notices or other communications received by the Company or Parent, as
the case may be, or any of their respective Subsidiaries, from any third party
and/or any Governmental Entity with respect to such transactions. The Company
and Parent shall permit counsel for the other party reasonable opportunity to
review in advance, and consider in good faith the views of the other party in
connection with, any proposed written communication to any Governmental Entity.
Each of the Company and Parent agrees not to participate in any substantive
meeting or discussion, either in person or by telephone, with any Governmental
Entity in connection with the proposed transactions unless it consults with the
other party in advance and, to the extent not prohibited by such Governmental
Entity, gives the other party the opportunity to attend and participate.
(d) Subject to the rights of Parent in Section 5.11, and in
furtherance and not in limitation of the covenants of the parties contained in
this Section 5.6, if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened to be
instituted) challenging the Merger or any other transaction contemplated by this
Agreement as violative of any Regulatory Law, each of the Company and Parent
shall cooperate in all respects with each other and shall use their respective
reasonable best efforts to contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the Merger or any
other transactions contemplated hereby. Notwithstanding the foregoing or any
other provision of this Agreement, nothing in this Section 5.6 shall limit a
party's right to terminate this Agreement pursuant to Section 7.1(b)(i) or (ii)
so long as such party has, prior to such termination, complied with its
obligations under this Section 5.6.
(e) For purposes of this Agreement, "REGULATORY LAW" means any and all
state, federal and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other Laws requiring notice to,
filings with, or the consent, clearance or approval of, any Governmental Entity,
or that otherwise may cause any restriction, in connection with the Merger and
the transactions contemplated thereby, including (i) the Sherman Act of 1890,
the Clayton Antitrust Act of 1914, the HSR Act, the Federal Trade Commission Act
of 1914, the ECMR and all other Laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening competition through merger or acquisition, (ii)
any Law governing the direct or indirect ownership or control of any of the
operations or assets of the Company and its Subsidiaries or (iii) any Law with
the purpose of protecting the national security or the national economy of any
nation.
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Section 5.7 TAKEOVER STATUTE. If any "fair price," "moratorium,"
"business combination," "control share acquisition" or other form of
anti-takeover statute or regulation shall become applicable to the Merger or the
other transactions contemplated by this Agreement after the date of this
Agreement, each of the Company and Parent and the members of their respective
Boards of Directors shall grant such approvals and take such actions as are
reasonably necessary so that the Merger and the other transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
herein and otherwise act to eliminate or minimize the effects of such statute or
regulation on the Merger and the other transactions contemplated hereby.
Section 5.8 PUBLIC ANNOUNCEMENTS. The Company and Parent will consult
with and provide each other the opportunity to review and comment upon any press
release or other public statement or comment prior to the issuance of such press
release or other public statement or comment relating to this Agreement or the
transactions contemplated herein and shall not issue any such press release or
other public statement or comment prior to such consultation except as may be
required by applicable Law or by obligations pursuant to any listing agreement
with any national securities exchange. Parent and the Company agree that the
press release announcing the execution and delivery of this Agreement shall be a
joint release of Parent and the Company.
Section 5.9 INDEMNIFICATION AND INSURANCE.
(a) Parent and Merger Sub agree that all rights to exculpation,
indemnification and advancement of expenses for acts or omissions occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, now existing in favor of the current or former
directors or officers, as the case may be, of the Company or its Subsidiaries as
provided in their respective certificates of incorporation or by-laws or other
organization documents or in any agreement shall survive the Merger and shall
continue in full force and effect. For a period of six (6) years from the
Effective Time, Parent and the Surviving Corporation shall maintain in effect,
for the benefit of the current and former directors and officers , any and all
exculpation, indemnification and advancement of expenses provisions of the
Company's and any of its Subsidiaries' articles of incorporation and by-laws or
similar organization documents in effect immediately prior to the Effective Time
or in any indemnification agreements of the Company or its Subsidiaries with any
of their respective current or former directors or officers in effect as of the
date hereof, and shall not amend, repeal or otherwise modify any such provisions
in any manner that would adversely affect the rights thereunder of any
individuals who at the Effective Time were current or former directors or
officers of the Company or any of its Subsidiaries; PROVIDED, HOWEVER, that all
rights to indemnification in respect of any Action (as hereinafter defined)
pending or asserted or any claim made within such period shall continue until
the disposition of such Action or resolution of such claim.
(b) From and after the Effective Time, each of Parent and the
Surviving Corporation shall, to the fullest extent permitted under applicable
Law, indemnify and hold harmless (and advance funds in respect of each of the
foregoing) each current and former director or officer of the Company or any of
its Subsidiaries (each, an "INDEMNIFIED PARTY") against any costs or expenses
(including advancing reasonable attorneys' fees and expenses in
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advance of the final disposition of any claim, suit, proceeding or investigation
to each Indemnified Party to the fullest extent permitted by Law), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative (an
"ACTION"), arising out of, relating to or in connection with any action or
omission occurring or alleged to have occurred whether before or after the
Effective Time (including acts or omissions in connection with such persons
serving as an officer, director or other fiduciary in any entity if such service
was at the request or for the benefit of the Company).
(c) Prior to the Effective Time, the Company shall purchase, and,
following the Effective Time, the Surviving Corporation shall maintain, a fully
pre-paid six-year "tail" policy to the current policy of directors' and
officers' liability insurance maintained as of the date hereof by the Company
(the "CURRENT POLICY"), which tail policy shall cover a period from the
Effective Time through and including the date six years after the Closing Date
with respect to claims arising from facts or events that existed or occurred
prior to or at the Effective Time, and which tail policy shall contain the same
coverage (including, without limitation, the scope and amount thereof) as, and
contain terms and conditions that are equivalent to, the coverage set forth in
the Current Policy.
