AGREEMENT AND PLAN OF MERGER Dated as of July 3, 2007 among WATSCO, INC., COCONUT GROVE HOLDINGS, INC. and ACR GROUP, INC.
Dated
as
of July 3, 2007
among
WATSCO,
INC.,
COCONUT
GROVE HOLDINGS, INC.
and
ACR
GROUP, INC.
TABLE
OF CONTENTS
PAGE
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ARTICLE
I The Offer
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2
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Section
1.1
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The
Offer.
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2
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Section
1.2
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Company
Action.
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3
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Section
1.3
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Directors.
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3
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Section
1.4
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90%
Top-Up Option.
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3
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ARTICLE
II The Merger
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3
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Section
2.1
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The
Merger.
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3
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Section
2.2
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Closing.
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3
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Section
2.3
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Effective
Time.
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3
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Section
2.4
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Effects
of the Merger.
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3
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Section
2.5
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Certificate of
Formation and By-laws of the Surviving Corporation.
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3
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Section
2.6
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Directors
and Officers of the Surviving Corporation.
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3
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ARTICLE
III Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
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3
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Section
3.1
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Effect
on Capital Stock.
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3
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Section
3.2
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Exchange
of Certificates.
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3
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Section
3.3
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Adjustments.
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3
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ARTICLE
IV Representations and Warranties of the
Company
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3
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Section
4.1
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Organization,
Standing and Corporate Power.
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3
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Section
4.2
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Capitalization.
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3
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Section
4.3
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Authority;
Noncontravention; Voting Requirements.
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3
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Section
4.4
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Governmental
Approvals.
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3
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Section
4.5
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Company
SEC Documents; Undisclosed Liabilities.
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3
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Section
4.6
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Absence
of Certain Changes.
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3
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Section
4.7
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Legal
Proceedings.
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3
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Section
4.8
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Compliance
With Laws; Permits.
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3
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Section
4.9
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Information
Supplied.
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3
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Section
4.10
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Tax
Matters.
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3
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Section
4.11
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Employee
Benefits and Labor Matters.
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3
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Section
4.12
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Environmental
Matters.
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3
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Section
4.13
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Properties.
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3
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Section
4.14
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Opinion
of Financial Advisor.
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3
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Section
4.15
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Brokers
and Other Advisors.
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3
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Section
4.16
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Takeover
Statutes.
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3
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Section
4.17
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Material
Contracts.
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3
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Section
4.18
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Intellectual
Property Matters.
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3
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Section
4.19
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Insurance.
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3
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Section
4.20
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Inventory.
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3
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Section
4.21
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Accounts
Receivable.
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3
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Section
4.22
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Ethical
Practices.
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3
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Section
4.23
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Related
Party Transactions.
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3
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i
Section
4.24
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Customers
and Suppliers.
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3
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Section
4.25
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Standstill
Agreements.
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3
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ARTICLE
V Representations and Warranties of Parent and Merger
Sub
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3
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Section
5.1
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Organization;
Standing.
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3
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Section
5.2
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Authority;
Noncontravention.
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3
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Section
5.3
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Governmental
Approvals.
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3
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Section
5.4
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Information
Supplied.
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3
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Section
5.5
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Ownership
and Operations of Merger Sub.
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3
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Section
5.6
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Financing.
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3
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Section
5.7
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Brokers
and Other Advisors.
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3
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Section
5.8
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No
Ownership of Company Common Stock.
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3
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ARTICLE
VI Additional Covenants and Agreements
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3
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Section
6.1
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Company
Disclosure Documents; Shareholders Meeting; Short-Form
Merger.
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3
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Section
6.2
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Conduct
of Business.
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3
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Section
6.3
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No
Solicitation.
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3
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Section
6.4
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Reasonable
Best Efforts.
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3
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Section
6.5
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Public
Announcements.
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3
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Section
6.6
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Access
to Information; Confidentiality.
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3
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Section
6.7
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Notification
of Certain Matters.
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3
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Section
6.8
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Insurance.
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3
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Section
6.9
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Fees
and Expenses.
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3
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Section
6.10
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Rule 16b-3.
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3
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Section
6.11
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401(k)
Plan.
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3
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Section
6.12
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Delisting.
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3
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Section
6.13
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Cooperation
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3
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Section
6.14
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FIRPTA
Certificate.
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3
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Section
6.15
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Company
Compensation Arrangements.
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3
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ARTICLE
VII Conditions Precedent
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3
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Section
7.1
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Conditions
to Each Party’s Obligation to Effect the Merger.
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3
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ARTICLE
VIII Termination
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3
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Section
8.1
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Termination.
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3
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Section
8.2
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Effect
of Termination.
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3
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Section
8.3
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Termination
Fee.
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3
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Section
8.4
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Remedies.
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3
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ARTICLE
IX Miscellaneous
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3
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Section
9.1
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No
Survival of Representations and Warranties.
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3
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Section
9.2
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Amendment
or Supplement.
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3
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Section
9.3
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Extension
of Time, Waiver, Etc.
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3
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Section
9.4
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Assignment.
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3
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Section
9.5
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Counterparts.
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3
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Section
9.6
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Entire
Agreement; No Third-Party Beneficiaries.
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3
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ii
Section
9.7
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Governing
Law; Jurisdiction; Waiver of Jury Trial.
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3
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Section
9.8
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Specific
Enforcement.
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3
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Section
9.9
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Notices.
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3
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Section
9.10
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Severability.
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3
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Section
9.11
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Definitions.
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3
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Section
9.12
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Interpretation.
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3
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INDEX
OF ANNEXES
Annex
I
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Conditions
to the Offer
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INDEX
OF EXHIBITS
Exhibit
A
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Form
of Sale and Support Agreement
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iii
This
AGREEMENT AND PLAN OF MERGER, dated as of July 3, 2007 (this
“Agreement”), is by and among Watsco, Inc., a Florida
corporation (“Parent”), Coconut Grove Holdings, Inc., a Texas
corporation (“Merger Sub”) and ACR Group, Inc., a Texas corporation (the
“Company”). Certain capitalized terms used in this Agreement are
used as defined in Section 9.11.
WHEREAS,
it is proposed that Merger Sub shall commence a tender offer (as it may be
amended from time to time in accordance with this Agreement, the “Offer”)
to purchase all of the outstanding shares of common stock, par value $0.01
per
share, of the Company (“Company Common Stock”) (other than Company
Restricted Shares, Converted Company Restricted Shares and Committed Shares
as
defined herein) at a price of $6.75 per share (such amount, or any different
amount per share offered pursuant to the Offer in accordance with the terms
of
this Agreement, the “Offer Price”), on the terms and subject to the
conditions set forth herein;
WHEREAS,
it is also proposed that, following the consummation of the Offer, Merger Sub
will merge with and into the Company (the “Merger”), and each share
of Company Common Stock that is not tendered and accepted pursuant to the Offer
will thereupon be cancelled and converted into the right to receive cash in
an
amount equal to the Offer Price, on the terms and subject to the conditions
set
forth herein, in accordance with the Texas Business Corporation Act (the
“TBCA”) and Texas Business Organization Code (the “TBOC”), upon
the terms and subject to the conditions set forth herein;
WHEREAS,
the Board of Directors of Parent and Merger Sub and the Company’s Board of
Directors have each unanimously approved and adopted this Agreement and
deem it advisable and in the best interests of their respective shareholders
to
consummate the Offer, the Merger and the other transactions contemplated hereby,
on the terms and subject to the conditions set forth herein; and
WHEREAS,
concurrently with the execution and delivery of this Agreement, and as a
condition and inducement to Parent’s and Merger Sub’s willingness to enter into
this Agreement, certain shareholders of the Company are entering into a Sale
and
Support Agreement substantially in the form attached hereto as Exhibit A
(the “Sale and Support Agreement”).
NOW,
THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained in this Agreement, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
1
ARTICLE
I
The
Offer
Section
1.1 The
Offer.
(a) Provided
that nothing shall have occurred that, had the Offer been commenced, would
give
rise to a right to terminate the Offer pursuant to any of the conditions set
forth in Annex I, as promptly as practicable after the date hereof,
Merger Sub shall, and Parent shall cause Merger Sub to, commence (within the
meaning of Rule 14d-2 under the Exchange Act) the Offer at the Offer
Price. Parent’s and Merger Sub’s obligation to accept and pay for
shares of Company Common Stock tendered in the Offer shall be subject to the
condition that there shall be validly tendered in accordance with the terms
of
the Offer, prior to the scheduled expiration of the Offer (as it may be extended
hereunder) and not withdrawn, a number of shares of Company Common Stock that,
together with the shares of Company Common Stock subject to a Sale and Support
Agreement (the “Committed Shares”), represents at least two-thirds (or
such lesser number as may be determined by Parent and Merger Sub) of all shares
of Company Common Stock then outstanding (the “Minimum Condition”) and to
the other conditions set forth in Annex I. Merger Sub
expressly reserves the right to waive any of the conditions to the Offer and
to
make any change in the terms of or conditions to the Offer; provided
that unless otherwise provided by this Agreement, the Sale and Support Agreement
or previously approved by the Company in writing, (i) the Minimum Condition
may
not be waived below that number of shares of Company Common Stock that, together
with the Committed Shares, represents a majority of all shares of Company Common
Stock then outstanding, (ii) no change may be made that changes
the form of consideration to be paid pursuant to the Offer, decreases the Offer
Price or the number of shares of Company Common Stock sought in the Offer,
imposes conditions to the Offer in addition to those set forth in Annex
I, or otherwise amends or modifies the Offer in any manner materially
adverse to the holders of shares of Company Common Stock and (iii) the Offer
may
not be extended except as set forth in this
Section 1.1(a). Subject to the terms and conditions of this
Agreement, the Offer shall expire at midnight, New York City time, on the date
that is 20 Business Days (for this purpose calculated in accordance with
Section 14d-1(g)(3) under the Exchange Act) after the date that the Offer
is commenced. Merger Sub shall extend the Offer (1) if, at the
scheduled or extended expiration date of the Offer, any of the conditions to
the
Offer shall not have been satisfied or waived, from time to time, until the
earliest to occur of (x) the satisfaction or waiver of such conditions, (y)
the
reasonable determination by Parent that any such condition to the Offer is
not
capable of being satisfied on or prior to the Walk-Away Date, provided
that the inability to satisfy such condition does not result from any breach
of
any provision of this Agreement by Parent or Merger Sub, and (z) the Walk-Away
Date, and (2) for any period required by any rule, regulation, interpretation
or
position of the SEC or the staff thereof applicable to the Offer or any period
required by applicable Law. Following expiration of the Offer, Merger
Sub may, in its sole discretion, provide one or more subsequent offering periods
(each, a “Subsequent Offering Period”) in accordance with Rule 14d-11 of
the Exchange Act, if, as of the commencement of each such period, the number
of
shares of Company Common Stock validly tendered and not withdrawn pursuant
to
the Offer and any prior Subsequent Offering Period, together with the Committed
Shares, is less than that number of shares of Company Common Stock necessary
to
permit the Merger to be effected without a meeting of shareholders of the
Company, in accordance with Section 5.16 of TBCA. Subject to the
foregoing, including the requirements of Rule 14d-11, and upon the terms and
subject to the conditions of the Offer, Merger Sub shall, and Parent shall
cause
Merger Sub to, accept for payment and pay for, as promptly as practicable,
all
shares of Company Common Stock (A) validly tendered and not withdrawn pursuant
to the Offer after the final expiration of the Offer and/or (B) validly tendered
in any Subsequent Offering Period. The Offer Price payable in respect
of each share of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer or validly tendered in any Subsequent Offering Period
shall be paid net to the holder thereof in cash, subject to reduction for any
applicable withholding Taxes.
2
(b) As
soon as practicable on the date of commencement of the Offer, Parent and Merger
Sub shall (i) file with the SEC a Tender Offer Statement on Schedule TO with
respect to the Offer (together with all amendments and supplements thereto
and
including exhibits thereto, the “Schedule TO”) that shall include the
summary term sheet required thereby and, as exhibits or incorporated by
reference thereto, the Offer to Purchase and forms of letter of transmittal
and
summary advertisement, if any, in respect of the Offer (collectively, together
with any amendments or supplements thereto, the “Offer Documents”), and
(ii) cause the Offer Documents to be disseminated to holders of shares of
Company Common Stock. The Company shall promptly furnish to Parent
and Merger Sub in writing all information concerning the Company that may be
required by applicable securities laws or reasonably requested by Parent or
Merger Sub for inclusion in the Schedule TO or the Offer
Documents. Each of Parent, Merger Sub and the Company agrees promptly
to correct any information provided by it for use in the Schedule TO and the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect. Parent and Merger Sub
agree to take all steps necessary to cause the Schedule TO as so corrected
to be
filed with the SEC and the Offer Documents as so corrected to be disseminated
to
holders of shares of Company Common Stock, in each case as and to the extent
required by applicable U.S. federal securities laws. The Company and
its counsel shall be given a reasonable opportunity to review and comment on
the
Schedule TO and the Offer Documents each time before any such document is filed
with the SEC, and Parent and Merger Sub shall give reasonable and good faith
consideration to any comments made by the Company and its
counsel. Parent and Merger Sub shall promptly provide the Company and
its counsel with (A) any comments or other communications, whether written
or
oral, that Parent, Merger Sub or their counsel may receive from time to time
from the SEC or its staff with respect to the Schedule TO or Offer Documents
promptly after receipt of those comments or other communications, and (B) a
reasonable opportunity to participate in the response of Parent and Merger
Sub
to those comments and to provide comments on that response (to which reasonable
and good faith consideration shall be given), including by participating with
Parent and Merger Sub or their counsel in any discussions or meetings with
the
SEC.
Section
1.2 Company
Action.
(a) (i)
The Company hereby consents to the Offer and represents that at a meeting duly
called and held prior to the execution of this Agreement at which all directors
of the Company were present, the Company’s Board of Directors duly and
unanimously adopted resolutions (A) declaring that this Agreement and the
Transactions, are in the best interests of the Company’s shareholders, (B)
approving and declaring advisable this Agreement and the Transactions and (C)
recommending that the Company’s shareholders accept the Offer, tender their
shares of Company Common Stock to Merger Sub pursuant to the Offer and, if
applicable, grant the Company Shareholder Approval (collectively, the
“Company Board Recommendation”). (ii) The Company hereby
consents to the inclusion of the foregoing determinations and approvals in
the
Offer Documents and, to the extent that no Adverse Recommendation Change shall
have occurred in accordance with Section 6.3, the Company hereby consents to
the
inclusion of the Company Board Recommendation in the Offer
Documents. The Company shall promptly furnish Parent with a list of
its shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of shares of Company
Common Stock and lists of securities positions of shares of Company Common
Stock
held in stock depositories, in each case true and correct as of the most recent
practicable date, and shall provide to Parent such additional information
(including updated lists of shareholders, mailing labels and lists of securities
positions) and such other assistance as Parent may reasonably request in
connection with the Offer. Parent and Merger Sub shall treat the
information contained in such labels, listing or files and any additional
information referred to in the preceding sentence in accordance with the terms
and conditions of the Confidentiality Agreement.
3
(b) As
soon as practicable on the day that the Offer is commenced, the Company shall
file with the SEC and disseminate to holders of shares of Company Common Stock,
in each case, as and to the extent required by applicable U.S. federal
securities laws, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the “Schedule
14D-9”) that, subject to Section 6.3, shall reflect the Company Board
Recommendation. Each of Parent and Merger Sub shall promptly furnish
to the Company in writing all information concerning Parent and Merger Sub
that
may be required by applicable securities laws or reasonably requested by the
Company for inclusion in the Schedule 14D-9. Each of the Company,
Parent and Merger Sub agrees promptly to correct any information provided by
it
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed
with the SEC and to be disseminated to holders of shares of Company Common
Stock, in each case as and to the extent required by applicable U.S. federal
securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 each time before it
is
filed with the SEC, and the Company shall give reasonable and good faith
consideration to any comments made by Parent, Merger Sub and their
counsel. The Company shall promptly provide Parent, Merger Sub and
their counsel with (i) any comments or other communications, whether written
or
oral, that the Company or its counsel may receive from time to time from the
SEC
or its staff with respect to the Schedule 14D-9 promptly after receipt of those
comments or other communications, and (ii) a reasonable opportunity to
participate in the Company’s response to those comments and to provide comments
on that response (to which reasonable and good faith consideration shall be
given), including by participating with the Company or its counsel in any
discussions or meetings with the SEC.
Section
1.3 Directors.
(a) Effective
upon the acceptance for payment of the number of shares of Company Common Stock
constituting at least the Minimum Condition pursuant to the Offer and subject
to
the conditions in Annex I, Parent shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company’s Board
of Directors that equals the product of (x) the total number of directors on
the
Company’s Board of Directors (giving effect to the election of any additional
directors pursuant to this Section), and (y) the percentage that the number
of
shares of Company Common Stock beneficially owned by Parent and/or Merger Sub
(including shares of Company Common Stock accepted for payment) bears to the
total number of shares of Company Common Stock then outstanding, and the Company
shall take all action necessary to cause Parent’s designees to be elected or
appointed to the Company’s Board of Directors, including increasing the number
of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company shall take all action necessary
to cause individuals designated by Parent to constitute the number of members,
rounded up to the next whole number, on (i) each committee of the Company’s
Board of Directors and (ii) each Board of Directors of each Subsidiary of the
Company (and each committee thereof) that represents the same percentage as
such
individuals represent on the Company’s Board of Directors, in each case to the
fullest extent permitted by applicable Law. Notwithstanding the
foregoing, until Parent and/or Merger Sub acquires a majority of the outstanding
shares of Company Common Stock on a fully diluted basis, the Company shall
use
its reasonable best efforts to ensure that all of the members of the Company’s
Board of Directors and such committees and boards as of the date hereof who
are
not employees of the Company shall remain members of the Company’s Board of
Directors and such committees and boards.
