Exhibit 10.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
July 3, 2006 (the "SIGNING DATE"), by and among VELOCITY EXPRESS CORPORATION, a
Delaware corporation ("PURCHASER"), CD&L ACQUISITION CORP., a Delaware
corporation and wholly owned Subsidiary of Purchaser ("NEWCO"), and CD&L, INC.,
a Delaware corporation (the "COMPANY"). For a listing of where the definitions
of capitalized terms used in this Agreement can be found, see Section 9.11
below.
RECITALS
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has, subject to the terms and conditions of this Agreement,
determined that this Agreement is advisable and in the best interests of the
stockholders of the Company and approved and adopted this Agreement and the
transactions contemplated hereby in accordance with the Delaware General
Corporation Law, as amended (the "DGCL"); and
WHEREAS, the Board of Directors has caused the Company Rights
Plan to be amended pursuant to an amendment in the form attached as Exhibit A
hereto (the "COMPANY RIGHTS PLAN AMENDMENT"), which shall prevent any Flip-in
Date, Flip-over Transaction or Event, Separation Time, or Stock Acquisition Date
(as each such term is defined in the Company Rights Plan) from occurring, and
shall prevent the Company Rights from becoming exercisable pursuant to the
Company Rights Plan, as a result of (i) approval, execution or delivery of this
Agreement, the Securities Purchase Agreements, the Voting Agreement or any
amendments thereof, provided that any such amendment is approved in advance by
the Board of Directors of the Company, (ii) the commencement or, prior to
termination of this Agreement, the consummation of the transactions contemplated
hereby (including the Merger), or by the Company Voting Agreements or the
Securities Purchase Agreements, (iii) any conversion, exercise or exchange of
any of the Company's securities acquired pursuant to the Securities Purchase
Agreements, or (iv) in the event of a termination of this Agreement, any
additional acquisitions of the Company's securities by any of the Purchaser
Companies (A) which are consummated after the termination of this Agreement at a
purchase price of not less than $3.00 per share of Company Common Stock (on an
as-converted basis, in the case of Convertible Securities), (B) which do not
cause any of Purchaser Companies to become the beneficial owner of more than 51%
of the shares of Company Common Stock outstanding at the time of such additional
acquisitions, and (C) which, in the event there is a Second Purchaser Restricted
Period, occur after the expiration of the Second Purchaser Restricted Period;
and
WHEREAS, the Board of Directors has approved the acquisition
by the Purchaser Companies of 15% or more of the Company's outstanding voting
stock for purposes of Section 203 of the DGCL so that the restrictions on
"business combinations" with "interested stockholders" (each as defined in
Section 203 of the DGCL) will not be applicable to the Purchaser Companies; and
WHEREAS, the board of directors of each of Purchaser and Newco
has, subject to the terms and conditions of this Agreement, determined that this
Agreement is advisable and in the best interests of its respective stockholders
and approved and adopted this Agreement and the transactions contemplated hereby
in accordance with the DGCL; and
WHEREAS, Purchaser, Newco and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger; and
WHEREAS, the holders of all of the outstanding shares of
Company Series A Preferred have consented to the execution and delivery of this
Agreement and the consummation of transactions contemplated hereby; and
WHEREAS, pursuant to purchase agreements with certain
securityholders of the Company, copies of which were previously provided to the
Company (the "SECURITIES PURCHASE AGREEMENTS"), Purchaser has acquired the
following securities of the Company prior to the execution of this Agreement and
subsequent to the aforesaid amendments to the Company Rights Plan and approval
of the Board of Directors for purposes of Section 203 of the DGCL (the
"PURCHASER ACQUIRED SECURITIES"): (i) shares of Company Series A Preferred that
represent as of the Signing Date the right to acquire up to an aggregate of
3,937,010 shares of Company Common Stock (which represents all of the
outstanding shares of Company Series A Preferred as of the Signing Date), (ii)
Company Notes that represent as of the Signing Date the right to acquire up to
an aggregate of 3,937,008 shares of Company Common Stock (which represents all
of the outstanding Company Notes as of the Signing Date), (iii) Company Warrants
that represent as of the Signing Date the right to acquire up to an aggregate of
506,250 shares of Company Common Stock (which represents all of the outstanding
Company Warrants as of the Signing Date), and (iv) 656,000 shares of Company
Common Stock; and
WHEREAS, Purchaser has obtained a voting agreement, a copy of
which was previously provided to the Company, from the stockholders listed on
Exhibit B, which voting agreement provides, among other things, that until the
date of termination of this Agreement (whether as a result of a Superior
Competing Transaction or for any other reason), such stockholders shall vote the
shares of Company Common Stock owned by them in favor of this Agreement, the
Merger and, to the extent required, all transactions incident thereto (the
"COMPANY VOTING AGREEMENT") and irrevocable proxies from such stockholders
giving Purchaser the right to vote the shares of Company Common Stock owned by
them in accordance with the requirements of the Company Voting Agreement
(collectively, the "IRREVOCABLE PROXIES").
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
and intending to be legally bound, Purchaser, Newco and the Company hereby agree
as follows:
ARTICLE 1 --
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Company and Newco shall, in accordance with Section
251 of the DGCL, consummate a merger (the "MERGER") in which Newco shall be
merged with and into the Company, with the Company being the surviving
corporation, and the separate corporate existence of Newco shall thereupon
cease. The corporation surviving the Merger shall be governed by the laws of the
state of Delaware and is sometimes hereinafter referred to as the "SURVIVING
CORPORATION." In accordance with Section 251 of the DGCL, all of the rights,
privileges, powers, immunities, purposes and franchises of Newco and the Company
shall vest in the Surviving Corporation and all of the debts, liabilities,
obligations and duties of Newco and the Company shall become the debts,
liabilities, obligations and duties of the Surviving Corporation.
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1.2 EFFECTIVE TIME. As soon as practicable after the satisfaction or
waiver of the conditions set forth in Article VII hereof, the appropriate
parties hereto shall execute in the manner required by the DGCL and file with
the Delaware Secretary of State a certificate of merger relating to the Merger,
and the parties shall take such other and further actions as may be required by
Law to make the Merger effective. The time the Merger becomes effective in
accordance with applicable Law is hereinafter referred to as the "EFFECTIVE
TIME."
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 251 of the DGCL.
1.4 CLOSING. The closing of the Merger (the "CLOSING") shall take place
(a) at the offices of Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx, at 10:00 a.m. as promptly as practicable after the last of the
conditions set forth in Section 7.1 hereof shall be fulfilled or waived in
accordance with this Agreement, or (b) at such other place, time and date as
Purchaser and the Company may agree.
ARTICLE II --
SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION. At the Effective Time, the
Certificate of Incorporation of the Company shall be amended in its entirety to
read as set forth in Exhibit C hereto and, as so amended, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by the DGCL.
2.2 BYLAWS. From and after the Effective Time, the Bylaws of Newco in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with DGCL.
2.3 DIRECTORS. The directors of Newco at the Effective Time shall, from
and after the Effective Time, be the initial directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
2.4 OFFICERS. The officers of Newco at the Effective Time shall, from
and after the Effective Time, be the initial officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
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ARTICLE III --
MERGER CONSIDERATION; CONVERSION OR CANCELLATION
OF COMPANY SHARES IN THE MERGER
3.1 MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF COMPANY SHARES
IN THE MERGER.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Purchaser, Newco, the Company, the Surviving
Corporation or the holders of any outstanding shares of capital stock of the
Company (the "COMPANY SHARES") or capital stock of Newco, each share of the
Company's common stock, par value $.001 per share (the "COMPANY COMMON STOCK")
and each share of the Company's Series A Convertible Redeemable Preferred Stock,
par value $.001 per share (the "COMPANY SERIES A PREFERRED"), issued and
outstanding immediately prior to the Effective Time (other than (A) Company
Shares owned by Purchaser, Newco or any direct or indirect wholly owned
Subsidiary of Purchaser (collectively, "PURCHASER COMPANIES"), (B) Company
Shares owned by any of the Company's direct or indirect wholly owned
Subsidiaries or held in the treasury of the Company ("TREASURY SHARES") and (C)
Dissenting Shares) shall, by virtue of the Merger, be cancelled and extinguished
and converted into the right to receive per share of Company Common Stock (on an
as-converted to Company Common Stock basis in the case of the Company Series A
Preferred) an amount in cash equal to Three Dollars ($3.00) (as adjusted
pursuant to Section 3.10 below, the "MERGER CONSIDERATION").
(b) Any Company Shares owned by the Purchaser Companies and
all Treasury Shares shall be cancelled and retired at the Effective Time and
shall cease to exist, and no Merger Consideration shall be delivered in exchange
therefor.
(c) On or after the Effective Time, (i) holders of
certificates representing Company Shares (the "CERTIFICATES") immediately prior
to the Effective Time shall cease to have any rights as stockholders of the
Company, except the right to receive the Merger Consideration in accordance with
Section 3.4 hereof for each share of Company Common Stock (on an as-converted to
Company Common Stock basis in the case of the Company Series A Preferred) held
by them and (ii) holders of certificates, agreements or other instruments
representing Convertible Securities (the "CONVERTIBLE SECURITY INSTRUMENTS")
immediately prior to the Effective Time shall be treated in accordance with
Section 3.7 below.
3.2 CONVERSION OF NEWCO SHARES. Each share of common stock, par value
$.004, of Newco ("NEWCO COMMON STOCK") issued and outstanding immediately prior
to the Effective Time shall be converted into one duly issued, validly
authorized, fully paid and nonassessable share of common stock, par value $.004
per share, of the Surviving Corporation.
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3.3 DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, (A) Company Shares held by holders thereof who are entitled to
vote on the Merger and who have not voted such Company Shares in favor of the
adoption of this Agreement and the Merger, and (B) shares of Series A Preferred,
even if their holders are not entitled to vote on the Merger, in each case with
respect to which appraisal rights shall have been properly exercised and
perfected in accordance with Section 262 of the DGCL (the "DISSENTING SHARES"),
shall not be converted into or represent the right to receive the Merger
Consideration which the holders of Company Shares are entitled to receive
pursuant to Section 3.1 above, and holders of such Dissenting Shares shall be
entitled to receive only the payment provided for by Section 262 of the DGCL
unless and until such holders fail to perfect or effectively withdraw or
otherwise lose their rights to demand payment under the DGCL. If, after the
Effective Time, any such holder fails to perfect or effectively withdraws or
loses such right, such Dissenting Shares shall thereupon be deemed to be
entitled to receive the Merger Consideration, without interest, per share of
Company Common Stock (on an as-converted to Company Common Stock basis in the
case of the Company Series A Preferred). The Company shall give Purchaser (i)
prompt notice of any demands for payment for Dissenting Shares pursuant to
Section 262 of the DGCL received by the Company, withdrawals of such demands,
and any other instruments served pursuant to the DGCL and received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for payment pursuant to Section 262 of the DGCL. The Company
shall not, except with the prior written consent of Purchaser or as otherwise
required by applicable Law, make any payment with respect to any such demands
for payment or offer to settle or settle any such demands.