(d) The rights of each Indemnified Party hereunder shall be in
addition to, and not in limitation of, any other rights such Indemnified Party
may have under the certificate of incorporation or by-laws or other organization
documents of the Company or any of its Subsidiaries or the Surviving
Corporation, any other indemnification agreement or arrangement, the CBCA or
otherwise. The provisions of this Section 5.9 shall survive the consummation of
the Merger and, notwithstanding any other provision of this Agreement that may
be to the contrary, expressly are intended to benefit, and are enforceable by,
each of the Indemnified Parties.
(e) In the event Parent, the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in either such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 5.9. The agreements and covenants contained herein shall
not be deemed to be exclusive of any other rights to which any Indemnified Party
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 and directors, it being understood and
agreed that the indemnification provided for in this Section 5.9 is not prior
to, or in substitution for, any such claims under any such policies.
Section 5.10 FINANCING. Parent shall use its reasonable best efforts
to obtain the Financing on the terms and conditions described in the Financing
Commitments or terms more favorable to Parent, including using its reasonable
best efforts (i) to maintain in effect the Financing Commitments and to
negotiate definitive agreements with respect thereto on the terms and conditions
contained in the Financing Commitments, (ii) to satisfy all conditions
applicable
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to Parent in such definitive agreements and consummate the Financing at or prior
to the Closing, (iii) to comply with its obligations under the Financing
Commitments and (iv) to enforce its rights under the Financing Commitments.
Parent shall give the Company prompt notice upon becoming aware of any material
breach by any party of the Financing Commitments or any termination of the
Financing Commitments. Parent shall keep the Company informed on a reasonably
current basis and in reasonable detail of the status of its efforts to arrange
the Financing and provide to the Company copies of all documents related to the
Financing (other than any ancillary documents subject to confidentiality
agreements). In connection with its obligations under this Section 5.10, Parent
shall be permitted, but not obligated, to amend, modify or replace the Debt
Commitment Letters with new Financing Commitments, including through
co-investment by or financing from one or more other additional parties (the
"NEW FINANCING COMMITMENTS"), PROVIDED that Parent shall not permit any
replacement of, or amendment or modification to be made to, or any waiver of any
material provision or remedy under, the Debt Commitment Letter if such
replacement (including through co-investment by or financing from one or more
other additional parties), amendment, modification, waiver or remedy reduces the
aggregate amount of the Financing below that amount required to consummate the
Merger and the other transactions contemplated hereby, adversely amends or
expands the conditions to the drawdown of the Financing in any respect that
would make such conditions less likely to be satisfied or that would expand the
possible circumstances under which such conditions would not be satisfied, that
can reasonably be expected to delay the Closing, or is adverse to the interests
of the Company in any other material respect; and PROVIDED, FURTHER, that
nothing in this Section 5.10 shall be deemed to excuse, waive compliance with or
modify any of the obligations set forth in the Confidentiality Agreement. In the
event that Parent becomes aware of any event or circumstance that makes
procurement of any portion of the Financing unlikely to occur in the manner or
from the sources contemplated in the Financing Commitments, Parent shall notify
the Company and shall use its reasonable best efforts to arrange as promptly as
practicable, but in no event later than the last day of the Marketing Period,
any such portion from alternative sources (including through co-investment by
one or more other additional parties) on terms and conditions no less favorable
to Parent or Merger Sub and no more adverse to the ability of Parent to
consummate the transactions contemplated by this Agreement. The Company shall
provide, and shall use reasonable best efforts to cause its Representatives,
including legal and accounting, to provide, all cooperation reasonably requested
by Parent in connection with the Financing and the other transactions
contemplated by this Agreement (PROVIDED that such requested cooperation does
not unreasonably interfere with the ongoing operations of the Company and its
Subsidiaries), including (i) providing reasonably required information relating
to the Company and its Subsidiaries to the parties providing the Financing,
which shall include all financial statements and financial data for the Company
and its Subsidiaries (A) of the type required by Regulation S-X and Regulation
S-K under the Securities Act and of the type and form customarily included in
private placements under Rule 144A of the Securities Act to consummate any
offering of senior or senior subordinated notes of the Company (or any direct or
indirect parent thereof), including replacements thereof prior to any such
information going "stale" or otherwise being unusable under applicable Law for
such purpose and (B) all financial statements and information reasonably
necessary for the satisfaction of the conditions set forth in the Debt
Commitment Letter (the "REQUIRED FINANCIAL INFORMATION"), (ii) participating in
a reasonable number of meetings, drafting sessions and due diligence sessions in
connection with the Financing, (iii) assisting in the preparation of (A) one
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or more offering documents or confidential information memoranda for any of the
Debt Financing (including the execution and delivery of one or more customary
representation letters in connection therewith) and (B) materials for rating
agency presentations, (iv) reasonably cooperating with the marketing efforts for
any of the Debt Financing, including providing assistance in the preparation
for, and participating in, reasonable meetings, due diligence sessions and
similar presentations to and with, among others, prospective lenders, investors
and rating agencies, (v) executing and delivering (or using reasonable best
efforts to obtain from advisors), and causing its Subsidiaries to execute and
deliver (or use reasonable best efforts to obtain from advisors), customary
certificates (including a certificate of the chief financial officer of the
Company with respect to solvency matters), accounting comfort letters, legal
opinions, surveys, title insurance or other documents and instruments relating
to guarantees, the pledge of collateral and other matters ancillary to the
Financing as may be reasonably requested by Parent in connection with the
Financing and otherwise reasonably facilitating the pledge of collateral and
providing of guarantees contemplated by the Debt Commitment Letter, and (vi)
delivering timely notice to its noteholders of the Company's intent to redeem
its outstanding 9-1/8% Senior Subordinated Notes due 2011 in connection with the
Financing; PROVIDED, HOWEVER, that no obligation of the Company or any of its
Subsidiaries under any such certificate, document or instrument (other than the
representation letter referred to above) shall be effective until the Effective
Time and none of the Company or any of its Subsidiaries shall be required to pay
any commitment or other similar fee that is not simultaneously reimbursed or
incur any other liability in connection with the Financing prior to the
Effective Time. Following the termination of this agreement in accordance with
its terms (other than pursuant to Section 7.1(b)(i) at a time when the Company
is not eligible to terminate this Agreement pursuant to such section or pursuant
to Section 7.1(d)) Parent shall promptly, upon request by the Company, reimburse
the Company for all reasonable and documented out-of-pocket costs incurred by
the Company or any of its Subsidiaries in connection with the cooperation of the
Company and its Subsidiaries contemplated by this Section 5.10, and Parent shall
further indemnify and hold harmless the Company, its Subsidiaries and their
respective representatives from and against any and all losses, damages, claims,
costs or expenses suffered or incurred by any of them in connection with the
arrangement of the Financing and any information used in connection therewith
(other than information provided in writing by the Company or its Subsidiaries),
except to the extent that such losses, damages, claims, costs or expenses,
directly or indirectly, resulted from the willful misconduct of the Company.