4
(b) The
Company’s obligations to appoint Parent’s designees to the Company’s Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors, as Section 14(f) and
Rule 14f-1 require in order to fulfill its obligations under this
Section. Parent shall supply to the Company in writing any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) Following
the election or appointment of Parent’s designees pursuant to
Section 1.3(a) and until the Effective Time, the approval of a majority of
the directors of the Company then in office who were not designated by Parent
(the “Continuing Directors”) (or the approval of the sole Continuing
Director if there shall be only one Continuing Director) shall be required
to
authorize (and such authorization shall constitute the authorization of the
Company’s Board of Directors and no other action on the part of the Company,
including any action by any other director of the Company, shall be required
to
authorize) any termination of this Agreement by the Company, any amendment
of
this Agreement, including any decrease in or change of form of the Merger
Consideration, any extension of time for performance of any obligation or action
hereunder by Parent or Merger Sub, any waiver of compliance with any of the
agreements or conditions contained herein for the benefit of the Company, and
any amendment or change to Section 6.8. Following the election or
appointment of Parent’s designees pursuant to Section 1.3(a) and until the
Effective Time, any actions with respect to the enforcement of this Agreement
by
the Company shall be effected only by the action of a majority of the Continuing
Directors (or the approval of the sole Continuing Director if there shall be
only one Continuing Director).
5
Section
1.4 90% Top-Up
Option.
(a) The
Company hereby irrevocably grants to Merger Sub an option (the “90% Top Up
Option”), exercisable upon the terms and conditions set forth in this
Section 1.4, to purchase that number of shares of Company Common Stock (the
“90% Top Up Option Shares”) equal to the lowest number of shares of
Company Common Stock that, when added to the number of Committed Shares, shall
constitute one share more than 90% of the shares of Company Common Stock then
outstanding (taking into account the issuance of the 90% Top Up Option Shares)
at an exercise price per share equal to the Offer Price; provided that
in no event shall the 90% Top Up Option be exercisable for a number of shares
of
Company Common Stock (i) that would require the Company to obtain shareholder
approval under applicable Law, or (ii) in excess of the Company’s then
authorized and unissued shares of Company Common Stock.
(b) Merger
Sub may exercise the 90% Top Up Option, in whole but not in part, at any time
after acceptance for payment by Merger Sub of the number of shares of Company
Common Stock constituting at least the Minimum Condition in accordance with
the
Offer and prior to the earlier to occur of (i) the Effective Time and (ii)
the
termination of this Agreement in accordance with its terms.
(c) Parent
and Merger Sub acknowledge that the shares of Company Common Stock which Merger
Sub may acquire upon exercise of the 90% Top Up Option will not be registered
under the Securities Act and will be issued in reliance upon an exemption
thereunder for transactions not involving a public offering. Parent
and Merger Sub represent and warrant to the Company that Merger Sub is, or
will
be upon the purchase of the 90% Top Up Option Shares, an “accredited investor”,
as defined in Rule 501 of Regulation D under the Securities
Act. Merger Sub agrees that the 90% Top Up Option and the 90% Top Up
Option Shares to be acquired upon exercise of the 90% Top Up Option are being
and will be acquired by Merger Sub for the purpose of investment and not with
a
view to, or for resale in connection with, any distribution thereof (within
the
meaning of the Securities Act).
ARTICLE
II
The
Merger
Section
2.1 The
Merger.Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the TBCA and the TBOC, at the
Effective Time, Merger Sub, an indirect wholly-owned subsidiary of Parent,
shall be merged with and into the Company, and the separate corporate
existence of Merger Sub shall thereupon cease, and the Company shall be the
surviving corporation in the Merger (the “Surviving
Corporation”).
Section
2.2 Closing.The
closing of the Merger (the “Closing”) shall take place at
10:00 a.m. (Houston, Texas time) on a date to be specified by
the parties (the “Closing Date”), which date shall be no later than
the fifth business day after satisfaction or waiver of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of
those conditions at such time), at the offices of Fulbright & Xxxxxxxx
L.L.P., Fulbright Tower, 0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, unless
another time, date or place is agreed to in writing by the parties
hereto.
6
Section
2.3 Effective
Time.Subject to the provisions of this Agreement, as soon as
practicable on the Closing Date the parties shall file with the Secretary
of State of the State of Texas the articles of merger, executed in
accordance with, and in such form as is required by, the
relevant provisions of the TBCA and TBOC (the “Articles of
Merger”). The Merger shall become effective upon the
issuance of the certificate of merger by the Secretary of State of the State
of
Texas or at such later time and date as is agreed to by the parties hereto
and set forth in the Articles of Merger (the time and date at which
the Merger becomes effective is herein referred to as the “Effective
Time”).
Section
2.4 Effects
of
the Merger.The Merger shall have the effects set forth herein
and in the applicable provisions of the TBCA and TBOC. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the properties, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
Section
2.5 Certificate of
Formation and By-laws of the Surviving Corporation. At the
Effective Time, the certificate of formation of the Company shall be
amended and restated in its entirety to be identical (subject to
Section 6.8 hereof) to the certificate of formation of Merger Sub, as in
effect immediately prior to the Effective Time, except that the name of the
Surviving Corporation shall remain ACR Group, Inc., until thereafter amended
as provided therein or by applicable Law. The by-laws of Merger
Sub in effect immediately prior to the Effective Time shall be the by-laws
of the Surviving Corporation until thereafter amended as provided therein
or by applicable Law.
Section
2.6 Directors and
Officers of the Surviving Corporation.
(a) Each
of the parties hereto shall take all necessary action to cause the
directors of Merger Sub immediately prior to the Effective Time to be the
initial directors of the Surviving Corporation immediately following the
Effective Time, until their respective successors are duly elected or
appointed and qualified or their earlier death, resignation or removal in
accordance with the certificate of formation and by-laws of the Surviving
Corporation.
(b) Each
of the parties hereto shall take all necessary action to cause the officers
of the Merger Sub immediately prior to the Effective Time to be the initial
officers of the Surviving Corporation until their respective successors
are duly appointed and qualified or their earlier death, resignation or
removal in accordance with the certificate of formation and by-laws of the
Surviving Corporation.
ARTICLE
III
Effect
of the Merger on the Capital Stock of the Constituent Corporations; Exchange
of
Certificates
Section
3.1 Effect
on
Capital Xxxxx.Xx the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, the Company or the
holders of any shares of Company Common Stock or any shares of capital stock
of
Merger Sub:
(a) Capital
Stock of Merger Sub. Each share of capital stock 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 of the Surviving
Corporation.
(b) Cancellation
of Treasury Stock and Parent-Owned Stock. Any shares of
Company Common Stock that are owned by the Company as treasury stock, and
any shares of Company Common Stock owned by Parent, Merger Sub or any
Subsidiary of the Company, shall be automatically canceled and shall cease
to exist and no consideration shall be delivered in exchange therefore (the
“Cancelled Shares”).
(c) Conversion
of Company Restricted Shares and Common Stock.
(i) At
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, each share of Company Common Stock listed on Schedule
3.1(c)(I) issued pursuant to restricted stock agreements between the individuals
listed on Schedule 3.1(c)(I) and the Company (including performance based
restricted shares) (a “Company Restricted Share”) outstanding immediately
prior to the Effective Time shall become fully vested and converted into the
right to receive the Merger Consideration. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof
except the execution and delivery of documentation or performance of other
actions required by Parent’s 2001 Incentive Compensation Plan, each share of
Company Common Stock listed on Schedule 3.1(c)(II) issued pursuant to restricted
stock agreements between the individuals listed on Schedule 3.1(c)(II) and
the
Company (including performance based restricted shares) (a “Converted
Company Restricted Share”) shall be converted automatically into that
number of restricted shares of Parent common stock equal to the
product of the number of Converted Company Restricted Shares multiplied by
the
Offer Price divided by the closing price of Parent common stock on the NYSE
on
the trading day immediately prior to the Effective Time (“Parent Restricted
Shares”) and each Parent Restricted Share issued pursuant to this Section
3.1(c)(i) shall remain subject to the same terms and conditions as were
applicable to such Converted Company Restricted Share (including vesting
schedule and any acceleration of vesting set forth on Schedule 3.1(c)(II) of
the
Company Disclosure Schedule) and shall bear a legend containing the same
restrictions on transferability.
7
(ii) Each
share of Company Common Stock issued and outstanding immediately prior to
the Effective Time (other than Company Common Stock received pursuant
to Section 3.1(a), Cancelled Shares (as defined and to the extent provided
in Section 3.1(b)), any Converted Company Restricted Shares and any Dissenting
Shares (as defined and to the extent provided in Section 3.1(d))), shall be
converted into the right to receive $6.75 in cash or any
different amount as may have been paid per share of Company Common Stock in
the
Offer, without interest (the “Merger Consideration”).
(iii) As
of the Effective Time, all shares of Company Common Stock (including
Cancelled Shares, Converted Company Restricted Shares and any Dissenting Shares)
shall no longer be outstanding and shall automatically be canceled and
shall cease to exist, and each holder of a certificate (or evidence of
shares in book-entry form) which immediately prior to the Effective Time
represented any such shares of Company Common Stock (each, a
“Certificate”) (or effective affidavits of loss in lieu thereof) or
non-certificated shares of Company Common Stock represented by book-entry
(“Book-Entry Shares”) shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration to be paid in
consideration therefor upon surrender of such Certificate or Book-Entry
Share in accordance with Section 3.2(b),
without interest.
(d) Dissenters’
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 shareholder
who
did not vote in favor of the Merger (or consent thereto in writing) and who
is
entitled to demand and properly demands the fair value of such shares pursuant
to, and who complies in all respects with, the provisions of Articles 5.12
and
5.13 of the TBCA (the “Dissenting Shareholders”), 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 and the
Converted Company Restricted Shares, the “Excluded Shares”), but instead
such holder shall be entitled to payment of the fair value of such shares in
accordance with the provisions of Articles 5.12 and 5.13 of the TBCA (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 fair
value of such Dissenting Shares in accordance with the provisions of Articles
5.12 and 5.13 of the TBCA), unless and until such holder shall have failed
to
perfect or shall have effectively withdrawn or lost rights to receive the fair
value of such shares of Company Common Stock under the TBCA. If any
Dissenting Shareholder 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
for
each such share of Company Common Stock, in accordance with Section 3.1(a),
without any interest thereon. The Company shall give Parent (i)
prompt notice of any written demands to exercise dissenter’s rights in respect
of any shares of Company Common Stock, attempted withdrawals of such demands
and
any other instruments served pursuant to the TBCA and received by the Company
relating to shareholders’ dissenter’s rights and (ii) the opportunity to
participate in negotiations and proceedings with respect to demands for fair
value under the TBCA. The Company shall not, except with 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 3.2 to pay for shares of Company Common Stock for which dissenter’s
rights have been perfected shall be returned to Parent upon
demand.
8
Section
3.2 Exchange of
Certificates.
(a) Paying
Agent. Prior to the Effective Time, Parent shall designate a
bank or trust company reasonably acceptable to the Company to act as agent
for the benefit of the holders of shares of Company Common Stock in
connection with the Merger (the “Paying Agent”) to receive, on terms
reasonably acceptable to the Company, for the benefit of holders of shares
of Company Common Stock immediately prior to the Merger, the aggregate
Merger Consideration to which holders of shares of Company Common Stock
shall become entitled pursuant to Section 3.1(c) (other than Company Common
Stock received pursuant to Section 3.1(a) and the Excluded
Shares). The Paying Agent shall also act as the agent for the
Company’s shareholders for the purpose of holding the Certificates and
shall obtain no rights or interests in the shares represented by such
Certificates. Parent shall deposit such aggregate
Merger Consideration with the Paying Agent at or prior to the Effective
Time. Such aggregate Merger Consideration deposited with the
Paying Agent shall, pending its disbursement to such holders, be invested
by the Paying Agent in short term investments in direct obligations of the
United States of America, obligations for which the full faith and credit of
the
United States of America is pledged to provide for the payment of all principal
and interest or commercial paper obligations receiving the highest rating from
either Xxxxx’x Investors Service, Inc. or Standard & Poor’s or a combination
thereof as directed by Parent or the Surviving Corporation; provided that
Parent shall promptly replace any funds deposited with the Paying Agent
lost through any investment made pursuant to this paragraph.
(b) Payment
Procedures. Promptly after the Effective Time (but in
no event more than five business days thereafter), the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record
of Company Common Stock (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or
effective affidavits of loss in lieu thereof) or Book-Entry Shares to the Paying
Agent, and which shall be in such form and shall have such other customary
provisions (including customary provisions with respect to delivery of an
“agent’s message” with respect to shares held in book-entry form) as Parent
may reasonably specify and (ii) instructions for use in effecting the
surrender of the Certificates (or effective affidavits of loss in lieu thereof)
or Book-Entry Shares in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate (or effective
affidavits of loss in lieu thereof) or Book-Entry Shares for cancellation
to the Paying Agent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions
(and such other customary documents as may reasonably be required by the
Paying Agent), the holder of such Certificate or Book-Entry Share shall be
entitled to receive in exchange therefor the Merger Consideration, without
interest, for each share of Company Common Stock formerly represented by
such Certificate or Book-Entry Share, and the Certificate or Book-Entry Share
so surrendered shall forthwith be canceled. If payment of the
Merger Consideration is to be made to a Person other than the Person in
whose name the surrendered Certificate is registered, it shall be a
condition of payment that (x) the Certificate so surrendered shall be
properly endorsed or shall otherwise be in proper form for transfer and (y)
the Person requesting such payment shall have paid any transfer and other
taxes required by reason of the payment of the Merger Consideration to a
Person other than the registered holder of such Certificate surrendered or
shall have established to the reasonable satisfaction of the Surviving
Corporation that such tax either has been paid or is
not applicable. Until surrendered as contemplated by this
Section 3.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger
Consideration as contemplated by this Article III, without interest, and
any declared and unpaid dividends to which the holder of such Certificate
is entitled.
9
(c) Transfer
Books; No Further Ownership Rights in Company
Stock. The Merger Consideration paid in respect of shares of
Company Common Stock upon the surrender for exchange of Certificates or
Book-Entry Shares in accordance with the terms of this Article III shall be
deemed to have been paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock previously represented by
such Certificates or Book-Entry Shares, and at the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. From
and after the Effective Time, the holders of Certificates or Book-Entry Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock, except as
otherwise provided for herein or by applicable Law. Subject to
the last sentence of Section 3.2(e), if, at any time after the
Effective Time, Certificates or Book-Entry Shares are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article III.
(d) Lost,
Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by
such Person of a bond, in such reasonable amount as Parent may direct, as
indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent will pay, in exchange for such lost,
stolen or destroyed Certificate, the applicable Merger Consideration to be
paid in respect of the shares of Company Common Stock formerly represented
by such Certificate, as contemplated by this Article III.
(e) Termination
of Fund. At any time following the first anniversary of the
Closing Date, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) that had been delivered to the Paying Agent
and which have not been disbursed to holders of Certificates or Book-Entry
Shares, and thereafter such holders shall be entitled to look only to the
Surviving Corporation (subject to abandoned property, escheat or other
similar Laws) as general creditors thereof with respect to the payment of
any Merger Consideration that may be payable upon surrender of any
Certificates or Book-Entry Shares held by such holders, as determined pursuant
to this Agreement, without any interest thereon. Any amounts
remaining unclaimed by such holders at such time at which such amounts
would otherwise escheat to or become property of any Governmental Authority
shall become, to the extent permitted by applicable Law, the property of
the Surviving Corporation, free and clear of all claims or interest of any
Person previously entitled thereto.
10
(f) No
Liability. Notwithstanding any provision of this Agreement
to the contrary, none of the parties hereto, the Surviving Corporation or
the Paying Agent shall be liable to any Person for Merger Consideration
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
(g) Withholding
Taxes. Parent, the Surviving Corporation and the Paying
Agent shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person who was a holder of shares of
Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder (the “Code”), or under any
provision of state, local or foreign tax Law. To the extent
amounts are so withheld and paid over to the appropriate Governmental
Authority, the withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Person in respect of which
such deduction and withholding was made.
Section
3.3 Adjustments.Notwithstanding
any provision of this Article III to the contrary, if between the date of this
Agreement and the Effective Time the outstanding shares of Company Common
Stock shall have been changed into a different number of shares or a
different class by reason of the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination, exchange of shares or similar transaction, the Offer Price,
the Merger Consideration any other amounts payable pursuant to this Agreement
shall be appropriately adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination,
exchange of shares or similar transaction.
ARTICLE
IV
Representations
and Warranties of the Company
The
Company represents and warrants to Parent that except as set forth in (i) the
disclosure schedule delivered by the Company to Parent immediately prior to
the
execution of this Agreement (the “Company Disclosure Schedule”), it being
understood that any matter set forth under a particular section or subsection
of
the Company Disclosure Schedule shall also be deemed disclosed with respect
to
any other section or subsection of Article IV or to Section 6.2 of this
Agreement, in each case to the extent the relevance of such matter to such
section or subsection is reasonably apparent from the text of such disclosure,
or (ii) the Company SEC Documents (as hereinafter defined) filed prior to the
date of this Agreement:
11
Section
4.1 Organization,
Standing and Corporate Power.
