EXHIBIT 7.14
------------
[EXECUTION COPY]
AGREEMENT AND PLAN OF MERGER
among
Talon Holdings Corp.,
Talon Acquisition Co.
and
EGL, Inc.
Dated as of March 18, 2007
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER.........................................................2
Section 1.1 The Merger....................................................2
Section 1.2 Closing.......................................................2
Section 1.3 Effective Time................................................2
Section 1.4 Effects of the Merger.........................................2
Section 1.5 Articles of Incorporation and Bylaws of the Surviving
Corporation...................................................2
Section 1.6 Directors.....................................................3
Section 1.7 Officers......................................................3
ARTICLE II CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES.....................3
Section 2.1 Effect on Capital Stock.......................................3
Section 2.2 Exchange of Certificates......................................5
Section 2.3 Timing of Equity Rollover.....................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................7
Section 3.1 Qualification, Organization, Subsidiaries, etc................7
Section 3.2 Capital Stock.................................................8
Section 3.3 Subsidiaries.................................................10
Section 3.4 Corporate Authority Relative to This Agreement; No
Violation....................................................10
Section 3.5 Reports and Financial Statements.............................11
Section 3.6 Internal Controls and Procedures.............................12
Section 3.7 No Undisclosed Liabilities...................................12
Section 3.8 Compliance with Law; Permits.................................12
Section 3.9 Environmental Laws and Regulations...........................13
Section 3.10 Employee Benefit Plans.......................................14
Section 3.11 Interested Party Transactions................................16
Section 3.12 Absence of Certain Changes or Events.........................16
Section 3.13 Investigations; Litigation...................................17
Section 3.14 Proxy Statement; Other Information...........................17
Section 3.15 Tax Matters..................................................17
Section 3.16 Labor Matters................................................19
Section 3.17 Intellectual Property........................................20
Section 3.18 Property.....................................................20
Section 3.19 Insurance....................................................20
Section 3.20 Opinion of Financial Advisor.................................21
Section 3.21 Required Vote of the Company Shareholders....................21
Section 3.22 Material Contracts...........................................21
Section 3.23 Finders or Brokers...........................................21
Section 3.24 State Takeover Statutes; Rights Plan.........................22
Section 3.25 Disclaimer...................................................22
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........23
Section 4.1 Qualification; Organization..................................23
Section 4.2 Corporate Authority Relative to This Agreement; No
Violation....................................................23
Section 4.3 Proxy Statement; Other Information...........................24
Section 4.4 Financing....................................................24
Section 4.5 Ownership and Operations of Merger Sub.......................25
Section 4.6 Finders or Brokers...........................................25
Section 4.7 Ownership of Shares..........................................26
Section 4.8 Certain Arrangements.........................................26
Section 4.9 Investigations; Litigation...................................26
Section 4.10 Guarantees...................................................26
Section 4.11 No Other Information.........................................26
Section 4.12 Access to Information; Disclaimer............................26
Section 4.13 Solvency.....................................................27
ARTICLE V COVENANTS AND AGREEMENTS..........................................27
Section 5.1 Conduct of Business by the Company and Parent................27
Section 5.2 Access to Information........................................31
Section 5.3 No Solicitation..............................................32
Section 5.4 Filings; Other Actions.......................................34
Section 5.5 Stock Options and Other Stock-Based Awards; Employee
Matters......................................................35
Section 5.6 Efforts......................................................37
Section 5.7 Takeover Statute.............................................39
Section 5.8 Public Announcements.........................................39
Section 5.9 Indemnification and Insurance................................40
Section 5.10 Financing....................................................42
Section 5.11 Shareholder Litigation.......................................43
Section 5.12 Notification of Certain Matters..............................43
Section 5.13 Rule 16b-3...................................................43
Section 5.14 Rights Plan..................................................44
Section 5.15 Acquisition of Shares........................................44
Section 5.16 Control of Operations........................................44
Section 5.17 Notes and Amounts Outstanding Under Credit Agreement.........44
ARTICLE VI CONDITIONS TO THE MERGER..........................................44
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger.......................................................44
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger.......................................................45
Section 6.3 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger............................................45
Section 6.4 Frustration of Conditions....................................46
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VII TERMINATION.......................................................46
Section 7.1 Termination or Abandonment...................................46
Section 7.2 Termination Fee; Expenses....................................48
ARTICLE VIII MISCELLANEOUS..................................................51
Section 8.1 No Survival of Representations and Warranties................51
Section 8.2 Expenses.....................................................51
Section 8.3 Counterparts; Effectiveness..................................51
Section 8.4 Governing Law................................................51
Section 8.5 Jurisdiction; Enforcement....................................51
Section 8.6 WAIVER OF JURY TRIAL.........................................52
Section 8.7 Notices......................................................52
Section 8.8 Assignment; Binding Effect...................................54
Section 8.9 Severability.................................................54
Section 8.10 Entire Agreement; No Third-Party Beneficiaries...............54
Section 8.11 Amendments; Waivers..........................................54
Section 8.12 Headings.....................................................55
Section 8.13 Interpretation...............................................55
Section 8.14 No Recourse..................................................55
Section 8.15 Determinations by the Company................................55
Section 8.16 Certain Definitions..........................................55
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AGREEMENT AND PLAN OF MERGER, dated as of March 18, 2007 (this
"Agreement"), among Talon Holdings Corp., a Delaware corporation ("Parent"),
Talon Acquisition Co., a Texas corporation and a direct wholly-owned subsidiary
of Parent ("Merger Sub"), and EGL, Inc., a Texas corporation (the "Company").
W I T N E S S E T H :
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WHEREAS, the parties intend that Merger Sub be merged with and into the
Company, with the Company surviving that merger on the terms and subject to the
conditions set forth in this Agreement (the "Merger");
WHEREAS, the Board of Directors of the Company, acting upon the unanimous
recommendation of the Special Committee, has (i) determined that it is in the
best interests of the Company and its shareholders, and declared it advisable,
to enter into this Agreement, (ii) approved the execution, delivery and
performance by the Company of this Agreement and the Voting Agreement (as
defined below) and the consummation of the transactions contemplated hereby and
thereby, including the Merger, and (iii) resolved to recommend approval of this
Agreement by the shareholders of the Company;
WHEREAS, the Board of Directors of Merger Sub and Parent have each
unanimously approved this Agreement and declared it advisable for Merger Sub and
Parent, respectively, to enter into this Agreement;
WHEREAS, certain existing shareholders of the Company desire to contribute
Shares (as hereinafter defined) to Parent immediately prior to the Effective
Time (as hereinafter defined) in exchange for common stock of Parent;
WHEREAS, concurrently with the execution of this Agreement, as a condition
and inducement to Parent and Merger Sub's willingness to enter into this
Agreement, Parent, Merger Sub and certain shareholders of the Company are
entering into a voting agreement, of even date herewith (the "Voting Agreement")
pursuant to which such shareholders have agreed, subject to the terms thereof,
to vote their respective Shares (as defined below) in favor of approval of this
Agreement;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to the Company's willingness to enter into this
Agreement, each of (i) Centerbridge Capital Partners, L.P, Centerbridge Capital
Partners Strategic, L.P. and Centerbridge Capital Partners SBS, L.P., (ii) The
Woodbridge Company Limited and (iii) Xxxxx X. Xxxxx (together, the "Guarantors")
has provided a guarantee (together, the "Guarantees") in favor of the Company,
which are attached to Section 4.10 of the Parent Disclosure Schedule, with
respect to the performance by Parent and Merger Sub, respectively, of their
obligations under this Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the transactions contemplated by this Agreement and also to prescribe
certain conditions to the Merger as specified herein.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as hereinafter defined),
upon the terms and subject to the conditions set forth in this Agreement and in
accordance with the applicable provisions of the Texas Business Corporation Act
(the "TBCA") and the Texas Business Organizations Code (the "TBOC"), Merger Sub
shall be merged with and into the Company, whereupon the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving company in the Merger (the "Surviving Corporation") and a direct
wholly owned subsidiary of Parent.
Section 1.2 Closing. The closing of the Merger (the "Closing") shall
take place at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, at 10:00 a.m., local time, on a date to be specified by the
parties (the "Closing Date") which shall be no later than the fifth Business Day
after the satisfaction or waiver (to the extent permitted by applicable Law (as
hereinafter defined)) of the conditions set forth in Article VI (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of such conditions), or at such other
place, date and time as the Company and Parent may agree in writing; provided,
that at the direction of Parent the Closing can be delayed to the last day of
the then current interest period of the Company's floating rate senior secured
notes (the "Notes") in which the conditions set forth in Article VI would be
satisfied or waived.
Section 1.3 Effective Time. On the Closing Date, the Company shall cause
the Merger to be consummated by executing and filing articles of merger (the
"Articles of Merger") with the Secretary of State of the State of Texas in
accordance with Article 5.04 of the TBCA and Section 10.153 of the TBOC, as
required. The Merger shall become effective at such time as the Articles of
Merger are duly filed with the Secretary of State of the State of Texas and a
certificate of merger is issued by the Secretary of State of the State of Texas,
or at such later date or time as may be agreed by Parent and the Company in
writing and specified in the Articles of Merger in accordance with the TBCA and
TBOC (such time as the Merger becomes effective is referred to herein as the
"Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in this Agreement and the applicable provisions of the TBCA and TBOC.
Section 1.5. Articles of Incorporation and Bylaws of the Surviving
Corporation.
(a) The articles of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the articles of incorporation
of the Surviving Corporation until thereafter amended in accordance with the
provisions thereof, hereof and applicable Law, in each case consistent with the
obligations set forth in Section 5.9.
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(b) The bylaws of Merger Sub as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended in accordance with the provisions thereof, hereof and
applicable Law, in each case consistent with the obligations set forth in
Section 5.9.
Section 1.6 Directors. Subject to applicable Law, the directors of
Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
Section 1.7 Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, Merger Sub or the
holders of any securities of the Company or Merger Sub:
(a) Conversion of Company Common Stock. Subject to Sections 2.1(b),
2.1(d) and 2.1(e), each issued and outstanding share of common stock, par value
$0.001 per share, of the Company outstanding immediately prior to the Effective
Time (such shares, collectively, "Company Common Stock," and each, a "Share"),
other than any Shares held by any direct or indirect wholly-owned subsidiary of
the Company, which Shares shall remain outstanding except that the number of
such Shares shall be appropriately adjusted in the Merger (the "Remaining
Shares"), any Cancelled Shares (as defined, and to the extent provided in,
Section 2.1(b)) and any Dissenting Shares (as defined, and to the extent
provided in, Section 2.1(e)) shall thereupon be converted automatically into and
shall thereafter represent the right to receive $38.00 in cash (the "Merger
Consideration"). All Shares that have been converted into the right to receive
the Merger Consideration as provided in this Section 2.1 shall be automatically
cancelled and shall cease to exist, and the holders of certificates which
immediately prior to the Effective Time represented such Shares shall cease to
have any rights with respect to such Shares other than the right to receive the
Merger Consideration.
(b) Parent and Merger Sub-Owned Shares. Each Share that is owned,
directly or indirectly, by Parent or Merger Sub immediately prior to the
Effective Time (including all Shares acquired pursuant to the Rollover
Commitments) or held by the Company immediately prior to the Effective Time (in
each case, other than any such Shares held on behalf of third parties) (the
"Cancelled Shares") shall, by virtue of the Merger and without any action on the
part of the holder thereof, be cancelled and retired and shall cease to exist,
and no consideration shall be delivered in exchange for such cancellation and
retirement.
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(c) Conversion of Merger Sub Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
each share of common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable share of common stock,
par value $0.001 per share, of the Surviving Corporation and shall with the
Remaining Shares constitute the only outstanding shares of capital stock of the
Surviving Corporation. From and after the Effective Time, all certificates
representing the common stock of Merger Sub shall be deemed for all purposes to
represent the number of shares of common stock of the Surviving Corporation into
which they were converted in accordance with the immediately preceding sentence.
(d) Adjustments. If at any time during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
capital stock of the Company, or securities convertible or exchangeable into or
exercisable for shares of capital stock, shall occur as a result of any
reclassification, recapitalization, stock split (including a reverse stock
split) or subdivision or combination, exchange or readjustment of shares, or any
stock dividend or stock distribution with a record date during such period,
merger, issuer tender or exchange offer, or other similar transaction, the
Merger Consideration shall be equitably adjusted to reflect such change;
provided that nothing herein shall be construed to permit the Company to take
any action with respect to its securities that is prohibited by the terms of
this Agreement.
(e) 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, 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 2.1(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 the prior written
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consent of Parent, voluntarily make any payment with respect to, or settle, or
offer or agree to settle, any such demand for payment. Any portion of the Merger
Consideration made available to the Paying Agent pursuant to Section 2.2 to pay
for shares of Company Common Stock for which dissenter's rights have been
perfected shall be returned to Parent upon demand.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a U.S. bank or trust company that
shall be appointed by Parent and approved by the Company in writing (such
approval not to be unreasonably withheld) to act as a paying agent hereunder
(the "Paying Agent"), in trust for the benefit of holders of the Shares, the
Company Stock Options (as hereinafter defined) and the Company Stock-Based
Awards (as hereinafter defined) cash in U.S. dollars sufficient to pay (i) the
aggregate Merger Consideration in exchange for all of the Shares outstanding
immediately prior to the Effective Time (other than the Excluded Shares and the
Remaining Shares), payable upon due surrender of the certificates that
immediately prior to the Effective Time represented Shares ("Certificates") (or
effective affidavits of loss in lieu thereof) or non-certificated Shares
represented by book-entry ("Book-Entry Shares") pursuant to the provisions of
this Article II and (ii) the Option and Stock-Based Consideration (as
hereinafter defined) payable pursuant to Section 5.5 (such cash referred to in
subsections (a)(i) and (a)(ii) being hereinafter referred to as the "Exchange
Fund"). The Exchange Fund shall not be used for any other purpose.
(b) Payment Procedures.
(i) As soon as reasonably practicable after the Effective Time and
in any event not later than the fifth Business Day following the Effective Time,
the Paying Agent shall mail (x) to each holder of record of Shares whose Shares
were converted into the Merger Consideration pursuant to Section 2.1, (A) a
letter of transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to Certificates shall
pass, only upon delivery of Certificates (or effective affidavits of loss in
lieu thereof) or Book-Entry Shares to the Paying Agent and shall be in such form
and have such other provisions as Parent and the Company shall reasonably
determine) and (B) instructions for use in effecting the surrender of
Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry
Shares in exchange for the Merger Consideration and (y) to each holder of a
Company Stock Option or a Company Stock-Based Award, a check in an amount due
and payable to such holder pursuant to Section 5.5 hereof in respect of such
Company Stock Option or Company Stock-Based Award.
(ii) Upon surrender of Certificates (or effective affidavits of
loss in lieu thereof) or Book-Entry Shares to the Paying Agent together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may customarily be
required by the Paying Agent, the holder of such Certificates or Book-Entry
Shares shall be entitled to receive in exchange therefor a check in an amount
equal to the product of (x) the number of Shares represented by such holder's
properly surrendered Certificates (or effective affidavits of loss in lieu
thereof) or Book-Entry Shares multiplied by (y) the Merger Consideration. No
interest will be paid or accrued on any amount payable upon due surrender of
Certificates or Book-Entry Shares. In the event of a transfer of ownership of
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Shares that is not registered in the transfer or stock records of the Company, a
check for any cash to be paid upon due surrender of the Certificate may be paid
to such a transferee if the Certificate formerly representing such Shares is
presented to the Paying Agent, accompanied by all documents required to evidence
and effect such transfer and to evidence that any applicable stock transfer or
other Taxes (as hereinafter defined) have been paid or are not applicable.
(iii) The Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable under
this Agreement to any holder of Shares or holder of Company Stock Options or
Company Stock-Based Awards such amounts as are required to be withheld or
deducted under the Internal Revenue Code of 1986 (the "Code"), or any provision
of federal, state, local or foreign Tax Law with respect to the making of such
payment. To the extent that amounts are so withheld or deducted and paid over to
the applicable Governmental Entity (as hereinafter defined), such withheld or
deducted amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares or holder of the Company Stock Options or
Company Stock-Based Awards in respect of which such deduction and withholding
were made.
(c) Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
Shares that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates or Book-Entry Shares are presented to the
Surviving Corporation or Parent for transfer, they shall be cancelled and
exchanged for a check in the proper amount pursuant to and subject to the
requirements of this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof) that remains undistributed
to the former holders of Shares for one year after the Effective Time shall be
delivered to the Surviving Corporation upon demand, and any former holders of
Shares who have not surrendered their Certificates or Book-Entry Shares in
accordance with this Section 2.2 shall thereafter look only to the Surviving
Corporation for payment of their claim for the Merger Consideration, without any
interest thereon, upon due surrender of their Certificates or Book-Entry Shares.
(e) No Liability. Notwithstanding anything herein to the contrary, none
of the Company, Parent, Merger Sub, the Surviving Corporation, the Paying Agent
or any other person shall be liable to any former holder of Shares for any
amount properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(f) Investment of Exchange Fund. The Paying Agent shall invest all cash
included in the Exchange Fund as reasonably directed by Parent; provided,
however, that any investment of such cash shall be limited to direct short-term
obligations of, or short-term obligations fully guaranteed as to principal and
interest by, the U.S. government and that no such investment or loss thereon
shall affect the amounts payable to holders of Certificates, Company Stock
Options or Company Stock-Based Awards pursuant to this Article II and Section
5.5(a). Any interest and other income resulting from such investments shall be
paid to the Surviving Corporation pursuant to Section 2.2(d).
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(g) Lost Certificates. In the case of any Certificate that has been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Paying Agent, the posting by such person of a bond in
customary amount as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Certificate a check in the amount of the number of
Shares represented by such lost, stolen or destroyed Certificate multiplied by
the Merger Consideration.
Section 2.3 Timing of Equity Rollover. For the avoidance of doubt, the
parties acknowledge and agree that the contribution of Shares to Parent pursuant
to the Rollover Commitments shall be deemed to occur immediately prior to the
Effective Time and prior to any other above-described event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed (i) in the Company SEC Documents filed on or after
December 31, 2006 and prior to the date of this Agreement (excluding any
disclosures included therein to the extent that they are cautionary, predictive
or forward-looking in nature, including those in any risk factor section of such
documents) or (ii) in the disclosure schedule delivered by the Company to Parent
immediately prior to the execution of this Agreement (the "Company Disclosure
Schedule," it being agreed that disclosure of any item in any section of the
Company Disclosure Schedule shall also be deemed to be disclosure with respect
to any other section of this Article III to which the relevance of such item is
reasonably apparent on its face), the Company represents and warrants to Parent
and Merger Sub as follows:
Section 3.1. Qualification, Organization, Subsidiaries, etc.