Section 5.11 STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate, subject to a customary joint defense agreement, in,
but not control, the defense or settlement of any stockholder litigation against
the Company or its directors or officers relating to the Merger or any other
transactions contemplated hereby; PROVIDED, HOWEVER, that no such settlement
shall be agreed to without Parent's consent, which consent shall not be
unreasonably withheld or delayed.
Section 5.12 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) any notice or other communication received by such party from any
Governmental Entity in connection with the Merger or the other transactions
contemplated hereby or from any person alleging that the consent of such person
is or may be required in connection with the Merger or the other transactions
contemplated hereby, if the subject matter of such communication or the failure
of
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such party to obtain such consent could be material to the Company, the
Surviving Corporation or Parent, (ii) any actions, suits, claims, investigations
or proceedings commenced or, to such party's Knowledge, threatened against,
relating to or involving or otherwise affecting such party or any of its
Subsidiaries which relate to the Merger or the other transactions contemplated
hereby, (iii) the discovery of any fact or circumstance that, or the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which, would
cause or result, or be reasonably likely to cause or result, in any of the
Conditions to the Merger set forth in Article VI not being satisfied or
satisfaction of those conditions being materially delayed; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 5.12 shall not (x) cure
any breach of, or non-compliance with, any other provision of this Agreement or
(y) limit the remedies available to the party receiving such notice; and,
PROVIDED, FURTHER, that the failure to give prompt notice hereunder pursuant to
clause (iii) shall not constitute a failure of a Condition to the Merger set
forth in Article VI except to the extent that the underlying fact or
circumstance not so notified would standing alone constitute such a failure. The
Company shall notify Parent, on a reasonably current basis, of any events or
changes with respect to any criminal or material regulatory investigation or
action involving the Company or any of its Affiliates (but, excluding traffic
violations or similar misdemeanors), and shall reasonably cooperate with Parent
or its Affiliates in efforts to mitigate any adverse consequences to Parent or
its Affiliates which may arise (including by coordinating and providing
assistance in meeting with regulators).
Section 5.13 RULE 16B-3. Prior to the Effective Time, the Company
shall be permitted to take such steps as may be reasonably necessary or
advisable hereto to cause dispositions of Company equity securities (including
derivative securities) pursuant to the transactions contemplated by this
Agreement by each individual who is a director or officer of the Company to be
exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 5.14 CONTROL OF OPERATIONS. Without in any way limiting any
party's rights or obligations under this Agreement, the parties understand and
agree that (i) nothing contained in this Agreement shall give Parent, directly
or indirectly, the right to control or direct the Company's operations prior to
the Effective Time, and (ii) prior to the Effective Time, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
Section 5.15 CERTAIN TRANSFER TAXES. Any liability arising out of any
real estate transfer Tax with respect to interests in real property owned
directly or indirectly by the Company or any of its Subsidiaries immediately
prior to the Merger, if applicable and due with respect to the Merger, shall be
borne by the Surviving Corporation or Parent and expressly shall not be a
liability of stockholders of the Company.
Section 5.16 OBLIGATIONS OF MERGER SUB. Parent shall take all action
necessary to cause Merger Sub and the Surviving Corporation to perform their
respective obligations under this Agreement, the Financing Commitments and any
New Financing Commitments.
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ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment (or waiver by all parties) at or prior to the
Effective Time of the following conditions:
(a) The Company Stockholder Approval shall have been obtained.
(b) No restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger and/or the other
transactions contemplated by this Agreement shall be in effect.
(c) (i) Any applicable waiting period under the HSR Act shall have
expired or been earlier terminated; (ii) any clearances or approvals required to
be obtained under the ECMR shall have been obtained; and (iii) any other Company
Approvals required to be obtained under other antitrust, competition, or similar
laws of any foreign jurisdiction for the consummation, as of the Effective Time,
of the Merger and the other transactions contemplated by this Agreement, other
than any Company Approvals the failure to obtain which would not have,
individually or in the aggregate, a Company Material Adverse Effect, shall have
been obtained.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger is further subject to
the fulfillment or waiver of the following conditions:
(a) Each of the representations and warranties of Parent and Merger
Sub set forth in this Agreement shall be true and correct (provided that any
representation or warranty of Parent or Merger Sub contained herein that is
subject to a materiality, Material Adverse Effect or similar qualification shall
not be so qualified for purposes of this paragraph) as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (provided that, to the extent any such representation or warranty speaks as
of a specified date, it need only be true and correct as of such specified
date), except in each case where the failure of such representations and
warranties to be true and correct do not and would not have a Parent Material
Adverse Effect;
(b) Parent shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time.