(a) The
Company is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Texas. The Company has all
requisite corporate power and authority necessary to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed, qualified or in good standing (or equivalent
status), individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect (as defined below)
on the Company (“Company Material Adverse Effect”). For
purposes of this Agreement, “Material Adverse Effect” shall mean, with
respect to any party, any change, event, development or occurrence that is
materially adverse to (A) the ability of such party to timely consummate
the Transactions or (B) the results of operations, financial condition or
assets of such party and its Subsidiaries taken as a whole, other than
changes, events, developments or occurrences arising out of, resulting
from or attributable to (i) changes in conditions in the United States or
the global economy or the capital or financial or markets generally,
including changes in interest or exchange rates, fluctuating commodity
prices and unexpected product shortages, (ii) changes in general legal,
regulatory, political, economic or business conditions or changes in GAAP
that, in each case, generally affect industries in which such party and its
Subsidiaries conduct business, (iii) the negotiation, announcement,
pendency or consummation of this Agreement or the Transactions and the identity
of Parent and its Affiliates, including the impact thereof on
relationships, contractual or otherwise, with customers, suppliers,
distributors, partners or employees, or (iv) earthquakes or other
natural disasters (in the case of unexpected product shortages referred
to in clause (i) and each of clauses (ii) and (iv), other than to
the extent any change, event, development or occurrence has had or would
reasonably be expected to have a disproportionately adverse effect on such
party and its Subsidiaries as generally compared to other participants in
the industries in which such party and its Subsidiaries conduct
business).
(b) Exhibit 21.1
of the Company’s Annual Report on Form 10-K for the fiscal year ended
February 28, 2007, together with Schedule 4.1(b) of the
Company Disclosure Schedule, sets forth a true and complete list of each of
the Company’s Subsidiaries, as of the date hereof. Each of the
Company’s Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite corporate or other power and authority necessary to own or lease
all of its properties and assets and to carry on its business as it is now
being conducted, except as, individually or in the aggregate, has not had
and would not reasonably be expected to have a Company Material Adverse
Effect. Each of the Company’s Subsidiaries is duly licensed or
qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or
location of the properties and assets owned or leased by it makes such
licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing (or equivalent
status), individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse
Effect. All the outstanding shares of capital stock of, or other
equity interests in, each such Subsidiary are owned directly or
indirectly by the Company free and clear of liens, pledges, security
interests and transfer restrictions or other encumbrances (“Liens”),
except for such transfer restrictions of general applicability as may be
provided under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the “Securities Act”), and other
applicable securities Laws. The Company does not own of record
or beneficially (within the meaning of Rule 13d-3 of the Exchange
Act), any material equity or similar interest in, or any material interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any other Person.
12
(c) The
Company has made available to Parent prior to the date hereof (i) complete
and correct copies of the articles of incorporation and by-laws of the
Company and each of its Subsidiaries, as amended to the date of
this Agreement (the “Company Charter Documents”) and (ii) the
minutes (or, in the case of draft minutes, the most recent drafts thereof)
of all meetings of the Company’s shareholders, the Company’s Board of
Directors and each committee of the Company’s Board of Directors held since
February 28, 2005 through the date hereof.
Section
4.2 Capitalization.
(a) The
authorized capital stock of the Company consists of 25,000,000 shares of Company
Common Stock par value $0.01 per share and 2,000,000 shares of preferred stock,
par value $0.01 (“Company Preferred Stock”). At the close of
business on June 29, 2007, (i) 12,063,765 shares of Company Common
Stock were issued and outstanding, which includes 289,751 Company
Restricted Shares and 373,001 Converted Company Restricted Shares, (ii) no
shares of Company Common Stock were held by the Company in its treasury,
(iii) no shares of the Company’s capital stock, voting securities or other
ownership interests were reserved for issuance for the types of arrangements
described in Section 4.2(b) and (iv) no shares of Company Preferred Stock
were issued or outstanding. All outstanding shares of Company
Common Stock and all outstanding shares of capital stock or other
equity interests of each of the Company’s Subsidiaries have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive and similar rights in favor of third parties. Since
June 29, 2007, the Company has not issued, or entered into any agreement or
arrangement to issue, any shares of its capital stock, or entered into any
agreement or arrangement to issue securities convertible into or
exchangeable or exercisable for any shares of its capital
stock. All dividends on the Company Common Stock that have been
declared or have accrued prior to the date hereof have been paid in full to
the Company’s paying agent.
(b) Except
for the Company Restricted Shares and Converted Company Restricted Shares
referenced in Section 4.2(a)(i), there are no outstanding (i) securities of
the
Company or any of its Subsidiaries convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests
in the Company or any of its Subsidiaries, (ii) options, restricted stock,
warrants, rights or other agreements or commitments to acquire from the
Company or any of its Subsidiaries, or obligations of the Company or any of
its Subsidiaries to issue or transfer, any capital stock, voting securities
or other ownership interests (or securities convertible into or
exchangeable for capital stock or voting securities or other ownership
interests) in the Company or any of its Subsidiaries, (iii) obligations of
the Company or any of its Subsidiaries to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock, voting
securities or other ownership interests in the Company or any of its
Subsidiaries or (iv) obligations of the Company or any of its Subsidiaries
to make any payment based on the market price or value of any securities of
the Company or any of its Subsidiaries. There are no
(i) outstanding obligations of the Company or any of its Subsidiaries to
purchase, redeem or otherwise acquire any outstanding securities of the
Company or any of its Subsidiaries or (ii) 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 capital stock of the
Company or any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries has any obligation or commitment to provide financing
to or make any debt or equity investment in any entity other
than wholly-owned Subsidiaries of the Company.
13
Section
4.3 Authority;
Noncontravention; Voting Requirements.
(a) The
Company has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the Transactions, subject in the case of the consummation of
the Merger to obtaining the Company Shareholder Approval. The
execution, delivery and performance by the Company of this Agreement, and
the consummation by it of the Transactions, have been duly authorized by
all necessary corporate action and no other corporate action on the part of
the Company is necessary to authorize the execution, delivery and
performance by the Company of this Agreement and the consummation by it of
the Transactions, subject in the case of the consummation of the Merger to
obtaining the Company Shareholder Approval. This Agreement has been duly
executed and delivered by the Company and, assuming due authorization,
execution and delivery hereof by Parent and Merger Sub, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar Laws of general application
affecting or relating to the enforcement of creditors’ rights generally and
(ii) is subject to general principles of equity, whether considered in a
proceeding at Law or in equity (the “Bankruptcy and Equity
Exception”).
(b) The
Company’s Board of Directors, at a meeting duly called and held, has unanimously
(i) approved and adopted this Agreement and approved the Transactions,
including the Merger, (ii) determined that this Agreement and the Transactions
are advisable and in the best interests of, the shareholders of the Company,
(iii) consented to the public disclosure of this Agreement and the
Transactions in accordance with the terms and provisions of the
Confidentiality Agreement, dated as of June 1, 2005, between Parent and the
Company (as it may be amended from time to time, the “Confidentiality
Agreement”) and (iv) resolved to, subject to Section 6.3 hereof,
recommend that the shareholders of the Company accept the Offer, tender
their shares of Company Common Stock to Merger Sub pursuant to the Offer and,
if
applicable, grant the Company Shareholder Approval and submit this
Agreement to the shareholders of the Company for approval and file with the
SEC
each document required to be filed by the Company with the SEC or required
to be
distributed or otherwise disseminated to the Company’s shareholders in
connection with the Transactions, including the Schedule 14D-9 and the proxy
or
information statement, if any, (the “Company Disclosure Documents”), as
required by Law.
(c) Neither
the execution, delivery and performance of this Agreement by the Company
nor the consummation by the Company of the Transactions, nor compliance by
the Company with any of the terms or provisions hereof, will (i) conflict
with or violate any provision of the Company Charter Documents or
(ii) assuming that the authorizations, consents and approvals referred to
in Section 4.4 (and, in the case of the consummation of the Merger, the Company
Shareholder Approval) are obtained and the filings referred to in
Section 4.4 are made, (x) violate any Law, judgment, writ or
injunction of any Governmental Authority applicable to the Company or any
of its Subsidiaries or any of their respective assets, properties or
rights, (y) violate or constitute a default (or an event which with notice
or lapse of time or both would become a default) or give rise to any right
of termination, cancellation, modification or acceleration under any of the
terms, conditions or provisions of any loan or credit agreement, debenture,
note, bond, mortgage, indenture, deed of trust, lease, license, contract or
other instrument or agreement (each, a “Contract”) to which
the Company or any of its Subsidiaries is a party or by which any of their
assets, properties or rights are bound or (z) result in the creation of any
Lien upon any of the assets, properties or rights of the Company or any of
its Subsidiaries other than Permitted Liens, except, in the case of
clause (ii), for such violations, defaults, rights or Liens, as,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
14
(d) The
affirmative vote (in person or by proxy) of the holders of at least
two-thirds of the outstanding shares of Company Common Stock entitled to
vote on such matter at the Company Shareholders Meeting, or any adjournment
or postponement thereof, in favor of the adoption of this Agreement and the
approval of the Merger (the “Company Shareholder Approval”) is the
only vote or approval of the holders of any class or series of capital
stock of the Company or any of its Subsidiaries which is necessary to
approve this Agreement and the Transactions.
Section
4.4 Governmental
Approvals.Except for (i) the filing with the SEC of
any Company Disclosure Documents and other filings required under, and
compliance with other applicable requirements of, the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the “Exchange Act”), and the rules of the AMEX, (ii)
the filing of the Articles of Merger with the Secretary of State of the
State of Texas pursuant to the TBCA and TBOC and (iii) filings required under,
and compliance with other applicable requirements of, the HSR Act and any
other applicable Antitrust Law, no consents or approvals of, or filings,
declarations or registrations with, any Governmental Authority are
necessary for the execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the Transactions, other
than such other consents, approvals, filings, declarations or registrations
that, if not obtained, made or given, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
Section
4.5 Company SEC
Documents; Undisclosed Liabilities.
(a) The
Company and each of its Subsidiaries have timely filed or furnished, as
applicable, all required registration statements, reports, schedules,
forms, certifications and other documents with the Securities and Exchange
Commission (the “SEC”) since February 29, 2004 (collectively, and in
each case including all exhibits and schedules thereto and financial
statements contained in, and documents incorporated by reference therein, the
“Company SEC Documents”). As of their respective filing dates,
the Company SEC Documents complied, and each such Company SEC Document
filed subsequent to the date hereof and prior to the consummation of the Offer
will comply, in all material respects with the requirements of the Exchange
Act and the Securities Act and all other federal securities Laws applicable
to such Company SEC Documents, and none of the Company SEC Documents as of
their respective dates contained or will contain any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not
misleading. The Company has made available to Parent prior to
the date hereof copies of all correspondence between the SEC and the
Company or any Company Subsidiary, since February 29, 2004 until the date
hereof. As of the date of this Agreement, there are no material
outstanding or unresolved comments from the SEC staff with respect to the
Company SEC Documents.
15
(b) The
consolidated financial statements of the Company included in the Company
SEC Documents have been prepared in accordance with GAAP (except, in the
case of unaudited interim statements, as indicated in the notes
thereto) applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations, cash flows and shareholders’ equity (when
required to be included in any such Company SEC Document) for the periods
then ended (subject, in the case of unaudited interim statements, to normal
year-end audit adjustments).
(c) Neither
the Company nor any of its Subsidiaries has any liabilities, whether
accrued, absolute, fixed, contingent or otherwise, whether due or to become
due, whether or not known, and whether or not required to be reflected or
reserved against on a consolidated balance sheet of the Company prepared in
accordance with GAAP or the notes thereto, except liabilities (i) reflected
or reserved against on the balance sheet of the Company and
its Subsidiaries as of February 28, 2007 (the “Balance Sheet
Date”) (including the notes thereto) included in the Company SEC
Documents, (ii) incurred after the Balance Sheet Date in the ordinary
course of business consistent with past practice, (iii) as expressly
contemplated by this Agreement or set forth in the Company Disclosure
Schedules or (iv) as, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material
Adverse Effect.
(d) The
Company has established and maintains effective internal control over
financial reporting (and, except as disclosed in the Company SEC Documents,
since February 29, 2004 has had no material weaknesses with respect to its
internal control over financial reporting) and disclosure controls and
procedures (as such terms are defined in Rule 13a-15 and Rule 15d-15
under the Exchange Act) sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the
preparation of financial statements in accordance with GAAP; such
disclosure controls and procedures are designed to ensure that material
information relating to the Company, including its consolidated
Subsidiaries, required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded and reported to the
Company’s principal executive officer and its principal financial officer
by others within those entities to allow timely decisions regarding
required disclosure; and such disclosure controls and procedures are
effective to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms. The Company’s principal
executive officer and its principal financial officer have disclosed, based
on their most recent evaluation, to the Company’s outside auditors and the
audit committee of the Company’s Board of Directors (x) all significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarize and
report financial data and have identified for the Company’s outside
auditors any material weaknesses in internal controls and (y) any fraud,
whether or not material, that involves management or other employees who
have a significant role in the Company’s internal controls. The
principal executive officer and the principal financial officer of the
Company have made all certifications required by the Xxxxxxxx-Xxxxx Act,
the Exchange Act and any related rules and regulations promulgated by the
SEC with respect to the Company SEC Documents, and the statements contained
in such certifications are complete and correct. Any written
notifications the Company has received of a “reportable condition” or “material
weakness” (each as defined in the Statement of Auditing Standards No. 60,
as in effect on the date hereof) in the Company’s internal controls
have been made available to Parent prior to the date
hereof.
16
Section
4.6 Absence
of
Certain Changes.Since the Balance Sheet Date, (a) the Company,
together with its Subsidiaries, has carried on and operated its businesses
in all material respects in the ordinary course of business consistent with
past practice, (b) there have not been any events, changes, conditions,
developments or occurrences that, individually or in the aggregate, have
had or would be reasonably be expected to have a Company Material
Adverse Effect and (c) neither the Company nor any of its Subsidiaries have
taken any action that, if taken after the date hereof, would constitute a
breach of Section 6.2(b) hereof.
Section
4.7 Legal
Proceedings.There is no pending or, to the Knowledge of the
Company, threatened, legal or administrative proceeding, claim, suit,
action or, to the Knowledge of the Company, any pending investigation
against or relating to the Company or any of its Subsidiaries (or any of
their respective assets or properties), nor is there any injunction, order,
writ, judgment, ruling or decree imposed upon the Company or any of
its Subsidiaries, in each case, by or before any Governmental Authority
that, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect or, as of the date
hereof, that challenges or relates to, or would prevent, materially delay
or impair the consummation of, the proposed sale of the Company, this Agreement
or any of the Transactions.
Section
4.8 Compliance
With Laws; Permits.The Company and its Subsidiaries are in
compliance with all laws, statutes, ordinances, codes, rules, regulations,
decrees and orders of Governmental Authorities (collectively,
“Laws”) applicable to the Company or any of its Subsidiaries or any
of their respective properties and assets, except for such
non-compliance as, individually or in the aggregate, has not had and would
not reasonably be expected to have a Company Material Adverse
Effect. The Company and each of its Subsidiaries hold all
licenses, franchises, permits, certificates, approvals and authorizations
from Governmental Authorities necessary for the lawful conduct of their
respective businesses (collectively, “Permits”), except where the
failure to hold the same, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse
Effect. The Company and its Subsidiaries are in compliance with
the terms of all Permits, except for such non-compliance as, individually
or in the aggregate, has not had and would not reasonably be expected to
have a Company Material Adverse Effect. The Company and its
Subsidiaries are in compliance in all material respects with all applicable
listing and corporate governance rules and regulations of the
AMEX.
17
Section
4.9 Information
Supplied.
(a) Each
Company Disclosure Document filed or required to be filed with the SEC for
use
in connection with the solicitation of proxies from the Company’s shareholders
in connection with the Merger and the Shareholder Meeting, and any amendments
or
supplements thereto, when filed, distributed or disseminated, as applicable,
will comply as to form in all material respects with the applicable requirements
of the Exchange Act. The representations and warranties contained in
this Section 4.9(a) will not apply to statements or omissions included in
the Company Disclosure Documents based upon information furnished to the Company
in writing by Parent or Merger Sub specifically for use therein.
(b) (i)
Any Company Disclosure Document required to be mailed to shareholders of the
Company, as supplemented or amended, if applicable, at the time such Company
Disclosure Documents or any amendment or supplement thereto is first mailed
to
shareholders of the Company and at the time such shareholders vote on adoption
of this Agreement, and (ii) any Company Disclosure Document, at the time of
the
filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof, will
not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.9(b) will not
apply to statements or omissions included in the Company Disclosure Documents
based upon information furnished to the Company in writing by Parent or Merger
Sub specifically for use therein.
(c) The
information with respect to the Company or any of its Subsidiaries that the
Company furnishes to Parent in writing specifically for use in the Schedule
TO
and the Offer Documents, at the time of the filing of the Schedule TO, at the
time of any distribution or dissemination of the Offer Documents and at the
time
of the consummation of the Offer, will not contain any untrue statement of
a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading.
Section
4.10 Tax
Matters. Except for those matters that would
not reasonably be expected to have a Company Material Adverse Effect: (i)
each of the Company and its Subsidiaries has timely filed, or has caused to
be timely filed on its behalf (taking into account any extension of time
within which to file), all Tax Returns required to be filed by it, and all
such filed Tax Returns are correct and complete in all respects; (ii) all
Taxes shown to be due on such Tax Returns have been timely paid and all
Taxes payable (whether or not actually shown on such Tax Returns) have, to
the Knowledge of the Company, been adequately reserved for in the Company
SEC Documents; (iii) no deficiency with respect to Taxes has been proposed,
asserted or assessed against the Company or any of its Subsidiaries, which
has not been fully paid or adequately reserved in the financial statements
included in the Company SEC Documents in accordance with GAAP; (iv) no
audit or other administrative or court proceedings are pending with any
Governmental Authority with respect to Taxes of the Company or any of its
Subsidiaries, and no written notice of threatened or proposed audit or
proceeding has been received; (v) there are no Liens for Taxes other than
Permitted Liens upon any assets of the Company or any of its Subsidiaries
and (vi) since the Balance Sheet Date, neither the Company nor any of its
Subsidiaries has incurred any liability for Taxes other than in
the ordinary course of business.
18
Section
4.11 Employee Benefits
and Labor Matters.