3.4 EXCHANGE OF CERTIFICATES AND CONVERTIBLE SECURITY INSTRUMENTS;
PAYMENT.
(a) On or prior to the Signing Date, Purchaser shall appoint a
bank or trust company reasonably acceptable to the Company as the Person to
receive Letters of Transmittal and to act as paying agent under this Agreement
(the "PAYING AGENT'), pursuant to an agreement in form and substance reasonably
acceptable to Purchaser and the Company (the "PAYING AGENT AGREEMENT"). On the
Signing Date, Purchaser shall deposit with the Paying Agent, pursuant to the
Paying Agent Agreement, an amount of cash equal to the aggregate amount of
Merger Consideration payable under this Agreement to all holders of Company
Shares and Convertible Securities (other than Company Shares or Convertible
Securities owned by Purchaser Companies) (collectively, the "COMPANY EQUITY
HOLDERS").
(b) Purchaser shall use commercially reasonable efforts to
cause the Paying Agent to mail to each stockholder of record of the Company and
all other Company Equity Holders as of the Effective Time, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates and Convertible Security Instruments shall
pass, only upon delivery of the Certificates and Convertible Security
Instruments to the Paying Agent) (a "LETTER OF TRANSMITTAL") and (ii)
instructions for effecting the surrender of the Certificates and Convertible
Security Instruments and receiving the Merger Consideration to which such holder
shall be entitled pursuant to Section 3.1.
(c) Upon surrender of a Certificate or Convertible Security
Instrument for cancellation to the Paying Agent, together with a duly executed
Letter of Transmittal, the holder of such Certificate or Convertible Security
Instruments shall be entitled to receive in exchange therefor, and shall
promptly receive, the Merger Consideration to which such holder is entitled in
accordance with Section 3.1 in the form of a bank check.
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(d) In the event that the Merger Consideration is to be
delivered to any Person in whose name the Certificate or Convertible Security
Instrument surrendered in exchange therefor is registered in the transfer
records of the Company, the Merger Consideration may be delivered to a
transferee if the Certificate is presented to the Paying Agent, accompanied by
all documents reasonably required to evidence and effect such transfer.
(e) Until surrendered as contemplated by Section 3.4(c), each
Certificate (other than a Certificate to be canceled in accordance with Section
3.1(b)) shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration contemplated
by this Section 3.4. No interest will be paid or will accrue on any cash payable
to holders of Certificates or Convertible Security Instruments pursuant to the
provisions of this Article III.
(f) Neither the Paying Agent nor any party hereto shall be
liable to a holder of Company Shares or Convertible Securities for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(g) In the case of any Company Shares that are not represented
by Certificates but are included in the Company Shares disclosed in Sections
4.2(a) and (b) below, such Company Shares shall be treated identically to
Company Shares that are represented by Certificates for purposes of this
Agreement (subject to evidence of ownership thereof reasonably satisfactory to
Purchaser) and for purposes of the Paying Agent Agreement (subject to evidence
of ownership thereof reasonably satisfactory to the Paying Agent).
(h) Purchaser shall be entitled, in accordance with Section
3.4(i) below, to receive all interest earned in respect of the funds deposited
with the Paying Agent.
(i) Purchaser shall receive any remaining Merger Consideration
on deposit with the Paying Agent on the date which is one year after the
Effective Time, and any Company Equity Holder who has not surrendered his
Certificate(s) or Convertible Security Instrument(s) to the Paying Agent prior
to such time shall be entitled to receive the Merger Consideration without
interest upon the surrender of such Certificate(s) to Purchaser, subject to
applicable escheat or abandoned property laws.
3.5 MISSING CERTIFICATES. If any holder of Company Shares convertible
into the right to receive the Merger Consideration is unable to deliver the
Certificate which represents such Company Shares, or any Company Equity Holder
is unable to deliver the Convertible Security Instrument which represents such
Convertible Securities, the Paying Agent shall deliver to such holder the Merger
Consideration to which the holder is entitled for such shares upon presentation
of the following:
(i) evidence to the reasonable satisfaction of Purchaser that
any such Certificate or Convertible Security Instrument, as applicable,
has been lost, wrongfully taken or destroyed;
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(ii) such security or indemnity as may be reasonably requested
by Purchaser to indemnify and hold harmless Purchaser and the Paying
Agent; and
(iii) evidence reasonably satisfactory to Purchaser that such
Person is the owner of the Company Shares theretofore represented by
each Certificate claimed to be lost, wrongfully taken or destroyed, or
the Convertible Securities theretofore represented by each Convertible
Security Instrument claimed to be lost, wrongfully taken or destroyed,
and that the holder is the Person who would be entitled to present such
Certificate or Convertible Security Instrument for payment pursuant to
this Agreement.
3.6 NO FURTHER RIGHTS OR TRANSFERS. At and after the Effective Time,
except for the surrender of the Certificate(s) in exchange for the right to
receive the Merger Consideration with respect thereto (or, in the case of
holders of Dissenting Shares, the right to receive the payment provided for by
Section 262 of the DGCL), (i) each holder of Company Shares shall cease to have
any rights as a stockholder of the Company, and (ii) no transfer of Company
Shares shall thereafter be made on the stock transfer books of the Surviving
Corporation.
3.7 CONVERTIBLE SECURITIES.
(a) The Company shall take all action necessary to ensure that
(i) each option or other right to purchase shares of Company Common Stock
pursuant to stock options (a "COMPANY OPTION") which is outstanding at the
Effective Time, whether granted by the Company under the Company's Amended and
Restated 2002 Stock Option Plan for Independent Directors, the Company's 1995
Stock Option Plan for Independent Directors, the Company's Year 2000 Stock
Incentive Plan or the Company's Employee Stock Compensation Program
(collectively, the "COMPANY OPTION PLANS") or any other plan or agreement, (ii)
each warrant to purchase shares of Company Common Stock (a "COMPANY WARRANT")
which is outstanding at the Effective Time, and (iii) each Performance Unit
granted by the Company under the Company's Year 2000 Stock Incentive Plan which
is outstanding at the Effective Time, in any such case, shall be fully vested
and exercisable in full immediately prior to the consummation of the Merger and
all Company Options, Company Warrants and Performance Units that are not
exercised prior to the consummation of the Merger will be cancelled as of the
Effective Time in exchange for the Merger Consideration described in Section
3.7(b) (other than Company Options, Company Warrants and Performance Units that
are owned by Purchaser Companies, which will be cancelled without
consideration); provided, however, that all Company Options, Company Warrants
and Performance Units that cannot be so cancelled by the Company ("REMAINING
EQUITY-BASED AWARDS") shall remain outstanding but, at all times after the
Effective Time, shall be deemed to refer to a cash payment to the holder thereof
in an amount equal to the product of (x) the number of shares of Company Common
Stock issuable upon exercise of such Remaining Equity-Based Awards immediately
prior to the Effective Time multiplied by (y) the Merger Consideration without
any interest thereon, less the applicable exercise price for the Company Option,
Company Warrant or Performance Unit, if any.
(b) Each Convertible Security that is outstanding immediately
prior to the Effective Time (other than Remaining Equity-Based Awards) shall be
cancelled as of the Effective Time and converted into the right to receive, for
each Company Share issuable upon exercise of such Convertible Security, the
Merger Consideration, without interest, less the applicable exercise price for
the Convertible Securities, if any (other than Convertible Securities that are
owned by Purchaser Companies, which will be cancelled without consideration).
Thereafter, without impairing the rights of the holders of the Convertible
Security to receive payments of Merger Consideration to the extent set forth
herein, the holders of Convertible Securities shall, as of the Effective Time,
cease to have any further right or entitlement to acquire any shares of capital
stock of the Company, Purchaser or the Surviving Corporation under the cancelled
Convertible Securities. Holders of Convertible Securities will be required to
deliver their Convertible Security Instruments in accordance with Section 3.4
above or, if unable to do so, otherwise meet the requirements set forth in
Section 3.5 above. The Seller Notes will not be cancelled in the Merger and will
remain outstanding at the Effective Time.
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(c) The Company agrees to take all other actions necessary or
appropriate so that, as of the Effective Time and as a result of the Merger,
except as permitted above, (i) no Convertible Securities are outstanding, (ii)
no Person other than Purchaser shall have any right, title or interest in or to
the ownership of the Company or the Surviving Corporation or any securities
issued by the Company or the Surviving Corporation, (iii) the holders of
Convertible Securities prior to the Closing, shall, on and after the Closing,
have no right, title or interest in or to the Company or the Surviving
Corporation or any securities of the Company or the Surviving Corporation, other
than the rights to payment of Merger Consideration in the manner described in
this Section 3.7 or rights in respect of Dissenting Shares as described in
Section 3.3 above, and (iv) no Person holding Convertible Securities shall by
virtue of any such securities have any right to acquire any securities of
Purchaser.
3.8 EMPLOYEE STOCK PURCHASE PLAN. There are no active participants or
participant accumulated cash balances in the Company's Employee Stock Purchase
Plan (the "ESPP"), and, after the Signing Date, the Company will not permit any
participation in the ESPP or offer any plan, program or arrangement for the
purchase of shares of Company Common Stock.
3.9 WITHHOLDING. Notwithstanding anything in this Agreement to the
contrary, the Paying Agent or Purchaser shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of Company Shares, Company Options, Company Warrants or Performance Units
such amounts as the Paying Agent, Purchaser or the Surviving Corporation, as the
case may be, is required to deduct and withhold with respect to such payment
under the Internal Revenue Code of 1986, as amended (the "CODE") or any
provisions of state, local or foreign tax Law. Any amounts so withheld shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Company Shares, Company Options, Company Warrants or Performance Units in
respect of which such deduction and withholding was made. The Company agrees to
provide the Paying Agent and Purchaser with such information as they may
reasonably require in order to calculate such amounts required to be withheld.
After the Effective Time, Purchaser will timely remit, or cause the timely
remission of, these withheld amounts to the taxing authorities entitled to
receive the same.
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3.10 ADJUSTMENTS TO MERGER CONSIDERATION.
(a) In the event of any change for any reason (including
without limitation as a result of a forward or reverse stock split, stock
dividend or distribution, reclassification, recapitalization, merger,
subdivision, issuer tender or exchange offer or other similar transaction) in
the number of Company Shares or Convertible Securities (other than Company
Shares or Convertible Securities owned by Purchaser Companies, and other than
any matter set forth on Part 4.2(b) of the Company Disclosure Memorandum) issued
and outstanding at any time after the Signing Date and prior to the Effective
Time (excluding changes resulting from any repurchase, redemption or repayment
by the Company or its Subsidiaries of any shares of Company Shares or
Convertible Securities), the Merger Consideration shall be appropriately
adjusted to provide to the holders of Company Shares and Convertible Securities
the same aggregate amount of consideration (i.e., Three Dollars ($3.00)
multiplied by the number of As Converted Total Company Shares as in effect at
the Signing Date, as appropriately adjusted to reflect any changes resulting
from any repurchase, redemption or repayment by the Company or its Subsidiaries
of any shares of Company Common Stock or Company Options after the Signing Date)
(the "TOTAL MERGER CONSIDERATION") (for the avoidance of doubt, Total Merger
Consideration excludes any Merger Consideration payable in respect of Company
Shares or Convertible Securities owned by Purchaser Companies) which they would
have received had such change not occurred; and as so adjusted shall thereafter
be the Merger Consideration, subject to further adjustment in accordance with
this Section 3.10.