(c) Parent shall have delivered to the Company a certificate, dated
the Effective Time and signed by its Chief Executive Officer or another senior
executive officer, certifying to the effect that the conditions set forth in
Section 6.2(a) and 6.2(b) have been satisfied.
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Section 6.3 CONDITIONS TO OBLIGATION OF PARENT AND MERGER SUB TO
EFFECT THE MERGER. The obligation of Parent and Merger Sub to effect the Merger
is further subject to the fulfillment or waiver of the following conditions:
(a) Each of the representations and warranties of the Company (i) set
forth in Sections 3.1(a), 3.2(a), 3.2(b) (in the case of Section 3.2(b) of the
Company Disclosure Letter, solely the information regarding the number of shares
and exercise prices of the Company Stock Options), 3.2(c), 3.4(a), 3.4(c)(ii),
3.19 and 3.22 of the Agreement (the "SPECIFIED SECTIONS") shall be true and
correct in all material respects, in each case, as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date
(provided that, to the extent any such representation or warranty speaks as of a
specified date, it need only be true and correct as of such specified date),
(ii) set forth in Section 3.12(c) shall be true and correct in all respects as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date and (iii) set forth in this Agreement (other than the
Specified Sections and Section 3.12(c)) shall be true and correct (provided that
any representation or warranty of the Company contained herein that is subject
to a materiality, Material Adverse Effect or similar qualification shall not be
so qualified for purposes of this paragraph) as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date
(provided that, to the extent any such representation or warranty speaks as of a
specified date, it need only be true and correct as of such specified date),
except in each case of this clause (iii) only where the failure of such
representations and warranties to be true and correct do not and would not have
a Company Material Adverse Effect;
(b) The Company shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time.
(c) The Company shall have delivered to Parent a certificate, dated
the Effective Time and signed by its Chief Executive Officer or another senior
executive officer, certifying to the effect that the conditions set forth in
Section 6.3(a) and Section 6.3(b) have been satisfied.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION OR ABANDONMENT. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
any approval of the matters presented in connection with the Merger by the
stockholders of the Company:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Effective Time shall not have occurred on or before May
31, 2007 (the "END DATE"), and the party seeking to terminate this
Agreement pursuant to this Section 7.1(b)(i) shall not have breached its
obligations under this Agreement in any
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manner that shall have proximately caused the failure to consummate the
Merger on or before the End Date; PROVIDED, FURTHER, that the Company may
not terminate under this clause during the Marketing Period;
(ii) an injunction, other legal restraint or order shall have
been entered permanently restraining, enjoining or otherwise prohibiting
the consummation of the Merger and such injunction, other legal restraint
or order shall have become final and non-appealable, PROVIDED that the
party seeking to terminate this Agreement pursuant to this Section
7.1(b)(ii) shall have used its reasonable best efforts to remove such
injunction, other legal restraint or order in accordance with Section 5.6;
or (iii) the Company Meeting (including any adjournments thereof) shall
have concluded and the Company Stockholder Approval contemplated by this
Agreement shall not have been obtained;
(c) by the Company, if:
(i) Parent shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform (i) would result in a
failure of a condition set forth in Section 6.1 or Section 6.2 and (ii)
cannot be cured by the End Date, PROVIDED that the Company is not in
material breach of its representations, warranties, covenants or other
agreements contained in this Agreement and shall have given Parent written
notice, delivered at least thirty (30) days prior to such termination,
stating the Company's intention to terminate this Agreement pursuant to
this Section 7.1(c)(i) and the basis for such termination; or
(ii) prior to the receipt of the Company Stockholder Approval, (A)
the Board of Directors of the Company (or the Special Committee) has
received a Superior Proposal, (B) in light of such Superior Proposal a
majority of the disinterested directors of the Company (or the Special
Committee) shall have determined in good faith, after consultation with
outside counsel, that the failure to withdraw or modify its Recommendation
would be inconsistent with the Board of Directors of the Company's (or the
Special Committee's) exercise of its fiduciary duty under applicable Law,
(C) the Company has notified Parent in writing of the determinations
described in clause (B) above, (D) at least 5 Business Days following
receipt by Parent of the notice referred to in clause (C) above, and taking
into account any revised proposal made by Parent since receipt of the
notice referred to in clause (C) above (provided that the Company has
negotiated in good faith with Parent with respect to any such revised
proposal), such Superior Proposal remains a Superior Proposal and a
majority of the disinterested directors of the Company (or the Special
Committee) has again made the determinations referred to in clause (B)
above, (E) the Company is in compliance, in all material respects, with
Section 5.3, (F) the Company has previously paid, or contemporaneously with
such termination pays, the fee due under Section 7.2 and (G) the Board of
Directors of the Company has approved, and the Company concurrently enters
into, a definitive agreement providing for the implementation of such
Superior Proposal.
-46-
(d) by Parent, if:
(i) the Company shall have breached or failed to perform any
of its representations, warranties, covenants or other agreements contained
in this Agreement, which breach or failure to perform (i) would result in a
failure of a condition set forth in Section 6.1 or Section 6.3 and (ii)
cannot be cured by the End Date, PROVIDED that Parent is not in material
breach of its representations, warranties, covenants or other agreements
contained in this Agreement and shall have given the Company written
notice, delivered at least thirty (30) days prior to such termination,
stating Parent's intention to terminate this Agreement pursuant to this
Section 7.1(d)(i) and the basis for such termination;
(ii) the Board of Directors of the Company or the Special
Committee withdraws, modifies or qualifies in a manner adverse to Parent or
Merger Sub, or publicly proposes to withdraw, modify or qualify, in a
manner adverse to Parent or Merger Sub, its Recommendation, fails to
recommend to the Company's stockholders that they give the Company
Stockholder Approval or approves, endorses or recommends, or publicly
proposes to approve, endorse or recommend, any Alternative Proposal; or
(iii) the Company gives Parent the notification contemplated by
Section 7.1(c)(ii)(C).