(a) Schedule 4.11(a)
of the Company Disclosure Schedule lists (i) each “employee benefit
plan” (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)), whether or not subject
to ERISA, and (ii) all employment, consulting, and severance plans
and agreements and all bonus or other incentive compensation, stock
purchase, equity or equity-based compensation, deferred compensation,
change in control, vacation, salary continuation, profit-sharing, fringe
benefit, life insurance and other similar plans, programs, and agreements
with respect to which the Company or any of its Subsidiaries has any
obligation or liability, contingent or otherwise ((i) and (ii)
collectively, the “Company Plans”).
(b) The
Company has made available to Parent prior to the date hereof, with respect
to each Company Plan (if applicable), a correct and complete copy of the
most recent (i) document constituting the Company Plan or, with respect to
any such Company Plan that is not in writing, a written description
thereof, and any modifications thereto, (ii) annual report on Form 5500,
including all schedules thereto, (iii) summary plan description for
each Company Plan and any modifications thereto, (iv) trust agreement and
insurance or group annuity contract, (v) annual report, financial statement
and/or actuarial report, and (vi) determination letter from the Internal
Revenue Service.
(c) Each
Company Plan has been established, maintained and funded in all material
respects in accordance with its terms and in compliance with the applicable
provisions of ERISA, the Code and all other applicable Laws and, to the
Knowledge of the Company, the terms of each Company Plan are in material
compliance with all such applicable Laws.
(d) All
contributions, premiums and benefit payments under or in connection with
the Company Plans that are required to have been made as of the date hereof
in accordance with the terms of the Company Plans or applicable Laws have been
timely made. Other than routine claims for benefits, there are
no actions pending, or to the Knowledge of the Company, threatened with
respect to any Company Plan that, individually or in the aggregate, have
had or would reasonably be expected to have a Company Material Adverse
Effect.
(e) Each
Company Plan that is intended to qualify under Section 401 of the Code
(i) has received a favorable determination letter to such effect and (ii)
no facts, circumstances or events have occurred since the date of the most
recent determination letter or application therefor relating to any such
Company Plan that, individually or in the aggregate, have caused or
would reasonably be expected to cause the loss of such
qualification.
19
(f) None
of the Company Plans is subject to Title IV of ERISA or is
a multi-employer plan or a multiple employer plan described in
Section 3(37) or Section 4063/4064, respectively, of ERISA, and
neither the Company nor any of its Subsidiaries to its and their Knowledge
has any obligation to contribute to any such multi-employer plan or has any
withdrawal liability associated with any such multi-employer
plan. There have been no non-exempt “prohibited transactions”
(as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Company Plan that,
individually or in the aggregate, have had or would reasonably be expected
to have a Company Material Adverse Effect.
(g) There
are no strikes, work slowdowns, work stoppages, lockouts, arbitrations,
grievances, unfair labor practice charges or complaints pending or, to the
Knowledge of the Company, threatened with respect to the Company or any of
its Subsidiaries, and neither the Company nor any of its Subsidiaries
has experienced any such strikes, slowdowns, work stoppages, lockouts,
arbitrations, grievances, unfair labor practice charges or complaints
within the past three years, that, individually or in the aggregate, have
had or would reasonably be expected to have a Company Material Adverse
Effect. Each of the Company and its Subsidiaries is in
compliance with all applicable Laws relating to labor, employment,
termination of employment or similar matters and has not engaged in any
unfair labor practices or similar prohibited practices except in each
case for any instances of noncompliance that, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(h) Neither
the Company nor any of the Subsidiaries is a party to or is bound by any
labor or collective bargaining agreement, and, as of the date hereof and to
the Knowledge of the Company, there is no organizational campaigns,
petitions or other unionization activities seeking recognition of
a collective bargaining unit with respect to, or otherwise attempting
to represent, any of the employees of the Company or any of its
Subsidiaries.
(i) Neither
the execution and delivery of this Agreement nor the consummation of the
Transactions will, either alone or in conjunction with any other event, (i)
result in any payment becoming due, or increase the amount of any
compensation due, to any current or former director, individual who is
an independent contractor or employee of the Company or its Subsidiaries,
(ii) increase the amount or value of any benefits or compensation otherwise
payable under any Company Plan or (iii) result in the acceleration of the
time of payment, vesting or funding of any such compensation or
benefits. Neither the Company nor any of its Subsidiaries is a party
to or is bound by any agreement that obligates the Company or any of its
Subsidiaries to make a gross-up payment to any employee of the Company or any
of
its Subsidiaries for any tax imposed by Section 4999 of the Code.
(j) On
or prior to the date hereof, the Compensation Committee of the Company’s Board
of Directors (the “Compensation Committee”) has (i) approved each Company
Plan pursuant to which consideration is payable to any officer, director or
employee (each, a “Company Compensation Arrangement”) as an “employment
compensation, severance or other employee benefit arrangement” within the
meaning of Rule 14d-10(d)(2) under the Exchange Act (an “Employment
Compensation Arrangement”), and (ii) taken all other action necessary to
satisfy the requirements of the non exclusive safe harbor with respect to such
Company Compensation Arrangements in accordance with Rule 14d-10(d)(3) under
the
Exchange Act (the approvals and actions referred to in clauses (i) and (ii)
above, the “Company Compensation Approvals”). The Company’s
Board of Directors has determined that each of the members of the Compensation
Committee are, and the members of the Compensation Committee are, “independent
directors” as defined in the listing standards of AMEX.
20
Section
4.12 Environmental
Matters.
(a) Except
for those matters that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect,
(i) each of the Company and its Subsidiaries is and has been in compliance
with all applicable Environmental Laws (as defined below), (ii) there is no
notice of violation in writing, investigation, suit, claim, action
or proceeding relating to or arising under Environmental Laws that is
pending or, to the Knowledge of the Company, threatened against the Company
or any of its Subsidiaries or any real property currently or, to the
Knowledge of the Company, formerly owned, operated or leased by the Company
or any of its Subsidiaries, (iii) neither the Company nor any of its
Subsidiaries has received any notice of, or entered into, any order,
settlement, judgment, injunction or decree (or, to the Knowledge of the
Company, has agreed to perform or entered into any contractual obligation
with a reasonable likelihood of requiring a material payment) involving
uncompleted, outstanding or unresolved obligations, liabilities or
requirements relating to or arising under Environmental Laws and (iv) to the
Knowledge of the Company, no Hazardous Materials have been released at, on,
above, under or from any properties currently or formerly owned, leased or
operated by the Company or any of its Subsidiaries, nor are there
any conditions or circumstances at any properties currently or formerly
owned, leased or operated by the Company that have or would reasonably be
expected to give rise to material liability for the Company or any of its
Subsidiaries under any Environmental Law. The Company and its
Subsidiaries are in possession of all Environmental Permits required for the
operation of their current business and are in compliance with all of the
requirements and limitations included in such Environmental Permits other than
Environmental Permits which the failure to possess would not, individually
or in
the aggregate, have a Company Material Adverse Effect.
(b) To
the Knowledge of the Company, copies of all material environmental and
health and safety reports or assessments or other material communications
or documentation concerning environmental, health and safety matters in the
Company’s possession, as of the date hereof, relating to the Company and
any of its Subsidiaries and any real property owned, operated or leased by
the Company or any of its Subsidiaries, have been made available to Parent
prior to the date hereof, to the extent any of the issues identified in any
such reports, assessments or other communications or documentation
would reasonably be expected to result in a material liability to the
Company or any of its Subsidiaries.
(c) For
purposes of this Agreement, “Environmental Laws” shall mean all
applicable Laws relating to (i) the protection or remediation of
the environment, including soil and subsurface soil, surface water,
groundwater, drinking water, indoor and ambient air, and natural resources,
(ii) human health and safety as affected by exposure to Hazardous
Materials, or (iii) the presence, use, management, assessment, remediation,
transportation, treatment, storage, disposal or recycling of any Hazardous
Materials.
21
(d) For
purposes of this Agreement, “Environmental Permit” shall mean all
registrations, filings, permits, consents, licenses, certificates, variances
and
similar rights granted by or obtained from any Governmental Authority required
under any Environmental Laws for the lawful operation of the Company’s and its
Subsidiaries’ business as it was conducted immediately prior to the Closing
Date.
(e) For
purposes of this Agreement, “Hazardous Materials” shall mean any
material, substance, or waste defined or regulated as hazardous, toxic,
a pollutant, a contaminant or words of similar meaning, including
without limitation, petroleum and petroleum byproducts and any fraction
thereof, asbestos and asbestos containing material, mold of the
concentrations and levels that would reasonably be likely to adversely
affect human health, radon or polychlorinated biphenyls, in non-utility
owned electrical equipment.
Section
4.13 Properties.
(a) Schedule 4.13(a)
of the Company Disclosure Schedule contains a true and complete list
of all real property owned by the Company or any of its Subsidiaries (the
“Owned Real Property”) and for each parcel of Owned Real Property,
identifies the correct street address (including business unit, if
applicable) of such Owned Real Property. Neither the Company nor
any of its Subsidiaries has received any notice of any, and to the
Knowledge of the Company there is no, default under any restrictive
covenants, restrictions and conditions affecting the Owned Real Property
and there has not occurred any event that with the lapse of time or the
giving of notice or both would constitute such a default under any such
restrictive covenants, restrictions or conditions, except as, individually
or in the aggregate, has not had and would not reasonably be expected to
have a material adverse effect on the Company’s or any of its Subsidiaries’
present use, enjoyment and marketability of each such parcel of the Owned Real
Property.
(b) Schedule 4.13(b)
of the Company Disclosure Schedule contains a true and complete list
of all real property leased, subleased, licensed or otherwise used or
occupied (whether as a tenant, subtenant or pursuant to other occupancy
arrangements) by the Company or any of its Subsidiaries or which
the Company or any of its Subsidiaries has the right to use or occupy
(collectively, including the improvements thereon, the “Leased Real
Property”), and for each Leased Real Property, identifies the
correct street address (including business unit, if applicable) of
such Leased Real Property. True and complete copies of all
agreements (including all material written modifications, amendments,
supplements, waivers and side letters thereto) under which the Company or
any Subsidiary is the landlord, sublandlord, tenant, subtenant, or occupant
(each a “Real Property Lease”) that have not been terminated or
expired as of the date of this Agreement have been made available to Parent
prior to the date hereof.
(c) The Company
and/or its Subsidiaries have good and marketable fee simple title to
all Owned Real Property and valid leasehold estates in all Leased Real
Property free and clear, in each case, of all Liens other than Permitted
Liens, except as, individually or in the aggregate, has not had and would
not reasonably be expected to have a material adverse effect on the Company’s or
any of its Subsidiaries’ present use, enjoyment and marketability of each such
parcel of Owned Real Property or Leased Real Property.
22
(d) Other
than the Real Property Leases, none of the Owned Real Property or
the Leased Real Property is subject to any lease, sublease, license or
other agreement granting to any other Person any right to the use,
occupancy or enjoyment of such Owned Real Property or Leased Real Property
or any part thereof, except as, individually or in the aggregate, has not
had and would not reasonably be expected to have a material adverse effect
on the Company’s or any of its Subsidiaries’ present use, enjoyment and
marketability of each such parcel of Owned Real Property or Leased Real
Property.
(e) Each Real
Property Lease is in full force and effect and constitutes the valid
and legally binding obligation of the Company or its Subsidiaries,
enforceable in accordance with its terms (subject to the Bankruptcy and
Equity Exception), and there is no material default under any Real Property
Lease either by the Company or its Subsidiaries party thereto or, to the
Knowledge of the Company, by any other party thereto, except as,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on the Company’s or any of its
Subsidiaries’ leasehold interest in a parcel of Leased Real
Property.
(f) There
does not exist any violations of building codes or pending condemnation
or eminent domain proceedings that affect any Owned Real Property or, to
the Knowledge of the Company, any such proceedings that affect any Leased
Real Property or, to the Knowledge of the Company, any threatened
condemnation or eminent domain proceedings that affect any Owned Real
Property or Leased Real Property, and neither the Company nor its
Subsidiaries have received any written notice of the intention of any
Governmental Authority or other Person to take or use any Owned Real
Property or Leased Real Property, except as, individually or in the aggregate,
has not had and would not reasonably be expected to have a material adverse
effect on the Company’s or any of its Subsidiaries’ present use, enjoyment and
marketability of each such parcel of Owned Real Property or Leased Real
Property.
(g) The buildings
and improvements on the Owned Real Property and the Leased Real Property
are in good condition and in a state of good and working maintenance and
repair, ordinary wear and tear excepted, except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(h) The Company
and each of its Subsidiaries are in possession of and have good title to,
or have valid leasehold interests in, all tangible personal property used
in the business of the Company and each of its Subsidiaries, respectively,
and all such tangible personal property is owned by the Company or any of
its Subsidiaries, free and clear of all Liens other than Permitted Liens,
or is leased under a valid and subsisting lease, and in any case, is in
good working order and condition, ordinary wear and tear excepted, except
as, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect.
Section
4.14 Opinion
of
Financial Advisor.The Company’s Board of Directors has received the
opinion of Houlihan, Lokey, Xxxxxx & Zurkin, Inc., dated the date
of this Agreement, to the effect that, as of such date, and subject to the
various assumptions and qualifications set forth therein, the consideration
to be received in the Offer or the Merger by holders of the Company Common
Stock is fair from a financial point of view to holders of such
shares.
23
Section
4.15 Brokers
and Other Advisors.Except for Houlihan, Lokey, Xxxxxx & Zurkin,
Inc., the fees and expenses of which will be paid by the Company and a true
and correct copy of whose engagement letter, including all amendments and
modifications thereto, has been made available to Parent prior to the date
hereof, no broker, investment banker, financial advisor or other Person is
entitled to any broker’s, finder’s, financial advisor’s or other similar
fee or commission, or the reimbursement of expenses (other than Fulbright &
Xxxxxxxx L.L.P., counsel to the Company), in connection with the
Transactions based upon arrangements made by or on behalf of the Company
or any of its Subsidiaries.
Section
4.16 Takeover
Statutes. The Company has taken all actions necessary
for purposes of Article 13.03 of the TBCA to ensure that the restrictions of
such provisions are not applicable to this Agreement, the Transactions or the
Sale and Support Agreement. In making such representation, the
Company has relied, in part, on the representations of Parent and Merger Sub
in
Section 5.8 of this Agreement. No “moratorium,” “fair price,”
“control share acquisition,” “affiliate transaction” or other similar
anti-takeover statute or regulation under any applicable Law or any
anti-takeover provision in the Company’s articles of incorporation or bylaws is
applicable to the Company, the Company Common Stock, this Agreement, the
Transactions or the Sale and Support Agreement.
Section
4.17 Material
Contracts.Schedule 4.17 of the Company Disclosure
Schedule contains a true and complete list of all Contracts (other than
purchase orders and invoices) to which the Company or any of
its Subsidiaries is a party (a) which is a joint venture, partnership or
other similar agreement involving co-investment with a third party; (b)
under which the Company or any of its Subsidiaries has created, incurred,
assumed or guaranteed indebtedness for borrowed money, or any capitalized
lease obligation, or any agreement under which it has granted a Lien on any
of its assets, tangible or intangible (but with a value in excess of
$100,000), or any currency or interest rate swap, collar or hedge
agreement; (c) whereby the Company or any of its Subsidiaries has an
obligation to make an investment in or loan to any Person in excess of
$100,000; (d) that contains a minimum purchase requirement for the Company
and its Subsidiaries to purchase during the 12-month period immediately
following, or pursuant to which the Company and its Subsidiaries have
purchased during the 12-month period immediately preceding, the Balance
Sheet Date, in the aggregate, a minimum of $100,000 of goods and/or
services on an annual basis; (e) that contains a minimum supply commitment
for the Company and its Subsidiaries to sell during the 12-month period
immediately following, or pursuant to which the Company and
its Subsidiaries have sold during the 12-month period immediately
preceding, the Balance Sheet Date, in the aggregate, a minimum of $100,000
of goods and/or services on an annual basis; (f) that contains covenants
restricting or limiting the ability of the Company, any of its Subsidiaries
or any of their Affiliates (including, without limitation, Parent or any of
its Affiliates from and after the consummation of the Offer or the Closing)
to compete in any business or with any person or in any geographic area;
(g) that contemplates any extraordinary transaction(s) by the Company or any
of
its Subsidiaries and/or shares of the Company held by its Affiliates, including
letters of intent, confidentiality, non-solicitation and other similar
agreements or arrangements; (h) that contains any indemnification rights or
obligations, or credit support relating to such indemnification rights or
obligations, where the contingent rights or obligations reasonably would be
expected to exceed $100,000; (i) to which any agency or department of the
United States federal government is a counterparty; (j) for the lease of
personal property to or from any Person providing for lease payments in
excess of $100,000 per annum; (k) that involve the use of Intellectual Property
by the Company and its Subsidiaries and which require annual license or royalty
payments in excess of $100,000; or (l) with customers, manufacturers,
distributors, dealers, manufacturer’s representatives or sales agents with whom
the Company deals which involve (or could reasonably be expected to involve)
the
receipt or payment, whether contingent or otherwise, by or to the Company of
more than $100,000 in fiscal year 2007. The Company has made available to
Parent prior to the date hereof a true and correct copy of each such
Contract. Each Contract required to be so listed is valid and
binding on the Company or its Subsidiary, as the case may be, and, to the
Knowledge of the Company, on each counterparty and is in full force
and effect, and neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any other party thereto, is in breach of, or
default under, any such Contract, and no event has occurred that with
notice or lapse of time or both would constitute such a breach or default
thereunder by the Company or any of its Subsidiaries, or, to the Knowledge
of the Company, any other party thereto, except for such failures to be
valid, binding or in full force and effect and such breaches and defaults
that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse
Effect.