(b) In the event that Section 4.2(c) below as in effect at the
Signing Date misstates the As Converted Company Total Shares, then the Merger
Consideration shall be appropriately reduced or increased as appropriate to
provide to the holders of Company Common Stock and Convertible Securities the
aggregate amount of Total Merger Consideration which they would have received if
Section 4.2(c) as in effect at the Signing Date had been accurate; and as so
adjusted shall thereafter be the Merger Consideration, subject to further
adjustment in accordance with this Section 3.10; provided, however, that no
adjustment pursuant to this paragraph shall be made for any matter set forth on
Part 4.2(b) of the Company Disclosure Memorandum.
(c) Notwithstanding anything herein to the contrary, no
adjustment shall be made pursuant to this Section 3.10 unless all of the
adjustments to be made pursuant to this Section 3.10 would in the aggregate
cause an adjustment in the Merger Consideration of more than $.01 per share
(i.e., if the adjustment would result in Merger Consideration of $2.99 per share
or $3.01 per share, the Merger Consideration shall remain at $3.00 per share).
(d) Notwithstanding any adjustment to the per share Merger
Consideration made pursuant to this Section 3.10, the aggregate Merger
Consideration to be received by any holder of Company Shares or Convertible
Securities in the Merger will be rounded up or down to the nearest one cent
($.01).
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ARTICLE IV --
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Contemporaneously with the execution and delivery of this
Agreement, the Company has delivered to Purchaser and Newco a Company Disclosure
Memorandum dated as of the date of this Agreement and signed by the Company (the
"COMPANY DISCLOSURE MEMORANDUM") setting forth certain information regarding the
Company and its business. To induce Purchaser and Newco to enter into and
perform this Agreement, the Company hereby represents and warrants to Purchaser
and Newco that, except (i) as set forth in the Company Disclosure Memorandum
(with specific reference to the particular Section or subsection of this
Agreement to which the information set forth in the Company Disclosure
Memorandum relates; provided, however, that any information set forth in one
Section or subsection of the Company Disclosure Memorandum shall be deemed to
apply to each other Section or subsection thereof to which its relevance is
readily apparent on its face) or (ii) as set forth in the Company SEC Reports,
each of the representations and warranties in the following paragraphs of this
Article IV is true and correct as of the Signing Date:
4.1 CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation. Each of
the Company and its Subsidiaries is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated
or the business conducted by it require such qualification, except where failure
to so qualify or be in good standing would not have a Company Material
Occurrence or materially adversely affect the consummation of the transactions
contemplated hereby. Each of the Company and its Subsidiaries has all requisite
power and authority (corporate or otherwise) to own its properties and to carry
on its business as it is now being conducted, except where failure to have such
power and authority would not reasonably be expected to result in a Company
Material Occurrence or to materially adversely affect the consummation of the
transactions contemplated hereby. Set forth as exhibits to the Company SEC
Reports are complete and correct copies of the Company's Certificate of
Incorporation and Bylaws, each as amended to date.
4.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Company Common Stock, of which, as of the Signing Date,
10,017,479 shares were issued and outstanding, and 2,000,000 shares of Preferred
Stock, par value $.001 per share, of which, as of the Signing Date, 393,701
shares were designated as Company Series A Preferred, and 393,701 shares of
Company Series A Preferred were issued and outstanding. All of the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable.
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(b) Set forth on Part 4.2(b) of the Company Disclosure
Memorandum is a list of all Company Options issued and outstanding as of the
Signing Date, together with a description of (i) the number of shares of Company
Common Stock issuable upon exercise or conversion thereof, (ii) the applicable
exercise or conversion price therefor, and (iii) the expiration date thereof.
The Company does not have any Performance Shares or Shares of Restricted Stock
issued or outstanding. All outstanding shares of capital stock of the
Subsidiaries are owned by the Company or a direct or indirect wholly owned
Subsidiary of the Company, free and clear of all liens, pledges, security
interests, charges, claims, options, rights of third parties and other
encumbrances of any kind or nature ("LIENS"). Except for (i) this Agreement and
as permitted or contemplated hereby, (ii) the Company Notes that represent as of
the Signing Date the right to acquire up to an aggregate of 3,937,008 shares of
Company Common Stock, (iii) the Company Options that represented as of the
Signing Date the right to acquire up to an aggregate of 4,244,223 shares of
Company Common Stock, (iv) the Company Warrants that represent as of the Signing
Date the right to acquire up to an aggregate of 506,250 shares of Company Common
Stock, (v) the Company Series A Preferred that represent as of the Signing Date
the right to acquire up to an aggregate of 3,937,010 shares of Company Common
Stock, (vi) the Seller Notes, and (vii) the Company Rights, there are not, as of
the Signing Date, any outstanding or authorized options, warrants, calls,
Performance Units, rights (including preemptive rights), commitments or any
other agreements of any character to which the Company or any of its
Subsidiaries is a party, or by which they may be bound, requiring it to issue,
transfer, sell, purchase, redeem or acquire any shares of capital stock or any
securities or rights convertible into, exercisable or exchangeable for, or
evidencing the right to subscribe for or otherwise acquire, any shares of
capital stock or other securities of the Company or any of its Subsidiaries.
(c) The aggregate number of shares of Company Common Stock (i)
which are issued and outstanding as of the Signing Date, and (ii) which would be
issued and outstanding as of the Signing Date assuming a cashless exercise or
cashless conversion of all Convertible Securities, using the actual exercise
price of such Convertible Securities (in each case excluding shares of Company
Common Stock and Convertible Securities that are owned by Purchaser Companies)
(the sum of (i) and (ii) are hereinafter collectively referred to as the "AS
CONVERTED TOTAL COMPANY SHARES") is 11,039,238. For purposes of calculating said
cashless exercise, the value of each share of Company Common Stock shall be
equal to the Merger Consideration. In addition, for purposes of calculating the
As Converted Total Company Shares, it shall be deemed that all Convertible
Securities which have an exercise or conversion price in excess of the Merger
Consideration would not be converted into any Company Common Stock.
(d) Except for the Company Voting Agreement, the Irrevocable
Proxies, the Company Stockholders Agreement and the Company Registration Rights
Agreement, there are not as of the Signing Date and there will not be at the
Effective Time any registration rights agreements, stockholder agreements,
voting trusts or other agreements or understandings to which the Company is a
party or by which it is bound (or, to the Company's Knowledge, to which any of
its stockholders are a party or by which they are bound) relating to the voting
of any Company Shares. There are no restrictions on the Company with respect to
voting the stock of any of its Subsidiaries.
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4.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to the approval and adoption of the
Merger and this Agreement by holders of the Company Shares in accordance with
the DGCL and the Company Stockholders Agreement. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby (other than, with respect
to the Merger, the adoption of this Agreement by holders of the Company Shares
in accordance with the DGCL and by the holders of the Company Series A Preferred
in accordance with the Company Stockholders Agreement). This Agreement has been
duly and validly executed and delivered by the Company and, assuming this
Agreement constitutes the valid and binding agreement of Purchaser and Newco,
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except that such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(b) The Board of Directors has caused the Company Rights Plan
to be amended pursuant to the Company Rights Plan Amendment, which shall prevent
any Flip-in Date, Flip-over Transaction or Event, Separation Time, or Stock
Acquisition Date (as each such term is defined in the Company Rights Plan) from
occurring, and shall prevent the Company Rights from becoming exercisable
pursuant to the Company Rights Plan, as a result of (i) the approval, execution
or delivery of this Agreement, the Securities Purchase Agreements, the Voting
Agreement or any amendments thereof, provided that any such amendment is
approved in advance by the Board of Directors of the Company, (ii) the
commencement or, prior to termination of this Agreement, the consummation of the
transactions contemplated hereby (including the Merger) or by the Company Voting
Agreements or the Securities Purchase Agreements, (iii) any conversion, exercise
or exchange of any of the Company's securities acquired pursuant to the
Securities Purchase Agreements, or (iv) in the event of a termination of this
Agreement, any additional acquisitions of the Company's securities by any of the
Purchaser Companies (A) which are consummated after the termination of this
Agreement at a purchase price of not less than $3.00 per share of Company Common
Stock (on an as-converted basis, in the case of Convertible Securities), (B)
which do not cause any of Purchaser Companies to become the beneficial owner of
more than 51% of the shares of Company Common Stock outstanding at the time of
such additional acquisitions, and (C) which, in the event there is a Second
Purchaser Restricted Period, occur after the expiration of the Second Purchaser
Restricted Period. The Board of Directors has approved the acquisition by the
Purchaser Companies of 15% or more of the Company's outstanding voting stock for
purposes of Section 203 of the DGCL so that the restrictions on "business
combinations" with "interested stockholders" (each as defined in Section 203 of
the DGCL) will not be applicable to the Purchaser Companies.
4.4 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Neither the execution and delivery of this Agreement nor
the consummation by the Company of the transactions contemplated hereby will:
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(i) conflict with or result in any breach of any
provision of the respective Certificate of Incorporation or Bylaws,
each as amended, of the Company or any of its Subsidiaries;
(ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental
Authority, except (A) pursuant to the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
the Securities Act of 1933, as amended (the "SECURITIES ACT"), (B) the
filing of the certificate of merger pursuant to the DGCL and
appropriate documents with the relevant authorities of other states in
which the Company or any of its Subsidiaries is authorized to do
business, (C) as may be required by any applicable state securities or
"blue sky" laws or state takeover laws, (D) such filings and consents
as may be required under any environmental, health or safety Law or
regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by
this Agreement, (E) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would
not individually or in the aggregate reasonably be expected to
materially adversely affect the consummation of the transactions
contemplated hereby, or (F) such filings, consents, approvals, orders,
registrations and declarations as may be required as a result of the
status or identity of Purchaser and/or Newco;
(iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration or lien or other charge or encumbrance) under any of the
terms, conditions or provisions of any Contracts to which the Company
or any of its Subsidiaries or any of their assets may be bound, except
for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or lien or other charge or encumbrance) as
to which requisite waivers or consents have been obtained or will be
obtained prior to the Effective Time; provided, however, that the
Company makes no representation as to the effect on the consummation of
the Merger and the other transactions contemplated by this Agreement on
any real estate lease or equipment lease; or
(iv) assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in this Section 4.4
are duly and timely obtained or made and, with respect to the Merger,
this Agreement is adopted by the Company's stockholders, violate any
material order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its Subsidiaries or to any of their
respective assets.