(a) Each of the Company and its Subsidiaries is a legal entity duly
organized, validly existing and in good standing under the Laws of its
respective jurisdiction of organization. Each of the Company and its
Subsidiaries has all requisite corporate, partnership or similar power and
authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted, except where the failure to have such power
or authority would not have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Each of the Company and its Subsidiaries 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, have
a Company Material Adverse Effect. The organizational or governing documents of
the Company and each of its Subsidiaries, as previously provided to Parent, are
in full force and effect. Neither the Company nor any Subsidiary is in violation
of its organizational or governing documents.
(c) As used in this Agreement, any reference to any fact, circumstance,
event, change, effect or occurrence having a "Company Material Adverse Effect"
means any fact, circumstance, event, change, effect or occurrence that,
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individually or in the aggregate with all other facts, circumstances, events,
changes, effects or occurrences, has had or would be reasonably likely to have a
material adverse effect on the assets, properties, business, results of
operation or financial condition of the Company and its Subsidiaries, taken as a
whole, or that would be reasonably likely to prevent or materially delay or
materially impair the ability of the Company to perform its obligations
hereunder or to consummate the Merger or the other transactions contemplated
hereby, but shall not include (i) facts, circumstances, events, changes, effects
or occurrences generally affecting the industry in which the Company operates or
the economy or the financial or securities markets in the United States or
elsewhere in the world, including any regulatory or political conditions or
developments, or any outbreak or escalation of hostilities, declared or
undeclared acts of war, terrorism or insurrection, except to the extent any
fact, circumstance, event, change, effect or occurrence that, relative to other
industry participants, disproportionately impacts the assets, properties,
business, results of operation or financial condition of the Company and its
Subsidiaries, taken as a whole, (ii) facts, circumstances, events, changes,
effects or occurrences to the extent directly resulting from the announcement of
the execution of this Agreement or the consummation of the transactions
contemplated hereby (without diminishing the effect of any representations or
warranties herein), (iii) fluctuations in the price or trading volume of shares
of Company Common Stock; provided, that the exception in this clause (iii) shall
not prevent or otherwise affect a determination that any fact, circumstance,
event, change, effect or occurrence underlying such fluctuation has resulted in,
or contributed to, a Company Material Adverse Effect, (iv) facts, circumstances,
events, changes, effects or occurrences to the extent resulting from any changes
in Law or in GAAP (or the interpretation thereof) after the date hereof, (v)
facts, circumstances, events, changes, effects or occurrences to the extent
resulting from any legal proceedings made or brought by any of the current or
former shareholders of the Company (on their own behalf or on behalf of the
Company) arising out of or related to this Agreement or any of the transactions
contemplated hereby or (vi) any failure by the Company to meet any published
analyst estimates or expectations of the Company's revenue, earnings or other
financial performance or results of operations for any period or any failure by
the Company to meet its internal budgets, plans or forecasts of its revenues,
earnings or other financial performance or results of operations; provided, that
the exception in this clause (vi) shall not prevent or otherwise affect a
determination that any fact, circumstance, event, change, effect or occurrence
underlying such failure has resulted in, or contributed to, a Company Material
Adverse Effect.
Section 3.2. Capital Stock.
(a) The authorized capital stock of the Company consists of 200,000,000
shares of Company Common Stock and 10,000,000 shares of preferred stock, par
value $0.001 per share ("Company Preferred Stock"). As of March 16, 2007, (i)
46,478,033 shares of Company Common Stock were issued and outstanding, (ii)
5,718,606 shares of Company Common Stock were held in treasury, (iii)(A)
1,155,779 shares of Company Common Stock were reserved for issuance under the
Circle International Group, Inc. 1994 Omnibus Equity Incentive Plan, none of
which were subject to outstanding options issued pursuant to such plan, (B)
46,000 shares of Company Common Stock were reserved for issuance under the
Circle International Group, Inc. 1999 Stock Option Plan, of which 1,000 shares
of Company Common Stock were subject to outstanding options issued pursuant to
such plan, (C) 4,150,955 shares of Company Common Stock were reserved for
issuance under the Company's Long Term Incentive Plan, of which 1,694,388 shares
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of Company Common Stock were subject to outstanding options issued pursuant to
such plan, (D) 157,203 shares of Company Common Stock were reserved for issuance
under the Company's Amended and Restated Nonemployee Director Stock Plan, of
which 82,500 shares of Company Common Stock were subject to outstanding options
issued pursuant to such plan, (E) 165,137 shares of Company Common Stock were
reserved for issuance under the Company's Employee Stock Purchase Plan, and (F)
158,725 shares of Company Common Stock were reserved for issuance under the
Circle International Group, Inc. 2000 Stock Option Plan, of which 2,712 shares
of Company Common Stock were subject to outstanding options issued pursuant to
such plan, (the plan described in clause (a)(iii)(E) above, the "Stock Purchase
Plan") and (iv) no shares of Company Preferred Stock were issued or outstanding.
One right to purchase Series A Junior Participating Preferred Stock (each, a
"Company Right") issued pursuant to the Rights Agreement, dated as of May 23,
2001 (the "Company Rights Agreement"), as amended, between the Company and
Computershare Investor Services, L.C. is associated with and attached to each
outstanding share of Company Common Stock. All outstanding shares of Company
Common Stock, and all shares of Company Common Stock reserved for issuance as
noted in clause (iii), when issued in accordance with the respective terms
thereof, are or will be duly authorized, validly issued, fully paid and
non-assessable and free of pre-emptive rights and issued in compliance with all
applicable securities Laws. No shares of Company Common Stock are owned by any
Subsidiaries of the Company.
(b) Except as set forth in subsection (a) above, or as permitted after
the date hereof by Section 5.1(b), (i) the Company does not have any shares of
its capital stock issued or outstanding other than shares of Company Common
Stock that have become outstanding after March 16, 2007 upon exercise of Company
Stock Options outsta nding as of March 16, 2007 and (ii) there are no
outstanding subscriptions, options, warrants, calls, convertible securities or
other similar rights, agreements or commitments relating to the issuance of
capital stock or other equity interests to which the Company or any of its
Subsidiaries is a party obligating the Company or any of its Subsidiaries to (A)
issue, transfer or sell any shares of capital stock or other equity interests of
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, (B) grant, extend or enter
into any such subscription, option, warrant, call, convertible securities or
other similar right, agreement or arrangement, (C) redeem or otherwise acquire
any such shares of capital stock or other equity interests or (D) provide a
material amount of funds to, or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any Subsidiary.
(c) Except for the awards to acquire shares of Company Common Stock
under the Company Stock Plans and Stock Purchase Plan of the Company or any of
its Subsidiaries listed in Section 3.2(a) above, neither the Company nor any of
its Subsidiaries has outstanding bonds, debentures, notes or other obligations,
the holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders of
the Company on any matter.
(d) Except for the Voting Agreement, there are no shareholder
agreements, voting trusts or other agreements or understandings to which the
Company or any of its Subsidiaries is a party or of which the Company is
otherwise aware with respect to the voting of the capital stock or other equity
interest of the Company or any of its Subsidiaries.
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(e) No holder of securities in the Company or any of its Subsidiaries
has any right to have such securities registered by the Company or any of its
Subsidiaries, as the case may be, other than pursuant to the Shareholder's
Agreement dated October 1, 1994 among the Company, Xxxxx X. Xxxxx, Xxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx.
Section 3.3 Subsidiaries. Section 3.3 of the Company Disclosure Schedule
lists all Subsidiaries of the Company together with the jurisdiction of
organization of each such Subsidiary. All the outstanding shares of capital
stock of, or other equity interests in, each Subsidiary of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and are
owned directly or indirectly by the Company free and clear of all liens, claims,
deeds of trust, options, rights of first refusal, restrictive covenants,
pledges, charges, mortgages, encumbrances, adverse rights or claims and security
interests of any kind or nature whatsoever (including any restriction on the
right to vote or transfer the same, except for such transfer restrictions of
general applicability as may be provided under applicable law, including the
Securities Act of 1933, and the rules and regulations promulgated thereunder
(the "Securities Act"), and the "blue sky" laws of the various States of the
United States) (collectively, "Liens"). The Company does not own, directly or
indirectly, any capital stock, voting securities or equity interests in any
Person.
Section 3.4. Corporate Authority Relative to This Agreement; No Violation.
(a) The Company has the requisite corporate power and authority to enter
into this Agreement and, subject to receipt of the Company Shareholder Approval
(as hereinafter defined), to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company, acting upon the unanimous recommendation of
the Special Committee, and, except for (i) the Company Shareholder Approval and
(ii) the filing of the Articles of Merger with the Secretary of State of the
State of Texas, no other corporate proceedings on the part of the Company are
necessary to authorize the consummation of the transactions contemplated hereby.
As of the date hereof, each of the Board of Directors of the Company and the
Special Committee of the Board of Directors has resolved to recommend that the
Company's shareholders approve this Agreement and the transactions contemplated
hereby (including the Special Committee's recommendation, the "Recommendation").
This Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes the valid and binding agreement of
Parent and Merger Sub, constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, 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, and any implied covenant of good
faith and fair dealing (the "Bankruptcy and Equity Exception").
(b) Other than in connection with or in compliance with (i) the TBCA
(ii) the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"), (xxx) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") and (iv)
competition approvals in foreign countries (collectively, the "Company
Approvals") no authorization, consent or approval of, or filing with, any United
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States or foreign governmental or regulatory agency, commission, court, body,
entity or authority (each, a "Governmental Entity") is necessary, under
applicable Law, for the consummation by the Company of the transactions
contemplated hereby, except for such authorizations, consents, approvals or
filings that, if not obtained or made, would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) The execution and delivery by the Company of this Agreement does
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof by the Company will not, (i) result in any violation
of, or default (with or without notice or lapse of time, or both) under, require
consent under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of any benefit under any loan,
guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture,
lease, agreement, contract, instrument, permit, Company Permit, concession,
franchise, right or license binding upon the Company or any of its Subsidiaries
or result in the creation of any Lien upon any of the properties or assets of
the Company or any of its Subsidiaries, (ii) conflict with or result in any
violation of any provision of the articles of incorporation or bylaws or other
equivalent organizational document, in each case as amended, of the Company or
any of its Subsidiaries or (iii) assuming that the consents and approvals
referred to in Section 3.4(b) are duly obtained, conflict with or violate any
applicable Laws, other than, in the case of clauses (i) and (iii), any such
violation, required consent, conflict, default, termination, cancellation,
acceleration, right, loss or Lien that would not have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.5. Reports and Financial Statements.
(a) The Company and its Subsidiaries have filed all forms, documents,
statements and reports required to be filed prior to the date hereof by them
with the Securities and Exchange Commission (the "SEC") since January 1, 2005
(the forms, documents, statements and reports filed with the SEC since January
1, 2005 and those filed with the SEC subsequent to the date of this Agreement,
including any amendments thereto, the "Company SEC Documents"). As of their
respective dates, or, if amended, as of the date of the last such amendment
prior to the date hereof, the Company SEC Documents complied, and each of the
Company SEC Documents filed subsequent to the date of this Agreement will
comply, as to form, in all material respects with the requirements of the
Securities Act and the Exchange Act, as the case may be, and the applicable
rules and regulations promulgated thereunder. None of the Company SEC Documents
so filed or that will be filed subsequent to the date of this Agreement
contained or will contain any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The financial statements (including all related notes and schedules)
of the Company and its Subsidiaries included in or incorporated by reference
into the Company SEC Documents fairly presented, in all material respects, the
consolidated financial position of the Company and its Subsidiaries, as of the
respective dates thereof, and the consolidated results of their operations and
their consolidated cash flows for the respective periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments and
to any other adjustments described therein, including the notes thereto) in
conformity with United States generally accepted accounting principles ("GAAP")
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(except, in the case of the unaudited statements or foreign Subsidiaries, as
permitted by the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto).
Section 3.6. Internal Controls and Procedures. The Company has
established and maintains disclosure controls and procedures and internal
control over financial reporting (as such terms are defined in paragraphs (e)
and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by
Rule 13a-15 under the Exchange Act. The Company's disclosure controls and
procedures are reasonably designed to ensure that all material information
required to be disclosed by the Company in the reports that it files under the
Exchange Act are recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all such material
information is accumulated and communicated to the management of the Company as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications required pursuant to Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated thereunder
(the "Xxxxxxxx-Xxxxx Act"). The management of the Company has completed its
assessment of the effectiveness of the Company's internal control over financial
reporting in compliance with the requirements of Section 404 of the
Xxxxxxxx-Xxxxx Act for the year ended December 31, 2006, and such assessment
concluded that such controls were effective. The Company has disclosed, based on
its most recent evaluations, to the Company's outside auditors and the audit
committee of the board of directors of the Company (A) all significant
deficiencies in the design or operation of internal controls over financial
reporting and any material weaknesses, which by definition have more than a
remote chance to materially adversely affect the Company's ability to record,
process, summarize and report financial data (as defined in Rule 13a-15(f) of
the Exchange Act) and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting for the year ended December 31, 2006.
Section 3.7 No Undisclosed Liabilities. Except (i) as reflected or
reserved against in the Company's consolidated balance sheets (or the notes
thereto) included in the Company SEC Documents filed at least two (2) Business
Days prior to the date hereof, (ii) for liabilities and obligations arising
under this Agreement and transactions contemplated by this Agreement, (iii) for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since December 31, 2006 (it being understood that,
for purposes of this Section 3.7, the taking of any action specifically
permitted by the exceptions in the covenants in Section 5.1(b) shall be deemed
to be in the ordinary course of business consistent with past practice) (iv) for
liabilities or obligations under Company Material Contracts and (v) for
liabilities or obligations which have been discharged or paid in full in the
ordinary course of business, neither the Company nor any Subsidiary of the
Company has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, whether known or unknown and whether due or to
become due, that would have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.8 Compliance with Law; Permits.
(a) The Company and its Subsidiaries are, and since the later of January
1, 2005 and their respective dates of formation or organization have been, in
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compliance with and are not in default under or in violation of any applicable
federal, state, local or foreign or provincial law, statute, ordinance, rule,
regulation, judgment, order, injunction, decree or agency requirement of or
undertaking to or agreement with any Governmental Entity, including common law,
(collectively, "Laws" and each, a "Law"), except where such non-compliance,
default or violation would not have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Neither the Company, nor any of its Subsidiaries, nor any of their
Affiliates or any other Persons acting on their behalf has, in connection with
the operation of their respective businesses, (i) used any corporate or other
funds for unlawful contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activity to government officials,
candidates or members of political parties or organizations, or established or
maintained any unlawful or unrecorded funds in violation of Section 104 of the
Foreign Corrupt Practices Act of 1977 or any other similar applicable foreign,
federal or state law, (ii) paid, accepted or received any unlawful
contributions, payments, expenditures or gifts, or (iii) violated or operated in
noncompliance with any export restrictions, anti-boycott regulations, embargo
regulations or other applicable domestic or foreign laws and regulations, except
in the case of clauses (i), (ii) or (iii) where such action, violation or
noncompliance would not have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, (i) the Company and its Subsidiaries are in possession
of all franchises, tariffs, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for the Company and its Subsidiaries to
own, lease and operate their properties and assets or to carry on their
businesses as they are now being conducted (the "Company Permits"), (ii) all
Company Permits are in full force and effect, (iii) no suspension or
cancellation of any of the Company Permits is pending or, to the Knowledge of
the Company, threatened, (iv) the Company and its Subsidiaries are not, and
since January 1, 2005 have not been, in violation or breach of, or default
under, any Company Permit and (v) no event or condition has occurred or exists
which would reasonably be expected to result in a violation of, breach of or
loss of a benefit under any Company Permit (in each case, with or without notice
or lapse of time or both).
(d) The representations and warranties set forth in this Section 3.8
shall not apply to Environmental Law (which is the subject of Section 3.9),
ERISA (which is the subject of Section 3.10) or Laws relating to Taxes (which
are the subject of Section 3.15).
Section 3.9 Environmental Laws and Regulations.
(a) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, (i) the Company and each of its Subsidiaries
have conducted their respective businesses in compliance with all applicable
Environmental Laws (as hereinafter defined), (ii) there has been no release of
any Hazardous Substance by the Company or any of its Subsidiaries, or from any
properties owned by the Company or any of its Subsidiaries, or as a result of
any operations or activities of the Company or any of its Subsidiaries, in any
manner or for which the Company or any of is Subsidiaries would be responsible
that could reasonably be expected to give rise to any remedial obligation,
corrective action requirement or other liability of any kind under applicable
Environmental Laws, (iii) neither the Company nor any of its Subsidiaries has
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received any notices, demand letters or requests for information from any
federal, state, local or foreign or provincial Governmental Entity asserting
that the Company or any of its Subsidiaries may be in violation of, or liable
under, any Environmental Law, and (iv) neither the Company, its Subsidiaries nor
any of their respective properties are, or, to the Knowledge of the Company, are
threatened to become, subject to any liabilities relating to any suit,
settlement, court order, administrative order, regulatory requirement, judgment
or written claim asserted or arising under any Environmental Law.
(b) As used herein, "Environmental Law" means any Law relating to (i)
the protection, preservation or restoration of the environment (including air,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or (ii) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as in effect at the date hereof.
(c) As used herein, "Hazardous Substance" means any substance presently
listed, defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law. Hazardous
Substance includes any substance to which exposure is regulated by any
Governmental Entity or any Environmental Law including any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste or petroleum or any derivative or byproduct thereof, radon,
radioactive material, asbestos or asbestos containing material, urea
formaldehyde, foam insulation or polychlorinated biphenyls.
Section 3.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Company Disclosure Schedule lists all
material Company Benefit Plans as of the date of this Agreement. "Company
Benefit Plans" means all compensation or employee benefit plans, programs,
policies, agreements or other arrangements, whether or not "employee benefit
plans" (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), whether or not subject to ERISA), providing
cash- or equity-based incentives, health, medical, dental, disability, accident
or life insurance benefits or vacation, severance, retirement, pension or
savings benefits, that are sponsored, maintained or contributed to by the
Company or any of its Subsidiaries, or that the Company or any of its
Subsidiaries has any obligation to sponsor, maintain or contribute to, for the
benefit of current or former employees, directors or consultants of the Company
or any of its Subsidiaries and all employee and consultant agreements providing
compensation, vacation, severance or other benefits to any current or former
officer, employee or consultant of the Company or any of its Subsidiaries.