24
Section
4.18 Intellectual
Property Matters.Except for those matters which, individually
and in the aggregate, have not had and would not reasonably be expected to
have a Company Material Adverse Effect, (a) (i) the Company and each of its
Subsidiaries owns, or is licensed to use, and on the Closing Date shall own
or
be licensed to use, (in each case, free and clear of any Liens, other than
Permitted Liens), all Intellectual Property (as defined below) used in or
necessary for the conduct of its business as currently conducted by it and
(ii) reasonable measures have been and continue to be taken to protect the
proprietary nature of the Intellectual Property and to prevent disclosure and
preserve secrecy of any trade secrets of the Company and its Subsidiaries;
(b)
(i) to the Knowledge of the Company, the issued patents, trademark registrations
and copyright registrations for such Intellectual Property are valid and in
full
force and effect; (ii) there are no pending or, to the Knowledge of the Company,
threatened actions or legal or administrative proceedings, including without
limitation oppositions, cancellations, invalidity proceedings, interferences
or
re-examination proceedings, challenging the validity or ownership of such
Intellectual Property by the Company or its Subsidiaries, or the right of the
Company or its Subsidiaries to use such Intellectual Property; (iii) to the
Knowledge of the Company, the use of any Intellectual Property by the
Company and its Subsidiaries does not infringe on or otherwise violate the
rights of any Person and is in accordance with any applicable license
pursuant to which the Company or any of its Subsidiaries acquired the right
to use any Intellectual Property; (iv) to the Knowledge of the Company, no
Person is challenging or infringing upon or otherwise violating any
Intellectual Property owned or licensed by the Company or its Subsidiaries;
(v)
neither the Company nor any of its Subsidiaries has received any written
notice of any pending or threatened claim with respect to any Intellectual
Property owned or licensed by the Company or its Subsidiaries and, to the
Knowledge of the Company, no Intellectual Property owned or licensed by the
Company or its Subsidiaries is being used or enforced or is failing to be
used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property; (vi) there
are
no agreements with any Person or any outstanding judgments, injunctions, orders
or decrees that limit the scope, ownership, registration or use of the
Intellectual Property by the Company and its Subsidiaries; and (vii) to the
Knowledge of the Company, no Person has any rights to any of the Intellectual
Property owned by (and not licensed to) the Company or any of its
Subsidiaries. For the purposes of this Agreement,
“Intellectual Property” shall mean trademarks, service marks, brand
names, certification marks, logos, domain names, trade dress and
other indications of source or origin, the goodwill associated with the
foregoing and the registrations in any jurisdiction of, and applications in
any jurisdiction to register, the foregoing, including any extension,
modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including divisions,
continuations, continued prosecution applications, continuations in part
and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; know-how, technology, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any Person; writings and other works, whether
copyrightable or not, in any jurisdiction, and registrations or applications
for
registration of copyrights in any jurisdictions, and any renewals or
extensions thereof.
25
Section
4.19 Insurance. Schedule
4.19 of the Company Disclosure Schedule sets forth (i) a list of the material
policies of insurance currently maintained by the Company or any of its
Subsidiaries (including any material policies of insurance maintained for
purposes of providing benefits such as workers’ compensation and employers’
liability coverage) and (ii) a list of all material claims currently
pending (including with respect to insurance obtained but not currently
maintained). Except for those matters that, individually and in
the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect, to the Knowledge of the Company, (i) all
such policies are in full force and effect and cover the assets and risks
of the Company and its Subsidiaries in a manner consistent with customary
practices of companies engaged in businesses and operations similar
to those of the Company and its Subsidiaries and (ii) all premiums due on
such policies have been paid and no notice of cancellation or termination
or intent to cancel has been received by the Company or any of its
Subsidiaries with respect to such policies.
Section
4.20 Inventory. All
inventory of the Company and its Subsidiaries consists of a quality and quantity
usable and salable in the ordinary course of business consistent with past
practice, subject to normal and customary reserves and allowances (including
for
spoilage, damage and outdated and excess items) in accordance with GAAP and
consistent with past practice, which items have been written off or written
down
to fair market value or for which adequate reserves have been provided in the
Company’s audited financial statements as of and for the period ended February
28, 2007 (the “Financial Statements”). All inventories have
been priced consistent with past practice or market. Except as
disclosed in the notes to the Financial Statements, all items included in the
inventory of the Company and its Subsidiaries are the property of the Company
and its Subsidiaries, free and clear of any and all liens, mortgages, pledges,
security interests, encumbrances, charges, have not been pledged as collateral,
are not held by the Company and its Subsidiaries on consignment from
others.
26
Section
4.21 Accounts
Receivable. All accounts receivable of the Company
reflected on the Financial Statements arose from bona fide sales transactions
in
the ordinary course of business. The Company has good title to all of
its accounts receivable free and clear of any Liens.
Section
4.22 Ethical
Xxxxxxxxx.Xx the Knowledge of the Company, except as permitted
under applicable Law, neither the Company nor any of its Subsidiaries has
offered or given anything of value to any official of a Governmental
Authority, any political party or official thereof, or any candidate for
political office (i) with the intent of inducing such Person to use such
Person’s influence with any Governmental Authority to affect or influence
any act or decision of such Governmental Authority to assist the Company or
any of its Subsidiaries in obtaining or retaining business for, or with, or
directing business to, any Person or (ii) constituting a bribe, kickback or
illegal or improper payment to assist the Company or any of
its Subsidiaries in obtaining or retaining business for or with any
Governmental Authority.
Section
4.23 Related
Party Transactions.Except to the extent disclosed in the
Company SEC Documents, there are and have been no transactions, agreements,
arrangements or understandings involving the Company or its Subsidiaries
that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act.
Section
4.24 Customers
and Suppliers.Schedule 4.24 of the Company Disclosure
Schedule contains a true and complete list of the ten (10) largest
customers and suppliers of each of the Company and its Subsidiaries, taken
as a
whole, during the fiscal year ended February 28, 2007. Since such
date, no customer or supplier listed on Schedule 4.24 has notified the Company
of its intent to decrease the amount of business that it does with the Company
by more than twenty-five percent (25%).
Section
4.25 Standstill
Agreements.Neither the Company nor any of its Subsidiaries has
entered into, terminated, waived or amended any standstill agreement with any
third party relating to an Alternative Proposal.
ARTICLE
V
Representations
and Warranties of Parent and Merger Sub
Parent
and Merger Sub jointly and severally represent and warrant to the
Company:
Section
5.1 Organization;
Standing.Each of Parent and Merger Sub is a corporation
duly organized, validly existing and in good standing under the Laws of its
respective jurisdiction of organization. Each of Parent and Merger
Sub is qualified 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 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 Transactions (a “Parent
Material Adverse Effect”).
27
Section
5.2 Authority;
Noncontravention.
(a) Each
of Parent and Merger Sub has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the Transactions. The execution, delivery and
performance by Parent and Merger Sub of this Agreement, and the consummation
by
Parent of the Transactions, have been duly authorized and approved by the
Board of Directors of each of Parent and Merger Sub, and by Parent, as sole
shareholder of Merger Sub, and no other corporate action on the part of
Parent or Merger Sub is necessary to authorize the execution, delivery and
performance by Parent or Merger Sub of this Agreement and the consummation
by
it of the Transactions. This Agreement has been duly executed
and delivered by Parent and Merger Sub and, assuming due authorization,
execution and delivery hereof by the Company, constitutes a legal, valid
and binding obligation of Parent and Merger Sub, enforceable against it in
accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(b) Neither
the execution, delivery and performance of this Agreement by Parent and
Merger Sub, nor the consummation by Parent or Merger Sub of the Transactions,
nor compliance by Parent and Merger Sub with any of the terms or provisions
hereof, will (i) conflict with or violate any provision of the certificate
of incorporation or bylaws of Parent or Merger Sub or (ii) assuming that
the authorizations, consents and approvals referred to in Section 5.3
are obtained and the filings referred to in Section 5.3 are made, (x)
violate any Law, judgment, writ or injunction of any Governmental Authority
applicable to Parent or any of its Subsidiaries or any of their respective
assets, properties or rights, (y) violate or constitute a default (or an
event which with notice or lapse of time or both would become a default) or
give rise to any right of termination, cancellation, modification or
acceleration under any of the terms, conditions or provisions of any
Contract to which Parent, Merger Sub or any of their respective
Subsidiaries is a party or (z) result in the creation of any Lien upon any
of the assets, property or rights of the Parent or any of its Subsidiaries,
except, in the case of clause (ii), for such violations,
defaults, rights or Liens, as, individually or in the aggregate, would not
reasonably be expected to impair in any material respect the ability of
Parent or Merger Sub to perform its obligations hereunder or prevent or
materially delay consummation of the Transactions.
Section
5.3 Governmental
Approvals.Except for (i) filings required under, and
compliance with other applicable requirements of, the Exchange Act and the
rules of the NYSE and AMEX, (ii) the filing of the Articles of Merger with
the Secretary of State of the State of Texas pursuant to the TBCA and TBOC
and (iii) filings required under, and compliance with other applicable
requirements of, the HSR Act and any other applicable Antitrust Law, no
consents or approvals of, or filings, declarations or registrations with,
any Governmental Authority are necessary for the consummation by Parent and
Merger Sub of the Transactions, other than such other consents, approvals,
filings, declarations or registrations that, if not obtained, made or
given, would not reasonably be expected to impair in any material respect
the ability of Parent or Merger Sub to perform its obligations hereunder or
prevent or materially delay consummation of the Transactions.
28
Section
5.4 Information
Supplied.
(a) The
information with respect to Parent and any of its Subsidiaries that Parent
furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of any Company
Disclosure Document required to be mailed to shareholders of the Company, as
supplemented or amended, if applicable, at the time such Company Disclosure
Documents or any amendment or supplement thereto is first mailed to shareholders
of the Company and at the time such shareholders vote on adoption of this
Agreement, and (ii) in the case of any Company Disclosure Document, at the
time
of the filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof and at
the
consummation of the Offer.
(b) The
Schedule TO, when filed, and the Offer Documents, when distributed or
disseminated, will comply as to form and substance in all material respects
with
the applicable requirements of the Exchange Act and, at the time of such filing,
at the time of such distribution or dissemination and at the time of
consummation of the Offer, will not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation and warranty will not
apply to statements or omissions included in the Schedule TO and the Offer
Documents based upon information furnished to Parent or Merger Sub in writing
by
the Company specifically for use therein.
Section
5.5 Ownership
and Operations of Merger Xxx.Xx of the Effective Time, Parent will
own beneficially and of record all of the outstanding capital stock of
Merger Sub. Merger Sub was formed solely for the purpose
of engaging in the Transactions, will engage in no other business
activities and will conduct its operations only as contemplated
hereby.
Section
5.6 Financing.Parent and
Merger Sub reasonably believe that they collectively will have at the expiration
of the Offer cash and cash equivalents that are sufficient to purchase the
shares of Company Common Stock outstanding at the Offer Price pursuant to the
Offer.
Section
5.7 Brokers
and Other Xxxxxxxx.Xx broker, investment banker, financial
advisor or other Person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or any
of its Subsidiaries.
Section
5.8 No
Ownership of Company Common Xxxxx.Xx of the date hereof, neither
Parent nor Merger Sub owns any shares of Company Common Stock.
29
ARTICLE
VI
Additional
Covenants and Agreements
Section
6.1 Company Disclosure
Documents; Shareholders Meeting; Short-Form Merger.
(a) If
Company Shareholder Approval is required under the TBCA in order to consummate
the Merger other than pursuant to Section 5.16 of the TBCA, then, in
accordance with applicable Law and the Company Charter Documents, the Company
shall establish a record date (which will be as promptly as reasonably
practicable following the consummation of the Offer) for, duly call, give notice
of, convene and hold a meeting of its shareholders (the “Company Shareholder
Meeting”) as promptly as practicable after the consummation of the Offer,
for the purpose of voting on the matters requiring the Shareholder Approval;
provided that (i) if the Company is unable to obtain a quorum of its
shareholders at such time, the Company may extend the date of the Shareholder
Meeting by no more than five business days and the Company shall use its
reasonable best efforts during such five-business day period to obtain such
a
quorum as soon as practicable, and (ii) the Company may delay the Shareholder
Meeting to the extent (and only to the extent) the Company reasonably determines
that such delay is required by applicable Law or the Company Charter
Documents. Subject to Section 6.3, the Company’s Board of
Directors shall recommend unanimously that the shareholders of the Company
grant
the Shareholder Approval and use its reasonable best efforts to obtain the
Shareholder Approval, and the Company shall otherwise comply with all applicable
Laws applicable to the Shareholder Meeting.
(b) If
the Shareholder Approval is required under the TBCA or TBOC in order to
consummate the Merger other than pursuant to Section 5.16 of the TBCA,
then, in accordance with applicable Law and the Company’s Charter Documents, as
promptly as practicable after the consummation of the Offer, the Company and
Parent shall prepare jointly and the Company shall file with the SEC the
applicable Company Disclosure Documents and as soon as practicable thereafter
use its reasonable best efforts to mail to its shareholders such Company
Disclosure Documents and all other proxy materials for such meeting, and if
necessary in order to comply with applicable securities laws, after the Company
Disclosure Documents shall have been so mailed, as promptly as practicable
circulate amended, supplemental or supplemented proxy material, and, if required
in connection therewith, resolicit proxies. Subject to
Section 6.3, the Company Disclosure Documents shall contain the unanimous
recommendation of the Company’s Board of Directors to the shareholders of the
Company to grant the Company Shareholder Approval. The Company and
Parent, as the case may be, shall furnish all information concerning the Company
or Parent as the other party hereto may reasonably request in connection with
the preparation and filing with the SEC of the Company Disclosure
Documents. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Company Disclosure Documents before
such document (or any amendment or supplement thereto) is filed with the SEC,
and the Company shall give reasonable and good faith consideration to any
comments reasonably proposed by Parent and its counsel. The Company
shall (i) as promptly as practicable after the receipt thereof, provide Parent
and its counsel with copies of any written comments, and advise Parent and
its
counsel of any oral comments, with respect to the Company Disclosure Documents
(or any amendment or supplement thereto) received from the SEC or its staff,
(ii) provide Parent and its counsel a reasonable opportunity to review the
Company’s proposed response to such comments, (iii) give reasonable and good
faith consideration to any comments reasonably proposed by Parent and its
counsel, and (iv) provide Parent and its counsel a reasonable opportunity to
participate in any discussions or meetings with the SEC.
30
(c) Notwithstanding
any provision of this Agreement to the contrary, if Parent, Merger Sub or any
other Subsidiary of Parent shall acquire at least 90% of the outstanding Company
Common Stock pursuant to the Offer, through exercise of the 90% Top Up Option
or
otherwise, the parties hereto shall take all necessary and appropriate action
to
cause the Merger to be effective as soon as practicable after such acquisition
without a meeting of shareholders of the Company, in accordance with
Section 5.16 of the TBCA.
Section
6.2 Conduct of
Business.
(a) Except
as contemplated by this Agreement, or Schedule 6.2(a) of the Company
Disclosure Schedule, or required by applicable Law, during the period from
the date of this Agreement until the Effective Time, unless
Parent otherwise consents (which consent shall not be unreasonably withheld
or delayed), the Company shall, and shall cause its Subsidiaries to,
conduct its business in all material respects in the ordinary course
consistent with past practice and use commercially reasonable efforts
consistent with past practice to preserve intact its present
business organizations, keep available the services of its present
executive officers and key employees and preserve its relationships with
Persons having significant business dealings with it and take no action
which would adversely affect or delay in any material respect the ability
of either Parent or the Company to obtain any necessary approvals of any
Governmental Authority required for the Transactions.
(b) Neither
the Company nor its Subsidiaries shall, unless Parent otherwise consents
(which consent shall not be unreasonably withheld or delayed):
(i) (A)
issue, sell or grant any shares of its capital stock, or any securities or
rights convertible into, exchangeable or exercisable for, or evidencing the
right to subscribe for any shares of its capital stock, or any rights,
warrants or options to purchase any shares of its capital stock, or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for, any shares of its capital stock; (B)
redeem, purchase or otherwise acquire any of its outstanding shares of
capital stock, or any rights, warrants or options to acquire any shares of
its capital stock, except pursuant to commitments in effect as of the date
hereof; (C) declare, set aside for payment or pay any dividend on, or make
any other distribution in respect of, any shares of its capital stock; or
(D) adjust, split, combine, subdivide or reclassify any shares of its
capital stock or otherwise amend the terms of its capital stock;
(ii) incur
any indebtedness for borrowed money or guarantee any such indebtedness,
other than changes in indebtedness under the Company’s existing revolving
credit agreement incurred in the ordinary course of business;
31
(iii) sell,
lease, dispose of or grant, create or incur any Lien on (x) any Owned Real
Property or Leased Real Property or (y) any of its properties or assets
with a fair market value in excess of $100,000 in the aggregate, except (A)
sales, leases, rentals and licenses of inventory in the ordinary course of
business consistent with past practice or (B) transfers among the Company
and its wholly owned Subsidiaries;
(iv) except
with respect to leases or acquisitions of real property, which are intended
to be covered in Section 6.2(b)(xi) below (it being understood that
any business combination transaction with another Person, even if such
transaction includes the acquisition of the real property of such Person,
shall be covered by this clause (iv) and not by clause (xi)),
make any acquisition (including by merger) of another Person or business,
including capital stock, or purchase or lease (except for purchases
of inventory in the ordinary course of business consistent with
past practice) the assets or properties, of any other Person, in each case
for consideration that, when taken together with the consideration in
all other such transactions not prohibited by this clause (iv), is not
in excess of $250,000 in the aggregate;
(v) (A)
amend or terminate any Company Plan, fail to make any required contribution
to any Company Plan or establish, adopt or enter into any plan, agreement
or policy that would be a Company Plan if it were in existence on the date
of this Agreement or (B) increase the compensation or other benefits
payable or to become payable to any of its current or former directors,
officers, or employees, other than (i) as required pursuant to applicable
Law or the terms of Contracts in effect on the date of this Agreement and
(ii) increases in salaries, wages and benefits of employees other than the
Company Senior Executives made in the ordinary course of business
consistent with past practice;
(vi) make
any changes in financial or Tax accounting methods, principles or practices
(or change an annual accounting period), except insofar as may be required
by a change in GAAP or applicable Law;
(vii) amend
the Company Charter Documents;
(viii) amend
in a material way or waive any material rights under or enter into a
Contract that would be required to be listed in the Company Disclosure
Schedules if the value at issue in any such amendment, waiver or
entrance (or any group of related amendments, waivers or entrances) exceeds
$100,000;
(ix) enter
into any transaction that would be required to be reported pursuant to Item
404 of Regulation S-K in a future SEC report;
(x) forgive
or make any loans, advances or capital contributions to, or investments in,
any other Person, other than (A) loans or advances in immaterial amounts in
the ordinary course of business consistent with past practice or (B) to
wholly owned Subsidiaries of the Company;
32
(xi) except
for renewals of existing leases, make any lease or acquisition of real property
or any commitment for any other capital expenditure in excess of
$250,000 in the aggregate (it being understood that (A) the total present
value of all future lease payments shall be taken into account for
purposes of determining whether the $250,000 basket has been filled and
(B) leases, acquisitions and commitments that would be covered by
clause (iv) shall not be included in the $250,000 basket in this
clause (xi));
(xii) enter
into, amend, or extend any collective bargaining or other labor
agreement;
(xiii) settle
or agree to settle any material suit, action, claim, proceeding or
investigation (including any suit, action, claim, proceeding or
investigation relating to this Agreement or the Transactions) or pay,
discharge or satisfy or agree to pay, discharge or satisfy any material
claim, liability or obligation (absolute or accrued, asserted or
unasserted, contingent or otherwise) other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in full in the
Financial Statements or incurred in the ordinary course of business consistent
with past practice subsequent to February 28, 2007;
(xiv)
adopt a plan or agreement of complete or
partial liquidation or dissolution;
(xv)
unless requested or directed by a Governmental
Authority, convene any regular or special meeting (or any adjournment
thereof) of the Shareholders of the Company other than the Company
Shareholders Meeting; and
(xvi)
agree to take any of the foregoing actions.