(b) The affirmative vote of (i) a majority of the outstanding
shares of Company Common Stock in favor of the adoption of this Agreement at a
meeting at which a quorum is present (the "COMPANY STOCKHOLDER APPROVAL") and
(ii) a majority of the outstanding shares of Company Series A Preferred in favor
of the approval and adoption of this Agreement (the "COMPANY SERIES A APPROVAL")
in accordance with the terms of the Stockholders Agreement dated as of April 14,
2004 by and among the Company and the stockholders of the Company listed as
"Stockholders" therein (the "COMPANY STOCKHOLDERS AGREEMENT") are the only votes
of the holders of any class or series of the Company's or its Subsidiaries'
securities necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby.
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4.5 SEC REPORTS; FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES;
DISCLOSURE CONTROLS AND PROCEDURES.
(a) SEC Reports. The Company has filed all forms, reports and
documents required to be filed by it with the Securities and Exchange Commission
("SEC") since December 31, 2004 (including, without limitation, the Company's
Annual Reports on Form 10-K for the year ended December 31, 2004 and Form 10-K/A
for the year ended December 31, 2005 (the "COMPANY 2005 AUDIT DATE"), the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 2005 and for the quarter ended March 31, 2006, and the
Company's proxy statement for its 2005 and 2006 Annual Meetings of Stockholders
and all certifications and statements required by Rule 13a-14 or 15d-14 under
the Exchange Act or 18 U.S.C. ss.1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of
2002 ("SOX")) with respect to any Annual Reports), pursuant to the federal
securities laws and the SEC's rules and regulations thereunder, and SOX and all
rules and regulations thereunder (collectively, and together with all forms,
reports and documents filed by the Company with the SEC after the date of this
Agreement, including any amendments thereto, the "COMPANY SEC REPORTS"). The
Company SEC Reports were or will, as applicable, be prepared in accordance with
the requirements of the Securities Act and the Exchange Act, as the case may be,
and the rules and regulations thereunder. As of their respective dates, none of
the Company SEC Reports, including, without limitation, any financial statements
or schedules included therein, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. No Subsidiary of the Company is or has
been required to file any form, report, registration statement or other document
with the SEC.
(b) Disclosure Controls and Procedures. The Company maintains
disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the
Exchange Act. Such controls and procedures are effective to ensure that all
material information concerning the Company and its Subsidiaries is made known
on a timely basis to the individuals responsible for the preparation of the
Company's filings with the SEC and other public disclosure documents. As used in
this Section 4.5, the term "file" shall be broadly construed to include any
manner in which a document or information is furnished, supplied otherwise made
available to the SEC.
(c) Financial Statements. The consolidated balance sheets and
the related consolidated statements of income and cash flows (including the
related notes thereto) of the Company included in the Company SEC Reports, as of
their respective dates, complied, or in the case of the Company SEC Reports
filed after the date hereof, will comply, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared, or in the case of the Company SEC
Reports filed after the date hereof, will be prepared, in accordance with U.S.
generally accepted accounting principles ("GAAP") applied on a basis consistent
with prior periods (except as otherwise noted therein), and present fairly, or
in the case of the Company SEC Reports filed after the date hereof, will present
fairly, in all material respects, the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for the periods
presented therein (subject, in the case of the unaudited interim financial
statements, to notes and normal year-end adjustments that were not, or with
respect to any such financial statements contained in any of the Company SEC
Reports to be filed subsequent to the Signing Date are not reasonably expected
to be, material in amount or effect).
-14-
(d) SOX Certifications. The Chief Executive Officer and the
Chief Financial Officer of the Company have signed, and the Company has
furnished to the SEC, all certifications required by Sections 302 and 906 of
SOX. Such certifications contain no qualifications or exceptions to the matters
certified therein and have not been modified or withdrawn. Neither the Company
nor any of it officers has received notice from any Governmental Authority
questioning or challenging the accuracy, completeness, form or manner of filing
or submission of such certifications.
(e) Undisclosed Liabilities. Except (i) as reflected in the
Company's unaudited consolidated balance sheet at March 31, 2006 or liabilities
described in any notes thereto (or liabilities for which neither accrual nor
footnote disclosure is required pursuant to GAAP), (ii) for liabilities incurred
in the ordinary course of business since March 31, 2006 consistent with past
practice or in connection with this Agreement or the transactions contemplated
hereby, or (iii) performance obligations under contracts required in accordance
with their terms, or performance obligations, to the extent required under
applicable laws, in each case to the extent arising after the date hereof, to
the Knowledge of the Company, neither the Company nor any of its Subsidiaries
has any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
financial statement or in the notes thereto.
(f) Off-Balance Sheet Arrangements. The Company and its
Subsidiaries have not effected any securitization transactions or "off-balance
sheet arrangements" (as defined in Item 303(c) of Regulation S-K of the SEC)
since the Company 2005 Audit Date. The Company has delivered or made available
to Purchaser copies of the documentation creating or governing all such all
securitization transactions and off-balance sheet arrangements.
(g) Loans to Executives and Directors. The Company has not,
since the effective date of SOX, extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer (or equivalent
thereof) of the Company in violation of SOX. The Company has not made any loan
or extension of credit to which the second sentence of Section 13(k)(I) of the
Exchange Act applies.
(h) Auditors. X.X. Xxxx LLP has not performed any non-audit
services for the Company and its Subsidiaries since the Company 2005 Audit Date.
There has been no change in the Company's accountants since the Company 2005
Audit Date. The Company has not been in any material disputes with X.X. Xxxx LLP
since the Company 2005 Audit Date, which, in any such case, were required to be
disclosed in the Company SEC Reports and were not so disclosed.
-15-
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as expressly required
or permitted by this Agreement or as set forth on Part 4.6 of the Company
Disclosure Memorandum, since March 31, 2006, there has not been:
(i) through the Signing Date, any Company Material
Occurrence;
(ii) any declaration, setting aside or payment of any
dividend (whether in cash, stock or property) with respect to any
Company Shares;
(iii) any (A) granting by the Company or any of its
Subsidiaries to any officer, employee or independent contractor of the
Company or any of its Subsidiaries of any increase in compensation or
payments, except in the ordinary course of business consistent with
prior practice, (B) granting by the Company or any of its Subsidiaries
to any such officer, employee or independent contractor of any increase
in severance or termination pay, (C) entry by the Company or any of its
Subsidiaries into any severance or termination agreement with any
director or officer or employee of the Company or any of its
Subsidiaries, or (D) entry by the Company or any of its Subsidiaries
into any employment, independent contractor or consulting agreement
with any director or officer or employee of the Company or any of its
Subsidiaries, except in the ordinary course of business consistent with
prior practice, subject to the following exceptions:
(x) except, in the case of any of such
clauses (A), (B), (C) or (D) above, as was required
under employment agreements with Key Officers
previously provided or made available to Purchaser,
and
(y) except, in the case of any of clauses
(B) and (C) above, for severance or termination
payments made in the ordinary course of business
consistent with past practice that did not or do not
exceed $10,000 for any individual or $200,000 in the
aggregate;
(iv) any amendment of any material term of any
outstanding equity security of the Company or any Subsidiary;
(v) any repurchase, redemption or other acquisition
by the Company or any Subsidiary of any outstanding shares of capital
stock or other equity securities of, or other ownership interests in,
the Company or any Subsidiary, except as contemplated by Company
Benefit Plans;
(vi) any material damage, destruction or other
property loss, whether or not covered by insurance;
(vii) any change in accounting methods, principles or
practices by the Company materially affecting its assets, liabilities
or business, except insofar as may have been required by a change in
GAAP or by applicable Laws;
(viii) any entry by either the Company or any
Subsidiary thereof into any transaction which was not in the ordinary
course of business;
-16-
(ix) any mortgage, pledge, sale, assignment or
transfer of any material tangible or intangible assets of the Company
or any Subsidiary thereof, except for obsolete assets or in the
ordinary course of business consistent with past practices;
(x) any resignation or termination of employment of
any Key Officer of the Company or any Subsidiary thereof and, to the
Company's Knowledge, there is not any impending resignation or
termination of employment of any such Key Officers;
(xi) any material change, except in the ordinary
course of business, in the contingent obligations of the Company or any
Subsidiary thereof (nor in any contingent obligation of the Company or
any Subsidiary thereof regarding any of its respective officers,
directors, employees, independent contractors or stockholders) by way
of guaranty, endorsement, indemnity, or warranty;
(xii) except for the expiration of any right or
Contract in accordance with its terms, any waiver or loss of any
material right of the Company or any Subsidiary thereof, or the
cancellation of any material debt, claim or Contract held by the
Company or any Subsidiary thereof (which for purposes of this Section
4.6 does not include any debt, claim or Contract with any holder of
Company Shares or Convertible Securities in their capacity as such, or
any Affiliate of the Company or Affiliate of any holder of Company
Shares or Convertible Securities in their capacity as such);
(xiii) any satisfaction or discharge of any Lien or
any payment of any obligation by the Company or any Subsidiary thereof,
except in the ordinary course of business and consistent with past
practices and which is not material to the Business, assets,
properties, operations or condition (financial or otherwise), or
results of operations of the Company or any Subsidiary thereof;
(xiv) any material reduction in the form or amount of
insurance coverage maintained by the Company or any Subsidiary;
(xv) any incurrence by either the Company or any
Subsidiary of any material liability or other material obligation,
except in the ordinary course of business;
(xvi) any material capital expenditures made by
either the Company or any Subsidiary, other than in the ordinary course
of business, and any commitments made by the Company or any Subsidiary
for any future material capital expenditure; or
(xvii) any agreements or commitments entered into by
the Company or any Subsidiary to take any actions identified under this
Section 4.6.
4.7 LITIGATION. Except as set forth on Part 4.7 of the Company
Disclosure Memorandum, there are no material actions, claims, suits, proceedings
or governmental investigations pending or, to the Knowledge of the Company,
threatened against the Company or any Subsidiary which could reasonably be
expected to result in a Company Material Occurrence or to materially adversely
affect the consummation of the transactions contemplated hereby. Neither the
Company nor any Subsidiary thereof is a party to or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or other
Governmental Authority which could reasonably be expected to result in a Company
Material Occurrence or to materially adversely affect the consummation of the
transactions contemplated hereby.
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4.8 INSURANCE.
(a) The Company has previously provided or made available to
Purchaser true and complete copies of all insurance policies maintained by the
Company and its Subsidiaries as of the Signing Date (including any exhibits,
schedules, riders or amendments thereof) (the "COMPANY INSURANCE POLICIES").
Each of the Company Insurance Policies is currently in full force and effect and
shall remain in full force and effect through the Effective Time. All premiums
on such Company Insurance Policies which are due have been paid through the
Signing Date. The Company has delivered to Purchaser copies of all reservation
of rights letters issued by any insurers of the Company and its Subsidiaries.
(b) The Company requires insurance coverage of each of the
Company Independent Contractors pursuant to the individual agreements with the
individual independent contractor drivers, specimens of which have been provided
to Purchaser.