(b) Except for such claims which would not have, individually or in the
aggregate, a Company Material Adverse Effect, no action, dispute, suit, claim,
arbitration, or legal, administrative or other proceeding or governmental action
(other than claims for benefits in the ordinary course) is pending or, to the
Knowledge of the Company, threatened (x) with respect to any Company Benefit
Plan by any current or former employee, officer or director of the Company or
any of its Subsidiaries, (y) alleging any breach of the material terms of any
-14-
Company Benefit Plan or any fiduciary duties or (z) with respect to any
violation of any applicable Law with respect to such Company Benefit Plan.
(c) Each Company Benefit Plan has been established, maintained and
administered in compliance with its terms and with applicable Law, including
ERISA and the Code to the extent applicable thereto, except for such
non-compliance which would not have, individually or in the aggregate, a Company
Material Adverse Effect. Each Company Benefit Plan intended to be qualified
under Section 401(a) or 401(k) of the Code has received a favorable
determination letter from the United States Internal Revenue Service that has
not been revoked and to the Knowledge of the Company, no fact or event has
occurred that would reasonably be expected to affect adversely the qualified
status of any such Company Benefit Plan.
(d) There are no Company Benefit Plans subject to Title IV or Section
302 of ERISA or Section 412 or 4971 of the Code.
(e) None of the Company Benefit Plans provides that the consummation of
the transactions contemplated by this Agreement will not, either alone or in
combination with another event, (i) entitle any current or former director,
employee, independent contractor, consultant or officer of the Company or any of
its Subsidiaries to severance pay, retention bonuses, parachute payments,
non-competition payments, unemployment compensation or any other payment,
compensation or benefit except as expressly provided in this Agreement or as
required by applicable Law, (ii) accelerate the time of payment or vesting,
result in any funding, or increase the amount of any payment, compensation or
benefit due any such director, employee, independent contractor, consultant or
officer, except as expressly provided in this Agreement, or (iii) result in any
forgiveness of indebtedness or obligation to fund benefits with respect to any
such employee, director, independent contractor, consultant or officer, (iv)
result in any limitation or restriction on the right of the Company or any of
its Subsidiaries to merge, amend or terminate any Company Benefit Plan, (v)
result in any new or increased contribution required to be made to any Company
Benefit Plan or (vi) provide for any director, officer, employee or service
provider to be entitled to a gross-up, make whole or other payment as a result
of the imposition of taxes under Section 280G, 4999 or 409A of the Code pursuant
to any agreement or arrangement with the Company or any of its Subsidiaries. No
payment or benefit which has been, will be or may be made by the Company or any
of its Subsidiaries with respect to any present or former employee in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement could result in any "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code or
nondeductibility under Section 162(m) of the Code.
(f) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, all Company Benefit Plans subject to the Law of
any jurisdiction outside of the United States (i) have been established and
maintained in accordance with all applicable requirements, (ii) if they are
intended to qualify for special tax treatment, meet all necessary requirements
for such treatment, and (iii) if they are intended to be funded and/or
book-reserved are funded and/or book-reserved, as appropriate, based upon
reasonable actuarial assumptions and in accordance with applicable Law.
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(g) With respect to each Company Benefit Plan, the Company has provided
to Parent a true, correct and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable: (i) the
most recent documents constituting the Company Benefit Plan and all amendments
thereto, (ii) any related trust agreement or other funding instrument and (iii)
the most recent Internal Revenue Service determination or opinion letter.
(h) No Company Benefit Plan is a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA ("Multiemployer Plan"), and neither the Company,
its Subsidiaries nor any other entity which together with the Company or any of
its Subsidiaries would be treated as a single employer under Section 4001 of
ERISA or Section 414 of the Code (each, an "ERISA Affiliate") has at any time
sponsored or contributed to, or had any liability or obligation in respect of,
any Multiemployer Plan, except as would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(i) With respect to the Company Benefit Plans, no event has occurred
and, to the Knowledge of the Company, except as would not have, individually or
in the aggregate, a Company Material Adverse Effect, no condition exists that
would, either directly or by reason of the Company's or any Subsidiary's
affiliation with any of their ERISA Affiliates, subject the Company or any of
its Subsidiaries to any tax, fine, lien, penalty or other liability imposed by
ERISA, the Code or other applicable Laws.
Section 3.11 Interested Party Transactions. Except for employment
Contracts filed as an exhibit to or incorporated by reference in a Company SEC
Document filed prior to the date hereof or Company Benefit Plans, Section 3.11
of the Company Disclosure Schedule sets forth a correct and complete list of the
contracts, arrangements that are in existence as of the date of this Agreement
or transactions under which the Company or any of its Subsidiaries has any
existing or future liabilities (an "Affiliate Transaction"), between the Company
or any of its Subsidiaries, on the one hand, and, on the other hand, any (A)
present executive officer or director of the Company or any of such executive
officer's or director's immediate family members, (B) record or beneficial owner
of more than 5% of the Shares as of the date hereof, or (C) to the Knowledge of
the Company, any Affiliate of any such executive officer, director or owner
(other than the Company or any of its Subsidiaries).
Section 3.12 Absence of Certain Changes or Events. Since December 31,
2006, (a) except as otherwise required or expressly contemplated by this
Agreement, (i) the businesses of the Company and its Subsidiaries have been
conducted, in all material respects, in the ordinary course of business
consistent with past practice (it being understood that, for purposes of this
Section 3.12, the taking of any action specifically permitted by the exceptions
in the covenants contained in Section 5.1(b) shall be deemed to be in the
ordinary course of business consistent with past practice) and (ii) there have
not been any facts, circumstances, events, changes, effects or occurrences that
have had or would have, individually or in the aggregate a Company Material
Adverse Effect and (b) prior to the date hereof, neither the Company nor any of
its Subsidiaries has taken or permitted to occur any action that were it to be
taken from and after the date hereof would require approval of Parent pursuant
to Section 5.1(b) to (i) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise acquire
or encumber, any shares of its capital stock or any securities or obligations
-16-
convertible (whether currently convertible or convertible only after the passage
of time or the occurrence of certain events) into or exchangeable for any shares
of its capital stock, (ii) waive, release, assign, settle or compromise any
claim, action or proceeding or (iii) implement or adopt any material change in
its Tax or financial accounting principles, practices or methods.
Section 3.13 Investigations; Litigation. There are no (i) investigations
or proceedings pending (or, to the Knowledge of the Company, threatened) by any
Governmental Entity with respect to the Company or any of its Subsidiaries or
(ii) actions, suits or proceedings pending (or, to the Knowledge of the Company,
threatened) against or affecting the Company or any of its Subsidiaries , or any
of their respective properties at law or in equity before, and there are no
orders, judgments or decrees of, or before, any Governmental Entity against the
Company or any of its Subsidiaries, in each case of clause (i) or (ii), which
would have (if adversely determined), individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.14 Proxy Statement; Other Information. None of the information
contained in the Proxy Statement (as hereinafter defined) will at the time of
the mailing of the Proxy Statement to the shareholders of the Company, at the
time of the Company Meeting (as such Proxy Statement shall have been amended or
supplemented as of the date of the Company Meeting), and at the time of any
amendments thereof or supplements thereto, and none of the information supplied
by the Company for inclusion or incorporation by reference in the Schedule 13E-3
(as hereinafter defined) to be filed with the SEC concurrently with the filing
of the Proxy Statement, will, at the time of its filing with the SEC, and at the
time of any amendments thereof or supplements thereto, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, that no
representation is made by the Company with respect to information supplied by or
on behalf of, or related to, Parent or any of its Affiliates (other than the
Company and its Subsidiaries). The Proxy Statement and the Schedule 13E-3 will
comply as to form in all material respects with the Exchange Act, except that no
representation is made by the Company with respect to information supplied by or
on behalf of, or related to, Parent or any of its Affiliates (other than the
Company and its Subsidiaries). The letter to shareholders, notice of meeting,
proxy statement and forms of proxy to be distributed to shareholders in
connection with the Merger to be filed with the SEC in connection with seeking
the approval of this Agreement are collectively referred to herein as the "Proxy
Statement." The Rule 13E-3 Transaction Statement on Schedule 13E-3 to be filed
with the SEC in connection with seeking the adoption and approval of this
Agreement is referred to herein as the "Schedule 13E-3."
Section 3.15 Tax Matters.
(a) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, (i) the Company and each of its Subsidiaries
have prepared and timely filed (taking into account any valid extension of time
within which to file) all Tax Returns required to be filed by any of them and
all such Tax Returns are complete and accurate, (ii) the Company and each of its
Subsidiaries have timely paid all Taxes that are required to be paid by any of
them (whether or not shown on any Tax Return), except with respect to matters
contested in good faith and for which adequate reserves have been established on
the financial statements of the Company and its Subsidiaries in accordance with
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GAAP, (iii) the U.S. consolidated federal income Tax Returns of the Company
through the tax year ending 2005 have been examined by the Internal Revenue
Service and such examinations have been completed or settled (or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired), (iv) all assessments for Taxes due with respect to completed
and settled examinations or any concluded litigation have been fully paid, (v)
there are no audits, examinations, investigations or other proceedings pending
or threatened in writing in respect of Taxes or Tax matters of the Company or
any of its Subsidiaries, (vi) there are no Liens for Taxes on any of the assets
of the Company or any of its Subsidiaries other than statutory Liens for Taxes
not yet due and payable or Liens for Taxes that are being contested in good
faith and for which adequate reserves have been established on the financial
statements of the Company and its Subsidiaries in accordance with GAAP, (vii)
none of the Company or any of its Subsidiaries has been a "controlled
corporation" or a "distributing corporation" in any distribution that was
purported or intended to be governed by Section 355 of the Code (or any similar
provision of state, local or foreign Law) (A) occurring during the two-year
period ending on the date hereof, or (B) that otherwise constitutes part of a
"plan" or "series of related transactions" (within the meaning of Section 355(e)
of the Code) that includes the Merger, (viii) the Company and each of its
Subsidiaries has timely withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, shareholder or other third party and is in
compliance with all applicable rules and regulations regarding the solicitation,
collection and maintenance of any forms, certifications and other information
required in connection therewith, (ix) none of the Company or any of its
Subsidiaries has been a party to any "reportable transaction" within the meaning
of Treasury Regulation 1.6011-4(b)(1), (x) neither the Company nor any of its
Subsidiaries is a party to any agreement or arrangement relating to the
apportionment, sharing, assignment or allocation of any material Tax or material
Tax asset (other than an agreement or arrangement solely among members of a
group the common parent of which is the Company) or has any liability for Taxes
of any Person (other than the Company or any of its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any predecessor or successor thereof or any
analogous or similar provision of Law), by contract, agreement or otherwise,
(xi) no waivers or extensions of any statute of limitations have been granted or
requested with respect to any Taxes of the Company or any of its Subsidiaries,
(xii) no issue has been raised in writing by a taxing authority in any prior
examination of the Company or any of its Subsidiaries which, by application of
the same or similar principles, could reasonably be expected to result in a
deficiency for any subsequent taxable period, (xiii) no claim has been in
writing made by a taxing authority in a jurisdiction where either the Company or
any of its Subsidiaries does not file Tax Returns such that it is or may be
subject to taxation by that jurisdiction, and (xiv) neither the Company nor any
of its Subsidiaries (A) is subject to any private letter ruling of the IRS or
comparable rulings of any taxing authority with respect to income Taxes or (B)
has executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any similar provision of Law, in each case, within the preceding three
taxable years or that may otherwise be in effect at any time after the Effective
Time of the Merger with respect to income Taxes.
(b) As used in this Agreement, (i) "Tax" or "Taxes" means (A) any and
all federal, state, local or foreign or provincial taxes, charges, fees,
imposts, levies or other assessments, including all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
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security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, including any and all interest, penalties, fines, additions to tax
or additional amounts imposed by any Governmental Entity in connection with
respect thereto, and (B) any liability in respect of any items described in
clause (A) payable by reason of contract, assumption, transferee liability,
operation of Law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or
successor thereof of any analogous or similar provision of Law) or otherwise,
and (ii) "Tax Return" means any return, report or similar filing (including any
attached schedules, supplements and additional or supporting material) required
to be filed with respect to Taxes, including any information return, claim for
refund, amended return or declaration of estimated Taxes (and including any
amendments with respect thereto).
Section 3.16 Labor Matters.
(a) Except for such matters which would not have individually or in the
aggregate, a Company Material Adverse Effect, neither the Company nor any of its
Subsidiaries has received written notice during the past two years of the intent
of any Governmental Entity responsible for the enforcement of labor, employment,
occupational health and safety or workplace safety and insurance/workers
compensation laws to conduct an investigation of the Company or any of its
Subsidiaries and, to the Knowledge of the Company, no such investigation is in
progress. Except for such matters which would not have, individually or in the
aggregate, a Company Material Adverse Effect, (i) there are no (and have not
been during the two year period preceding the date hereof) strikes or lockouts
with respect to any employees of the Company or any of its Subsidiaries
("Employees"), (ii) to the Knowledge of the Company, there is no (and has not
been during the two year period preceding the date hereof) union organizing
effort pending or threatened against the Company or any of its Subsidiaries,
(iii) there is no (and has not been during the two year period preceding the
date hereof) unfair labor practice, labor dispute (other than routine individual
grievances) or labor arbitration proceeding pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries, (iv) there
is no (and has not been during the two year period preceding the date hereof)
slowdown or work stoppage in effect or, to the Knowledge of the Company,
threatened with respect to Employees and (v) the Company and its Subsidiaries
are in compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and unfair
labor practices. Neither the Company nor any of its Subsidiaries has any
liabilities under the Worker Adjustment and Retraining Act and the regulations
promulgated thereunder (the "WARN Act") or any similar state or local law as a
result of any action taken by the Company that would have, individually or in
the aggregate, a Company Material Adverse Effect. Neither the Company nor any of
its Subsidiaries is a party to any collective bargaining agreements.
(b) Except as would not have, individually or in the aggregate a Company
Material Adverse Effect, all individuals that have been or that are classified
by the Company as independent contractors, including without limitation drivers,
have been and are correctly so classified, and none of such individuals could
reasonably be classified as an employee of the Company.
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Section 3.17 Intellectual Property. Except as would not have,
individually or in the aggregate, a Company Material Adverse Effect, either the
Company or a Subsidiary of the Company owns, or is licensed or otherwise
possesses adequate rights to use, all material trademarks, trade names, service
marks, service names, xxxx registrations, logos, assumed names, registered and
unregistered copyrights, patents or applications and registrations, domain
names, Internet addresses and other computer identifiers, web sites and web
pages, computer software programs and related documentation, trade secrets,
know-how, customer information, confidential business information and technical
information used in their respective businesses as currently conducted
(collectively, the "Intellectual Property"). Except as would not have,
individually or in the aggregate, a Company Material Adverse Effect, (i) there
are no pending or, to the Knowledge of the Company, threatened claims by any
person alleging infringement by the Company or any of its Subsidiaries or with
regard to the ownership, validity or use of any Intellectual Property of the
Company, (ii) to the Knowledge of the Company, the conduct of the business of
the Company and its Subsidiaries does not infringe any intellectual property
rights of any person, (iii) neither the Company nor any of its Subsidiaries has
made any claim of a violation or infringement by others of its rights to or in
connection with the Intellectual Property of the Company or any of its
Subsidiaries, and (iv) to the Knowledge of the Company, no person is infringing
any Intellectual Property of the Company or any of its Subsidiaries. To the
Knowledge of the Company, upon the consummation of the transactions contemplated
herein, the Company shall own or have the right to use all Intellectual Property
on the same terms and conditions as the Company and its Subsidiaries enjoyed
prior to such transaction, except where the failure to so own or have the right
to use would not have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 3.18 Property. Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, the Company or a Subsidiary of the
Company owns and has good and indefeasible title to all of its owned real
property and good title to all its personal property and has valid leasehold
interests in all of its leased properties free and clear of all Liens (except in
all cases for Liens permissible under any applicable loan agreements and
indentures and for title exceptions, defects, encumbrances, liens, charges,
restrictions, restrictive covenants and other matters, whether or not of record,
which in the aggregate do not materially affect the continued use of the
property for the purposes for which the property is currently being used
(assuming the timely discharge of all obligations owing under or related to the
owned real property, the personal property and leased property) by the Company
or a Subsidiary of the Company). Except as would not have, individually or in
the aggregate, a Company Material Adverse Effect, all leases under which the
Company or any of its Subsidiaries lease any real or personal property are valid
and effective against the Company or any of its Subsidiaries and, to the
Company's Knowledge, the counterparties thereto, in accordance with their
respective terms, and there is not, under any of such leases, any existing
default by the Company or any of its Subsidiaries or, to the Company's
Knowledge, the counterparties thereto, or event which, with notice or lapse of
time or both, would become a default by the Company or any of its Subsidiaries
or, to the Company's Knowledge, the counterparties thereto. The representations
and warranties set forth in this Section 3.18 shall not apply to Intellectual
Property, which is the subject of Section 3.17.
Section 3.19 Insurance. Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries
maintain, or are entitled to the benefits of, insurance covering their
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properties, operations, personnel and businesses in the amounts set forth on
Section 3.19 of the Company Disclosure Schedule. Except as would not have,
individually or in the aggregate, a Company Material Adverse Effect, none of the
Company or its Subsidiaries has received notice from any insurer or agent of
such insurer that substantial capital improvements or other expenditures will
have to be made in order to continue such insurance, and all such insurance is
outstanding and duly in force on the date hereof and will be (or equivalent
replacement insurance will be) outstanding and duly in force on the Closing
Date.
Section 3.20 Opinion of Financial Advisor. The Board of Directors of the
Company and the Special Committee have received the opinion of Deutsche Bank
Securities Inc., dated as of the date of this Agreement, to the effect that, as
of the date hereof, the Merger Consideration is fair to the holders of the
Company Common Stock (other than those that are parties to a Rollover
Commitment, Parent and Merger Sub) from a financial point of view.
Section 3.21 Required Vote of the Company Shareholders. The affirmative
vote of the holders of outstanding shares of Company Common Stock, voting
together as a single class, representing at least a majority of all the votes
entitled to be cast thereupon by holders of Company Common Stock, is the only
vote of holders of securities of the Company which is required to approve this
Agreement, the Merger and the other transactions contemplated hereby (the
"Company Shareholder Approval").
Section 3.22 Material Contracts.
(a) As of the date of this Agreement, except for this Agreement, the
Company Benefit Plans, Contracts relating to Intellectual Property or Contracts
filed with the SEC prior to the date hereof, neither the Company nor any of its
Subsidiaries is a party to or bound by, as of the date hereof, any Contract
(whether written or oral) which is a "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) (all contracts of the
type described in this Section 3.22(a) being referred to herein as "Company
Material Contracts").