(e) In the event of termination of this Agreement pursuant to
this Section 7.1, this Agreement shall terminate (except for the Confidentiality
Agreement, the Limited Guarantees and the provisions of this Section 7.1(e),
Section 7.2 and Article VIII), and there shall be no other liability on the part
of the Company or Parent and Merger Sub to the other except liability arising
out of any willful breach of any of the representations, warranties or covenants
in this Agreement by the Company (subject to the express limitations set forth
in this Agreement), or as provided for in the Confidentiality Agreement or the
Limited Guarantees, in which case the aggrieved party shall be entitled to all
rights and remedies available at Law or in equity.
Section 7.2 TERMINATION FEES.
(a) In the event that:
(i) (A) a bona fide Alternative Proposal, whether or not
conditional, shall have been made known to the Company or shall have been
made directly to its stockholders generally or any person shall have
publicly announced a bona fide intention (not subsequently withdrawn) to
make an Alternative Proposal and (B) following the occurrence of an event
described in the preceding clause (A), this Agreement is terminated by
Parent pursuant to Section 7.1(b)(i), Section 7.1(b)(iii) (so long as the
Alternative Proposal was publicly disclosed prior to, and had not been
withdrawn at, the time of the Company Meeting) or Section 7.1(d)(i), and
(C) the Company enters into a definitive agreement with respect to, or
consummates, a transaction contemplated by any Alternative Proposal
(whether or not such Alternative Proposal was the same Alternative Proposal
referred to in the foregoing clause (A)) within twelve (12) months of the
date
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this Agreement is terminated (PROVIDED that for purposes of this Section
7.2(a)(i), the references to "20%" in the definition of Alternative
Proposal shall be deemed to be references to "50%"); or
(ii) this Agreement is terminated by the Company pursuant to
Section 7.1(c)(ii); or
(iii) this Agreement is terminated by Parent pursuant to Section
7.1(d)(i) on the basis of a willful breach or willful failure to perform by
the Company, 7.1(d)(ii) or 7.1(d)(iii);
then in any such event under clause (i), (ii) or (iii) of this Section 7.2(a),
the Company shall pay to Parent a termination fee of $33 million in cash, less
any Parent Expenses, if any, previously paid in accordance with Section 7.2(b)
(such net amount the "TERMINATION FEE"), it being understood that in no event
shall the Company be required to pay the Termination Fee on more than one
occasion.
(b) In the event that this Agreement is terminated by Parent under the
provisions referred to in clause (B) of Section 7.2(a)(i) and the circumstances
referred to in clause (A) of Section 7.2(a)(i) shall have occurred prior to such
termination but the Termination Fee (or any portion thereof) has not been paid
and is not payable because the circumstances referred to in clause (C) of
Section 7.2(a)(i) shall not have occurred, then the Company shall pay, to an
account or accounts designated by Parent, as promptly as possible (but in any
event within two Business Days) following receipt of an invoice therefor all of
Parent's and Merger Sub's actual and reasonably documented out-of-pocket fees
and expenses (including legal fees and expenses) actually incurred by Parent,
Merger Sub and their Affiliates on or prior to the termination of this Agreement
in connection with the transactions contemplated by this Agreement ("PARENT
EXPENSES"), which amount shall not be greater than $5 million; PROVIDED, that
the existence of circumstances which could require the Termination Fee to become
subsequently payable by the Company pursuant to Section 7.2(a)(i) shall not
relieve the Company of its obligations to pay the Parent Expenses pursuant to
this Section 7.2(b); and PROVIDED, FURTHER that the payment by the Company of
Parent Expenses pursuant to this Section 7.2(b) shall not relieve the Company of
any subsequent obligation to pay the Termination Fee pursuant to Section
7.2(a)(i).
(c) In the event that (i) (x) the Company shall terminate this
Agreement pursuant to Section 7.1(c)(i) on the basis of a willful breach or
willful failure to perform by Parent or Merger Sub and (y) at the time of such
termination there is no state of facts or circumstances that would reasonably be
expected to cause the conditions in Section 6.1, Section 6.3(a) or Section
6.3(b) not to be satisfied on the End Date assuming the Closing were to be
scheduled on the End Date, or (ii) Parent or the Company shall terminate this
Agreement pursuant to Section 7.1(b)(i) and the conditions set forth in Section
6.1, Section 6.3(a) and Section 6.3(b) shall have been satisfied either (A) at
the time of such termination, or (B) if earlier, on the last day of the
Marketing Period if the Merger shall not have been consummated as of the end of
the Marketing Period, then Parent shall pay to the Company a termination fee of
$33 million in cash (the "PARENT TERMINATION FEE"), it being understood that in
no event shall Parent be required to pay the Parent Termination Fee on more than
one occasion.
-48-
(d) Any payment required to be made pursuant to clause (i) of Section
7.2(a) shall be made to Parent promptly following the earlier of the execution
of a definitive agreement with respect to, or the consummation of, any
transaction contemplated by an Alternative Proposal (and in any event not later
than two Business Days after delivery to the Company of notice of demand for
payment); any payment required to be made pursuant to clause (ii) of Section
7.2(a) shall be made to Parent concurrently with, and as a condition to the
effectiveness of, the termination of this Agreement by the Company pursuant to
Section 7.1(c)(ii); any payment required to be made pursuant to clause (iii) of
Section 7.2(a) shall be made to Parent promptly following termination of this
Agreement by Parent pursuant to Section 7.1(d)(i), (ii) or (iii), as applicable
(and in any event not later than two Business Days after delivery to the Company
of notice of demand for payment), and such payment shall be made by wire
transfer of immediately available funds to an account to be designated by
Parent. Any payment required to be made pursuant to Section 7.2(b) shall be made
to the Company promptly following termination of this Agreement by the Company
or Parent, as the case may be (and in any event not later than two Business Days
after delivery to Parent of notice of demand for payment), and such payment
shall be made by wire transfer of immediately available funds to an account to
be designated by the Company.