(c) The
Company and Parent agree that, during the period from the date of this
Agreement until the Effective Time, the Company and Parent shall not, and
shall not permit any of their respective Subsidiaries to, take, or agree or
commit to take, any action that could reasonably be expected to (i) impose
any material delay in the obtaining of, or significantly increase the risk
of not obtaining, any authorizations, consents, orders, declarations
or approvals of any Governmental Authority necessary to consummate the
Transactions or the expiration or termination of any applicable waiting
period, (ii) significantly increase the risk of any Governmental Authority
entering an order or Restraint prohibiting or impeding the consummation of
the Transactions or (iii) otherwise materially delay the consummation of
the Transactions (each, a “Delay”). Without limiting the
generality of the foregoing, Parent agrees that, during the period from the
date of this Agreement until the Effective Time, Parent shall not, and
shall not permit any of its Subsidiaries to, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of
the assets of or equity in, or by any other manner, any Person or portion
thereof, or otherwise acquire or agree to acquire any assets or rights, if
the entering into of a definitive agreement relating to or the consummation
of such acquisition, merger or consolidation would reasonably be expected
to result in a Delay.
33
Section
6.3 No
Solicitation.
(a) The
Company shall, and shall cause its Subsidiaries and its and its
Subsidiaries’ respective directors, officers and employees and
each investment banker, financial advisor, attorney, accountant and each
other advisor, agent or representative retained by or acting at the
direction of the Company or any of its Subsidiaries in connection with the
Transactions (collectively, “Representatives”) to, (i) cease
any discussions or negotiations with any Person with respect to an
Alternative Proposal or that would reasonably be expected to lead to an
Alternative Proposal, (ii) request the prompt return or destruction of any
confidential information or evaluation material previously provided or
furnished to any such Person and (iii) not terminate, waive, amend, modify
or fail to enforce any provision of any standstill or
confidentiality agreement to which it or any of its Subsidiaries is a
party. The Company shall not, and shall cause its Subsidiaries
and its and their Representatives not to, directly or indirectly (i)
solicit, initiate, knowingly facilitate or otherwise knowingly encourage
any Alternative Proposal or any inquiry that constitutes or would
reasonably be likely to lead to an Alternative Proposal or (ii) other than
to inform such third party of the provisions of this Section 6.3,
participate in any discussions or negotiations regarding any Alternative
Proposal or any inquiry that constitutes or would reasonably be likely to
lead to an Alternative Proposal, furnish to any Person any information or
data with respect to, or otherwise cooperate with or take any action to
knowingly facilitate any proposal that constitutes or would reasonably be
expected to lead to any Alternative Proposal, or requires the Company to
abandon, terminate or fail to consummate the Transactions or (iii) enter
into any letter of intent, memorandum of understanding, merger agreement or
other agreement or understanding relating to, or that would reasonably be
expected to lead to, any Alternative Proposal. Notwithstanding the
foregoing, prior to the acceptance for payment of shares of Company Common
Stock
in the Offer, if the Company’s Board of Directors determines, after
consultation with outside counsel, in good faith by resolution duly adopted
that an unsolicited written Alternative Proposal received after the date
hereof other than in breach of this Section 6.3 constitutes or
is reasonably likely to constitute a Superior Proposal and that it is
reasonably necessary to take such action to comply with its fiduciary
duties to the shareholders of the Company under applicable Law, then the
Company, after giving Parent prompt written notice of such determination
(and in any event no later than 24 hours after such determination), may (A)
furnish any information with respect to the Company and its Subsidiaries to
the Person (and its Representatives) making such Alternative Proposal
pursuant to a confidentiality agreement not less restrictive of such Person
than the Confidentiality Agreement, provided, that all such information
provided or furnished to such Person has been provided or furnished
previously to Parent or is provided or furnished to Parent concurrently
with it being provided or furnished to such Person and (B) participate in
discussions and negotiations with such Person (and its Representatives)
regarding an Alternative Proposal. The Company agrees that
any violation of this Section 6.3(a) by any Representative of the
Company or any of its Subsidiaries shall be deemed a breach of this
Section 6.3(a) by the Company.
(b) In
the event the Company receives an Alternative Proposal or request for
information or inquiry that relates to or would be reasonably likely to
lead to an Alternative Proposal, the Company shall promptly (within 24
hours) provide Parent with a copy (if in writing) and summary of the
material terms and conditions of such Alternative Proposal, request or
inquiry and the identity of the Person (and its equity investors, if known
by the Company) making such Alternative Proposal, request or inquiry, and shall
keep Parent reasonably informed of the status of any financial or other
material modifications to such Alternative Proposal, request or inquiry,
including by conveying a copy of all such modifications that are in
writing, promptly (within 24 hours) of any of the Company’s officers’,
directors’ or financial advisors’ receipt thereof.
34
(c) Except
as expressly permitted by this Section 6.3(c), the Company’s
Board of Directors or any committee thereof shall not and shall
not publicly propose to (i)(A) withdraw or modify, in a manner adverse to
Parent, the Company Board Recommendation, (B) recommend to the shareholders
of the Company, or approve or adopt, an Alternative Proposal or (C) in the
event that any Alternative Proposal is publicly announced or any Person
commences a tender offer or exchange offer for any outstanding shares of
Company Common Stock, fail to issue a press release that reaffirms the
Company Board Recommendation and, in the case of a tender offer or exchange
offer, recommend against acceptance of such tender offer or exchange offer
by the Company shareholders, in each case within 10 business days of such
announcement or commencement (for the avoidance of doubt, the taking of no
position by the Company’s Board of Directors in respect of the acceptance
of any tender offer or exchange offer by its shareholders shall constitute
a failure to recommend against any such offer) (any action, publicly
proposed action or inaction described in this clause (i) being
referred to as a “Company Adverse Recommendation Change”) or (ii)
enter into, approve or authorize the Company or any of its Subsidiaries to
enter into any letter of intent, memorandum of understanding, or any
merger, acquisition, option, joint venture, partnership or similar
agreement with respect to any Alternative Proposal (other than a confidentiality
agreement, subject to the requirements set forth in Section 6.3(a))
(each, a “Company Acquisition Agreement”). Notwithstanding the
foregoing, prior to the acceptance for payment of shares of Company Common
Stock
in the Offer (x) the Company’s Board of Directors may, subject to compliance
with this Section 6.3, withdraw or modify the Company Board
Recommendation if the Company’s Board of Directors determines (after receiving
the advice of its outside counsel) in good faith by resolution duly adopted
that it is reasonably necessary to do so to comply with its fiduciary
duties to the shareholders of the Company under applicable Law and (y) if
the Company’s Board of Directors receives an Alternative Proposal that the
Company’s Board of Directors determines, in good faith by resolution duly
adopted, constitutes a Superior Proposal, the Company or its Subsidiaries
may, subject to compliance with this Section 6.3, enter into a definitive
Company Acquisition Agreement with respect to such Superior Proposal and
concurrently with entering into such Company Acquisition Agreement
terminates this Agreement pursuant to Section 8.1(d). If the Company
desires to enter into such a Company Acquisition Agreement with respect to
an Alternative Proposal or to make a Company Adverse Recommendation Change,
it shall give Parent written notice (a “Company Adverse Recommendation
Notice”) containing a description of the material terms of such Alternative
Proposal or any other basis for a Company Adverse Recommendation Change,
the most current version of any Company Acquisition Agreement relating to
the Superior Proposal, if any, any other information required by Section 6.3(b)
and, if applicable, advising Parent that the Company’s Board of Directors has
determined that such Alternative Proposal is a Superior Proposal and that the
Company’s Board of Directors intends to enter into a Company Acquisition
Agreement with respect to such Superior Proposal. The Company
may make a Company Adverse Recommendation Change or terminate this
Agreement pursuant to Section 8.1(d) only (i) if at least five business
days have passed since the date of the Company Adverse Recommendation
Notice and (ii) if after taking into account any revised proposal that may
be made by Parent since receipt of the Company Adverse
Recommendation Notice, the Company’s Board of Directors shall have not
changed its determination that such Alternative Proposal is a Superior
Proposal (it being understood that any amendment to the financial terms or
other material terms of such Superior Proposal shall require a new Company
Adverse Recommendation Notice and a new five business
day period).
35
(d) For
purposes of this Agreement:
“Alternative
Proposal” means any inquiry, proposal or offer, whether or not
conditional, from any Person (other than Parent and its
Subsidiaries) relating to any direct or indirect (A) acquisition of assets
of the Company and its Subsidiaries (including securities of Subsidiaries,
but excluding sales of assets in the ordinary course of business in
compliance with this Agreement) equal to 15% or more of the Company’s
consolidated assets or to which 15% or more of the Company’s revenues or
earnings on a consolidated basis are attributable, (B) acquisition of 15%
or more of the outstanding Company Common Stock, voting power of the
Company or any class of equity securities of the Company, (C) tender offer
or exchange offer that if consummated would result in any Person
beneficially owning 15% or more of the outstanding Company Common Stock,
(D) merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company, (E) acquisition by the Company or any of
its Subsidiaries of any third party in any of the foregoing types of
transactions in which the shareholders of such third party immediately
prior to the consummation of such transaction will own more than 15% of the
outstanding Company Common Stock immediately following such transaction, or
(F) without limiting any of the foregoing, any of the foregoing types of
transactions involving the acquisition of greater than 49% of the voting equity
interests in any Subsidiary or Subsidiaries of the Company with assets, revenue
or earnings representing 15% or more of the consolidated assets, revenue or
earnings of the Company on a consolidated basis.
“Superior
Proposal” means a bona fide written proposal or offer to acquire,
directly or indirectly, for consideration consisting of cash
and/or publicly listed and traded securities, more than two-thirds of the
equity securities of the Company or all or substantially all of the assets
of the Company and its Subsidiaries on a consolidated basis, made by a
third party, and which is otherwise on terms and conditions which the
Company’s Board of Directors determines in its good faith and reasonable
judgment and by resolution duly adopted (after consultation with a
financial advisor of national reputation and in light of all relevant
circumstances, including all the terms and conditions of such proposal and
this Agreement and the timing and certainty of consummation) to be more
favorable to the Company’s shareholders than the terms set forth in this
Agreement or the terms of any other proposal made by Parent after Parent’s
receipt of a Company Adverse Recommendation Notice, and which the Company’s
Board of Directors determines in good faith is reasonably capable of being
consummated on the terms so proposed and determines (after receiving
the advice of its outside counsel) in good faith by resolution duly adopted
that it is reasonably necessary to withdraw or modify the Company Board
Recommendation in order to comply with its fiduciary duties to
the shareholders of the Company under applicable Law, taking into account
such matters as the Company’s Board of Directors deems relevant to its decision,
including but not limited to, any financing and approval requirements,
timing of such consummation and all financial, regulatory, legal and other
aspects of such proposal.
36
(e) Nothing
in this Section 6.3 shall prohibit the Company or the Company’s Board of
Directors from taking and disclosing to the Company’s shareholders
a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item
1012(a) of Regulation M-A promulgated under the Exchange Act, or other
applicable Law, if the Company’s Board of Directors determines, after
consultation with outside counsel, that there is a reasonable likelihood
failure to so disclose such position would constitute a violation
of applicable Law. In addition, it is understood and agreed
that, for purposes of this Agreement (including Article VIII), (i) a
factually accurate public statement by the Company that merely describes
the Company’s receipt of an Alternative Proposal and the operation of this
Agreement with respect thereto shall not be deemed a withdrawal or
modification, or proposal by the Company’s Board of Directors to withdraw
or modify, the Company’s Board of Directors’ recommendation of this
Agreement or the Transactions, or an approval or recommendation
with respect to such Alternative Proposal and (ii) any “stop, look and
listen” communication by the Company’s Board of Directors to the shareholders of
the Company pursuant to Rule 14d-9(f) of the Exchange Act or any
similar communication to the shareholders shall not constitute a Company
Adverse Recommendation Change provided that, in no event will the Company,
the Company’s Board of Directors or any committee thereof (A) recommend that the
shareholders of the Company tender their shares in connection with any such
tender or exchange offer (or otherwise approve or recommend any Alternative
Proposal) or (B) withdraw or modify the Company Board Recommendation, in
each case other than in accordance with Section 6.3(c).
Section
6.4 Reasonable Best
Efforts.
(a) Subject
to the terms and conditions of this Agreement, each of the parties hereto
shall cooperate with the other parties and use (and shall cause their
respective Subsidiaries to use) their respective reasonable best efforts to
(i) take, or cause to be taken, all actions, and do, or cause to be done,
all things, necessary, proper or advisable to cause the conditions to
Closing to be satisfied as promptly as practicable and to consummate and
make effective, in the most expeditious manner practicable,
the Transactions, including using its reasonable efforts to prepare and
file promptly and fully all documentation to effect all necessary filings,
notices, petitions, statements, registrations, submissions of information,
applications and other documents (including any required or recommended
filings under applicable Antitrust Laws) and (ii) obtain all approvals,
consents, registrations, permits, authorizations and other confirmations
from any Governmental Authority or third party necessary, proper or
advisable to consummate the Transactions. For purposes hereof,
“Antitrust Laws” means the Xxxxxxx Act, as amended, the Xxxxxxx Act,
as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other applicable Laws issued by a foreign, United States or federal
Governmental Authority that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition through merger or
acquisition.
For
purposes of this Agreement, the “reasonable best efforts” of Parent or
Merger Sub shall not include acceptance by Parent or Merger Sub of any or all
divestitures of any subsidiary or assets of Parent or Merger Sub or any of
their
Affiliates or acceptance of an agreement to hold any assets of the business
of
the Company and its Subsidiaries separate in any lawsuit or other legal
proceeding, whether judicial or administrative and whether required by the
FTC,
the Antitrust Division or any other applicable U.S. or foreign Governmental
Authority in connection with the transactions contemplated by this Agreement
or
any other agreement contemplated hereby to the extent such action would
reasonably be expected to deprive Parent or Merger Sub of a material benefit
or
benefits of the Transactions.
37
(b) In
furtherance and not in limitation of the foregoing, (i) each party hereto
agrees use its reasonable best efforts to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
Transactions as promptly as practicable and in any event within ten
business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and use its reasonable best efforts to
take, or cause to be taken, all other actions consistent with this
Section 6.4 necessary to cause the expiration or termination of
the applicable waiting periods under the HSR Act (including any extensions
thereof) as soon as practicable and (ii) the Company and Parent shall each
use its reasonable best efforts to (x) take all action necessary to ensure
that no state takeover, “moratorium,” “fair price,” “affiliate
transaction” or similar statute or regulation under any applicable Law is
or becomes applicable to any of the Transactions and (y) if any state
takeover, “moratorium,” “fair price,” “affiliate transaction” or similar
statute or regulation under any applicable Law becomes applicable to any of
the Transactions, take all action necessary to ensure that the Transactions
may be consummated as promptly as practicable on the terms contemplated by
this Agreement and otherwise minimize the effect of such Law on the
Transactions.
(c) Each
of the parties hereto shall use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission with a Governmental Authority in connection with the
Transactions and in connection with any investigation or other inquiry by
or before a Governmental Authority relating to the Transactions, including
any proceeding initiated by a private party and (ii) keep the other party
informed in all material respects and on a reasonably timely basis of any
material communication received by such party from, or given by such party
to, the Federal Trade Commission, the Antitrust Division of the Department
of Justice or any other Governmental Authority and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the
Transactions. Subject to applicable Laws relating to the exchange
of information, each of the parties hereto shall have the right to review
in advance, and to the extent practicable each will consult the other on,
all the information relating to the other parties and their respective
Subsidiaries, as the case may be, that appears in any filing made with, or
written materials submitted to, any third party and/or any Governmental
Authority in connection with the Transactions. Each party shall
have the right to attend conferences and meetings between the other party
and regulators concerning the Transactions, unless objection is raised by
the Governmental Authority. Notwithstanding anything in this
Agreement to the contrary, nothing in the Agreement shall require Parent or
Merger Sub to provide to the Company any or any access to non-public
information about Parent and its Affiliates.