(b) Other than as a result of the expiration or termination of any
Company Material Contract in accordance with its terms and except as would not
have, either individually or in the aggregate, a Company Material Adverse
Effect, (i) each Company Material Contract is valid and binding on the Company
and any of its Subsidiaries that is a party thereto, as applicable, and in full
force and effect, (ii) the Company and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each Company Material Contract, and (iii) neither the Company nor any
of its Subsidiaries knows of, or has received notice of, the existence of any
event or condition which constitutes, or, after notice or lapse of time or both,
will constitute, a material default on the part of the Company or any of its
Subsidiaries under any such Company Material Contract.
Section 3.23 Finders or Brokers. Except for Deutsche Bank Securities
Inc., neither the Company nor any of its Subsidiaries has engaged any investment
banker, broker or finder in connection with the transactions contemplated by
this Agreement who might be entitled to any fee or any commission in connection
with or upon consummation of the Merger or the other transactions contemplated
hereby.
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Section 3.24 State Takeover Statutes; Rights Plan. The Company has taken
all actions necessary for purposes of Article 13.03 of the TBCA to ensure that
the restrictions of such provision are not applicable to the Merger, the Voting
Agreement, the Rollover Commitments or other transactions contemplated hereby,
and no other "fair price," "moratorium," "control share acquisition" or other
similar antitakeover statute or regulation enacted under state or federal laws
in the United States is applicable to the Company with respect to the Merger,
the Voting Agreement, the Rollover Commitments or other transactions
contemplated hereby. The Company has amended and taken all other actions
necessary to (a) render the Company Rights Agreement inapplicable to this
Agreement, the Merger, the Voting Agreement, the Rollover Commitments or other
transactions contemplated hereby, (b) ensure that (i) none of Parent, Merger Sub
or any other interestholder or Subsidiary of Parent is an Acquiring Person (as
defined in the Company Rights Agreement) pursuant to the Company Rights
Agreement and (ii) a Distribution Date or a Triggering Event (as such terms are
defined in the Company Rights Agreement) does not occur, in the case of clauses
(a) and (b)(i) and (ii), solely by reason of the execution of this Agreement,
the Voting Agreement, or the Rollover Commitments, or the consummation of the
transactions contemplated thereby, including the Merger, and (c) provide that
the Expiration Date (as defined in the Company Rights Agreement) shall occur
immediately prior to the Effective Time.
Section 3.25 Disclaimer.
(a) Except for the representations and warranties contained in this
Article III of this Agreement, Parent acknowledges that neither the Company nor
any other Person on behalf of the Company makes any other express or implied
representation or warranty with respect to the Company with respect to any other
information provided to Parent. Except in the case of fraud or willful
misrepresentation, neither the Company nor any other Person will have or be
subject to any liability or indemnification obligation to Parent or any other
Person resulting from the distribution to Parent, or use by Parent of, any such
information, including any information, documents, projections, forecasts or
other material made available to Parent in certain "data rooms", confidential
information memoranda or management presentations in expectation of the
transactions contemplated by this Agreement.
(b) In connection with investigation by Parent of the Company and its
Subsidiaries, Parent has received or may receive from the Company and/or the
Company's Subsidiaries certain projections, forward-looking statements and other
forecasts and certain business plan information. Parent acknowledges that there
are uncertainties inherent in attempting to make such estimates, projections and
other forecasts and plans, that Parent is familiar with such uncertainties, that
Parent is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections and other forecasts and
plans so furnished to it (including the reasonableness of the assumptions
underlying such estimates, projections, forecasts or plans), and that, absent
fraud or willful misrepresentation, Parent shall have no claim against anyone
with respect thereto. Accordingly, Parent acknowledges that the Company makes no
representation or warranty with respect to such estimates, projections,
forecasts or plans (including the reasonableness of the assumptions underlying
such estimates, projections, forecasts or plans).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the disclosure schedule delivered by Parent to the
Company immediately prior to the execution of this Agreement (the "Parent
Disclosure Schedule"), Parent and Merger Sub jointly and severally represent and
warrant to the Company as follows:
Section 4.1 Qualification; Organization.
(a) Each of Parent and Merger Sub is a legal entity duly organized,
validly existing and in good standing under the Laws of its respective
jurisdiction of organization. Each of Parent and Merger Sub has all requisite
corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted,
except where the failure to have such power or authority would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) Each of Parent and Merger Sub is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership,
leasing or operation of its assets or properties or conduct of its business
requires such qualification, except where the failure to be so qualified or in
good standing would not, individually or in the aggregate, prevent or materially
delay or materially impair the ability of Parent or Merger Sub to consummate the
Merger and the other transactions contemplated hereby (a "Parent Material
Adverse Effect"). The organizational or governing documents of Parent and Merger
Sub, as previously provided to the Company, are in full force and effect.
Neither Parent nor Merger Sub is in violation of its organizational or governing
documents.
Section 4.2 Corporate Authority Relative to This Agreement; No
Violation.
(a) Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Parent and Merger Sub and by Parent, as
the sole stockholder of Merger Sub, and no other corporate proceedings on the
part of Parent or Merger Sub are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming this Agreement
constitutes the valid and binding agreement of the Company, this Agreement
constitutes the valid and binding agreement of Parent and Merger Sub,
enforceable against each of Parent and Merger Sub in accordance with its terms,
subject to the Bankruptcy and Equity Exception.
(b) Other than in connection with or in compliance with (i) the
provisions of the TBOC, (ii) the Exchange Act, (iii) the HSR Act, and (iv)
competition approvals in foreign countries (collectively, the "Parent
Approvals"), no authorization, consent or approval of, or filing with, any
Governmental Entity is necessary for the consummation by Parent or Merger Sub of
the transactions contemplated by this Agreement, except for such authorizations,
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consents, approvals or filings, that, if not obtained or made, would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
(c) The execution and delivery by Parent and Merger Sub of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof by Parent and Merger Sub will not (i)
result in any violation of, or default (with or without notice or lapse of time,
or both) under, require consent under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of any benefit
under any loan, guarantee of indebtedness or credit agreement, note, bond,
mortgage, indenture, lease, agreement, contract, instrument, permit, concession,
franchise, right or license binding upon Parent or any of its Subsidiaries or
result in the creation of any Lien upon any of the properties or assets of
Parent or any of its Subsidiaries, (ii) conflict with or result in any violation
of any provision of the certificate of incorporation or by-laws or other
equivalent organizational document, in each case as amended, of Parent or any of
its Subsidiaries or (iii) assuming that the consents and approvals referred to
in Section 4.2(b) are duly obtained, conflict with or violate any applicable
Laws, other than, in the case of clauses (i) and (iii), any such violation,
required consent, conflict, default, termination, cancellation, acceleration,
right, loss or Lien that would not have, individually or in the aggregate, a
Parent Material Adverse Effect.
Section 4.3 Proxy Statement; Other Information. None of the information
supplied or to be supplied by or on behalf of Parent or any of its Affiliates
(other than the Company and its Subsidiaries) which is included or incorporated
by reference in the Proxy Statement will at the time of the mailing of the Proxy
Statement to the shareholders of the Company, at the time of the Company Meeting
(as such Proxy Statement shall have been amended or supplemented as of the date
of the Company Meeting), and at the time of any amendments thereof or
supplements thereto, and none of the information supplied by or on behalf of
Parent or any of its Affiliates (other than the Company and its Subsidiaries)
and contained in the Schedule 13E-3 to be filed with the SEC concurrently with
the filing of the Proxy Statement, will, at the time of filing with the SEC, and
at the time of any amendments thereof or supplements thereto, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 4.4 Financing.
(a) Section 4.4 of the Parent Disclosure Schedule sets forth true,
accurate and complete copies of (i) executed equity commitment letters to
provide equity financing to Parent and/or Merger Sub (the "Equity Commitment
Letters"), (ii) the Rollover Commitments and (iii) executed debt commitment
letters and related term sheets (the "Debt Commitment Letters" and together with
the Equity Commitment Letters, the "Financing Commitments") pursuant to which,
and subject to the terms and conditions thereof, certain lenders have committed
to provide Parent or the Surviving Corporation with loans in the amounts
described therein, the proceeds of which may be used to consummate the Merger
and the other transactions contemplated hereby (the "Debt Financing" and
together with the equity financing referred to in clauses (i) and (ii), the
"Financing"); provided, however, that in the event any terms of the Financing
Commitments are set forth in one or more fee letters containing information
regarding fees and compensation payable to parties providing the Financing that
Parent and Merger Sub have agreed to keep confidential, the copies of such fee
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letters may be redacted to delete such compensation information that is not
material to an assessment of the likelihood of the Financing being consummated.
Each of the Financing Commitments, in the form so delivered, is a legal, valid
and binding obligation of Parent or Merger Sub and, to Parent's Knowledge, the
other parties thereto. The Financing Commitments are in full force and effect
and have not been withdrawn or terminated (and no party thereto has indicated an
intent to so withdraw or terminate) or otherwise amended or modified in any
respect and neither Parent nor Merger Sub is in breach of any of the terms or
conditions set forth therein and no event has occurred which, with or without
notice, lapse of time or both, could reasonably be expected to constitute a
material breach or failure to satisfy a condition precedent set forth therein.
No event has occurred which, with or without notice, lapse of time or both,
would constitute a default or breach on the part of Parent or Merger Sub with
any term or condition of the Financing Commitments. As of the date of this
Agreement, Parent has no reason to believe it will be unable to satisfy on a
timely basis any term or condition of closing to be satisfied by it pursuant to
the Financing Commitments. The proceeds from the Financing, together with the
Rollover Commitments, constitute all of the financing required for the
consummation of Merger and the other transactions contemplated hereby, and are
sufficient for the satisfaction of all of Parent's and Merger Sub's obligations
under this Agreement, including the payment of the Merger Consideration and the
Option and Stock-Based Consideration, and the payment of all fees and expenses
reasonably expected to be incurred in connection herewith. Parent or Merger Sub
has fully paid any and all commitment fees or other fees on the dates and to the
extent required by the Financing Commitments. The Financing Commitments contain
all of the conditions precedent to the obligations of the parties thereunder to
make the Financing available to Parent on the terms therein. Notwithstanding
anything in this Agreement to the contrary, the Debt Commitment Letters may be
superseded at the option of Parent or Merger Sub after the date of this
Agreement but prior to the Effective Time by the New Financing Commitments in
accordance with Section 5.10. In such event, the term "Financing Commitment" as
used herein shall be deemed to include the New Financing Commitments to the
extent then in effect.
(b) Parent has delivered to the Company a true and complete copy of the
documentation governing each Rollover Commitment, pursuant to which each
committing party has committed to contribute to Parent that number of Shares set
forth in such letter in exchange for shares of capital stock of Parent
immediately prior to the Effective Time. As of the date of this Agreement, each
Rollover Commitment is in full force and effect.
Section 4.5 Ownership and Operations of Merger Sub. As of the date of
this Agreement, the authorized capital stock of Merger Sub consists of 1,000
shares of common stock, par value $0.01 per share, all of which are validly
issued and outstanding. All of the issued and outstanding capital stock of
Merger Sub is, and at the Effective Time will be, owned by Parent. Neither
Parent nor Merger Sub has conducted any business other than incident to its
formation and pursuant to this Agreement, the Merger and the other transactions
contemplated hereby and the financing of such transactions.
Section 4.6. Finders or Brokers. Except for Xxxxxxx Xxxxx & Co., neither
Parent nor any of its Subsidiaries has engaged any investment banker, broker or
finder in connection with the transactions contemplated by this Agreement who
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might be entitled to any fee or any commission in connection with or upon
consummation of the Merger or the other transactions contemplated hereby.
Section 4.7 Ownership of Shares. Neither Parent, as of the date hereof,
nor Merger Sub owns any Shares, beneficially, of record or otherwise.
Immediately prior to the Effective Time, Parent or Merger Sub will only own
those Shares subject to the Rollover Commitments.
Section 4.8 Certain Arrangements. Section 4.8 of the Parent Disclosure
Schedule sets forth, as of the date hereof, all Contracts between Parent, Merger
Sub or the Guarantors, on the one hand, and any member of the Company's
management or directors, on the other hand, as of the date hereof that relate in
any way to the Company or the transactions contemplated by this Agreement.
Parent has provided the Special Committee and the Board of Directors of the
Company with true, correct and complete copies of the Contracts in Section 4.8
of the Parent Disclosure Schedule. Prior to the Board of Directors of the
Company approving this Agreement, the Voting Agreement, the Rollover
Commitments, the Merger and the other transactions contemplated thereby for
purposes of Article 13.03 of the TBCA or the Company Rights Agreement, neither
Parent nor Merger Sub, alone or together with any other person, has taken any
action that would cause Article 13.03 of the TBCA to be applicable to this
Agreement, the Merger or any transactions contemplated by this Agreement.
Section 4.9 Investigations; Litigation. There are no suits, claims,
actions, proceedings, arbitrations, mediations or investigations pending or, to
the Knowledge of Parent, threatened against Parent or any of its Subsidiaries or
Affiliates (other than the Company or any of its Subsidiaries, as to which
Parent and Merger Sub make no representation), other than any such suit, claim,
action, proceeding or investigation that would not have, individually or in the
aggregate, a Parent Material Adverse Effect. As of the date hereof, neither
Parent nor any of its Subsidiaries nor any of their respective properties is or
are subject to any order, writ, judgment, injunction, decree or award that would
have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.10 Guarantees. Concurrently with the execution of this
Agreement, each of the Guarantors has delivered to the Company the Guarantees,
dated as of the date hereof, in favor of the Company, true, accurate and
complete copies of which are set forth in Section 4.10 of the Parent Disclosure
Schedule, with respect to the performance by Parent and Merger Sub,
respectively, of their obligations under this Agreement.
Section 4.11 No Other Information. Parent and Merger Sub acknowledge that
the Company makes no representations or warranties as to any matter whatsoever
except as expressly set forth in Article III. The representations and warranties
set forth in Article III are made solely by the Company, and no Representative
of the Company shall have any responsibility or liability related thereto.
Section 4.12 Access to Information; Disclaimer. Parent and Merger Sub
each acknowledges and agrees that it (a) has had an opportunity to discuss the
business of the Company and its Subsidiaries with the management of the Company,
(b) has had reasonable access to the books and records of the Company and its
Subsidiaries, (c) has been afforded the opportunity to ask questions of and
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receive answers from officers of the Company and (d) has conducted its own
independent investigation of the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, and has not relied on any
representation, warranty or other statement by any Person on behalf of the
Company or any of its Subsidiaries, whether express or implied, other than the
representations and warranties of the Company expressly contained in Article III
of this Agreement and that all other representations and warranties are
specifically disclaimed.
Section 4.13 Solvency. As of the Effective Time, assuming (i)
satisfaction of the conditions to Parent's and Merger Sub's obligation to
consummate the Merger, or waiver of such conditions, (ii) the accuracy of the
representations and warranties of the Company set forth in Article III (for such
purposes, such representations and warranties shall be true and correct in all
material respects without giving effect to any "knowledge," materiality or
"Company Material Adverse Effect" qualification or exception) including, without
limitation, the representations and warranties set forth in Section 3.5(b), and
(iii) estimates, projections or forecasts provided by the Company to Parent
prior to the date hereof have been prepared in good faith on assumptions that
were and continue to be reasonable, and after giving effect to all of the
transactions contemplated by this Agreement, including without limitation the
Financing, any alternative financing and the payment of the aggregate Merger
Consideration, any contemplated repayment or refinancing of debt and payment of
all related fees and expenses, the Surviving Corporation will be Solvent. For
the purposes of this Section 4.13, the term "Solvent" when used with respect to
the Surviving Corporation means that, as of any date of determination, (a) the
amount of the "fair saleable value" of the assets of the Surviving Corporation
will, as of such date, exceed (i) the value of all "liabilities of the Surviving
Corporation, including contingent and other liabilities," as of such date, as
such quoted terms are generally determined in accordance with applicable federal
laws governing determinations of the insolvency of debtors, and (ii) the amount
that will be required to pay the probable liabilities of the Surviving
Corporation on its existing debts (including contingent liabilities) as such
debts become absolute and matured, (b) the Surviving Corporation will not have,
as of such date, an unreasonably small amount of capital for the operation of
the businesses in which it is engaged or proposed to be engaged following such
date, and (c) the Surviving Corporation will be able to pay its liabilities,
including contingent and other liabilities, as they mature. For purposes of this
definition, (i) "not have an unreasonably small amount of capital for the
operation of the businesses in which it is engaged or proposed to be engaged"
and "able to pay its liabilities, including contingent and other liabilities, as
they mature" means that the Surviving Corporation will be able to generate
enough cash from operations, asset dispositions or refinancing, or a combination
thereof, to meet its obligations as they become due.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business by the Company and Parent.
(a) From and after the date hereof and prior to the Effective Time or
the date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1 (the "Termination Date"), and except (i) as may be required by
applicable Law, (ii) with the prior written consent of Parent, which consent
shall not be unreasonably withheld, conditioned or delayed, (iii) as expressly
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contemplated or permitted by this Agreement or (iv) as disclosed in Section 5.1
of the Company Disclosure Schedule, the Company shall, and shall cause each of
its Subsidiaries to conduct its business in all material respects in the
ordinary course consistent with past practices, and use commercially reasonable
efforts to maintain and preserve intact its business organization and
significant business relationships and to retain the services of its key
officers and key employees; provided, however, that no action by the Company or
its Subsidiaries with respect to matters specifically addressed by any other
provision of this Section 5.1 shall be deemed a breach of this sentence unless
such action would constitute a breach of such other provision. In the event that
(i) the Company requests the written consent of Parent to take any action
otherwise prohibited by this Section 5.1 and (ii) Parent does not grant such
consent, any fact, circumstance, event, change, effect or occurrence resulting
directly from the failure of the Company to be able to take such action as
result of the failure of Parent to grant its written consent shall not
constitute, or be considered in determining the existence or occurrence of, a
Company Material Adverse Effect.