4.9 TAXES.
(a) The Company and its Subsidiaries are members of an
affiliated group, within the meaning of Section 1504(a) of the Code, of which
the Company is the common parent; such affiliated group files a consolidated
federal income Tax Return.
(b) Each of the Company, its Subsidiaries and its former
Subsidiaries has filed or caused to be filed all Tax Returns required to have
been filed by or for it, and all information set forth in such Tax Returns is
correct and complete in all material respects.
(c) Each of the Company, its Subsidiaries and its former
Subsidiaries has paid all Taxes due and payable by it as shown on such Tax
Returns.
(d) Except as set forth on Part 4.9(d) of the Company
Disclosure Memorandum, there are no unpaid Taxes due and payable by the Company,
its Subsidiaries or its former Subsidiaries that are or could become a lien on
any asset of the Company, or otherwise materially adversely affect the business,
properties or financial condition of the Company or any of its Subsidiaries.
(e) Each of the Company and its Subsidiaries is in material
compliance with, and the records of each of them contain all information and
documents (including, without limitation, properly completed IRS Forms W-9)
necessary to comply with, all applicable Tax information reporting and Tax
withholding requirements.
(f) Except as set forth on Part 4.9(f) of the Company
Disclosure Memorandum, each of the Company and its Subsidiaries has collected or
withheld all amounts required to be collected or withheld by it for any Taxes,
and all such amounts have been paid to the appropriate Governmental Authority or
set aside in appropriate accounts for future payment when due.
-18-
4.10 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Except as set forth in the Company SEC Reports, the
Company does not maintain any Company Benefit Plans.
(b) All contributions and other payments required to have been
made by the Company or any Company ERISA Affiliate with respect to any Company
Benefit Plan (or to any Person pursuant to the terms thereof) have been or will
be timely made, and all such amounts properly accrued through the date of the
Company SEC Reports have been reflected therein.
(c) The terms of all Company Benefit Plans that are intended
to be "qualified" within the meaning of Section 401(a) of the Code have been
determined by the IRS to be so qualified or the applicable remedial periods will
not have ended prior to the Effective Time of the Merger. To the Company's
Knowledge, no event or condition exists or has occurred that could cause the IRS
to disqualify any Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code. With respect to each Company Benefit Plan, the
Company and each Company ERISA Affiliate are in compliance in all material
respects with, and each Company Benefit Plan and related source of benefit
payment is and has been operated in material compliance with, its terms, all
applicable laws, rules and regulations governing such plan or source, including,
without limitation, ERISA, the Code and applicable local Law. To the Knowledge
of the Company, no Company Benefit Plan is subject to any ongoing audit,
investigation, or other administrative proceeding of the IRS, the Department of
Labor, or any other federal, state, or local Governmental Authority or is
scheduled to be subject to such an audit investigation or proceeding.
(d) With respect to each Company Benefit Plan, to the
Knowledge of the Company, there exists no condition or set of circumstances that
could subject the Company or any Company ERISA Affiliate to any liability
arising under the Code, ERISA or any other applicable Law (including, without
limitation, any liability to or under any such plan or under any indemnity
agreement to which the Company or any Company ERISA Affiliate is a party). No
claim, action or litigation has been made, commenced or, to the Knowledge of the
Company, threatened, by or against any Company Benefit Plan or the Company or
any of its Subsidiaries with respect to any Company Benefit Plan (other than for
benefits in the ordinary course).
(e) No Company Benefit Plan that is a "welfare benefit plan"
(within the meaning of Section 3(1) of ERISA) provides benefits for any retired
or former employees (other than as required under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or other applicable state or
local Law that specifically mandates continued health coverage).
(f) Except as set forth in the Company SEC Reports and except
for the Company Change in Control Payments and except for accelerated vesting of
Company Options, there are no (i) payments (whether of severance pay or
otherwise) which will become due from the Company or any of its Subsidiaries,
which individually or in the aggregate are material, to any Company Beneficiary
or to the trustee under any "rabbi trust" or similar arrangement, or (ii)
material benefits under any Company Benefit Plan being established or increased,
or becoming accelerated, vested or payable, in either case as a result of the
commencement or announcement of the transaction contemplated by this Agreement.
-19-
(g) Neither the Company nor any entity that was at any time
during the six-year period ending on the Signing Date a Company ERISA Affiliate
has ever maintained, had an obligation to contribute to, contributed to, or had
any liability with respect to any plan that (A) is or was a pension plan (as
defined in Section 3(2) of ERISA) that is or was subject to Title IV of ERISA,
Section 412 of the Code or Section 302 of ERISA or (B) that is or was a
multiemployer plan (as defined in Section 414(f) of the Code or Sections 3(37)
or 4001(a)(31) of ERISA).
(h) Each Company Benefit Plan may be terminated or modified by
the Company or Purchaser without material liability to the Company, Purchaser or
any ERISA Affiliate of either, excluding liabilities attributable to
administrative costs or to acceleration of the vesting and exercisability of
Company Options.
(i) Neither the Company nor any of its Subsidiaries is a party
to any collective bargaining or other arrangement with any labor union.
4.11 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) The Company and each of its Subsidiaries is now in
compliance in all material respects with all Environmental Laws, and has been in
compliance in all material respects with Environmental Laws. The conduct of the
businesses of the Company and each of its Subsidiaries does not violate or
conflict with any Environmental Laws in any material respect.
(b) The Company and each of its Subsidiaries has obtained all
necessary Environmental Permits. The Environmental Permits are in full force and
effect, and are being complied with in all material respects. The Environmental
Permits are transferable and will remain in effect or will be replaced, renewed
or transferred as appropriate immediately following the Closing. No other
governmental authorizations are necessary for the day to day operations of the
Company and each of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has
received any formal complaint or notice from any Environmental Authority or any
other Person alleging any past or present violation of any Environmental Law in
connection with the operation of its business that is currently unresolved. As
of the Signing Date, to the Knowledge of the Company, there is no investigative
proceeding against the Company or any of its Subsidiaries by any Environmental
Authority in connection with the past or present operation of its business.
There are no pending claims under any Environmental Law against the Company or
any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has been
subject to any administrative or judicial enforcement action pursuant to any
Environmental Law either now or at any time during the past three years in
connection with the business of the Company and its Subsidiaries.
(e) Neither the Company nor or any of its Subsidiaries is
subject to any remedial obligation or other response action under a currently
issued and applicable administrative order, decree, or agreement pursuant to any
Environmental Law.
-20-
(f) To the Company's Knowledge, no Company Real Property or
real property currently or formerly owned, leased, operated or used by the
Company or any of its Subsidiaries (including real property used for off-site
disposal of any Regulated Material) is listed on any federal list of Superfund
or National Priorities List sites or similar governmental lists. To the
Company's Knowledge, there exist no circumstances that could result in any such
property being listed on any federal list of Superfund or National Priorities
List sites or similar governmental lists regarding waste sites at which there
has been a Release or threatened Release of Regulated Materials. To the
Company's Knowledge, none of the Company Real Property has been used at any time
by any Person as a hazardous waste treatment, storage or disposal site.
(g) To the Company's Knowledge, there are no (i) underground
storage tanks (as defined under the Resource Conservation and Recovery Act or
any equivalent Environmental Law), or (ii) capacitors, transformers or other
equipment or fixtures containing polychlorinated biphenyls ("PCBS") (other than
light fixtures which contain PCBs), located in, at, under or on the Company Real
Property.
(h) To the Company's Knowledge, there are no facts, actions,
activities, circumstances, conditions, occurrences, events, liabilities, or
incidents, including any Release, threatened Release, generation, use,
treatment, storage, disposal, arranging for disposal, transportation, or the
presence of Regulated Materials, that are likely to (i) result in any
environmental liability, (ii) prevent or interfere with the operation of the
Company's business as it is currently being conducted, in compliance with all
applicable Environmental Laws, (iii) materially affect the assets, business or
financial conditions of the Company or any of its Subsidiaries, or (iv)
adversely impact or affect the use of any Company Real Property.
(i) No property owned or used by the Company or any of its
Subsidiaries and located in the State of New Jersey is an "industrial
establishment" within the meaning of ISRA or is or has been used by the Company
or any of its Subsidiaries (or, to the Company's Knowledge, by any other Person)
for the generation, manufacture, refining, transportation, treatment, storage,
handling or disposal of any "hazardous substances" or "hazardous wastes" within
the meaning of ISRA. There is no North American Industry Classification System
code applicable to the properties and operations of the Company or any of its
Subsidiaries which is subject to ISRA.
4.12 INTELLECTUAL PROPERTY. Except as set forth on Part 4.12 of the
Company Disclosure Memorandum:
(a) Prior to the Signing Date, the Company has delivered or
made available to Purchaser true and correct copies of (i) all registered
service marks which are material to the business of the Company and its
Subsidiaries as currently conducted, taken as a whole ("COMPANY INTELLECTUAL
PROPERTY") and (ii) all written agreements relating to software which the
Company or its Subsidiaries is licensed or authorized by third parties to use
and which are material to the business of the Company and its Subsidiaries as
currently conducted, taken as a whole ("COMPANY SOFTWARE"). Neither the Company
nor any of its Subsidiaries has any material patents or rights or owned
software, nor have any of them granted any third parties any license to use any
Company Intellectual Property.
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(b) As of the Signing Date, (i) the Company or a Subsidiary of
the Company is the owner of, or a licensee under a valid license for, all
Company Intellectual Property and Company Software, and (ii) there were no
claims pending or, to the Company's Knowledge, threatened, that the Company or
any Subsidiary was in violation of any such intellectual property rights of any
third party.
4.13 COMPLIANCE WITH LAWS AND ORDERS. Except with respect to the
matters described in Sections 4.9, 4.10 and 4.11, neither the Company nor any
Subsidiary is in violation of or in default under any law, statute, rule or
regulation having the effect of law of the United States or any state, county,
city or other political subdivision thereof or of any government or regulatory
authority ("LAWS") or writ, judgment, decree, injunction or similar order of any
Governmental Authority, in each case, whether preliminary or final (an "ORDER"),
applicable to the Company or any Subsidiary or any of their respective assets
and properties the effect of which, individually, or in the aggregate with other
such violations and defaults, could reasonably be expected to have a Company
Material Occurrence. The Company is in compliance with all listing and corporate
governance requirements of the American Stock Exchange ("AMEX"), and since the
enactment of SOX, has been and is in compliance in all material respects, and
will continue to remain in compliance following the effective time, in all
material respects, with all applicable rules, regulations, and requirements of
SOX and the SEC.
4.14 CERTAIN AGREEMENTS.
(a) Neither the Company nor any of its Subsidiaries is a party
to any oral or written agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement, except (i) as expressly required or permitted by this Agreement, (ii)
for accelerated vesting of Company Options, and (iii) for the Company Change in
Control Payments.