(d) In
furtherance and not in limitation of the covenants of the parties contained
in this Section 6.4, each of the parties hereto shall use
its reasonable best efforts to resolve such objections, if any, as may be
asserted by a Governmental Authority or other Person with respect to the
Transactions. Without limiting any other provision hereof, Parent and the
Company shall each use its reasonable best efforts to (i) avoid the entry
of, or to have vacated or terminated, any decree, order or judgment that
would restrain, prevent or delay the consummation of the Transactions, on
or before the Walk-Away Date, including by defending through
litigation on the merits any claim asserted in any court by any Person, and
(ii) avoid or eliminate each and every impediment under any Antitrust Law
that may be asserted by any Governmental Authority with respect to the
Transactions so as to enable the consummation of the Transactions to occur
as soon as reasonably possible (and in any event no later than the
Walk-Away Date).
38
Section
6.5 Public
Announcements.The initial press release with respect to the
execution of this Agreement shall be a joint press release to be reasonably
agreed upon by Parent and the Company. Thereafter, neither
the Company nor Parent shall issue or cause the publication of any press
release or other public announcement (to the extent not previously issued
or made in accordance with this Agreement) with respect to the Merger, this
Agreement or the other Transactions without the prior consent of the other
party (which consent shall not be unreasonably withheld or delayed), except
(i) as may be required by Law or by any applicable listing agreement with a
national securities exchange or Nasdaq as determined in the good faith
judgment of the party proposing to make such release (in which case such
party shall not issue or cause the publication of such press release or
other public announcement without prior consultation with the other party)
and (ii) each of Parent and the Company may make any public statement in
response to specific questions by the press, analysts, investors or those
attending industry conferences or financial analyst conference calls, so
long as such statements are substantially similar to previous press
releases, public disclosures or public statements made jointly by Parent
and the Company (or individually, if approved by the other party).
Section
6.6 Access
to
Information; Confidentiality.Subject to applicable Laws
relating to the exchange of information, the Company shall (i) afford to
Parent and Parent’s Representatives reasonable access during
normal business hours to the Company’s properties, books, Contracts,
records (including Tax Returns) and employees (subject to reasonable
procedures), (ii) use reasonable best efforts to cause the Company’s
consultants and independent public accountants to provide access to their
work papers and such other information as Parent may reasonably request and
(iii) furnish promptly to Parent (A) a copy of each report, schedule
and other document filed by it pursuant to the requirements of Federal or
state securities Laws, (B) each written update provided to the Company’s
Board of Directors on the financial performance and projections for the
Company or any of its Subsidiaries and (C) other information concerning its
business and properties as Parent may reasonably request; provided,
however, that the Company shall not be obligated to provide such access or
information if the Company determines, in its reasonable judgment, that
doing so would violate applicable Law or a Contract or obligation of
confidentiality owing to a third-party or jeopardize the protection of an
attorney-client privilege. The Company shall use reasonable best
efforts to obtain waivers of any of the foregoing
confidentiality obligations and the Company and Parent shall use reasonable
best efforts to enter into appropriate joint defense agreements to preserve
attorney-client privilege. Until the Effective Time, the
information provided will be subject to the terms of the Confidentiality
Agreement.
39
Section
6.7 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
Authority in connection with the Transactions or from any Person alleging
that the consent of such Person is or may be required in connection with
the Transactions, (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 Transactions, or (iii) the
occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which is likely (A) to cause any representation or
warranty of such party contained in this Agreement to be untrue or
inaccurate in any material respect if made as of any time at or prior to
the Effective Time or (B) to result in any material failure of such party
to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.7 shall not limit
or otherwise affect the remedies or conditions to Closing available
hereunder to the party receiving such notice.
Section
6.8 Xxxxxxxxx.Xx
the Company’s election in consultation with Parent, (i) the Company shall obtain
prior to the Effective Time “tail” insurance policies with a claims period of at
least six years from the Effective Time with respect to directors’ and officers’
liability insurance in amount and scope at least as favorable as the Company’s
existing policies for claims arising from facts or events that occurred on
or
prior to the Effective Time or (ii) if the Company shall not have obtained
such
tail policy, the Surviving Corporation shall maintain in effect for six years
from the Effective Time the Company’s current directors’ and officers’ liability
insurance covering acts or omissions occurring at or prior to the Effective
Time
with respect to those persons who are currently (and any additional persons
who
prior to the Effective Time become) covered by the Company’s directors’ and
officers’ liability insurance policy on terms with respect to such coverage, and
in amount, not less favorable to such individuals than those of such policy
in
effect on the date hereof (or Parent may cause the Surviving Corporation to
substitute therefor policies, issued by reputable insurers, of at least the
same
coverage with respect to matters occurring prior to the Effective Time);
provided, however, that, if the aggregate annual premiums for such insurance
shall exceed 150% of the current aggregate annual premium, then Parent shall
provide or cause to be provided a policy for the applicable individuals with
the
best coverage as shall then be available at an annual premium equal to 150%
of
the current aggregate annual premium.
Section
6.9 Fees
and
Expenses.All fees and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring
such fees or expenses, whether or not the Transactions are consummated,
except as otherwise provided in Sections 6.13 and 8.3.
Section
6.10 Rule 16b-3.Prior
to the Effective Time, the Company shall take such steps as may be
reasonably requested by any party hereto to cause dispositions of Company
equity securities (including derivative securities) pursuant to the
Transactions by or in respect of each individual who is a director or
officer of the Company to be exempt under Rule 16b-3 promulgated under
the Exchange Act, including any such actions specified in that certain
No-Action Letter dated January 12, 1999 issued by the SEC regarding
such matters.
40
Section
6.11 401(k)
Plan.
Effective
no later than immediately prior to the Effective Time, the Company shall
terminate or cause to be terminated any Company Plan intended to include an
arrangement under Section 401(k) of the Code (each, a “Company 401(k)
Plan”) unless Parent provides written notice to the Company that any
such Company 401(k) Plan shall not be terminated. Unless Parent
provides such written notice to the Company, no later than three business
days prior to the Closing Date, the Company shall provide Parent with
evidence that such Company 401(k) Plan(s) have been terminated (effective
no later than immediately prior to the Effective Time) pursuant to
resolutions of the Company’s Board of Directors or one of its Subsidiaries, as
the case may be. The Company also shall take such other actions
in furtherance of terminating such Company 401(k) Plan(s) as Parent may
reasonably require.
Section
6.12 Delisting.Parent
shall cause the Company’s securities to be de-listed from the AMEX and
de-registered under the Exchange Act as soon as practicable following the
Effective Time.
Section
6.13 Cooperation.
(a) The
Company shall cooperate with Parent with respect to any request by Parent
to obtain consents to (i) this Agreement and the Transactions from
landlords and other nongovernmental counterparties to agreements with
the Company and its Subsidiaries, (ii) the prepayment of amounts owing to
such parties (including the provision of customary pay-off letters) or
(iii) the amendment of covenants under such agreements.
(b) The
Company shall cooperate with Parent, upon Parent’s request, with respect to and
in any negotiations regarding contracts, including distribution agreements
with
suppliers, entered into or to be entered into by Company prior to consummation
of the Merger.
(c) The
Company and Parent shall cooperate with one another (i) in connection with
the
preparation of the Company Disclosure Documents and the Offer Documents, (ii)
in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts,
in
connection with the consummation of the transactions contemplated by this
Agreement, and (iii) in taking such actions or making any such filings,
furnishing information required in connection therewith or with the Company
Disclosure Documents or the Offer Documents and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section
6.14 FIRPTA
Certificate. The Company shall deliver to Parent (a) a
certification dated not more than 30 days prior to the date of the consummation
of the Offer and (b) to the extent necessary in light of the certification
delivered pursuant to clause (a), an additional certification dated not more
than 30 days prior to the Effective Time, in each case signed by the Company
and
to the effect that the shares of Company Common Stock are not “United States
real property interests” within the meaning of Section 897 of the
Code.
41
Section
6.15 Company
Compensation Arrangements. Prior to the scheduled expiration
of the Offer (as it may be extended hereunder), the Company (acting through
its
Compensation Committee) will take all such steps as may be required to cause
each Company Compensation Arrangement entered into by the Company or any of
its
Subsidiaries on or after the date hereof with any of its officers, directors
or
employees or any member of the Compensation Committee pursuant to which
consideration is paid to such officer, director, employee or member to be
approved as an Employment Compensation Arrangement and to satisfy the
requirements of the non exclusive safe harbor set forth in Rule 14d-10(d) of
the
Exchange Act. Prior to the scheduled expiration of the Offer (as it
may be extended hereunder), neither the Company’s Board of Directors nor the
Compensation Committee shall withdraw, nor permit the withdrawal of, the Company
Compensation Approvals.
ARTICLE
VII
Conditions
Precedent
Section
7.1 Conditions
to Each Party’s Obligation to Effect the Merger.The respective
obligations of each party hereto to effect the Merger shall be subject to
the satisfaction (or waiver, if permissible under applicable Law) on or
prior to the Closing Date of the following conditions:
(a) Company
Shareholder Approval. If required by Texas Law, the Company
Shareholder Approval shall have been obtained;
(b) Antitrust. The
waiting period (and any extension thereof) applicable to the Merger under
the HSR Act shall have been terminated or shall have expired;
(c) No
Injunctions or Restraints. No Law, injunction, judgment
or ruling enacted, promulgated, issued, entered, amended or enforced by
any Governmental Authority, nor shall any Governmental Authority have
instituted an action or proceeding that remains pending seeking to enjoin,
restrain, prevent or prohibit consummation of the Merger, (collectively,
“Restraints”) shall be in effect enjoining, challenging,
restraining, preventing or prohibiting the consummation of the Merger or making
the consummation of the Merger illegal; and
(d) Completion
of Offer. Merger Sub (or Parent on Merger Sub’s behalf) shall
have accepted for payment and paid for all of the shares of Company Common
Stock
validly tendered pursuant to the Offer and not withdrawn, provided,
however, that this Section 7.1(d) shall not be a condition to the
obligation of Parent or Merger Sub to consummate the Merger if the failure
to
satisfy such condition shall arise from Parent’s or Merger Sub’s breach of any
provision of this Agreement.
42
ARTICLE
VIII
Termination
Section
8.1 Termination.This
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time, whether before or after receipt of the Company Shareholder
Approval for any reason provided in paragraphs (a) through (d) below; provided,
that if any shares of Company Common Stock are accepted for payment pursuant
to
the Offer, none of Parent, Merger Sub nor the Company may terminate this
Agreement or abandon the Merger except pursuant to paragraphs (a) and (b)(ii)
and (b)(iii) below:
(a) by
the mutual written consent of the Company and Parent duly authorized by
each of their respective Boards of Directors; or
(b) by
either of the Company or Parent, if:
(i) the
Offer or Company Shareholder Approval has not been consummated or obtained
on or
before the date that is four months after the date of this Agreement (the
“Walk-Away Date”); provided, however, that the right to
terminate this Agreement under this Section 8.1(b)(i) shall not
be available to a party if the failure of the Offer to have
been consummated on or before the Walk-Away Date was proximately caused by
the failure of such party to perform any of its obligations under
this Agreement and provided, further, that Parent may unilaterally extend,
by notice delivered to the Company on or prior to the original Walk-Away Date,
the Walk-Away Date for one month after the date above, in which case the
Walk-Away Date shall be deemed to be for all purposes to be such
date;
(ii) any
Restraint having the effect of (A) making acceptance for payment of, and payment
for, the shares of Company Common Stock pursuant to the Offer or consummation
of
the Merger illegal or otherwise prohibited or (B) enjoins Merger Sub from
accepting for payment of, and paying for, the shares of Company Common Stock
pursuant to the offer or the Company or Parent from consummating the Merger
shall be in effect and shall have become final and nonappealable;
or
(iii) the
Company Shareholder Approval, if required, shall not have been obtained at
the Company Shareholders Meeting duly convened therefor or at any
adjournment or postponement thereof; or
(c) by
Parent, if:
(i) the
Company shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (x) would give rise to the
failure of a condition set forth in Section 7.1 or Annex I and (y) cannot be
cured by the Company by the Walk-Away Date or, if curable, is not cured
within 45 days after the Company receives written notice from Parent of
such breach; or
43
(ii) a
Company Adverse Recommendation Change shall have occurred; or
(d) by
the Company in accordance with Section 6.3(c), if the Company (A) has
materially complied with its obligations under Sections 6.1 and 6.3
and (B) has paid the Termination Fee pursuant to
Section 8.3(a).
Section
8.2 Effect
of
Xxxxxxxxxxx.Xx the event of the termination of this Agreement
as provided in Section 8.1, written notice thereof shall be given to
the other party or parties, specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become
null and void (other than Sections 6.9, 8.2 and 8.3, Article IX
and the last sentence of Section 6.6, and the Confidentiality
Agreement in accordance with its terms, all of which shall survive
termination of this Agreement), and there shall be no liability on the part
of Parent, Merger Sub or the Company or their respective directors,
officers and Affiliates, except (i) the Company may have liability
as provided in Section 8.3 and (ii) nothing shall relieve any party
from liability for fraud.
Section
8.3 Termination
Fee.
(a) In
the event that this Agreement is to be terminated by the Company pursuant
to Section 8.1(d), then the Company shall pay to Parent a termination
fee of $5.0 million in cash (the “Termination Fee”),
which Termination Fee shall be paid concurrently with such termination,
payable by wire transfer of same-day funds.
(b) In
the event that this Agreement is terminated by Parent either pursuant to (i)
Section 8.1(c)(i) based on a willful breach by the Company of its
representations, warranties, covenants or agreements set forth in this Agreement
or (ii) Section 8.1(c)(ii), the Company shall pay to Parent the
Termination Fee within two business days of such termination, payable by
wire transfer of same-day funds; provided, however, that the amount of the
Termination Fee due under this Section 8.3(b) shall be reduced by the amount
of
Expenses (as hereinafter defined), if any, paid to Parent or Merger Sub under
Section 8.3(d) of this Agreement.
(c) In
the event this Agreement is terminated by (i) Parent pursuant to
Section 8.1(b)(i) or (ii) Parent or the Company pursuant to Section
8.1(b)(iii) and, in the case of either (i) or (ii), (A) after the date
of this Agreement but prior to the date of such termination an Alternative
Proposal or a request or communication reasonably likely to lead to an
Alternative Proposal shall have been made known to the Company (or any director
or officer of the Company) or shall have been made directly to its
shareholders generally or any Person shall have publicly announced an
interest in making or an intention (whether or not conditional) to make an
Alternative Proposal and (B) the Company enters into a Company Acquisition
Agreement with respect to an Alternative Proposal, or the transaction
contemplated by an Alternative Proposal is consummated, within twelve
months of the date this Agreement is so terminated, the Company shall pay
to Parent the Termination Fee concurrently with (and as a condition to) the
event under clause (B), payable by wire transfer of same-day funds;
provided, however, that the amount of the Termination Fee due under this Section
8.3(c) shall be reduced by the amount of Expenses (as hereinafter defined),
if
any, paid to Parent or Merger Sub under Section 8.3(d) of this
Agreement.
44
(d) In
the event that this Agreement is terminated by Parent pursuant to (i)
Section 8.1(b)(i), (ii) Section 8.1(b)(ii) (other than due to a Restraint that
was issued in connection with Antitrust Law), (iii) Section 8.1(b)(iii) or
(iv)
Section 8.1(c)(i), the Company shall pay to Parent all of the Expenses
(as hereinafter defined) of Parent and Merger Sub within two business days
of
such termination, payable by wire transfer of same-day funds. Parent
shall not claim a termination and right of payment of the Expenses if it has
been paid the Termination Fee. As used herein, “Expenses”
shall mean all reasonable out-of-pocket fees and expenses (including
all fees
and expenses of counsel, accountants, consultants and other experts engaged
by
Parent or Merger Sub) incurred by Parent or Merger Sub in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and any other matters related to the
Merger.
(e) Each
of the Company and Parent acknowledges that the agreements contained in
this Section 8.3 are an integral part of the Transactions. If
the Company shall fail to pay the Termination Fee when due, the Company
shall reimburse Parent for all reasonable costs and expenses actually
incurred or accrued by Parent (including reasonable fees and expenses of
counsel) in connection with the collection under and enforcement of this
Section 8.3 together with interest on the amount of the Termination
Fee from the date such payment was required to be made until the date of
payment at the prime rate of SunTrust Bank in effect on the date such payment
was required to be made. Solely for the purposes of
Section 8.3(c) and 8.3(d), the term “Alternative Proposal” shall have the
meaning assigned to such term in Section 6.3(d), except that
all references to “15%” shall be changed to “35%”.
Section
8.4 Remedies.Except
as otherwise provided in this Agreement, any and all remedies expressly
conferred upon a party to this Agreement shall be cumulative with, and not
exclusive of, any other remedy contained in this Agreement, at law or in
equity. The exercise by a party to this Agreement of any one
remedy shall not preclude the exercise by it of any other remedy.
ARTICLE
IX
Miscellaneous
Section
9.1 No
Survival of Representations and
Warranties.The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or, except as
otherwise provided in Section 8.2, upon the termination of this
Agreement pursuant to Section 8.1, as the case may be, except that the
agreements set forth in Article III and Sections 6.8, 6.10,
6.11, and 6.12 and any other agreement in this Agreement which contemplates
performance after the Effective Time shall survive the Effective
Time indefinitely and those set forth in Sections 6.9, 8.2 and 8.3 and
this Article IX shall survive termination indefinitely and, if any shares of
Company Common Stock are accepted for payment pursuant to the Offer and Parent
or Merger Sub terminates this Agreement pursuant to Section 8.1(b)(iii)
following such acceptance for payment pursuant to the Offer, neither Parent
or
Merger Sub will interfere or limit the Company’s indemnification policies for
its directors or the Company’s obtaining of insurance as contemplated by Section
6.8. The Confidentiality Agreement shall (i) survive termination
of this Agreement in accordance with its terms and (ii) terminate as of the
Effective Time.