(b) The Company agrees with Parent, on behalf of itself and its
Subsidiaries, that between the date hereof and the Effective Time, except as set
forth in Section 5.1 of the Company Disclosure Schedule, consented to in writing
by Parent (such consent not to be unreasonably withheld, conditioned or delayed)
or contemplated by this Agreement, the Company shall not, and shall not permit
any of its Subsidiaries to, without the prior written consent of Parent:
(i) adjust, split, combine or reclassify any capital stock or
otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise acquire
or encumber, any shares of its capital stock or any securities or obligations
convertible (whether currently convertible or convertible only after the passage
of time or the occurrence of certain events) into or exchangeable for any shares
of its capital stock, except in connection with cashless exercises or similar
transactions pursuant to the exercise of stock options or other awards issued
and outstanding as of the date hereof under the Company Stock Plans or permitted
hereunder to be granted after the date hereof; provided, that this Section
5.1(b)(ii) shall not apply to (A) dividends or distributions paid by
wholly-owned Subsidiaries of the Company to the Company or to other wholly-owned
Subsidiaries or (B) dividends or distributions paid by Subsidiaries of the
Company, other than wholly-owned Subsidiaries, that are not within the
discretion of the Company or its Subsidiaries;
(iii) grant any person any right to acquire any shares of its
capital stock except as required under any existing agreement;
(iv) issue any additional shares of capital stock except pursuant
to the exercise of stock options or other awards issued under the Company Stock
Plans issued and outstanding as of the date hereof and in accordance with the
terms of such instruments; provided, that the Company shall not issue any Shares
under the Stock Purchase Plan;
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(v) except for hedging agreements entered into in the ordinary
course of business consistent with past practice, purchase, sell, transfer,
mortgage, encumber or otherwise dispose of any properties or assets having a
value in excess of $ 5,000,000 in the aggregate;
(vi) make any capital expenditures in any fiscal quarter exceeding
the Company's capital expenditure budget for such fiscal quarter by more than
1%; provided, that any capital expenditures contemplated by the Company's
capital expenditure budget for any fiscal quarter not made such fiscal quarter
may be made in the fiscal quarter immediately following such fiscal quarter;
(vii) other than in connection with guarantees, surety bonds,
security time deposits and customs bonds in the ordinary course of business
consistent with past practice or in connection with drawdowns and issuances of
letters of credit under existing credit facilities in the ordinary course of
business consistent with past practice, incur, assume, guarantee, or become
obligated with respect to any indebtedness for borrowed money;
(viii) make any acquisition of another Person or business in excess
of $5,000,000 in the aggregate, whether by purchase of stock or securities,
contributions to capital (other than (A) capital contributions to wholly-owned
Subsidiaries of the Company and (B) capital contributions to Subsidiaries of the
Company, other than wholly--owned Subsidiaries, that are not within the
discretion of the Company or its Subsidiaries), property transfers, or entering
into binding agreements with respect to any such investment or acquisition;
(ix) except in the ordinary course of business consistent with past
practice, enter into, renew, extend, materially amend or terminate any Company
Material Contract or Contract which if entered into prior to the date hereof
would be a Company Material Contract, in each case, other than any Contract
relating to indebtedness that would not be prohibited under clause (vii) of this
Section 5.1(b);
(x) except to the extent required by Law or by Contracts in
existence as of the date hereof, (A) increase in any manner the compensation or
benefits of any of its present or former employees, directors, consultants,
independent contractors or service providers except in the ordinary course of
business consistent with past practice (including, for this purpose, the normal
employee salary, bonus and equity compensation review process conducted each
year), (B) pay any pension, severance or retirement benefits not required by any
existing plan or agreement to any such present or former employees, directors,
consultants, independent contractors or service providers, (C) other than in the
ordinary course of business consistent with past practice, enter into, amend,
alter, adopt, implement or otherwise commit itself to any compensation or
benefit plan, program, policy, arrangement or agreement including any pension,
retirement, profit-sharing, bonus or other employee benefit or welfare benefit
plan, policy, arrangement or agreement or employment, consulting or collective
bargaining agreement with or for the benefit of any present or former employee,
director, consultant or service provider (other than amendments that do not
materially increase the cost to the Company or any of its Subsidiaries of
maintaining such plan, policy, arrangement or agreement), (D) accelerate the
vesting of, or the lapsing of restrictions with respect to, any stock options or
other stock-based compensation, (E) cause the funding of any rabbi trust or
similar arrangement or take any action to fund or in any other way secure the
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payment of compensation or benefits under any Company Benefit Plan, or (F)
materially change any actuarial or other assumptions used to calculate funding
obligations with respect to any Company Benefit Plan or change the manner in
which contributions to such plans are made or the basis on which such
contributions are determined, except as may be required by GAAP or applicable
Law;
(xi) waive, release, assign, settle or compromise any claim, action
or proceeding, other than waivers, releases, assignments, settlements or
compromises not exceeding the amount reserved against in the financial
statements contained in the Company SEC Documents, or that involve only the
payment of monetary damages not in excess of $1,250,000 in the aggregate
(excluding amounts to be paid under existing insurance policies) or otherwise
pay, discharge or satisfy any claims, liabilities or obligations in excess of
such amount, in each case, other than in the ordinary course consistent with
past practice;
(xii) amend or waive any provision of its articles of incorporation
and bylaws or other equivalent organizational documents or, in the case of the
Company, enter into any agreement with any of its shareholders in their capacity
as such;
(xiii) take or omit to take any action that is intended or would
reasonably be expected to, individually or in the aggregate, result in any of
the conditions to the Merger set forth in Article VI not being satisfied or
satisfaction of those conditions being materially delayed in violation of any
provision of this Agreement;
(xiv) enter into any "non-compete", "non-solicit" or similar
agreement that would materially restrict the businesses of the Surviving
Corporation or its Subsidiaries or their ability to solicit customers or
employees following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of such entity;
(xvi) implement or adopt any material change in its Tax or financial
accounting principles, practices or methods, other than as required by GAAP,
applicable Law or regulatory guidelines;
(xvii) enter into any closing agreement with respect to material
Taxes, settle or compromise any material liability for Taxes, make, revoke or
change any material Tax election, agree to any adjustment of any material Tax
attribute, file or surrender any claim for a material refund of Taxes, execute
or consent to any waivers extending the statutory period of limitations with
respect to the collection or assessment of material Taxes, file any material
amended Tax Return or obtain any material Tax ruling;
(xviii) enter into any new, or materially amend or otherwise
materially alter any current, Affiliate Transaction or transaction which would
be an Affiliate Transaction if such transaction occurred prior to the date
hereof;
(xix) make any loans to any individual (other than advances of
out-of-pocket business expenses to employees, contractors or consultants in the
ordinary course of business and consistent with past practices) or make any
material loans, advances or capital contributions to, or investments in, any
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other Person in excess of $3,000,000 in the aggregate for all such loans,
advances, contributions and investments, except for (i) transactions solely
among the Company and/or wholly-owned Subsidiaries of the Company, or (ii) as
required by existing contracts set forth in Section 5.1(b)(xix) of the Company
Disclosure Schedule; or
(xx) agree to take, make any commitment to take, or adopt any
resolutions of its Board of Directors in support of, any of the actions
prohibited by this Section 5.1(b).
Section 5.2 Access to Information.
(a) From the date hereof until the Effective Time and subject to the
requirements of applicable Laws, the Company shall (i) provide to Parent, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access during normal business hours to the offices, properties, books
and records of the Company and its Subsidiaries, (ii) furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request (including, to the extent practicable, furnishing to Parent
the financial results of the Company in advance of any filing by the Company
with the SEC containing such financial results), and (iii) instruct the
employees, counsel, financial advisors, auditors and other authorized
representatives (other than nonemployee directors) of the Company and its
Subsidiaries to cooperate reasonably with Parent to obtain access to information
concerning the Company and its Subsidiaries, as the case may be, except that
nothing herein shall require the Company or any of its Subsidiaries to disclose
any information that would cause a violation of any agreement to which the
Company or any of its Subsidiaries is a party or would cause a risk of a loss of
privilege to the Company or any of its Subsidiaries. Such access to information
pursuant to this Section 5.2(a) shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of the Company and its
Subsidiaries.
(b) Parent hereby agrees that all information provided to it or its
counsel, financial advisors, auditors and other authorized representatives in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be deemed to be "Confidential Information" to the
extent such information would be considered "Confidential Information," in each
case, as such term is used in, and shall be treated in accordance with, the
Confidentiality Agreement, dated as of February 10, 2007, between the Company
and Centerbridge Associates, L.P. (the "Confidentiality Agreement") and any
other confidentiality agreements entered into by co-investors in Parent had it
been provided prior to the date of this Agreement; provided, that Parent shall
be entitled to share such Confidential Information with the parties providing
the Financing, prospective co-investors or limited partners of the members of
Parent; provided further, however, that any parties providing the Financing,
prospective co-investors or limited partners of the members of Parent to whom
Parent provides Confidential Information shall agree in writing to be bound by
the confidentiality provisions of the Confidentiality Agreement or shall execute
their own confidentiality agreements with the Company.
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Section 5.3 No Solicitation.
(a) Subject to Sections 5.3(b)-(g), the Company agrees that neither it
nor any Subsidiary of the Company shall, and that it shall direct its and their
respective officers, directors, employees, agents and representatives, including
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries ("Representatives") not to, directly or indirectly, (i) initiate,
solicit, knowingly encourage (including by providing information) or facilitate
any inquiries, proposals or offers with respect to, or the making or completion
of, an Alternative Proposal, (ii) engage or participate in any negotiations
concerning, or provide or cause to be provided any non-public information or
data relating to the Company or any of its Subsidiaries, in connection with, or
have any discussions with any person relating to, an actual or proposed
Alternative Proposal, or otherwise knowingly encourage or facilitate any effort
or attempt to make or implement an Alternative Proposal, (iii) approve, endorse
or recommend, or propose publicly to approve, endorse or recommend, any
Alternative Proposal, (iv) approve, endorse or recommend, or propose to approve,
endorse or recommend, or execute or enter into, any letter of intent, agreement
in principle, merger agreement, acquisition agreement, option agreement or other
similar agreement relating to any Alternative Proposal, (v) amend, terminate,
waive or fail to enforce, or grant any consent under, any confidentiality,
standstill or similar agreement, or (vi) resolve to propose or agree to do any
of the foregoing. Without limiting the foregoing, it is understood that any
violation of the foregoing restrictions by any Subsidiary of the Company or
Representatives of the Company or any of its Subsidiaries shall be deemed to be
a breach of this Section 5.3 by the Company.
(b) The Company shall, and shall cause each of its Subsidiaries and
Representatives to, immediately cease any existing solicitations, discussions or
negotiations with any Person (other than the parties hereto) that has made or
indicated an intention to make an Alternative Proposal.
(c) Notwithstanding anything to the contrary in Section 5.3(a), the
Company may, in response to an unsolicited Alternative Proposal which did not
result from or arise in connection with a breach of Section 5.3(a) and which the
Board of Directors of the Company (acting through its Special Committee)
determines, in good faith, after consultation with its outside counsel and
financial advisors, may reasonably be expected to result in a Superior Proposal,
(i) furnish information with respect to the Company and its Subsidiaries to the
person making such Alternative Proposal and its Representatives pursuant to a
customary confidentiality agreement no less restrictive (including with respect
to standstill provisions) of the other party than the Confidentiality Agreement
and (ii) participate in discussions or negotiations with such person and its
Representatives regarding such Alternative Proposal; provided, however, (i) that
Parent shall be entitled to receive an executed copy of such confidentiality
agreement prior to or substantially simultaneously with the Company furnishing
information to the person making such Alternative Proposal or its
Representatives and (ii) that the Company shall simultaneously provide or make
available to Parent any material non-public information concerning the Company
or any of its Subsidiaries that is provided to the person making such
Alternative Proposal or its Representatives which was not previously provided or
made available to Parent.
(d) Subject to Section 7.1(c)(ii), neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify in a manner
adverse to Parent or Merger Sub, or resolve to or publicly propose to withdraw
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or modify in a manner adverse to Parent or Merger Sub, the Recommendation, (ii)
approve any letter of intent, agreement in principle, acquisition agreement or
similar agreement relating to any Alternative Proposal or (iii) approve or
recommend, resolve to or publicly propose to approve, endorse or recommend, any
Alternative Proposal (any of the foregoing actions in clauses (i) through (iii),
whether taken by the Board of Directors of the Company or a committee thereof, a
"Change in Board Recommendation"). Notwithstanding the foregoing, but subject to
Section 5.4(b), if, prior to receipt of the Company Shareholder Approval, the
Board of Directors of the Company or the Special Committee determines in good
faith, after consultation with its outside counsel and financial advisors, that
failure to so withdraw or modify its Recommendation would be inconsistent with
the Board of Directors of the Company's or the Special Committee's exercise of
its fiduciary duties, the Board of Directors of the Company or the Special
Committee may withdraw or modify its Recommendation.
(e) The Company promptly (and in any event within 24 hours) shall advise
Parent orally and in writing of (i) the receipt of any Alternative Proposal,
(ii) the identity of the person making any such Alternative Proposal and (iii)
the material terms of any such Alternative Proposal. The Company shall keep
Parent reasonably informed on a current basis of any material change to the
terms of any such Alternative Proposal.
(f) Notwithstanding the foregoing, other than in connection with a
termination of this Agreement pursuant to Section 7.1(c)(ii) to accept a
Superior Proposal, the Company shall not waive Article 13.03 of the TBCA or
amend the Company Rights Agreement, redeem any of the Rights (as defined in the
Company Rights Agreement), or otherwise take any action to render the provisions
of the Company Rights Agreement inapplicable, with respect to any Person other
than Parent, its shareholders and their respective Affiliates.
(g) Nothing contained in this Agreement shall prohibit the Company or
its Board of Directors from disclosing to its shareholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act;
provided, however, that neither the Company nor the Board of Directors of the
Company (or any committee thereof) shall in any event be entitled to disclose a
position under Rules 14d-9 or 14e-2(a) promulgated under the Exchange Act other
than the Recommendation unless the Board of Directors of the Company or the
Special Committee determines in good faith, after consultation with its outside
counsel and financial advisors, that a failure to so withdraw or modify its
Recommendation would be inconsistent with the Board of Directors of the
Company's or the Special Committee's exercise of its fiduciary duties.
(h) As used in this Agreement, "Alternative Proposal" shall mean (i) any
proposal or offer from any Person or group of Persons other than Parent or one
of its Subsidiaries for a merger, consolidation, dissolution, recapitalization
or other business combination involving the Company or any of its Subsidiaries,
(ii) any proposal for the issuance by the Company of over 15% of its equity
securities or (iii) any proposal or offer to acquire in any manner, directly or
indirectly, over 15% of the equity securities or consolidated total assets of
the Company and its Subsidiaries, in each case other than the Merger.
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(i) As used in this Agreement, "Superior Proposal" shall mean any
Alternative Proposal, (i) on terms which the Board of Directors of the Company
(or the Special Committee) determines in good faith, after consultation with the
Company's outside legal counsel and financial advisors, to be more favorable
from a financial point of view to the holders of Company Common Stock than the
Merger (other than those holders of Company Common Stock that are party to a
Rollover Commitment), taking into account all the terms and conditions of such
proposal, and this Agreement (including any proposal or offer by Parent to amend
the terms of this Agreement and the Merger during the applicable time periods
specified in Section 7.1(c)(ii)) and (ii) that the Board of Directors (or the
Special Committee) believes is reasonably capable of being completed, taking
into account all financial, regulatory, legal and other aspects of such
proposal; provided that for purposes of the definition of "Superior Proposal,"
the references to "15%" in the definition of "Alternative Proposal" shall be
deemed to be references to "50%."
Section 5.4 Filings; Other Actions.
(a) As promptly as reasonably practicable following the date of this
Agreement, the Company shall prepare the Proxy Statement, and the Company and
Parent shall prepare the Schedule 13E-3. Parent and the Company shall cooperate
with each other in connection with the preparation of the foregoing documents.
The Company will use its reasonable best efforts to have the Proxy Statement,
and Parent and the Company will use their reasonable best efforts to have the
Schedule 13E-3, cleared by the SEC as promptly as practicable after such filing.
The Company will use its reasonable best efforts to cause the Proxy Statement to
be mailed to the Company's shareholders as promptly as practicable after the
Proxy Statement is cleared by the SEC. The Company shall as promptly as
practicable notify Parent of the receipt of any oral or written comments from
the SEC relating to the Proxy Statement. The Company shall cooperate and provide
Parent with a reasonable opportunity to review and comment on the draft of the
Proxy Statement (including each amendment or supplement thereto), and Parent and
the Company shall cooperate and provide each other with a reasonable opportunity
to review and comment on the draft Schedule 13E-3 (including each amendment or
supplement thereto) and all responses to requests for additional information by
and replies to comments of the SEC, prior to filing such with or sending such to
the SEC, and Parent and the Company will provide each other with copies of all
such filings made and correspondence with the SEC with respect thereto. If at
any time prior to the Effective Time, any information should be discovered by
any party hereto which should be set forth in an amendment or supplement to the
Proxy Statement or the Schedule 13E-3 so that the Proxy Statement or the
Schedule 13E-3 would not include any misstatement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and, to the extent required by applicable Law,
an appropriate amendment or supplement describing such information shall be
promptly filed by the Company with the SEC and disseminated by the Company to
the shareholders of the Company.
(b) Subject to the other provisions of this Agreement, the Company shall
(i) take all action necessary in accordance with the TBCA and its articles of
incorporation and bylaws to duly call, give notice of, convene and hold a
meeting of its shareholders as promptly as reasonably practicable following the
mailing of the Proxy Statement for the purpose of obtaining the Company
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Shareholder Approval (such meeting or any adjournment or postponement thereof,
the "Company Meeting"), and (ii) subject to the Board of Directors of the
Company's or the Special Committee's withdrawal or modification of its
Recommendation in accordance with Section 5.3(d), use all reasonable best
efforts to solicit from its shareholders proxies in favor of the approval of
this Agreement, the Merger and the other transactions contemplated hereby.
Notwithstanding anything in this Agreement to the contrary, unless this
Agreement is terminated in accordance with Section 7.1 and subject to compliance
with Section 7.2, the Company, regardless of whether the Board of Directors
(whether or not acting through the Special Committee, if then in existence) has
approved, endorsed or recommended an Alternative Proposal or has withdrawn,
modified or amended the Recommendation, will submit this Agreement for approval
by the shareholders of the Company at such meeting.
Section 5.5 Stock Options and Other Stock-Based Awards; Employee
Matters.
(a) Stock Options and Other Stock-Based Awards.