(e) In the event that the Company shall fail to pay the Termination
Fee, or Parent shall fail to pay the Parent Termination Fee, required pursuant
to this Section 7.2 when due, such fee shall accrue interest for the period
commencing on the date such fee became past due, at a rate equal to the rate of
interest publicly announced by JPMorgan Chase Bank, National Association, in the
City of New York from time to time during such period, as such bank's prime
lending rate. In addition, if either party shall fail to pay such fee when due,
then such owing party shall also pay to the owed party all of the owed party's
costs and expenses (including attorneys' fees) in connection with efforts to
collect such fee.
(f) Each of the parties hereto acknowledges that the agreements
contained in this Section 7.2 are an integral part of the transactions
contemplated by this Agreement and that neither the Termination Fee nor the
Parent Termination Fee is a penalty, but rather is liquidated damages in a
reasonable amount that will compensate Parent and Merger Sub or the Company, as
the case may be, for the efforts and resources expended and opportunities
foregone while negotiating this Agreement and in reliance on this Agreement and
on the expectation of the consummation of the transactions contemplated hereby,
which amount would otherwise be impossible to calculate with precision.
Notwithstanding anything to the contrary in this Agreement, the payment of the
Parent Termination Fee by Parent or the Guarantors pursuant to this Section 7.2
and the Limited Guarantees shall be the sole and exclusive remedy available to
the Company, its Affiliates and its Subsidiaries against Parent, Merger Sub, the
Guarantors and any of their respective former, current, or future general or
limited partners, stockholders, managers, members, directors, officers,
Affiliates or agents with respect to this Agreement and the transactions
contemplated hereby, including for any loss suffered as a result of the failure
of the Merger to be consummated, under any theory or for any reason, and upon
payment of such amount in full by Parent, none of Parent, Merger Sub, the
Guarantors or any of their respective former, current, or future general or
limited partners, stockholders, managers, members, directors, officers,
Affiliates or agents shall have any further liability or obligation relating to
or arising out of this Agreement or the transactions contemplated by this
Agreement; provided, however, that
-49-
the Company shall also be entitled to payment of the amounts contemplated by
Sections 5.10 and 7.2(d) of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the occurrence of the Merger.
Section 8.2 EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated hereby shall be paid by the party incurring or
required to incur such expenses, except as otherwise set forth in Section 7.2 or
in the Limited Guarantees.
Section 8.3 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more consecutive counterparts (including by facsimile), each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 8.4 GOVERNING LAW. This Agreement, and all claims or causes of
action (whether at Law, in contract or in tort) that may be based upon, arise
out of or relate to this Agreement or the negotiation, execution or performance
hereof, shall be governed by and construed in accordance with the Laws of the
State of Delaware (other than with respect to matters governed by CBCA, with
respect to which such Laws apply), without giving effect to any choice or
conflict of Law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of Delaware.
Section 8.5 JURISDICTION; ENFORCEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that prior to the termination of
this Agreement in accordance with Article VII the parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement exclusively in
any federal or state court located in the State of Delaware, this being in
addition to any other remedy which they are entitled at Law or in equity;
PROVIDED, HOWEVER that the Company shall not be entitled to an injunction or
injunctions to prevent Parent from failing to, or to specifically enforce
Parent's obligation to, effect the Closing pursuant to Article I and satisfy its
obligation to make the payment pursuant to Article II (except that the Company
shall be entitled to specifically enforce such payment obligation if the Closing
has occurred), and the Company's sole and exclusive remedy under this Agreement
for such failure shall be payment by Parent to the Company pursuant to Section
7.2(c). In addition, each of the parties hereto irrevocably agrees that any
legal action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Agreement and
-50-
the rights and obligations arising hereunder brought by the other party hereto
or its successors or assigns, shall be brought and determined exclusively in any
federal or state court located in the State of Delaware. Each of the parties
hereto hereby irrevocably submits with regard to any such action or proceeding
for itself and in respect of its property, generally and unconditionally, to the
personal jurisdiction of the aforesaid courts and agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated
hereby in any court other than the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above named courts for any reason other than the failure to
serve in accordance with this Section 8.5, (b) any claim that it or its property
is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise) and (c) to the fullest extent permitted by applicable
Law, any claim that (i) the suit, action or proceeding in such court is brought
in an inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.
Section 8.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.7 NOTICES. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission (PROVIDED that
any notice received by facsimile transmission or otherwise at the addressee's
location on any Business Day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
Business Day), by reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
To Parent or Merger Sub:
MDI Holdings, LLC
c/o Court Square Capital Partners, L.P.
399 Park Avenue, 14th Floor
New York, New York 10043
Telecopy: (212) 888-2940
Attention: Joseph Silvestri
-51-
with a copy to:
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, Pennsylvania 19104
Telecopy: (215) 994-2222
Attention: G. Daniel O'Donnell
Geraldine A. Sinatra
To the Company:
MacDermid, Incorporated
245 Freight Street
Waterbury, Connecticut 06702
Telecopy: (203) 575-7970
Attention: John Cordani
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2000
Attention: Edward D. Herlihy
Lawrence S. Makow
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated or personally delivered or three (3) Business Days after
mailed. Any party to this Agreement may notify any other party of any changes to
the address or any of the other details specified in this paragraph; PROVIDED,
HOWEVER, that such notification shall only be effective on the date specified in
such notice or five (5) Business Days after the notice is given, whichever is
later. Rejection or other refusal to accept or the inability to deliver because
of changed address of which no notice was given shall be deemed to be receipt of
the notice as of the date of such rejection, refusal or inability to deliver.