(b) The transactions contemplated by this Agreement will not
constitute a "change of control" under, require the consent from or the giving
of notice to any third party pursuant to, or accelerate the vesting of or lapse
of repurchase rights or other rights under, the terms, conditions or provisions
of any loan or commitment letter, note, bond, mortgage, indenture, license, or
any material lease, contract, agreement or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which any of them
or any of their properties or assets may be bound, except (i) for the Company
Change in Control Payments, (ii) for the Company's repayment in full its credit
facility with Bank of America, (iii) for any payment required to be made to the
holders of the Company Series A Preferred pursuant to the Company's Certificate
of Incorporation, and (iv) for acceleration of principal and interest due under
any of the Seller Notes or Company Notes; provided, however, that the Company
makes no representation as to the effect on the consummation of the Merger and
the other transactions contemplated by this Agreement on any real estate lease
or equipment lease.
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(c) There are no amounts payable by the Company or its
Subsidiaries to any officers of the Company or its Subsidiaries (in their
capacity as officers) as a result of the transactions contemplated by this
Agreement and/or any subsequent employment termination, except for the Company
Change in Control Payments.
4.15 BROKERS AND FINDERS. The Company has not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or other fee or commission in connection
with this Agreement or the transactions contemplated hereby, except that the
Company has employed Scura Rise & Partners, LLC, as its financial advisor, and
Xxxxxx X. Xxxxxx III, as a consultant, pursuant to agreements with Purchaser,
true and correct copies of which have been furnished to Purchaser.
4.16 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of Scura Rise & Partners, LLC, dated as of June 26, 2006, to the effect that, as
of such date, the Merger Consideration to be received by the common stockholders
of the Company pursuant to the Merger, taking into account the amount and form
of consideration and taking into account the consideration to be received by
securityholders of the Company pursuant to the Securities Purchase Agreements,
is fair to such common stockholders from a financial point of view.
4.17 CUSTOMERS AND SUPPLIERS. Except as set forth on Part 4.17 of the
Company Disclosure Memorandum, neither the Company nor any Subsidiary thereof
has received any notice, nor does the Company have any Knowledge, that any
material customer or supplier of the Company or any Subsidiary thereof has taken
or contemplates taking, any steps that would be reasonably likely to disrupt the
business relationship of the Company with such material customer or supplier, or
could result in a Company Material Occurrence other than such steps that might
result from the announcement of this transaction.
4.18 NO DEFAULT. Except as set forth on Part 4.18 of the Company
Disclosure Memorandum, neither the Company nor any of its Subsidiaries is in
material breach, default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a material breach, default
or violation) of any term, condition or provision of (i) its Certificate of
Incorporation or Bylaws (or similar governing documents), or (ii) any Law
applicable to the Company or its Subsidiaries or any of their respective
properties or assets.
4.19 MATERIAL CONTRACTS. The Company has delivered or made available to
Purchaser a true and complete copy of each written Contract that is of a type
described below (collectively, the "COMPANY MATERIAL CONTRACTS"):
(a) any Contract for capital expenditures or the acquisition
or construction of fixed assets in excess of $250,000.00 per annum;
(b) any Contract for the purchase or lease of goods or
services (including without limitation, equipment, materials, software,
hardware, supplies, merchandise, parts or other property, assets or services),
requiring aggregate future payments in excess of $250,000.00 per annum, other
than standard inventory purchase orders executed in the ordinary course of
business;
(c) any Contract relating to the borrowing of money or
guaranty of indebtedness;
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(d) any collective bargaining or other arrangement with any
labor union;
(e) any Contract granting a first refusal, first offer or
similar preferential right to purchase or acquire any of the Company's capital
stock or assets;
(f) any Contract limiting, restricting or prohibiting the
Company from conducting business anywhere in the United States or elsewhere in
the world or any Contract limiting the freedom of the Company to engage in any
line of business or to compete with any other Person;
(g) any joint venture or partnership Contract;
(h) any written employment Contract, severance agreement or
other similar binding agreement or policy with any officer or employee; and
(i) any Contracts requiring future payments of $250,000.00 or
more per annum which are not otherwise described in clauses (a) though (h)
above.
The Company has also delivered or made available to Purchaser a copy of the
Company's form of independent contractor agreement. Each Company Material
Contract is a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject only to bankruptcy,
reorganization, receivership or other laws affecting creditors' rights generally
and general principles of equity (whether applied in an action at law or in
equity). The Company is in compliance with all obligations required to be
performed by it under the Company Material Contracts, and the Company is not
and, to the Knowledge of the Company, no other party to a Company Material
Contract is, in breach or default thereunder in any material respect. Each
Contract of the Company that is a "material contract" as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC has been filed in the Company SEC
Reports prior to the date hereof. The Company is not a party to any written or
oral customer contract with revenues of over $150,000 per year which requires
the Company to pay any material penalty upon termination of such contract.
4.20 STATE TAKEOVER STATUTES; ANTI-TAKEOVER PROVISIONS. The Company has
taken all actions with respect to any anti-takeover provisions of the Company's
Bylaws or Certificate of Incorporation or applicable provisions of the DGCL
necessary to enter into and consummate the Merger on the terms set forth in this
Agreement.
4.21 TRANSACTIONS WITH AFFILIATES. The Company's Material Contracts
(other than employment or consulting related Contracts or the Company
Stockholders Agreement) do not include any obligation or commitment between the
Company and (i) any employee of the Company, (ii) to the Knowledge of the
Company, any stockholder of the Company beneficially owning 5% or more of the
Company Common Stock, (iii) any Person that directly or indirectly controls, is
controlled by or is under common control with the Company, or (iv) any member of
the immediate family of any of the foregoing Persons (each, a "COMPANY
AFFILIATE"). The assets of the Company do not include any receivable or other
obligation or commitment from a Company Affiliate to the Company.
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4.22 LICENSES.
(a) The Company has delivered or made available to Purchaser a
true and complete copy of all material licenses, permits approvals,
certificates, titles, fuel permits, franchises, operating authorizations
(including without limitation any necessary operating authorizations from the
Federal Motor Carrier Safety Administration or Department of Transportation),
state operating licenses or registrations and other interstate or intrastate
regulatory licenses or authorizations required for the operation of the business
of the Company and its Subsidiaries (the "LICENSES"). Each of the Licenses is in
full force and effect, and there are no pending modifications, amendments or
revocation proceedings for any of the Licenses which would materially adversely
affect the operations of the Company.
(b) All material fees due and payable to Governmental
Authorities pursuant to the rules governing the Licenses have been paid and, to
the Company's Knowledge, no event has occurred with respect to the Licenses held
by the Company which, with the giving of notice or the lapse of time or both,
would constitute grounds for revocation thereof. The Company is in compliance in
all material respects with the terms of the Licenses, as applicable, and there
is no condition, event or occurrence existing, nor is there any proceeding being
conducted of which the Company has received notice, nor, to the Company's
Knowledge, is there any proceeding threatened, by any Governmental Authority
(including without limitation the Federal Motor Carrier Safety Administration or
Department of Transportation), which would cause the termination, suspension,
cancellation or nonrenewal of any of the Licenses, or the imposition of any
penalty or fine.
4.23 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company in writing for inclusion or incorporation by reference
in the Proxy Statement will, at the date the Proxy Statement is first mailed to
the Company's stockholders or, except as set forth in any amendments or
supplements to the Proxy Statement filed with the SEC and timely mailed to the
Company's stockholders, at the time of the Company Stockholders Meeting contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, as it relates to the Company Stockholders
Meeting, will comply as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Purchaser for inclusion or incorporation by reference therein.
4.24 TITLE TO AND CONDITION OF ASSETS.
(a) Each of the Company and its Subsidiaries has good title
to, or valid licenses to or leasehold interests in, all of the material
properties and assets used by them in connection with their businesses, except
for minor defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate do not and will not
materially interfere with its ability to conduct its business as currently
conducted. All such assets and properties, other than assets and properties in
which the Company or any of the Subsidiaries has leasehold interests, are free
and clear of all Liens, except for such Liens, that, in the aggregate, do not
and will not materially interfere with the ability of the Company or any of its
Subsidiaries to conduct its business as currently conducted.
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(b) Each of the Company and each of its Subsidiaries has
complied in all material respects with the terms of all leases to which it is a
party and under which it is in occupancy, and all such leases are in full force
and effect, except for such invalidity as would not, individually or in the
aggregate, reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole, and except that the Company makes no
representation here or elsewhere in this Agreement as to the effect of the
consummation of the Merger and the other transactions contemplated by this
Agreement on such leases. Each of the Company and each of its Subsidiaries
enjoys peaceful and undisturbed possession under all such leases.
4.25 REAL PROPERTY.
(a) Neither the Company nor any Subsidiary thereof owns, or
has at any time owned (in the case of a Subsidiary, since the Company's
acquisition thereof), any real property.
(b) Each parcel or tract of real property that is used or
occupied by the Company or any Subsidiary thereof (the "COMPANY REAL PROPERTY")
is subject to a written lease or sublease to which the Company or any Subsidiary
thereof is a party as lessee or sublessee (individually a "REAL PROPERTY
LEASE"). All such Real Property Leases are valid and in full force and effect in
accordance with their terms, except for such invalidity as would not,
individually or in the aggregate, reasonably be expected to be material to the
Company and its Subsidiaries, taken as a whole, and except that the Company
makes no representation (here or in any other section dealing with required
consents) as to the effect of the consummation of the Merger and the other
transactions contemplated by this Agreement on such leases. The Company has
previously furnished or made available to Purchaser true, correct and complete
copies of all Real Property Leases. There is not, with respect to any Real
Property Lease (i) any material default by the Company or any Subsidiary
thereof, or any event of default or event which with notice or lapse of time, or
both, would constitute a material default by the Company or any Subsidiary
thereof, or (ii) to the Knowledge of the Company, any existing material default
by any other party to any Real Property Lease, or event of default or event
which with notice or lapse of time, or both, would constitute a material default
by any other party to any Real Property Lease.
(c) No options have been granted by the Company to others to
purchase, lease or otherwise acquire any interest in the Company Real Property
or any part thereof. Except as set forth in the applicable Real Property Lease,
the Company and its Subsidiaries have the exclusive right of possession of the
Company Real Property.
(d) To the Company's Knowledge, the present use, occupancy and
operation of the Company Real Property, and all aspects of the improvements to
the Company Real Property are in compliance, in all material respects, with all
Laws, the applicable Real Property Lease and private restrictive covenants of
record, and, there has not been any proposed change thereto that would affect
any of the Company Real Property or its use, occupancy or operation. All
improvements on the real property are in good condition and repair, and are
suited for the operation of the business of the Company and its Subsidiaries as
it currently is conducted.