(i) Except as otherwise agreed in writing by the Company and
Parent and the applicable holder thereof, each option or other award to purchase
shares of Company Common Stock (each, a "Company Stock Option") granted under
any employee or director equity plans of the Company (the "Company Stock
Plans"), whether vested or unvested, that is outstanding immediately prior to
the Effective Time shall (notwithstanding any provisions to the contrary in the
Company Stock Plans or applicable option grants), as of the Effective Time,
become fully vested and be converted into the right to receive an amount in cash
in U.S. dollars equal to the product of (x) the total number of shares of
Company Common Stock subject to such Company Stock Option and (y) the excess, if
any, of the amount of the Merger Consideration over the exercise price per share
of Company Common Stock subject to such Company Stock Option (or if there is not
any such excess, zero) with the aggregate amount of such payment rounded to the
nearest cent (the aggregate amount of such cash hereinafter referred to as the
"Option Consideration") less such amounts as are required to be withheld or
deducted under the Code or any provision of federal, state, local or foreign Tax
Law with respect to the making of such payment.
(ii) Except as otherwise agreed in writing by the Company and
Parent and the applicable holder thereof, immediately prior to the Effective
Time, each right of any kind, contingent or accrued, to receive shares of
Company Common Stock or benefits measured in whole or in part by the value of a
number of shares of Company Common Stock granted under the Company Stock Plans
or Company Benefit Plans (including, but not limited to, performance shares,
stock appreciation rights, restricted stock, restricted stock units, phantom
stock or units, deferred stock units and dividend equivalents), other than
Restricted Shares (as hereinafter defined), Purchase Plan Shares (as hereinafter
defined) and Company Stock Options (each, other than Restricted Shares, Purchase
Plan Shares and Company Stock Options, a "Company Stock-Based Award"), whether
vested or unvested, which is outstanding immediately prior to the Effective Time
shall (notwithstanding any provisions to the contrary under the applicable plans
or grant awards), as of the Effective Time, cease to represent a right or award
with respect to shares of Company Common Stock, shall become fully vested and
shall entitle the holder thereof to receive, pursuant to Section 2.2(a) and (b),
an amount in cash equal to the Merger Consideration in respect of each Share
underlying a particular Company Stock-Based Award (the aggregate amount of such
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cash, together with the Option Consideration, hereinafter referred to as the
"Option and Stock-Based Consideration") less such amounts as are required to be
withheld or deducted under the Code or any provision of federal, state, local or
foreign Tax Law with respect to the making of such payment.
(iii) Except as otherwise agreed in writing by the Company and
Parent and the applicable holder thereof, and notwithstanding any contrary
provisions, if any, in any plan or agreement or otherwise relating to such
Restricted Shares, immediately prior to the Effective Time, each award of
restricted Company Common Stock (the "Restricted Shares") shall vest in full and
be converted into the right to receive the Merger Consideration as provided in
Section 2.1(a).
(iv) At the Effective Time, the Company's Stock Purchase Plan shall
terminate. In connection with such termination, the Company shall refund to the
participants in the Stock Purchase Plan any accumulated payroll deductions in
respect of any Purchase Period ending after the Effective Time. The participants
in the Stock Purchase Plan shall be entitled to continue to make purchases of
Company Common Stock pursuant to the terms of the Stock Purchase Plan for any
Purchase Period ending prior to the Effective Time and such shares (the
"Purchase Plan Shares") of Company Common Stock shall be converted into the
right to receive the Merger Consideration in accordance with Section 2.1(a).
After the date hereof, no participant in the Stock Purchase Plan may increase
the percentage amount of his or her payroll deduction election from those in
effect on the date hereof.
(v) Prior to the Effective Time, the Compensation Committee of the
Board of Directors of the Company, or the Board of Directors of the Company, as
appropriate, shall make such adjustments and amendments to, make such
determinations or take such actions with respect to Company Stock Plans, Company
Stock Options, Company Benefit Plans, Company Stock-Based Awards, Restricted
Shares and Purchase Plan Shares, including obtaining consents where necessary,
to implement the foregoing provisions of this Section 5.5.
(b) Employee Matters.
(i) From and after the Effective Time, Parent shall honor all
Company Benefit Plans and compensation arrangements and agreements in accordance
with their terms as in effect immediately before the Effective Time, provided
that nothing herein shall limit the right of the Company or Parent from amending
or terminating such Company Benefit Plans, arrangements and agreements in
accordance with their terms. For a period of one (1) year following the
Effective Time, Parent shall provide, or shall cause to be provided, to each
current and former employee of the Company and its Subsidiaries other than such
employees covered by collective bargaining agreements (each, a "Company
Employee") compensation opportunities that are substantially comparable and
benefits that in the aggregate are substantially comparable to the compensation
opportunities and benefits (excluding equity-based compensation) provided to
such Company Employee immediately before the Effective Time, it being understood
that the total package of such compensation and benefits may be different from
the compensation and benefits provided to the Company Employees prior to the
Effective Time.
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(ii) For all purposes (including purposes of vesting, eligibility
to participate and level of benefits) under the employee benefit plans of Parent
and its Subsidiaries providing benefits to any Company Employees after the
Effective Time as required pursuant to this Section 5.5(b) (the "New Plans"),
each Company Employee shall be credited with his or her years of service with
the Company and its Subsidiaries and their respective predecessors before the
Effective Time, to the same extent as such Company Employee was entitled, before
the Effective Time, to credit for such service under any similar Company
employee benefit plan in which such Company Employee participated or was
eligible to participate immediately prior to the Effective Time, provided that
the foregoing shall not apply with respect to benefit accrual under any defined
benefit pension plan or to the extent that its application would result in a
duplication of benefits. In addition, and without limiting the generality of the
foregoing, (A) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan is comparable to a Company Benefit Plan in which
such Company Employee participated immediately before the consummation of the
Merger (such plans, collectively, the "Old Plans"), and (B) for purposes of each
New Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Company Employee, Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for such employee
and his or her covered dependents, unless such conditions would not have been
waived under the comparable plans of the Company or its Subsidiaries in which
such employee participated immediately prior to the Effective Time and Parent
shall cause any eligible expenses incurred by such employee and his or her
covered dependents during the portion of the plan year of the Old Plan ending on
the date such employee's participation in the corresponding New Plan begins to
be taken into account under such New Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year as
if such amounts had been paid in accordance with such New Plan.
(iii) Nothing contained herein shall be construed as requiring
Parent or the Surviving Corporation to continue (or resume) the employment of
any specific person.
(iv) Without limiting the generality of Section 8.10, no provision
of this Section 5.5 shall be construed to create any third party beneficiary
rights in any employee, officer, current or former director or consultant of the
Company or its Subsidiaries, or any beneficiary of such employee, officer,
director or consultant under a Company Benefit Plan or otherwise, and is not
intended to constitute an amendment to any Company Benefit Plan.
(v) Parent hereby acknowledges that a "change of control" (or
similar phrase) within the meaning of the Company Benefit Plans, as applicable,
will occur at or prior to the Effective Time, as applicable.
Section 5.6 Efforts.
(a) Subject to the terms and conditions set forth in this Agreement,
each of the parties hereto shall, and shall cause its Subsidiaries to, use its
reasonable best efforts (subject to, and in accordance with, applicable Law) to
take promptly, or to cause to be taken, all actions, and to do promptly, or to
cause to be done, and to assist and to cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective the Merger and the other transactions contemplated hereby, including
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(i) the obtaining of all necessary actions or nonactions, waivers, consents and
approvals, including the Company Approvals and the Parent Approvals, from
Governmental Entities and the making of all necessary registrations and filings
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby and (iv) the execution and delivery of any
additional instruments reasonably necessary to consummate the transactions
contemplated hereby; provided, however, that in no event shall the Company or
any of its Subsidiaries be required to pay prior to the Effective Time any fee,
penalties or other consideration to any third party to obtain any consent or
approval required for the consummation of the Merger under any Contract (other
than de minimis amounts or if Parent and Merger Sub have provided adequate
assurance of repayment).
(b) Subject to the terms and conditions herein provided and without
limiting the foregoing, the Company and Parent shall (i) promptly as practicable
after the date hereof, make their respective filings and thereafter make any
other required submissions under the HSR Act, (ii) use reasonable best efforts
to cooperate with each other in (x) determining whether any filings are required
to be made with, or consents, permits, authorizations, waivers or approvals are
required to be obtained from, any third parties or other Governmental Entities
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (y) timely making all
such filings and timely seeking all such consents, permits, authorizations or
approvals, (iii) use reasonable best efforts to take, or to cause to be taken,
all other actions and to do, or to cause to be done, all other things necessary,
proper or advisable to consummate and make effective the Merger and the other
transactions contemplated hereby, including taking all such further action as
reasonably may be necessary to resolve such objections, if any, as the United
States Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, state or foreign antitrust enforcement authorities or
competition authorities, other Governmental Entities in connection with the
Specified Regulatory Clearances, or other state or federal regulatory
authorities of any other nation or other jurisdiction or any other person may
assert under Regulatory Law (as hereinafter defined) with respect to the Merger
and the other transactions contemplated hereby, and to avoid or eliminate each
and every impediment under any Law that may be asserted by any Governmental
Entity with respect to the Merger so as to enable the Closing to occur as soon
as reasonably possible (and in any event no later than the End Date (as
hereinafter defined)), and (iv) subject to applicable legal limitations and the
instructions of any Governmental Entity, keep each other apprised of the status
of matters relating to the completion of the transactions contemplated by this
Agreement, including to the extent permitted by Law promptly furnishing the
other with copies of notices or other communications received by the Company or
Parent, as the case may be, or any of their Subsidiaries, from any third party
and/or any Governmental Entity with respect thereto.
(c) Subject to Section 5.11, and in furtherance and not in limitation of
the covenants of the parties contained in this Section 5.6, if any
administrative or judicial action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted) challenging the
Merger or any other transaction contemplated by this Agreement, each of the
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Company and Parent shall cooperate in all respects with each other and shall use
their respective reasonable best efforts to contest and resist any such action
or proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger or any other transactions contemplated hereby.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 5.6 shall limit a party's right to terminate this Agreement
pursuant to Section 7.1(b)(i) or (ii) so long as such party has, prior to such
termination, complied with its obligations under this Section 5.6.
(d) For purposes of this Agreement, "Regulatory Law" means any and all
state, federal and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other Laws requiring notice to,
filings with, or the consent or approval of, any Governmental Entity, or that
otherwise may cause any restriction, in connection with the Merger and the
transactions contemplated thereby, including (i) the Xxxxxxx Act of 1890, the
Xxxxxxx Antitrust Act of 1914, the HSR Act, the Federal Trade Commission Act of
1914 and all other Laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening competition through merger or acquisition, (ii) any Law
governing the direct or indirect ownership or control of any of the operations
or assets of the Company and its Subsidiaries or (iii) any Law with the purpose
of protecting the national security or the national economy of any nation.
Section 5.7 Takeover Statute. If any "fair price," "moratorium,"
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the Merger, the Voting Agreement, the Rollover
Commitments or the other transactions contemplated, by this Agreement, each of
the Company and Parent and the members of their respective Boards of Directors
shall grant such approvals and take such actions as are reasonably necessary so
that the Merger, the Voting Agreement, the Rollover Commitments and the other
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated herein and otherwise act to eliminate or minimize the
effects of such statute or regulation on the Merger, the Voting Agreement, the
Rollover Commitments and the other transactions contemplated hereby.
Section 5.8 Public Announcements. Except with respect to a Change in
Board Recommendation, the Company and Parent will consult with and provide each
other the opportunity to review and comment upon any press release or other
public statement or comment prior to the issuance of such press release or other
public statement or comment relating to this Agreement or the transactions
contemplated herein (other than routine employee communications) and shall not
issue any such press release or other public statement or comment prior to such
consultation except as such party in its good faith judgment may be required by
applicable Law or by obligations pursuant to any listing agreement with any
national securities exchange, it being understood that the final form of any
release or statement shall be at the final discretion of the issuing party.
Parent and the Company agree to issue a joint press release announcing the
execution and delivery of this Agreement.
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Section 5.9 Indemnification and Insurance.
(a) Parent and Merger Sub agree that all rights to exculpation,
indemnification (including rights accruing under self-insurance arrangements in
respect of deductibles, coverage limits or forgone third-party insurance) and
advancement of expenses for acts or omissions occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, now existing in favor of the current or former directors, officers or
employees (in their capacity as such and not as shareholders or option holders
of the Company or its Subsidiaries), as the case may be, of the Company or its
Subsidiaries as provided in their respective articles of incorporation or bylaws
or other organization documents or in any agreement shall survive the Merger and
shall continue in full force and effect. For a period of six (6) years from the
Effective Time, Parent and the Surviving Corporation shall maintain in effect
the exculpation, indemnification and advancement of expenses and arrangement of
self-insurance provisions of the Company's and any of its Subsidiaries' articles
of incorporation and bylaws or similar organization documents in effect
immediately prior to the Effective Time or in any indemnification agreements of
the Company or its Subsidiaries with any of their respective directors, officers
or employees in effect as of the date hereof, and shall not amend, repeal or
otherwise modify any such provisions in any manner that would adversely affect
the rights thereunder of any individuals who at the Effective Time were current
or former directors, officers or employees of the Company or any of its
Subsidiaries; provided, however, that all rights to indemnification in respect
of any Action (as hereinafter defined) pending or asserted or any claim made
within such period shall continue until the disposition of such Action or
resolution of such claim.
(b) From and after the Effective Time, each of Parent and the Surviving
Corporation shall, jointly and severally, to the fullest extent permitted under
applicable Law, indemnify and hold harmless (and advance funds in respect of
each of the foregoing) each current and former director, officer or employee of
the Company or any of its Subsidiaries (each, together with such person's heirs,
executors or administrators, an "Indemnified Party") against any costs or
expenses (including advancing reasonable attorneys' fees and expenses in advance
of the final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by Law), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative (an
"Action"), arising out of, relating to or in connection with any action or
omission occurring or alleged to have occurred whether before or after the
Effective Time (including acts or omissions in connection with such persons
serving as an officer, director or other fiduciary in any entity if such service
was at the request or for the benefit of the Company); provided, however, that
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without either Parent's or the Surviving Corporation's prior written
consent, and the Surviving Corporation shall not be obligated to pay the fees
and expenses of more than one counsel (selected by a plurality of the applicable
Indemnified Parties) for all Indemnified Parties in any jurisdiction with
respect to any single such claim, action, suit, proceeding or investigation;
provided, further, however, that if any Indemnified Party or group of
Indemnified Parties is advised in writing by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
or group of Indemnified Parties and another Indemnified Party or group of
Indemnified Parties, then the Surviving Corporation shall pay the fees and
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expenses of the minimum number of counsel as are required to eliminate such
conflicts of interest. It shall be a condition to the advancement of any amounts
to be paid in respect of legal and other fees and expenses that the Surviving
Corporation receive an undertaking by the Indemnified Party to repay such legal
and other fees and expenses paid in advance if it is ultimately determined that
such Indemnified Party is not entitled to be indemnified under applicable Law.
In the event of any such Action, Parent and the Surviving Corporation shall
reasonably cooperate with the Indemnified Party in the defense of any such
Action.
(c) For a period of six (6) years from the Effective Time, Parent shall
either cause to be maintained in effect the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
the Company and its Subsidiaries or cause the Surviving Corporation to provide
substitute policies or cause the Surviving Corporation to purchase, a "tail
policy," in either case of at least the same coverage and amounts containing
terms and conditions that are not less advantageous in the aggregate than such
policy with respect to matters arising on or before the Effective Time;
provided, however, that after the Effective Time, such Persons shall not be
required to pay with respect to such insurance policies in respect of any one
policy year more than 200% of the last annual premium paid by the Company prior
to the date hereof in respect of the coverages required to be obtained pursuant
hereto, but in such case shall purchase as much coverage as reasonably
practicable for such amount; and further provided that if the Surviving
Corporation purchases a "tail policy" and the same coverage costs more than 200%
of such last annual premium, the Surviving Corporation shall purchase the
maximum amount of coverage that can be obtained for 200% of such last annual
premium.
(d) The rights of each Indemnified Party hereunder shall be in addition
to, and not in limitation of, any other rights such Indemnified Party may have
under the articles of incorporation or bylaws or other organizational documents
of the Company or any of its Subsidiaries or the Surviving Corporation, any
other indemnification arrangement, self-insurance arrangement, the TBCA or
otherwise. The provisions of this Section 5.9 shall survive the consummation of
the Merger and expressly are intended to benefit, and are enforceable by, each
of the Indemnified Parties. Nothing in this Agreement is intended to, shall be
construed to or shall release, waive or impair any rights to directors' and
officers' insurance claims under any policy that is or has been in existence
with respect to the Company or any of its Subsidiaries or their respective
officers, directors and employees, it being understood and agreed that the
indemnification provided for in this Section 5.9 is not prior to or in
substitution for any such claims under any such policies.
(e) This Section 5.9 shall survive the consummation of the Merger and is
intended to be for the benefit of, and shall be enforceable by, present or
former directors or officers of the Company or its Subsidiaries, their
respective heirs and personal representatives and shall be binding on Parent and
the Surviving Corporation and their respective successors and assigns. In the
event Parent, the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in either such case, proper provision shall be made so
that the successors and assigns of Parent or the Surviving Corporation, as the
case may be, shall assume the obligations set forth in this Section 5.9.