Section 8.8 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties, except that Parent or Merger Sub may
assign, in its sole discretion, any of or all of its rights, interest and
obligations under this Agreement to (a) Parent or to any direct or indirect
wholly owned subsidiary of Parent, or (b) its lenders and debt providers for
collateral security purposes only, but no such assignment under clause (a) or
(b) shall relieve Parent or Merger Sub of its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
-52-
Parent shall cause Merger Sub, and any assignee thereof, to perform its
obligations under this Agreement and shall be responsible for any failure of
Merger Sub or such assignee to comply with any representation, warranty,
covenant or other provision of this Agreement.
Section 8.9 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.10 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the exhibits and letters hereto), the Confidentiality
Agreement and the Limited Guarantees constitute the entire agreement, and
supersede all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof
and thereof and, except as set forth in Section 5.9, is not intended to and
shall not confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.11 AMENDMENTS; WAIVERS. At any time prior to the Effective
Time, any provision of this Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company (approved by the Special Committee), Parent and Merger Sub, or in
the case of a waiver, by the party against whom the waiver is to be effective
(and, in the case of the Company, as approved by the Special Committee);
PROVIDED, HOWEVER, that after receipt of Company Stockholder Approval, if any
such amendment or waiver shall by applicable Law or in accordance with the rules
and regulations of the New York Stock Exchange require further approval of the
stockholders of the Company, the effectiveness of such amendment or waiver shall
be subject to the approval of the stockholders of the Company. Notwithstanding
the foregoing, no failure or delay by the Company or Parent in exercising any
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right hereunder.
Section 8.12 HEADINGS. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever. The table of contents to this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.13 INTERPRETATION. When a reference is made in this
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Agreement 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 to any particular provision of
this Agreement. The word "or" shall be deemed to mean "and/or." All terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as
-53-
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. Each of the parties
has participated in the drafting and negotiation of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement must be
construed as if it is drafted by all the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of authorship
of any of the provisions of this Agreement.
Section 8.14 NO RECOURSE. This Agreement may only be enforced against,
and any claims or causes of action that may be based upon, arise out of or
relate to this Agreement, or the negotiation, execution or performance of this
Agreement may only be made against the entities that are expressly identified as
parties hereto or the Guarantors and no past, present or future Affiliate,
director, officer, employee, incorporator, member, manager, partner,
stockholder, agent, attorney or representative of any party hereto (other than
the Guarantors) shall have any liability for any obligations or liabilities of
the parties to this Agreement or for any claim based on, in respect of, or by
reason of, the transactions contemplated hereby.
Section 8.15 DETERMINATIONS BY THE COMPANY. Whenever a determination,
decision or approval by the Company is called for in this Agreement, such
determination, decision or approval must be authorized by the Special Committee
or, if the Special Committee is not then in existence, the Company's Board of
Directors.
Section 8.16 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms will have the following meanings when used herein:
(a) "AFFILIATES" shall mean, as to any person, any other person which,
directly or indirectly, controls, or is controlled by, or is under common
control with, such person. As used in this definition, "CONTROL" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a person, whether through the
ownership of securities or partnership or other ownership interests, by contract
or otherwise.
(b) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
a day on which the banks in New York are authorized by Law or executive order to
be closed.
(c) "COMPANY STOCK PLANS" means the Company's Amended and Restated
1992 Special Stock Purchase Plan, the Company's 1998 Stock Option Plan, the
Company's 2001 All Employee Option Plan, the Company's 2001 Key Executive
Performance Equity Plan, the Company's 2006 Stock Option Plan and the Company's
1995 Equity Incentive Plan.
(d) "CONTRACTS" means any contracts, agreements, licenses, notes,
bonds, mortgages, indentures, commitments, leases or other instruments or
obligations, whether written or oral.
-54-
(e) "KNOWLEDGE" means (i) with respect to Parent, the actual knowledge
after due inquiry of the individuals listed on Section 8.16(e)(i) of the Parent
Disclosure Letter and (ii) with respect to the Company, the actual knowledge
after due inquiry of the individuals listed on Section 8.16(e)(ii) of the
Company Disclosure Letter.
(f) "ORDERS" means any orders, judgments, injunctions, awards, decrees
or writs handed down, adopted or imposed by, including any consent decree,
settlement agreement or similar written agreement with, any Governmental Entity.
(g) "PERSON" or "PERSON" shall mean an individual, a corporation, a
partnership, a limited liability company, an association, a trust or any other
entity, group (as such term is used in Section 13 of the Exchange Act) or
organization, including, without limitation, a Governmental Entity, and any
permitted successors and assigns of such person.
(h) "ROLLOVER COMMITMENT" means the commitment made by a Person listed
on Section 8.16(g) of the Parent Disclosure Letter in such Person's equity
rollover letter, which has been executed and which is valid and binding.
(i) "SPECIAL COMMITTEE" means the special committee of the Company's
Board of Directors, the members of which are not affiliated with Parent or
Merger Sub and are not members of the Company's management, formed on September
5, 2006 for the purpose of evaluating, and making a recommendation to the full
Board of Directors of the Company with respect to, this Agreement and the
transactions contemplated hereby, certain proposed transactions including the
Merger, and shall include any successor committee to the Special Committee
existing as of the date of this Agreement or any reconstitution thereof.