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4.26 COMPANY INDEPENDENT CONTRACTORS. The Company is not a party to any
agreement with any Company Independent Contractor who employs or represents more
than ten (10) other drivers, couriers and/or operators.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO
To induce the Company to enter into and perform this
Agreement, Purchaser and Newco hereby represent and warrant to the Company that
each of the representations, warranties and statements in the following
paragraphs of this Article V is true and correct as of the Signing Date and will
be true and correct as of the Effective Time:
5.1 CORPORATE ORGANIZATION AND QUALIFICATION. Each of Purchaser and
Newco is a corporation duly organized, validly existing and in good standing
under the laws of Delaware.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Purchaser and Newco
has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and the consummation by Purchaser and Newco of the transactions contemplated
hereby have been duly and validly authorized by the respective Boards of
Directors of Purchaser and Newco. No other corporate proceedings on the part of
Purchaser and Newco or their stockholders are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of Purchaser and Newco
and, assuming this Agreement constitutes the valid and binding agreement of the
Company, constitutes the valid and binding agreement of each of Purchaser and
Newco, enforceable against each of them in accordance with its terms, except
that such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
5.3 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Neither the execution and delivery of this Agreement by
Purchaser or Newco nor the consummation by Purchaser and Newco of the
transactions contemplated hereby will:
(i) conflict with or result in any breach of any
provision of the Certificate of
Incorporation or the Bylaws, as amended, respectively, of Purchaser or Newco;
(ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, except
(A) if any, pursuant to the applicable requirements of the Exchange Act and the
Securities Act, (B) the filing of the certificate of merger pursuant to the DGCL
and appropriate documents with the relevant authorities of other states in which
Purchaser is authorized to do business, (C) as may be required by any applicable
state securities or "blue sky" laws or state takeover laws, (D) such filings and
consents as may be required under any environmental, health or safety Law
pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement, (E) where the failure
to obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not, individually or in the aggregate, reasonably
be expected to have a Purchaser Material Occurrence or materially adversely
affect the consummation of the transactions contemplated hereby or (F) such
filings, consents, approvals, orders, registrations and declarations as may be
required as a result of the status or identity of the Company;
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(iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or lien or
other charge or encumbrance) under any of the terms, conditions or provisions of
any note, license, agreement or other instrument or obligation to which
Purchaser or any of its Subsidiaries or any of their assets may be bound, except
for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or lien or other charge or encumbrance) as to which
requisite waivers or consents have been obtained or which individually or in the
aggregate materially adversely affect the consummation of the transactions
contemplated hereby or reasonably be expected to result in a Purchaser Material
Occurrence; or
(iv) assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in this Section 5.3 are duly
and timely obtained or made, violate any material order, writ, injunction,
decree, statute, rule or regulation applicable to Purchaser or any of its
Subsidiaries or to any of their respective assets.
(b) The affirmative vote of Purchaser as the sole holder of
voting capital stock of Newco is the only vote of the holders of any class or
series of Purchaser's or its Subsidiaries' securities necessary to approve this
Agreement and the transactions contemplated hereby.
5.4 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Purchaser for inclusion or incorporation by reference in the Proxy
Statement will, at the date the Proxy Statement is first mailed to the Company's
stockholders or, except as disclosed in any amendments or supplements to the
Proxy Statement filed with the SEC and timely mailed to the Company's
stockholders, at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
5.5 LITIGATION. As of the Signing Date, there are no actions, claims,
suits, proceedings or governmental investigations pending or, to the Knowledge
of Purchaser, threatened against Purchaser or any of its Subsidiaries which
question the validity of this Agreement or any action taken or to be taken in
connection herewith or which could adversely affect the ability of Purchaser to
consummate the transactions contemplated by this Agreement. Neither Purchaser
nor any Subsidiary thereof is a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or other Governmental
Authority which would reasonably be expected to materially and adversely affect
Purchaser's ability to consummate the transactions contemplated by this
Agreement.
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5.6 CAPITAL RESOURCES. As of the Closing, in addition to funds
deposited with the Paying Agent pursuant to Section 3.4(a), Purchaser will have
funds that are sufficient to (i) make the payments required under Section
7.2(b), (ii) operate its business as currently contemplated after giving effect
to the Merger and the other transactions contemplated by this Agreement, and
(iii) to pay its debts as they become due.
5.7 NO DEFAULT. Neither Purchaser nor any of its Subsidiaries is in
breach, default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a breach, default or violation) of any
term, condition or provision of (i) its Certificate of Incorporation or Bylaws
(or similar governing documents), (ii) any Law applicable to Purchaser or its
Subsidiaries or any of their respective properties or assets or (iii) any
material agreement to which it is a party or by which it is bound, in each case
for clauses (i)-(iii) above except for such breach, default or violation that
would not, individually or in the aggregate, reasonably be expected to adversely
effect Purchaser's ability to consummate the transactions contemplated by this
Agreement.
ARTICLE VI --
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 CONDUCT OF BUSINESS OF THE COMPANY. The Company agrees that during
the period from the Signing Date to the Effective Time (unless Purchaser shall
otherwise agree in writing and except as otherwise contemplated by this
Agreement), the Company will, and will cause each of its Subsidiaries to,
conduct its operations according to its ordinary and usual course of business
consistent with past practice and, to the extent consistent therewith, with no
less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organizations, keep
available the service of its current officers, employees and independent
contractors and preserve its relationships with customers, suppliers and others
having business dealings with it. Without limiting the generality of the
foregoing, and except as otherwise permitted in this Agreement, or as Purchaser
shall otherwise agree in writing, neither the Company nor any of its
Subsidiaries will, without the prior written consent of Purchaser, which shall
not be unreasonably withheld, delayed or conditioned:
(a) (except for shares of Company Common Stock to be issued or
delivered pursuant to (i) the Company Option Plans with respect to the exercise
of options, (ii) the conversion of Company Series A Preferred, (iii) the
exercise of Company Warrants, (iv) the conversion of Company Notes, or (v) the
conversion of Seller Notes (to the extent convertible), which in each case are
outstanding on the Signing Date and, in each case, together with any Company
Rights issued in respect thereof and initially attached thereto) issue, deliver,
sell, dispose of, pledge or otherwise encumber, or authorize or propose the
issuance, sale, disposition or pledge or other encumbrance of (x) any additional
shares of capital stock of any class (including the Company Shares), or any
Convertible Securities (including issuances pursuant to any of the Company
Option Plans or the ESPP), or (y) any other securities in respect of, in lieu
of, or in substitution for, Company Shares outstanding on the Signing Date;
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(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding Company Shares or
any other outstanding Convertible Securities, provided that the Company may
repurchase outstanding stock options in accordance with the terms of the Company
Option Plans;
(c) split, combine, subdivide or reclassify any Company Shares
or Convertible Securities or declare, set aside for payment or pay any dividend,
or make any other actual, constructive or deemed distribution in respect of any
Company Shares or Convertible Securities or otherwise make any payments to
securityholders in their capacity as such, except for dividends by a wholly
owned Subsidiary of the Company to the Company;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries not constituting an
inactive Subsidiary (other than the Merger);
(e) adopt any amendments to its Certificate of Incorporation
or Bylaws or alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of any Subsidiary not
constituting an inactive Subsidiary of the Company, except as expressly required
or permitted by this Agreement;
(f) make any material divestiture or acquisition, by means of
merger, consolidation or otherwise, or material disposition, of assets or
securities;
(g) incur any indebtedness for borrowed money or guarantee any
such indebtedness, except for (i) indebtedness for borrowed money incurred in
the ordinary course of business and consistent with past practice, (ii)
indebtedness for borrowed money in replacement of existing indebtedness for
borrowed money on customary commercial terms, or (iii) guarantees by the Company
of indebtedness of wholly-owned Subsidiaries of the Company or guarantees by
Subsidiaries of indebtedness of the Company (provided that all such guaranteed
indebtedness, together with the indebtedness of the Company and its Subsidiaries
incurred pursuant to clause (i) above, was incurred in the ordinary course of
business and consistent with past practice);
(h) make any loans, advances or capital contributions to, or
investments in, any other Person, other than to the Company or any wholly owned
Subsidiary of the Company in excess of $250,000 in the aggregate;
(i) grant any increases in the compensation of any of its
directors, officers or employees, except (i) in the ordinary course of business
and consistent with past practice, (ii) as required under any Company Benefit
Plan in effect on the Signing Date and set forth in the Company SEC Reports,
(iii) as required under any written severance, termination or employment
agreement in effect on the Signing Date, copies of which have been provided or
made available to Purchaser prior to the Signing Date, or (iv) to the extent
reflected in the Company Change in Control Payments;
(j) pay or agree to pay any pension, retirement allowance or
other employee benefit not required or contemplated by any of the existing
benefit, severance, termination, pension or employment plans, agreements or
arrangements as in effect on the Signing Date and provided or made available to
Purchaser prior to the Signing Date;
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(k) except as expressly provided by this Agreement, enter into
any new or materially amend any existing employment or severance or termination
agreement with any director, officer or employee;
(l) except as may be required to comply with applicable Law,
become obligated under any new pension plan, welfare plan, multiemployer plan,
employee benefit plan, severance plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the Signing Date, or amend any such
plan or arrangement in existence on the Signing Date if such amendment would
have the effect of materially enhancing any benefits thereunder;
(m) make or agree to make any material capital expenditures or
material commitments not in the ordinary course of business and consistent with
past practice;
(n) take any action or fail to take any action which could
reasonably be expected to result in any of the covenants or conditions to the
Merger set forth in Article VII not being satisfied; or
(o) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
6.2 NO SOLICITATION OF TRANSACTIONS.
(a) The Company agrees that, as of the Signing Date, it has,
and has caused each officer, director or employee of, or any investment banker,
attorney or other advisor or representative of the Company or any Subsidiary
(the "COMPANY REPRESENTATIVES"), to immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Third Party
conducted heretofore with respect to any Competing Transaction. The Company
shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any Company Representatives to:
(i) solicit or initiate, or knowingly encourage or
facilitate, directly or indirectly, any inquiries relating to, or the submission
of, any proposal or offer, whether in writing or otherwise, from any Person
other than Purchaser, Newco or any affiliates thereof (a "THIRD PARTY") to
acquire beneficial ownership (as defined under Rule 13(d) of the Exchange Act)
of all or more than 10% of the assets of the Company and its Subsidiaries, taken
as a whole, or 10% or more of any class of equity securities of the Company
pursuant to a merger, consolidation or other business combination, sale of
shares of stock, sale of assets, tender offer, exchange offer or similar
transaction or series of related transactions, which is structured to permit
such Third Party to acquire beneficial ownership of more than 10% of the assets
of the Company and its Subsidiaries, taken as a whole, or 10% or more of any
class of equity securities of the Company (a "COMPETING TRANSACTION");
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(ii) participate in any discussions or negotiations
regarding, or furnish to any Person any information or data with respect to or
access to the properties of, or take any other action to knowingly facilitate
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Competing Transaction;
(iii) enter into any agreement with respect to any
Competing Transaction, approve or recommend or resolve to approve or recommend
any Competing Transaction or enter into any agreement requiring it to abandon,
terminate or fail to consummate the Merger and the other transactions
contemplated by this Agreement.