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Section 5.10 Financing. Parent shall use its reasonable best efforts to
obtain the Financing on the terms and conditions described in the Financing
Commitments or terms more favorable to Parent, including using its reasonable
best efforts (i) to negotiate definitive agreements with respect thereto on the
terms and conditions contained in the Financing Commitments, (ii) to satisfy all
conditions applicable to Parent in such definitive agreements, (iii) to comply
with its obligations under the Financing Commitments, (iv) to enforce its rights
under the Financing Commitments, and (v) to consummate the Financing at or prior
to the Closing. Parent shall give the Company prompt notice upon becoming aware
of any material breach by any party of the Financing Commitments or any
termination of the Financing Commitments. Parent shall keep the Company informed
on a reasonably current basis and in reasonable detail of the status of its
efforts to arrange the Financing and provide to the Company copies of all
material documents related to the Financing (other than any ancillary documents
subject to confidentiality agreements). In connection with its obligations under
this Section 5.10, Parent shall be permitted to amend, modify or replace the
Debt Commitment Letters with new Financing Commitments, including through
co-investment by or financing from one or more other additional parties (the
"New Financing Commitments"), provided Parent shall not permit any replacement
of, or amendment or modification to be made to, or any waiver of any material
provision or remedy under, the Debt Commitment Letter if such replacement
(including through co-investment by or financing from one or more other
additional parties), amendment, modification, waiver or remedy reduces the
aggregate amount of the Financing or adversely amends or expands the conditions
to the drawdown of the Financing in any respect that would make such conditions
materially less likely to be satisfied or that can reasonably be expected to
materially delay the Closing. In the event that Parent becomes aware of any
event or circumstance that makes procurement of any portion of the Financing
unlikely to occur in the manner or from the sources contemplated in the
Financing Commitments, Parent shall notify the Company and shall use its
reasonable best efforts to arrange as promptly as practicable any such portion
from alternative sources (including through co-investment by one or more other
additional parties) on terms and conditions no less favorable to Parent or
Merger Sub. The Company shall provide, and shall cause its Subsidiaries, and
shall cause each of its and their respective Representatives, including legal
and accounting, to provide, all cooperation reasonably requested by Parent in
connection with the Financing and the other transactions contemplated by this
Agreement (provided that such requested cooperation does not unreasonably
interfere with the ongoing operations of the Company and its Subsidiaries),
including (i) providing reasonably required information relating to the Company
and its Subsidiaries to the parties providing the Financing, (ii) participating
in meetings, drafting sessions and due diligence sessions in connection with the
Financing, (iii) assisting in the preparation of (A) any offering documents for
any of the Debt Financing, and (B) materials for rating agency presentations,
(iv) reasonably cooperating with the marketing efforts for any of the Debt
Financing (including consenting to the use of the Company's and its
Subsidiaries' logos), and (v) executing and delivering (or obtaining from its
advisors), and causing its Subsidiaries to execute and deliver (or obtain from
its advisors), customary certificates (including a certificate of the principal
financial officer of the Company or any Subsidiary with respect to solvency
matters), accounting comfort letters (including consents of accountants for use
of their reports in any materials relating to the Debt Financing), legal
opinions, surveys, title insurance or other documents and instruments relating
to guarantees, the pledge of collateral and other matters ancillary to the
Financing as may be reasonably requested by Parent in connection with the
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Financing, (vi) entering into one or more credit or other agreements on terms
satisfactory to Parent and that are reasonably requested by Parent in connection
with the Debt Financing immediately prior to the Effective Time, and (vii)
taking all corporate actions, subject to the occurrence of the Closing,
reasonably requested by Parent to permit the consummation of the Debt Financing
and the direct borrowing or incurrence of all of the proceeds of the Debt
Financing, by the Surviving Corporation immediately following the Effective
Time; provided, however, that no obligation of the Company or any of its
Subsidiaries under any such agreement, certificate, document or instrument shall
be effective until the Effective Time and none of the Company or any of its
Subsidiaries shall be required to pay any commitment or other similar fee or
incur any other liability in connection with the Financing prior to the
Effective Time. Parent shall promptly, upon request by the Company, reimburse
the Company for all reasonable out-of-pocket third party costs incurred by the
Company in connection with this Section 5.10.
Section 5.11 Shareholder Litigation. The Company shall give Parent the
opportunity to participate, subject to a customary joint defense agreement, in,
but not control, the defense or settlement of any shareholder litigation against
the Company and/or its directors relating to the Merger or any other
transactions contemplated hereby and no such settlement shall in any event be
agreed to without Parent's consent (not to be unreasonably withheld).
Section 5.12 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) any notice or other communication received by such party from any
Governmental Entity in connection with the Merger or the other transactions
contemplated hereby or from any person alleging that the consent of such person
is or may be required in connection with the Merger or the other transactions
contemplated hereby, if the subject matter of such communication or the failure
of such party to obtain such consent could be material to the Company, the
Surviving Corporation or Parent, (ii) any actions, suits, claims, investigations
or proceedings commenced or, to such party's Knowledge, threatened against,
relating to or involving or otherwise affecting such party or any of its
Subsidiaries which relate to the Merger or the other transactions contemplated
hereby, (iii) the discovery of any fact or circumstance that, or the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which, would
cause or result in any of the conditions to the Merger set forth in Article VI
not being satisfied or satisfaction of those conditions being materially delayed
in violation of any provision of this Agreement; provided, however, that the
delivery of any notice pursuant to this Section 5.12 shall not (x) cure any
breach of, or non-compliance with, any other provision of this Agreement or (y)
limit the remedies available to the party receiving such notice. The Company
shall notify Parent, on a reasonably current basis, of any events or changes
with respect to any criminal or regulatory investigation or action involving the
Company or any of its Affiliates (but excluding traffic violations and similar
misdemeanors), and shall reasonably cooperate with Parent or its Affiliates in
efforts to mitigate any adverse consequences to Parent or its Affiliates which
may arise therefrom (including by coordinating and providing assistance in
meeting with regulators).
Section 5.13 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 contemplated by this Agreement by each individual
who is a director or officer of the Company to be exempt under Rule 16b-3
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promulgated under the Exchange Act in accordance with that certain No-Action
Letter dated January 12, 1999 issued by the SEC regarding such matters.
Section 5.14 Rights Plan. The Company Rights Agreement shall terminate
upon the Effective Time, without payment of any amounts to any holders
thereunder.
Section 5.15 Acquisition of Shares. Neither Parent nor Merger Sub shall,
directly or indirectly, purchase any shares of Company Common Stock or otherwise
intentionally acquire the right to vote shares of Company Common Stock, without
the Company's prior written consent (other than pursuant to the Rollover
Commitments).
Section 5.16 Control of Operations. Without in any way limiting any
party's rights or obligations under this Agreement, the parties understand and
agree that (i) nothing contained in this Agreement shall give Parent, directly
or indirectly, the right to control or direct the Company's operations prior to
the Effective Time, and (ii) prior to the Effective Time, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
Section 5.17 Notes and Amounts Outstanding Under Credit Agreement. At the
direction of Parent, the Company shall give any notice to the Administrative
Agent under the Company's First Amended and Restated Credit Agreement, dated as
of September 30, 2005 (the "Credit Agreement") as is required in order for the
Company to prepay all amounts outstanding under the Credit Agreement at such
time as directed by Parent; provided, that any such notice shall not be required
by the Company unless it may be made in accordance with the terms of the Credit
Agreement and is subject to the consummation of the transactions contemplated by
this Agreement. At the direction of Parent, the Company shall give any notice or
make any offer to the holders of the Notes under the Company's Note Purchase
Agreement, dated as of October 12, 2005, among the Company and the Purchasers
named therein (the "Note Purchase Agreement") as are required in order for the
Company to prepay the Notes at such time as may be reasonably requested and
directed by Parent; provided, that any such notice and offer shall not be
required by the Company unless it may be made in accordance with the terms of
the Note Purchase Agreement and is subject to the consummation of the
transactions contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment (or waiver by all parties) at or prior to the Effective Time
of the following conditions:
(a) The Company Shareholder Approval shall have been obtained.
(b) No restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger and/or the other
transactions contemplated by this Agreement shall be in effect.
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(c) Any applicable waiting period under the HSR Act shall have expired
or been earlier terminated and all competition approvals or notices required for
the consummation of the transactions contemplated by this Agreement under the
Laws of Argentina, the European Union or other Governmental Entities in
countries in which the Company and its Subsidiaries did business in excess of
$10,000,000 in revenues in 2006 shall have been received or made.
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject to
the fulfillment or waiver of the following conditions:
(a) (i) The representations and warranties of Parent and Merger Sub
contained in Section 4.1 (Qualification, Organization) and Section 4.2(a)
(Corporate Authority) shall be true and correct in all respects (except, in the
case of Section 4.1(a) for such inaccuracies as are de minimis in the
aggregate), in each case at and as of the date of this Agreement and at and as
of the Closing Date as though made at and as of the Closing Date and (ii) the
representations and warranties of Parent and Merger Sub set forth in this
Agreement (other than in clause (i) above) shall be true and correct in all
respects (disregarding any materiality or Parent Material Adverse Effect
qualifiers contained therein) at and as of the date of this Agreement and at and
as of the Closing Date as though made at and as of the Closing Date, except
where the failure of such representations or warranties to be so true and
correct would not have, individually or in the aggregate, a Parent Material
Adverse Effect; provided, however, that, with respect to clauses (i) or (ii)
hereof, representations and warranties that are made as of a particular date or
period shall be true and correct (in the manner set forth in clauses (i) or
(ii), as applicable) only as of such date or period.
(b) Parent shall have in all material respects performed all obligations
and complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time.
(c) Parent shall have delivered to the Company a certificate, dated the
Effective Time and signed by its Chief Executive Officer or another senior
executive officer, certifying to the effect that the conditions set forth in
Sections 6.2(a) and 6.2(b) have been satisfied.
Section 6.3 Conditions to Obligation of Parent and Merger Sub to Effect
the Merger. The obligation of Parent and Merger Sub to effect the Merger is
further subject to the fulfillment or waiver of the following conditions:
(a) (i) The representations and warranties of the Company contained in
Section 3.1 (Qualification, Organization, Subsidiaries, etc.), Section 3.2
(Capital Stock), Section 3.3 (Subsidiaries), Section 3.4(a) (Corporate
Authority), Section 3.12(a)(ii) (Absence of Certain Changes or Events), Section
3.21 (Required Vote of the Company Shareholders), and Section 3.24 (State
Takeover Statutes; Rights Plan) shall be true and correct in all respects
(except, in the case of Sections 3.1(a), 3.2 and 3.3 for such inaccuracies as
are de minimis in the aggregate), in each case at and as of the date of this
Agreement and at and as of the Closing Date as though made at and as of the
Closing Date and (ii) the representations and warranties of the Company set
forth in this Agreement (other than in clause (i) above) shall be true and
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correct in all respects (disregarding any materiality or Company Material
Adverse Effect qualifiers contained therein) as of the date of this Agreement
and at and as of the Closing Date as though made at and as of the Closing Date,
except where the failure of such representations or warranties to be so true and
correct would not have, individually or in the aggregate, a Company Material
Adverse Effect; provided, however, that, with respect to clauses (i) or (ii)
hereof, representations and warranties that are made as of a particular date or
period shall be true and correct (in the manner set forth in clauses (i) or
(ii), as applicable) only as of such date or period.
(b) The Company shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time.
(c) The Company shall have delivered to Parent a certificate, dated the
Effective Time and signed by its Chief Executive Officer or another senior
executive officer, certifying to the effect that the conditions set forth in
Sections 6.3(a), 6.3(b) and 6.3(d) have been satisfied.
(d) Since the date of this Agreement there shall not have been a Company
Material Adverse Effect;
Section 6.4 Frustration of Conditions. No party may rely on the failure
of any condition set forth in this Article VI to be satisfied if such failure
was caused by such party's failure to act in good faith or to use its reasonable
best efforts to consummate the Merger and the other transactions contemplated by
this Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination or Abandonment. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
any approval of the matters presented in connection with the Merger by the
shareholders of the Company:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Effective Time shall not have occurred on or before
September 18, 2007 (the "End Date") and the party seeking to terminate this
Agreement pursuant to this Section 7.1(b)(i) shall not have breached its
obligations under this Agreement in any manner that shall have proximately
caused the failure to consummate the Merger on or before the End Date; provided,
however, that in the event the conditions set forth in Section 6.1(c) shall not
have been satisfied on or before the End Date, either Parent or the Company may
unilaterally extend, by notice delivered to the other party on or prior to the
original End Date, the End Date until December 18, 2007, in which case the End
Date shall deemed to be for all purposes to be such date;
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(ii) an injunction, other legal restraint or order shall have been
entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger and such injunction, other legal restraint or order
shall have become final and non-appealable, provided that the party seeking to
terminate this Agreement pursuant to this Section 7.1(b)(ii) shall have used its
reasonable best efforts to remove such injunction, other legal restraint or
order in accordance with Section 5.6; or
(iii) the Company Meeting (including any adjournments thereof) shall
have concluded and the Company Stockholder Approval contemplated by this
Agreement shall not have been obtained;
(c) by the Company, if:
(i) Parent shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (i) would result in a failure of a
condition set forth in Section 6.1 or 6.2 and (ii) cannot be cured by the End
Date, provided that the Company shall have given Parent written notice,
delivered at least 30 days prior to such termination, stating the Company's
intention to terminate this Agreement pursuant to this Section 7.1(c)(i) and the
basis for such termination; provided, further, that the Company is not then in
material breach of this Agreement so as to cause any of the conditions set forth
in Section 6.1 or 6.3 not to be satisfied; or
(ii) prior to the receipt of the Company Stockholder Approval, (A)
the Board of Directors of the Company (or the Special Committee) has received a
Superior Proposal, (B) in light of such Superior Proposal the Board of Directors
of the Company (or the Special Committee) shall have determined in good faith,
after consultation with its outside counsel and financial advisors, that the
failure to withdraw or modify its Recommendation would be inconsistent with the
Board of Directors of the Company's or the Special Committee's exercise of its
fiduciary duties, (C) the Company has notified Parent in writing of the
determinations described in clause (B) above which notice shall specify the
material terms and conditions of any such Superior Proposal (including the
identity of the party making such Superior Proposal), and shall have
contemporaneously provided a copy of the relevant proposed transaction
agreements with the party making such Superior Proposal and other material
documents, (D) at least five Business Days following receipt by Parent of the
notice referred to in clause (C) above, and taking into account any revised
proposal made by Parent since receipt of the notice referred to in clause (C)
above, such Superior Proposal remains a Superior Proposal and the Board of
Directors of the Company (or the Special Committee) has again, following good
faith negotiations with Parent during such five Business Day period, made the
determinations referred to in clause (B) above (it being understood that in the
event of any material revisions to the Superior Proposal, the Company shall be
required to deliver a new written notice to Parent pursuant to clause (C) above
and to comply with the requirements of this Section 7.1(c)(ii) with respect to
such new written notice, except that all references in this clause (D) to five
Business Days shall be deemed to be references to three Business Days in such
event), (E) the Company has previously paid (or concurrently pays) the
Termination Fee and (F) the Board of Directors of the Company (or the Special
Committee) has approved or concurrently approves, and the Company concurrently
enters into, a definitive agreement providing for the implementation of such
Superior Proposal.
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(d) by Parent, if:
(i) the Company shall have breached or failed to perform any of
its representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (i) would result in a failure of a
condition set forth in Section 6.1, Section 6.3(a), Section 6.3(b) or Section
6.3(d) and (ii) cannot be cured by the End Date, provided that Parent shall have
given the Company written notice, delivered at least thirty (30) days prior to
such termination, stating Parent's intention to terminate this Agreement
pursuant to this Section 7.1(d)(i) and the basis for such termination; provided,
further, that the Parent is not then in material breach of this Agreement so as
to cause any of the conditions set forth in Section 6.1 or 6.2 not to be
satisfied;
(ii) the Board of Directors of the Company or the Special Committee
withdraws, modifies or qualifies in a manner adverse to Parent or Merger Sub, or
publicly proposes to withdraw, modify or qualify, in a manner adverse to Parent
or Merger Sub, its Recommendation, fails to recommend to the Company's
shareholders that they give the Company Stockholder Approval or approves,
endorses or recommends, or publicly proposes to approve, endorse or recommend,
any Alternative Proposal, including in any disclosure made pursuant to Rule
14e-2(a) promulgated under the Exchange Act; or
(iii) since the date of this Agreement there shall have been a
Company Material Adverse Effect that cannot be cured by the End Date.
In the event of termination of this Agreement pursuant to this Section
7.1, this Agreement shall terminate (except for the Confidentiality Agreement,
any other confidentiality agreements entered into by co-investors in Parent, the
Guarantees and the provisions of Sections 7.2 and Article VIII), and there shall
be no other liability on the part of the Company or Parent and Merger Sub, or
any of their respective stockholders, partners, members, directors, officers or
agents, as the case may be, to the other except liability arising out of any
willful breach of any of the representations, warranties or covenants in this
Agreement and any termination resulting therefrom (subject to any express
limitations set forth in this Agreement), any action for fraud, or as provided
for in the Confidentiality Agreement or the Guarantees, in which case the
aggrieved party shall be entitled to all rights and remedies available at law or
in equity.
Section 7.2 Termination Fee; Expenses.
(a) In the event that:
(i) this Agreement is terminated by the Company pursuant to
Section 7.1(c)(ii) then the Company shall pay to Parent a termination fee of
$30,000,000 in cash (the "Termination Fee"); or
(ii) (x) at any time after the date of this Agreement, an
Alternative Proposal shall have been made known to the Company or publicly
disclosed, (y) this Agreement is terminated by Parent pursuant to Section
7.1(b)(i) and as of the date of such termination the conditions to Parent's
obligation to close set forth in Section 6.3(a) or Section 6.3(b) are not
satisfied, or this Agreement is terminated by Parent or the Company pursuant to
Section 7.1(b)(iii) (so long as, in the case of Section 7.1(b)(iii), the
Alternative Proposal was publicly disclosed and not withdrawn at the time of the
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Company Meeting) and (z) within 12 months after this termination, the Company
enters into an agreement in respect of any Alternative Proposal or a transaction
pursuant to which any Alternative Proposal is consummated, then the Company
shall pay to Parent the Termination Fee (provided, that, for purpose of this
Section 7.2(a)(ii), the term "Alternative Proposal" shall have the meaning
assigned to such term in Section 5.3(h), except that the references to "15% or
greater" and "15% or more" shall be deemed to be references to "50% or greater"
and "50% or more," respectively); or
(iii) this Agreement is terminated by Parent pursuant to Section
7.1(d)(i) or (ii), then the Company shall pay to Parent all of the Expenses (as
hereinafter defined) of Parent and Merger Sub. Parent shall not claim a
termination and a right to payment of the Expenses if it shall have been paid
the Termination Fee. As used herein, "Expenses" shall mean all reasonable
out-of-pocket documented fees and expenses (including all fees and expenses of
counsel, accountants, consultants, financial advisors and investment bankers of
Parent and its Affiliates), up to $15,000,000 in the aggregate, incurred by
Parent, Merger Sub and their Affiliates or on their behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the Financing and all other matters related to
the Merger; or
(iv) (x) at any time after the date of this Agreement, an
Alternative Proposal shall have been made known to the Company or publicly
disclosed and (y) this Agreement is terminated by Parent or the Company pursuant
to Section 7.1(b)(iii) (so long as the Alternative Proposal was publicly
disclosed and not withdrawn at the time of the Company Meeting) and no
Termination Fee is yet payable in respect thereof pursuant to Section
7.2(a)(ii), then the Company shall pay to Parent all of the Expenses of Parent
and Merger Sub and thereafter the Company shall be obligated to pay to Parent
the Termination Fee (net of the amount of Expenses previously actually paid to
Parent pursuant to this sentence) in the event such fee is payable pursuant to
Section 7.2(a)(ii) (provided, that, for purpose of this Section 7.2(a)(iv), the
term "Alternative Proposal" shall have the meaning assigned to such term in
Section 5.3(h), except that the references to "15% or greater" and "15% or more"
shall be deemed to be references to "50% or greater" and "50% or more,"
respectively).