(j) "SUBSIDIARIES" of any party shall mean any corporation,
partnership, association, trust or other form of legal entity of which (i) more
than 50% of the outstanding voting securities are on the date hereof directly or
indirectly owned by such party, or (ii) such party or any Subsidiary of such
party is a general partner (excluding partnerships in which such party or any
Subsidiary of such party does not have a majority of the voting interests in
such partnership).
(k) Each of the following terms is defined on the page set forth
opposite such term:
"ACTION".....................................................................40
"AFFILIATE TRANSACTION"......................................................17
"AFFILIATES".................................................................54
"AGREEMENT"...................................................................1
"ALTERNATIVE PROPOSAL".......................................................33
"BOOK-ENTRY SHARES"...........................................................5
"BUSINESS DAY"...............................................................54
"CANCELLED SHARES"............................................................4
"CBCA"........................................................................2
"CERTIFICATE OF MERGER".......................................................2
"CERTIFICATES"................................................................5
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"CLOSING DATE"................................................................2
"CLOSING".....................................................................2
"CODE"........................................................................6
"COMPANY APPROVALS"..........................................................11
"COMPANY BENEFIT PLANS"......................................................15
"COMPANY CERTIFICATE".........................................................3
"COMPANY COMMON STOCK"........................................................3
"COMPANY DISCLOSURE LETTER"...................................................8
"COMPANY EMPLOYEES"..........................................................35
"COMPANY FOREIGN PLAN".......................................................15
"COMPANY MATERIAL ADVERSE EFFECT".............................................8
"COMPANY MATERIAL CONTRACTS".................................................22
"COMPANY MEETING"............................................................35
"COMPANY PERMITS"............................................................13
"COMPANY PREFERRED STOCK".....................................................9
"COMPANY RESTRICTED SHARES"...................................................7
"COMPANY RETIREE WELFARE PROGRAMS"...........................................36
"COMPANY SEC DOCUMENTS"......................................................12
"COMPANY STOCK OPTION"........................................................7
"COMPANY STOCK PLANS"........................................................54
"COMPANY STOCKHOLDER APPROVAL"...............................................21
"COMPANY".....................................................................1
"CONFIDENTIALITY AGREEMENT"..................................................31
"CONTRACTS"..................................................................54
"CONTROL"....................................................................54
"CONTROLLED GROUP LIABILITY".................................................15
"CURRENT POLICY".............................................................40
"DEBT COMMITMENT LETTERS"....................................................24
"DEBT FINANCING".............................................................24
"DISSENTING SHARES............................................................4
"DISSENTING STOCKHOLDERS".....................................................4
"ECMR".......................................................................11
"EFFECTIVE TIME"..............................................................2
"END DATE"...................................................................45
"ENVIRONMENTAL LAW"..........................................................14
"ERISA"......................................................................15
"EXCHANGE ACT"...............................................................11
"EXCHANGE FUND"...............................................................5
"EXCLUDED SHARES".............................................................4
"FINANCING COMMITMENTS"......................................................24
"FINANCING"..................................................................24
"GAAP".......................................................................12
"GOVERNMENTAL ENTITY"........................................................11
"GUARANTORS"..................................................................1
"HAZARDOUS SUBSTANCE"........................................................14
"HSR ACT"....................................................................11
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"INDEMNIFIED PARTY"..........................................................39
"INTELLECTUAL PROPERTY"......................................................20
"KNOWLEDGE"..................................................................55
"LAW"........................................................................13
"LAWS".......................................................................13
"LIEN".......................................................................11
"LIMITED GUARANTEES"..........................................................1
"MARKETING PERIOD"............................................................2
"MERGER CONSIDERATION"........................................................3
"MERGER SUB"..................................................................1
"MERGER"......................................................................1
"MULTIEMPLOYER PLAN".........................................................15
"NEW FINANCING COMMITMENTS"..................................................41
"NEW PLANS"..................................................................35
"OLD PLANS"..................................................................36
"ORDERS".....................................................................55
"PARENT APPROVALS"...........................................................24
"PARENT DISCLOSURE LETTER"...................................................23
"PARENT EXPENSES"............................................................48
"PARENT MATERIAL ADVERSE EFFECT".............................................23
"PARENT TERMINATION FEE".....................................................48
"PARENT"......................................................................1
"PAYING AGENT"................................................................5
"PBGC".......................................................................16
"PERSON".....................................................................55
"PERSON".....................................................................55
"PROXY STATEMENT"............................................................18
"RECOMMENDATION".............................................................11
"REGULATORY LAW".............................................................38
"RELEASE"....................................................................14
"REMAINING SHARES"............................................................3
"REPRESENTATIVES"............................................................31
"REQUIRED FINANCIAL INFORMATION".............................................41
"ROLLOVER COMMITMENT"........................................................55
"SARBANES-OXLEY ACT".........................................................12
"SCHEDULE 13E-3".............................................................18
"SEC"........................................................................12
"SECURITIES ACT".............................................................12
"SHARE".......................................................................3
"SPECIAL COMMITTEE"..........................................................55
"SUBSIDIARIES"...............................................................55
"Subsidiary".................................................................10
"SUPERIOR PROPOSAL"..........................................................33
"SURVIVING CORPORATION".......................................................2
"TAX RETURN".................................................................19
"TAX"........................................................................19
-57-
"TAXES"......................................................................19
"TERMINATION DATE"...........................................................27
"TERMINATION FEE"............................................................48
"VOTING AGREEMENT"............................................................1
-58-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
MDI HOLDINGS, LLC
By: /s/ Joseph M. Silvestri
------------------------
Name: Joseph M. Silvestri
Title: President
MATRIX ACQUISITION CORP.
By: /s/ Joseph M. Silvestri
------------------------
Name: Joseph M. Silvestri
Title: President
MACDERMID, INCORPORATED
By: /s/ T. Quinn Spitzer, Jr.
------------------------
Name: T. Quinn Spitzer, Jr.
Title: Lead Director