45
Section
9.2 Amendment
or Xxxxxxxxxx.Xx any time prior to the Effective Time, this
Agreement may be amended or supplemented in any and all respects, whether
before or after receipt of the Company Shareholder Approval, by written
agreement of the parties hereto, by action taken or authorized by their
respective Boards of Directors; provided, however, that following
receipt of the Company Shareholder Approval, there shall be no amendment or
change to the provisions hereof which by Law would require further approval
by the shareholders of the Company without such approval.
Section
9.3 Extension
of Time, Waiver, Xxx.Xx any time prior to the Effective Time,
any party may, subject to applicable Law, (a) waive any inaccuracies in the
representations and warranties of any other party hereto, (b) extend the
time for the performance of any of the obligations or acts of any other
party hereto or (c) waive compliance by the other party with any of
the agreements contained herein or, except as otherwise provided herein,
waive any of such party’s conditions. 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 thereof or
the exercise of any other right hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such
party.
Section
9.4 Assignment.Neither
this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned, in whole or in part, by operation of Law or otherwise,
by any of the parties without the prior written consent of the other party,
provided, that Parent may assign any of its rights and obligations to any
direct or indirect wholly owned Subsidiary of Parent, but no such
assignment shall relieve Parent of its obligations hereunder. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their
respective successors and permitted assigns. Any purported
assignment not permitted under this Section 9.4 shall be null and
void.
Section
9.5 Counterparts.This
Agreement may be executed in counterparts (each of which shall be deemed to
be an original but all of which taken together shall constitute one and the
same agreement) and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
party.
Section
9.6 Entire
Agreement; No Third-Party Beneficiaries.This Agreement,
including the Company Disclosure Schedule, the exhibits hereto,
the documents and instruments relating to the Transactions referred to
herein, the Sale and Support Agreement and the Confidentiality Agreement
(a) constitute the entire agreement, and supersede all other prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof and (b) except
for the provisions of Section 6.8 are not intended to and shall not
confer upon any Person other than the parties hereto any rights, benefits
or remedies hereunder.
46
Section
9.7 Governing Law;
Jurisdiction; Waiver of Jury Trial.
(a) This
Agreement shall be governed by and interpreted under the laws of the State
of Delaware (without regard to its principles of conflicts of laws), except
that the Merger and all applicable fiduciary duties of the Company’s Board of
Directors and any committee thereof hereunder shall be governed by and
interpreted under the Laws of the State of Texas. Each
party irrevocably and unconditionally (a) consents to submit to the
jurisdiction of the courts of Miami-Dade County in the State of
Florida for any action, suit or proceeding arising
out of or relating to this agreement (and each party irrevocably
and unconditionally agrees not to commence any such action, suit or
proceeding except in such courts), (b) waives any objection to the laying
of venue of any such action, suit or proceeding in any such courts and (c)
waives and agrees not to plead or claim that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
(b) Each
of the parties hereto hereby irrevocably waives any and all rights to trial
by jury in any legal proceeding arising out of or related to this
Agreement.
Section
9.8 Specific
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 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 this being in addition to any other remedy to which they are
entitled at law or in equity.
Section
9.9 Notices.All
notices, requests and other communications to any party hereunder shall be
in writing and shall be deemed given if delivered personally, facsimiled
(which is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses:
If
to
Parent and Merger Sub, to:
Watsco,
Inc.
0000
Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
Attention:
Xxxxx X. Xxxxx, Senior Vice President
Facsimile:
(000) 000-0000
47
with
a
copy (which shall not constitute notice) to:
Xxxxx
& Xxx Xxxxx PLLC
000
X.
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
XX 00000-0000
Attention:
Xxxxxxx X. Hope
Facsimile:
(000) 000-0000
If
to the
Company, to:
ACR
Group, Inc.
0000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attention:
General Counsel
Facsimile:
(000) 000-0000
with
a
copy (which shall not constitute notice) to:
Fulbright
& Xxxxxxxx L.L.P.
Fulbright Tower
0000
XxXxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000-0000
Attention:
Xxxxx Xxxxxxxx
Facsimile:
(000) 000-0000
or
such
other address or facsimile number as such party may hereafter specify
by like notice to the other party hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 P.M. in the
place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding
business day in the place of receipt.
Section
9.10 Severability.If
any term or other provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being
enforced by any rule of Law or public policy, all other terms, provisions
and conditions of this Agreement shall nevertheless remain in full force
and effect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable Law in an acceptable manner to the
end that the Transactions are fulfilled to the extent
possible.
Section
9.11 Definitions. As
used in this Agreement, the following terms have the meanings ascribed
thereto below:
“Affiliate”
shall mean, as to any Person, any other Person that, directly or
indirectly, controls, or is controlled by, or is under common control with,
such Person. For this purpose, “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.
48
“AMEX”
shall mean the American Stock Exchange.
“business
day” shall mean a day except a Saturday, a Sunday or other day on which
the SEC or banks in the City of New York, New York are authorized or
required by Law to be closed.
“GAAP”
shall mean generally accepted accounting principles in the United
States.
“Governmental
Authority” shall mean any government, court, regulatory or
administrative agency, commission or authority, securities exchange,
Nasdaq or other governmental instrumentality, whether federal, state or
local, domestic, foreign or multinational.
“HSR
Act” shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
“Knowledge”
shall mean, in the case of the Company, the actual knowledge, as of the
date of this Agreement and at and as of the Closing Date, of the
individuals listed on Schedule 9.11 of the Company Disclosure
Schedule.
“NYSE”
means The New York Stock Exchange.
“Permitted
Liens” shall mean Liens specifically disclosed in the Company’s most recent
annual report on Form 10-K for the year ended February 28, 2007 or Liens
incurred in accordance with Section 6.2; Liens for taxes not yet due or being
contested in good faith (and, with respect to those being contested, for
which adequate accruals or reserves have been established on the Company’s
financial statements in accordance with GAAP); or Liens that do
not materially detract from the value or materially interfere with any
present or intended use of such property or assets.
“Person”
shall mean an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity, including
a Governmental Authority.
“Subsidiary”
when used with respect to any party, shall mean any corporation, limited
liability company, partnership, association, trust or other entity of which
securities or other ownership interests representing more than 50% of the
equity and more than 50% of the ordinary voting power (or, in the case of a
partnership, more than 50% of the general partnership interests) are, as of
such date, owned by such party or one or more Subsidiaries of such party or
by such party and one or more Subsidiaries of such party.
“Tax
Returns” shall mean any return, report, claim for refund, estimate,
information return or statement or other similar document relating to or
required to be filed with any Governmental Authority with respect to
Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
49
“Taxes”
shall mean (i) all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments, including all net income, gross
receipts, capital, real property, personal property, 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, fees, assessments and charges of any kind and all interest,
penalties, fines, additions to tax or additional amounts imposed by any
Governmental Authority with respect thereto, (ii) any liability for the
payment of any amounts described in clause (i) as a result of being a
member of an affiliated, consolidated, combined, unitary or similar group
or as a result of transferor or successor liability; and (iii) any
liability for the payments of any amounts as a result of being a party to
any tax sharing agreement or as a result of any express or implied
obligation to indemnify any other Person with respect to the payment of any
amounts of the type described in clause (i) or (ii).
“Transactions”
refers collectively to this Agreement and all transactions contemplated hereby,
including the Merger and the Offer.
50
The
following terms are defined on the page of this Agreement set forth
after such term below:
90%
Top Up Option
|
6
|
90%
Top Up Option Shares
|
6
|
Agreement
|
1
|
Alternative
Proposal
|
37
|
Antitrust
Laws
|
38
|
Articles
of Merger
|
7
|
Balance
Sheet Date
|
17
|
Bankruptcy
and Equity Exception
|
15
|
Book-Entry
Shares
|
9
|
Cancelled
Shares
|
8
|
Certificate
|
9
|
Closing
|
6
|
Closing
Date
|
6
|
Code
|
12
|
Committed
Shares
|
2
|
Company
|
1
|
Company
401(k) Plan
|
42
|
Company
Acquisition Agreement
|
36
|
Company
Adverse Recommendation Change
|
36
|
Company
Adverse Recommendation Notice
|
36
|
Company
Board Recommendation
|
4
|
Company
Charter Documents
|
14
|
Company
Common Stock
|
1
|
Company
Compensation Approvals
|
22
|
Company
Compensation Arrangements
|
21
|
Company
Disclosure Documents
|
15
|
Company
Disclosure Schedule
|
12
|
Company
Material Adverse Effect
|
13
|
Company
Plans
|
20
|
Company
Preferred Stock
|
14
|
Company
Restricted Share
|
8
|
Company
SEC Documents
|
17
|
Company
Shareholder Approval
|
16
|
Company
Shareholder Meeting
|
31
|
Compensation
Committee
|
21
|
Confidentiality
Agreement
|
15
|
Continuing
Directors
|
5
|
Contract
|
16
|
Converted
Company Restricted Share
|
8
|
Delay
|
34
|
Dissenting
Shareholders
|
9
|
Dissenting
Shares
|
9
|
51
Effective
Time
|
7
|
Employment
Compensation Arrangement
|
21
|
Environmental
Laws
|
22
|
Environmental
Permit
|
23
|
ERISA
|
20
|
Exchange
Act
|
16
|
Excluded
Shares
|
9
|
Expenses
|
46
|
Financial
Statements
|
27
|
Hazardous
Materials
|
23
|
Intellectual
Property
|
27
|
Laws
|
18
|
Leased
Real Property
|
23
|
Liens
|
14
|
Material
Adverse Effect
|
13
|
Merger
|
1
|
Merger
Consideration
|
9
|
Merger
Sub
|
1
|
Minimum
Condition
|
2
|
Offer
|
1
|
Offer
Documents
|
3
|
Offer
Price
|
1
|
Owned
Real Property
|
23
|
Parent
|
1
|
Parent
Material Adverse Effect
|
29
|
Parent
Restricted Shares
|
8
|
Paying
Agent
|
10
|
Permits
|
18
|
Real
Property Lease
|
23
|
reasonable
best efforts
|
38
|
Representatives
|
35
|
Restraints
|
43
|
Sale
and Support Agreement
|
1
|
Schedule
14D-9
|
4
|
Schedule
TO
|
3
|
SEC
|
16
|
Securities
Act
|
14
|
Subsequent
Offering Period
|
2
|
Superior
Proposal
|
37
|
Surviving
Corporation
|
6
|
XXXX
|
0
|
XXXX
|
0
|
Termination
Fee
|
45
|
Walk-Away
Date
|
44
|
52
Section
9.12 Interpretation.
(a) When
a reference is made in this Agreement to an Article, a Section,
Exhibit or Schedule, such reference shall be to an Article of, a
Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the
words “without limitation”. The 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. All terms defined in this Agreement shall have
the defined meanings when used in any document made or delivered pursuant
hereto 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 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. References to a Person are also to its permitted
successors and assigns.
(b) The
parties hereto have participated jointly in the negotiation and drafting of
this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted
by the parties hereto and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
[signature
page follows]
53
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
WATSCO,
INC.
|
||
By:
|
/s/
Xxxxx X. Xxxxx
|
|
Name:
Xxxxx X. Xxxxx
|
||
Title:
Senior Vice President
|
||
COCONUT
GROVE HOLDINGS, INC.
|
||
By:
|
/s/
Xxxxx X. Xxxxx
|
|
Name:
Xxxxx X. Xxxxx
|
||
Title:
President
|
||
ACR
GROUP, INC.
|
||
By:
|
/s/
Xxxx Xxxxxxx, Jr.
|
|
Name: Xxxx
Xxxxxxx, Jr.
|
||
Title: President
|
54
ANNEX
I
Notwithstanding
any other provision of the Offer, but subject to compliance with
Section 1.1(a) of the Agreement, Merger Sub (i) shall not be required to
accept for payment or pay for any tendered shares of Company Common Stock,
(ii)
may delay the acceptance for payment of, or the payment for, any tendered shares
of Company Common Stock, and (iii) may terminate or amend the Offer as to shares
of Company Common Stock not then paid for, in the event that at or prior to
the
scheduled expiration of the Offer (as it may be extended pursuant to
Section 1.1(a) of the Agreement) if: (A) the Minimum Condition shall not
have been satisfied; (B) the applicable waiting period (and any extension
thereof) applicable to the Transactions (including the Offer and the Merger)
under the HSR Act shall not have expired or been terminated, or any affirmative
approval of a Governmental Authority required shall not have been obtained;
or
(C) any of the following conditions exists:
(a) there
shall be instituted or pending any proceeding by any Governmental Authority,
(i)
challenging or seeking to make illegal, delay materially or otherwise directly
or indirectly restrain or prohibit the making of the Offer, the acceptance
for
payment of or payment for some or all of the shares of Company Common Stock
by
Parent or Merger Sub or the consummation of the Offer or the Merger or seeking
to obtain material damages in connection therewith, (ii) seeking to
restrain or prohibit Parent’s ownership or operation (or that of its Affiliates)
of all or any material portion of the business, assets or products of the
Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, or to compel Parent or any of its Affiliates
to
dispose of, license (whether pursuant to an exclusive or nonexclusive license)
or hold separate all or any material portion of the business, assets or products
of the Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, (iii) seeking, directly or indirectly, to
impose or confirm material limitations on the ability of Parent or any of its
Affiliates effectively to acquire, hold or exercise full rights of ownership
of
any shares of Company Common Stock or any shares of common stock of the
Surviving Corporation, including the right to vote the shares of Company Common
Stock or the shares of common stock of the Surviving Corporation acquired or
owned by Parent, Merger Sub or any of Parent’s other Affiliates on all matters
properly presented to the Company’s shareholders, (iv) seeking to require
divestiture by Parent, Merger Sub or any of Parent’s other Affiliates of any
shares of Company Common Stock, or (v) which would reasonably be expected to
impede, interfere with, prevent or materially delay the Offer; or
(b) there
shall have been any action taken, or any Applicable Law shall have been
proposed, enacted, enforced, promulgated, issued or deemed applicable to the
Offer or the Merger, by any Governmental Authority, other than the application
of the waiting period provisions of the HSR Act or any requirement for
affirmative approval of a Governmental Authority, that, in the good faith
judgment of Parent is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
or
(c) (i)
any of the representations and warranties of the Company contained in
Section 4.2 shall not be true in all but de minimis respects when made or
at any time prior to the consummation of the Offer as if made at and as of
such
time (other than any such representation or warranty that is made only as of
a
specified date, which need only to be true in all but de minimis respects as
of
such specified date), (ii) any of the representations and warranties of the
Company contained in Sections 4.3 and 4.16, disregarding any materiality or
Company Material Adverse Effect qualifications contained in any such
representation or warranty, shall not be true in all material respects when
made
or at any time prior to the consummation of the Offer as if made at and as
of
such time (other than any such representation or warranty that is made only
as
of a specified date, which need only to be true in all material respects as
of
such specified date), or (iii) any of the other representations and warranties
of the Company contained in this Agreement, disregarding any materiality or
Company Material Adverse Effect qualifications contained in any such
representation or warranty, shall not be true in all respects when made or
at
any time prior to the consummation of the Offer as if made at and as of such
time (other than any such representation or warranty that is made only as of
a
specified date, which need only to be true in all respects as of such specified
date); provided that the condition set forth in this paragraph (c)(iii)
shall be deemed to have been satisfied unless the individual or aggregate impact
of the failure to be true of the representations and warranties of the Company
contained in this Agreement would reasonably be expected to have a Company
Material Adverse Effect; provided further that in determining whether a
Company Material Adverse Effect would result, any inaccuracies in the
representations and warranties set forth in Sections 4.3(c)(ii)(y) and
4.3(c)(ii)(z) that would cause an adverse effect otherwise excluded by clause
(iii) of the definition of Company Material Adverse Effect shall be taken into
account; or
55
(d) the
Company shall have breached or failed to perform in any material respect any
of
its obligations required to be performed or complied with by it under the
Agreement or any covenants contained in the Agreement, including obtaining
all
regulatory approvals and consents required to consummate the Transactions;
or
(e) any
change or development shall have occurred following the date of this Agreement
that has had or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect; or
(f) (i)
a Company Adverse Recommendation Change shall have occurred and not been
withdrawn, or (ii) the Company shall have entered into, or publicly announced
its intention to enter into, a letter of intent, memorandum of understanding
or
Contract (other than a confidentiality agreement contemplated by
Section 6.3 of the Agreement) relating to any Acquisition Proposal and such
announcement shall not have been withdrawn and such letter, memorandum of
understanding or Contract shall remain in effect; or
(g) it
shall have been publicly disclosed that any Third Party shall have acquired
beneficial ownership of more than 15% of any class or series of capital stock
of
the Company (including the shares of Company Common Stock), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 15% of any class or series of capital stock
of
the Company (including the shares of Company Common Stock), other than
acquisitions for bona fide arbitrage purposes only; or
(h) Parent
shall not have received a certificate signed on behalf of the Company by an
executive officer of the Company certifying that the conditions set forth
in Annex I have been satisfied; or
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(i) the
Agreement shall have been terminated in accordance with its terms.
The
foregoing conditions are for the sole benefit of Parent and Merger Sub and,
subject to the terms and conditions of the Agreement, may be waived by Parent
or
Merger Sub, in whole or in part at any time and from time to time in the sole
discretion of Parent or Merger Sub. The failure by Parent or Merger
Sub at any time to exercise any of the foregoing rights shall not be deemed
a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
The
capitalized terms that are used in this Annex I shall have the respective
meanings ascribed thereto in the Agreement and Plan of Merger (the
“Agreement”), dated as of July 3, 2007, by and among Watsco, Inc., a
Florida corporation (“Parent”), Coconut Grove Holdings, Inc., a
Texas corporation (“Merger Sub”) and ACR Group, Inc., a Texas corporation
(the “Company”).
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