(b) Parent shall pay to the Company a termination fee of $30,000,000 in
cash (the "Parent Termination Fee") in the event that:
(i) the Company shall terminate this Agreement pursuant to Section
7.1(b)(i) and the Effective Time shall not have occurred on or before the End
Date as a result of Parent or Merger Sub's failure to obtain and consummate the
Financing; provided that this Section 7.2(b)(i) shall not be applicable in the
event that the Financing cannot be consummated as a result of the failure of any
condition set forth in Section 6.1 or Section 6.3 to have been satisfied; or
(ii) the Company shall terminate this Agreement pursuant to Section
7.1(c)(i) and the Parent shall have willfully breached any of its
representations, warranties or covenants in this Agreement as to give the
Company the right to terminate pursuant to 7.1(c)(i).
-49-
(c) Any payment required to be made pursuant to clause (i) of Section
7.2(a) shall be made to Parent concurrently with, and as a condition to the
effectiveness of, the termination of this Agreement by the Company pursuant to
Section 7.1(c)(ii); any payment required to be made by the Company pursuant to
clause (ii) of Section 7.2(a) shall be made to Parent promptly (and in any event
not later than two Business Days following the consummation of the Alternative
Proposal); and, in circumstances in which Expenses are payable, such payment
shall be made to Parent not later than two Business Days after delivery to the
Company of an itemization setting forth in reasonable detail all Expenses of
Parent (which itemization may be supplemented and updated from time to time by
such party until the 60th day after such party delivers such notice of demand
for payment). All such payments shall be made by wire transfer of immediately
available funds to an account to be designated by Parent. Any payment required
to be made pursuant to Section 7.2(b) shall be made to the Company promptly
following termination of this Agreement by the Company (and in any event not
later than two Business Days after delivery to Parent of notice of demand for
payment), and such payment shall be made by wire transfer of immediately
available funds to an account to be designated by the Company.
(d) In the event that the Company shall fail to pay the Termination Fee
and/or Expenses, or Parent shall fail to pay the Parent Termination Fee required
pursuant to this Section 7.2 when due, such fee and/or Expenses, as the case may
be, shall accrue interest for the period commencing on the date such fee and/or
Expenses, as the case may be, became past due, at a rate equal to the rate of
interest publicly announced by Citibank, in the City of New York from time to
time during such period, as such bank's Prime Lending Rate. In addition, if
either party shall fail to pay such fee and/or Expenses, as the case may be,
when due, such owing party shall also pay to the owed party all of the owed
party's costs and expenses (including attorneys' fees) in connection with
efforts to collect such fee and/or Expenses, as the case may be. Parent and the
Company acknowledge that the fees, Expense reimbursement and the other
provisions of this Section 7.2 are an integral part of the Merger and that,
without these agreements, Parent and the Company would not enter into this
Agreement.
(e) The Company acknowledges that the Parent Termination Fee is not a
penalty, but rather is liquidated damages in a reasonable amount that will
compensate the Company for the efforts and resources expended and opportunities
foregone while negotiating this Agreement and in reliance on this Agreement and
on the expectation of the consummation of the transactions contemplated hereby,
which amount would otherwise be impossible to calculate with precision.
Notwithstanding anything to the contrary in this Agreement, the Company's right
to receive payment of the Parent Termination Fee pursuant to this Section 7.2 or
the guarantee thereof pursuant to the Guarantees shall be the exclusive remedy
of the Company against Parent, Merger Sub, the Guarantors or any of their
respective stockholders, partners, members, directors, Affiliates, officers or
agents in respect of this Agreement and the transactions contemplated hereby,
and upon payment of the Parent Termination Fee in accordance with this Section
7.2, none of Parent, Merger Sub or the Guarantors, or any of their respective
stockholders, partners, members, directors, Affiliates, officers or agents, as
the case may be, shall have any further liability or obligation relating to or
arising out of this Agreement or the transactions contemplated by hereby (except
that Parent and the Guarantors (to the extent, and only to the extent, of the
Guarantees) also shall be obligated with respect to the provisions of Section
7.2(d), Section 5.2(b) and the last sentence of Section 5.10). Parent and Merger
Sub acknowledge and agree that, except in the case of a willful breach of any of
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the representations, warranties or covenants in this Agreement by the Company,
receipt of the Termination Fee shall be the sole and exclusive remedy of Parent
and Merger Sub against that the Company, and shall in all cases be the sole and
exclusive remedy against any of the Company's stockholders, partners, members,
directors, Affiliates, officers or agents.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Merger.
Section 8.2 Expenses. Except as set forth in Section 7.2, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
the Merger, this Agreement and the transactions contemplated hereby shall be
paid by the party incurring or required to incur such expenses.
Section 8.3 Counterparts; Effectiveness. This Agreement may be executed
in two or more consecutive counterparts (including by facsimile), each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 8.4 Governing Law. This Agreement, and all claims or causes of
action (whether at law, in contract or in tort) that may be based upon, arise
out of or relate to this Agreement or the negotiation, execution or performance
hereof, shall be governed by and construed in accordance with the laws of the
State of Delaware (other than with respect to matters governed by TBCA or TBOC,
with respect to which such laws apply), without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
Section 8.5 Jurisdiction; Enforcement. The Company agrees that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that prior to the termination of
this Agreement in accordance with Article VII Parent shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement exclusively in any
federal or state court located in the State of Delaware, this being in addition
to any other remedy which they are entitled at law or in equity. In addition,
each of the parties hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement and the rights and obligations arising
hereunder, or for recognition and enforcement of any judgment in respect of this
Agreement and the rights and obligations arising hereunder brought by the other
party hereto or its successors or assigns, shall be brought and determined
exclusively in any federal or state court located in the State of Delaware. Each
of the parties hereto hereby irrevocably submits with regard to any such action
or proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
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that it will not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than the aforesaid courts.
Each of the parties hereto hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above named courts for any reason
other than the failure to serve in accordance with this Section 8.5, (b) any
claim that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (c) to the fullest extent
permitted by the applicable law, any claim that (i) the suit, action or
proceeding in such court is brought in an inconvenient forum, (ii) the venue of
such suit, action or proceeding is improper or (iii) this Agreement, or the
subject mater hereof, may not be enforced in or by such courts.
Section 8.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THE
PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 8.7 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (provided that any
notice received by facsimile transmission or otherwise at the addressee's
location on any Business Day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
Business Day), by reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
To Parent or Merger Sub:
Talon Holdings Corp.
c/o Centerbridge Partners, L.P.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxx
with copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
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Xxxx, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: R. Xxx Xxxxx
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
Goodmans LLP
000 Xxxxx Xxxxxx
Xxxxx 0000, Xxx 00
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Telecopy: (000) 000-0000
Attention: Xxxxx X Xxxxx
To the Company:
EGL, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000 0000
Attention: Xxxxxx X. Xxxxxx
Xxxxx Xxxxx L.L.P.
One Shell Plaza
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
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details specified in this paragraph; provided, however, that such notification
shall only be effective on the date specified in such notice or five (5)
Business Days after the notice is given, whichever is later. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice as of the
date of such rejection, refusal or inability to deliver.
Section 8.8 Assignment; Binding Effect. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that, without written consent of
any party hereto, (i) Merger Sub may assign, in its sole discretion, any of or
all of its rights, interest and obligations under this agreement to Parent or to
any direct or indirect wholly-owned subsidiary of Parent and (ii) Merger Sub
and/or Parent may assign its rights hereunder as collateral security to any
lender to Merger Sub and/or Parent or an Affiliate of Merger Sub and/or Parent,
as the case may be, but, in each case, no such assignment shall relieve Merger
Sub and/or Parent, as applicable, of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Parent shall cause Merger Sub, or any assignee thereof, to perform its
obligations under this Agreement.
Section 8.9 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 8.10 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the exhibits and schedules hereto), the Confidentiality
Agreement, any other confidentiality agreements entered into by co-investors in
Parent, the Voting Agreement and the Guarantees constitute the entire agreement,
and supersede all other prior agreements and understandings, both written and
oral, between the parties, or any of them, with respect to the subject matter
hereof and thereof and, except as set forth in Section 5.9, is not intended to
and shall not confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.11 Amendments; Waivers. At any time prior to the Effective
Time, any provision of this Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company (approved by the Special Committee), Parent and Merger Sub, or in
the case of a waiver, by the party against whom the waiver is to be effective
(and, in the case of the Company, as approved by the Special Committee);
provided, however, that after receipt of Company Stockholder Approval, if any
such amendment or wavier shall by applicable Law or in accordance with the rules
and regulations of the NASDAQ Stock Market require further approval of the
shareholders of the Company, the effectiveness of such amendment or waiver shall
be subject to the approval of the shareholders of the Company. Notwithstanding
the foregoing, no failure or delay by the Company or Parent in exercising any
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right hereunder.
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Section 8.12 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever. The table of contents to this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.13 Interpretation. When a reference is made in this Agreement
to an Article or Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The word "or" shall be deemed to mean "and/or." All terms defined in
this Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant thereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. Any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. Each of the parties has participated in the
drafting and negotiation of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement must be construed as if it is
drafted by all the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of authorship of any of the
provisions of this Agreement. Any time materiality of effect is measured with
respect to the Company and its Subsidiaries, the interests not owned directly or
indirectly by the Company and its wholly owned Subsidiaries shall be excluded.
Section 8.14 No Recourse. This Agreement may only be enforced against,
and any claims or causes of action that may be based upon, arise out of or
relate to this Agreement, or the negotiation, execution or performance of this
Agreement may only be made against the entities that are expressly identified as
parties hereto or the Guarantors and no past, present or future Affiliate,
director, officer, employee, incorporator, member, manager, partner,
stockholder, agent, attorney or representative of any party hereto (other than
the Guarantors) shall have any liability for any obligations or liabilities of
the parties to this Agreement or for any claim based on, in respect of, or by
reason of, the transactions contemplated hereby.
Section 8.15 Determinations by the Company. Whenever a determination,
decision or approval by the Company is called for in this Agreement, such
determination, decision or approval must be authorized by the Special Committee
or, if the Special Committee is not then in existence, the Company's Board of
Directors.
Section 8.16 Certain Definitions. For purposes of this Agreement, the
following terms will have the following meanings when used herein:
(a) "Affiliates" shall mean, as to any person, any other person which,
directly or indirectly, controls, or is controlled by, or is under common
control with, such person. As used in this definition, "control" (including,
-55-
with its correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a person, whether through the
ownership of securities or partnership or other ownership interests, by contract
or otherwise.
(b) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which the banks in New York are authorized by law or executive order to
be closed. References in this Agreement to specific laws or to specific
provisions of laws shall include all rules and regulations promulgated
thereunder.
(c) "Contracts" means any contracts, agreements, licenses, notes, bonds,
mortgages, indentures, commitments, leases or other instruments or obligations.
(d) "Knowledge" means (x) with respect to Parent, the actual knowledge
of the individuals listed on Section 8.16(d)(i) of the Parent Disclosure
Schedule and (y) with respect to the Company, the actual knowledge, after
reasonable inquiry, of the following individuals: (i) Xxx Xxxxx (Chairman &
CEO), (ii) Xxx Xxxxx (President & Chief Marketing Officer), (iii) Xxxxxxxx
Xxxxxx (President - International), (iv) Xxxx Xxxxxx (Chief Operating Officer),
(v) Xxxxx Xxxxxxx (Chief Administrative Officer), (vi) Xxxx Xxxxxxxxx (Chief
Accounting Officer), (vii) Xxxx Xxxxxxx (Chief Compliance Officer, General
Counsel) and (viii) Xxxxxx X. Xxxxxx (President of The Select Carrier Group).
(e) "Orders" or "orders" means any orders, judgments, injunctions,
awards, decrees or writs handed down, adopted or imposed by, including any
consent decree, settlement agreement or similar written agreement with, any
Governmental Entity.
(f) "person" or "Person" shall mean an individual, a corporation, a
partnership, a limited liability company, an association, a trust or any other
entity, group (as such term is used in Section 13 of the Exchange Act) or
organization, including a Governmental Entity, and any permitted successors and
assigns of such person.
(g) "Rollover Commitment" means the commitment made by a Person listed
on Section 8.16(g) of the Parent Disclosure Schedule in such Person's equity
rollover letter, dated as of the date hereof.
(h) "Special Committee" means a committee of the Company's Board of
Directors, the members of which are not affiliated with Merger Sub and are not
members of the Company's management, formed for the purpose of evaluating, and
making a recommendation to the full Board of Directors of the Company with
respect to, this Agreement and the transactions contemplated hereby, including
the Merger, and shall include any successor committee to the Special Committee
existing as of the date of this Agreement or any reconstitution thereof.
(i) "Subsidiaries" of any party shall mean any corporation, partnership,
association, trust or other form of legal entity of which (i) more than 50% of
the outstanding voting securities are on the date hereof directly or indirectly
owned by such party, or (ii) such party or any Subsidiary of such party is a
general partner.
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(j) Each of the following terms is defined in the Sections set forth
opposite such term:
Action......................................................Section 5.9(b)
Affiliate Transaction.......................................Section 3.11
Affiliates..................................................Section 8.16(a)
Agreement...................................................Preamble
Alternative Proposal........................................Section 5.3(h)
Articles of Merger..........................................Section 1.3
Bankruptcy and Equity Exception.............................Section 3.4(a)
Book-Entry Shares...........................................Section 2.2(a)
Business Day................................................Section 8.16(b)
Cancelled Shares............................................Section 2.1(b)
Certificates................................................Section 2.2(a)
Change in Board Recommendation..............................Section 5.3(d)
Closing.....................................................Section 1.2
Closing Date................................................Section 1.2
Code........................................................Section 2.2(b)(iii)
Company.....................................................Preamble
Company Approvals...........................................Section 3.4(b)
Company Benefit Plans.......................................Section 3.10(a)
Company Common Stock........................................Section 2.1(a)
Company Disclosure Schedule.................................ARTICLE III
Company Employees...........................................Section 5.5(b)(i)
Company Material Adverse Effect.............................Section 3.1(c)
Company Material Contracts..................................Section 3.22(a)
Company Meeting.............................................Section 5.4(b)
Company Permits.............................................Section 3.8(c)
Company Preferred Stock.....................................Section 3.2(a)
Company Right...............................................Section 3.2(a)
Company Rights Agreement....................................Section 3.2(a)
Company SEC Documents.......................................Section 3.5(a)
Company Shareholder Approval................................Section 3.21
Company Stock Option........................................Section 5.5(a)(i)
Company Stock Plans.........................................Section 5.5(a)(i)
Company Stock-Based Award...................................Section 5.5(a)(ii)
Confidentiality Agreement...................................Section 5.2(b)
Contracts...................................................Section 8.16(c)
control.....................................................Section 8.16(a)
Credit Agreement ...........................................Section 5.17
Debt Commitment Letters.....................................Section 4.4
Debt Financing..............................................Section 4.4
Dissenting Shares...........................................Section 2.1(e)
Dissenting Shareholders.....................................Section 2.1(e)
Effective Time..............................................Section 1.3
Employees...................................................Section 3.16
End Date....................................................Section 7.1(b)(i)
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Environmental Law...........................................Section 3.9(b)
Equity Commitment Letters...................................Section 4.4
ERISA.......................................................Section 3.10(a)
ERISA Affiliate.............................................Section 3.10(h)
Exchange Act................................................Section 3.4(b)
Exchange Fund...............................................Section 2.2(a)
Excluded Shares.............................................Section 2.1(e)
Expenses....................................................Section 7.2(a)(iii)
Financing...................................................Section 4.4
Financing Commitments.......................................Section 4.4
GAAP........................................................Section 3.5(b)
Governmental Entity.........................................Section 3.4(b)
Guarantees..................................................Recitals
Guarantors..................................................Recitals
Hazardous Substance.........................................Section 3.9(c)
HSR Act.....................................................Section 3.4(b)
Indemnified Party...........................................Section 5.9(b)
Intellectual Property.......................................Section 3.17
Knowledge...................................................Section 8.16(d)
Law.........................................................Section 3.8(a)
Laws........................................................Section 3.8(a)
Lien........................................................Section 3.3
Merger......................................................Recitals
Merger Consideration........................................Section 2.1(a)
Merger Sub..................................................Preamble
Multiemployer Plan..........................................Section 3.10(h)
New Financing Commitments...................................Section 5.10
New Plans...................................................Section 5.5(b)(ii)
Notes.......................................................Section 1.2
Notes Purchase Agreement....................................Section 5.17
Old Plans...................................................Section 5.5(b)(ii)
Option and Stock-Based Consideration........................Section 5.5(a)(ii)
Option Consideration........................................Section 5.5(a)(i)
Orders......................................................Section 8.16(e)
orders......................................................Section 8.16(e)
Parent......................................................Preamble
Parent Approvals............................................Section 4.2(b)
Parent Disclosure Schedule..................................ARTICLE IV
Parent Material Adverse Effect..............................Section 4.1(b)
Parent Termination Fee......................................Section 7.2(b)
Paying Agent................................................Section 2.2(a)
person......................................................Section 8.16(f)
Person......................................................Section 8.16(f)
Purchase Plan Shares........................................Section 5.5(a)(iv)
Proxy Statement.............................................Section 3.14
Recommendation..............................................Section 3.4(a)
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Regulatory Law..............................................Section 5.6(d)
Remaining Shares............................................Section 2.1(a)
Representatives.............................................Section 5.3(a)
Restricted Shares...........................................Section 5.5(a)(iii)
Rollover Commitment.........................................Section 8.16(g)
Xxxxxxxx-Xxxxx Act..........................................Section 3.6
SEC.........................................................Section 3.5(a)
Securities Act..............................................Section 3.3
Share.......................................................Section 2.1(a)
Schedule 13E-3..............................................Section 3.14
Solvent.....................................................Section 4.13
Special Committee...........................................Section 8.16(h)
Stock Purchase Plan.........................................Section 3.2(a)
Subsidiaries................................................Section 8.16(i)
Superior Proposal...........................................Section 5.3(i)
Surviving Corporation.......................................Section 1.1
Tax Return..................................................Section 3.15(b)
Taxes.......................................................Section 3.15(b)
TBCA........................................................Section 1.1
TBOC........................................................Section 1.1
Termination Date............................................Section 5.1(a)
Termination Fee.............................................Section 7.2(a)
Voting Agreement............................................Recitals
WARN Act....................................................Section 3.16
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
TALON HOLDINGS CORP.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
TALON ACQUISITION CO.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
EGL, INC.
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: Secretary & General Counsel
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