(b) Notwithstanding paragraph (a) above, if the Company
receives a bona fide, unsolicited, written proposal or offer for a Competing
Transaction by a Third Party, which the Board of Directors determines in good
faith (after consulting its independent financial advisor) (i) will result in,
or is reasonably likely to lead to, terms which are more favorable to the
holders of Company Shares than the Merger and the other transactions
contemplated by this Agreement and, after consultation with counsel, determines
in good faith that failure to take an action otherwise prohibited under
paragraph (a) above would result in a breach of its fiduciary duties under
applicable laws, (ii) is reasonably capable of being consummated (provided that
the Company, including the Board of Directors, and any of its advisors shall be
permitted to contact such Third Party and its advisors solely for the purpose of
clarifying the proposal and any material contingencies and the capability of
consummation), and (iii) is subject to a confidentiality agreement with such
Third Party on terms no less favorable to the Company, in all material respects,
than the confidentiality agreement with Purchaser (each as amended or restated,
a "SUPERIOR COMPETING TRANSACTION"), then the Company may, in response to an
unsolicited request therefor and subject to compliance with Section 6.2(d),
furnish information with respect to the Company and its Subsidiaries to and
participate in discussions and negotiations directly or through its
representatives with, such Third Party, provided that the Company shall have
delivered to Purchaser prior written notice that it intends to take such action.
(c) Notwithstanding anything in this Agreement to the
contrary, the Board of Directors (including any committee thereof) shall be
permitted to (A) withhold, withdraw or modify in a manner adverse to Purchaser,
or publicly propose to withhold, withdraw or modify in a manner adverse to
Purchaser, its recommendation to the holders of the Company Shares as a result
of any Competing Transaction, or (B) adopt or recommend, or propose publicly to
adopt or recommend, any Competing Transaction (any action described in either
clause (A) or (B) or in paragraph (h) below being referred to as a "COMPANY
ADVERSE RECOMMENDATION CHANGE") and, concurrently therewith or thereafter, enter
into any letter of intent, memorandum of understanding, agreement in principle,
merger agreement, acquisition agreement, option agreement, joint venture
agreement, partnership agreement or other similar contract constituting or
related to any Competing Transaction, but only if (i) a Third Party submits an
unsolicited Competing Transaction that the Board of Directors determines, in its
good faith judgment, is reasonably likely to result in a Superior Competing
Transaction and after consultation with counsel, determines that failure to take
such action would result in a breach of fiduciary duties under applicable Laws,
(ii) the Company shall have delivered to Purchaser prior written notice that it
intends to take such action, including therein the identity of such Third Party
and the terms and conditions of such Competing Transaction, (iii) seven (7)
business days have elapsed following delivery to Purchaser of written notice of
such prior written notice and during such seven (7) business day period the
Company has given Purchaser reasonable opportunity to discuss with the Company
the Competing Transaction and any proposed amendments to this Agreement, and
(iv) at the of end such seven (7) business day period the Board of Directors
determines in good faith that the Competing Transaction continues to be
reasonably likely to result in a Superior Competing Transaction (taking into
consideration any modifications to the terms hereof proposed by Purchaser),
after consultation with its counsel and its independent financial advisor.
Nothing contained in this Agreement shall prevent the Company or the Board of
Directors from complying with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act or from making any disclosure to the stockholders of the Company
that is required by applicable Laws.
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(d) The Company shall promptly advise Purchaser orally and in
writing of (i) any Competing Transaction or any inquiry with respect to or which
could reasonably be expected to lead to any Competing Transaction received by
any officer or director of the Company or, to the Knowledge of the Company, any
financial advisor, attorney or other advisor or representative of the Company;
(ii) the identity of the Third Party submitting such Competing Transactions or
making such inquiry; and (iii) the material terms and conditions of such
Competing Transaction. The Company will keep Purchaser reasonably informed on a
current basis of the status and details of any such Competing Transaction
(including amendments and proposed amendments) proposal or inquiry in a timely
manner.
(e) Purchaser and Newco agree and covenant that, in the event
that a vote or consent of the Company's stockholders is required in connection
with the approval of any Superior Competing Transaction, then:
(i) the total amount of Company Shares owned (of
record or beneficially) by Purchaser Companies which are voted against
any Superior Competing Transaction shall represent no more than twenty
five percent (25%) of the issued and outstanding voting stock of the
Company which are entitled to vote in respect of such Superior
Competing Transaction as of the date of such stockholder vote; and
(ii) all Company Shares which are owned (of record or
beneficially) by Purchaser Companies, which are entitled to vote in
respect of such Superior Competing Transaction and which are not voted
against such Superior Competing Transaction (the "PROXY SHARES") shall
be voted for or voted against such Superior Competing Transaction, or
abstained or not voted, in a manner which emulates the percentages of
votes, abstentions and failures to vote by all of the other holders of
all Company Shares which are entitled to vote in respect of such
Superior Competing Transaction (the "EMULATED SHARES"). For example, if
40% of the Emulated Shares voted in favor of the Superior Competing
Transaction, 20% of the Emulated Shares voted against the Superior
Competing Transaction, and 40% of the Emulated Shares abstained or not
voted, then 40% of the Proxy Shares must be voted in favor of the
Superior Competing Transaction, 20% of the Proxy Shares must be voted
against the Superior Competing Transaction, and 40% of the Proxy Shares
must be abstained or not voted.
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(f) Purchaser hereby waives, and agrees not to assert and to
cause all Purchaser Companies not to assert, any appraisal rights any of the
Purchaser Companies may have under the DGCL with respect to any Company Shares
owned (of record or beneficially) by them in connection with a Superior
Competing Transaction, provided that such waiver and agreements not to assert
are conditioned upon and subject to the Company's compliance with Section
8.5(d).
(g) Purchaser hereby irrevocably appoints and constitutes the
Secretary of the Company (the "PROXYHOLDER") as the agent, attorney and proxy of
the Purchaser with respect to the Proxy Shares solely for purposes of causing
the Proxyholder to vote the Proxy Shares as set forth in Sections 6.2(e)(ii)
above and 6.11 below. The Proxyholder may not exercise such proxy rights with
respect to any other matter. Such proxy rights shall be deemed coupled with an
interest and are irrevocable prior to the termination of this Agreement;
provided, however, that if this Agreement is terminated pursuant to Sections 8.3
or 8.4 hereof, then such proxy rights shall survive the termination of this
Agreement solely with respect to votes in respect of the Superior Competing
Transaction giving rise to such termination.
(h) Notwithstanding anything in this Agreement to the
contrary, in the absence of a Competing Transaction, the Board of Directors
(including any committee thereof) shall be permitted to make a Company Adverse
Recommendation Change if the Board of Directors determines in good faith, after
consultation with counsel, that failure to take such action would result in a
breach of its fiduciary duties under applicable laws.
6.3 REASONABLE EFFORTS. Subject to the terms and conditions herein
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including using its reasonable efforts to (i)
take all acts necessary to cause the conditions to Closing to be satisfied as
promptly as practicable, (ii) obtain all necessary or appropriate waivers,
consents and approvals, (iii) effect all necessary registrations, filings and
submissions (including, but not limited to, such filings, consents, approvals,
orders, registrations and declarations as may be required under the laws of any
foreign country in which the Company or any of its Subsidiaries conducts any
business or owns any assets), and (iv) lift any injunction or other legal bar to
the Merger (and, in such case, to proceed with the Merger as expeditiously as
possible), subject, however, to the Company Stockholder Approval.
Notwithstanding the foregoing, the Company shall not be obligated to use its
reasonable efforts or take any action pursuant to this Section 6.3 if in the
good faith opinion of the Board of Directors in accordance with Section 6.2
after consultation with its counsel such actions might be inconsistent with its
fiduciary duties to the Company's stockholders under applicable Law.
6.4 ACCESS TO INFORMATION; SOLICITATION OF EMPLOYEES.
(a) Access to Information. Upon reasonable prior notice, each
party shall (and shall cause each of its Subsidiaries to) afford to officers,
employees, consultants, counsel, accountants, financial advisors, insurance
advisors and other authorized representatives of any other party
("REPRESENTATIVES"), in order to evaluate the transactions contemplated by this
Agreement, full and free access, during normal business hours and upon
reasonable notice throughout the period prior to the Effective Time, to its
properties, books and records and, during such period, shall (and shall cause
each of its Subsidiaries to) furnish or make available reasonably promptly to
such Representatives all information concerning its business, properties,
personnel, contracts, books and records, and other information and data
(including, without limitation, by (i) furnishing copies of the Company's
contracts, plans, and other books, records and correspondence (including
electronic books, records and correspondence); (ii) granting full access to the
Company's tracking systems and all hardware or software related thereto; (iii)
by granting reasonable access to the Company's Representatives; and (iv)
granting reasonable access to the Company's customers and vendors and the
Company Independent Contractors, provided that the foregoing shall not authorize
Purchaser to contact any such customer, vendor or Company Independent Contractor
without first receiving clearance from the Company (which clearance shall not be
unreasonably withheld, delayed or conditioned) and without offering the Company
an opportunity to jointly participate)) as may reasonably be requested;
provided, however, that a party shall not be required to (or to cause any of its
Subsidiaries to) so afford such access or furnish or make available such
information to the extent that doing so would result in the loss of
attorney-client privilege (provided that such party shall use its reasonable
efforts to allow for such access or disclosure in a manner that does not result
in a loss of attorney-client privilege). Each party agrees that it will not, and
will cause its Representatives not to, use any information obtained pursuant to
this Section 6.4 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Each of the confidentiality
agreements dated October 22, 2004 and March 29, 2005, respectively, by and
between the Company and Purchaser, as amended (collectively, the
"CONFIDENTIALITY AGREEMENTS") shall apply with respect to information furnished
by each party, its Subsidiaries and its Representatives to the other hereunder.
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(b) Solicitation of Employees. Notwithstanding the terms of
the Confidentiality Agreements, Purchaser and the Company agree that until the
earlier of the consummation of this Agreement or the one-year anniversary of the
date of termination of this Agreement, as applicable, each party and its
respective Subsidiaries shall not, without the other party's prior written
consent, directly or indirectly solicit for employment (other than through
advertising in newspapers or periodicals of general circulation or recruiters'
searches, in each case not specifically directed at the employees of the other
party or its Subsidiaries) any person currently employed by the other party or
any of its Subsidiaries with whom it has contact or who is identified to such
party in connection with the transactions contemplated by this Agreement.
6.5 PUBLICITY. Except with respect to any Company Adverse
Recommendation Change, neither the Company nor Purchaser will cause or permit
the issuance of any press release or public announcement pertaining to this
Agreement and the Merger without the prior approval of the other party, which
approval shall not be unreasonably conditioned, delayed or withheld; provided,
however, that such approval shall not be required for such press releases or
public announcements as may be required by applicable Law or by obligations
pursuant to any agreement with any national securities exchange or automated
quotation system, provided that the party proposing to issue such press release
or make such public announcement shall consult in good faith with the other
party before issuing any such press release or making any such public
announcement.
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6.6 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) In the event of any threatened or actual claim, action,
suit, demand, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
demand, proceeding or investigation in which any Person who is now, or has been
at any time prior to the Signing Date, or who becomes prior to the Effective
Time, a director, officer, employee, fiduciary or agent of the Company or any
Subsidiary of the Company (the "INDEMNIFIED PARTIES") is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to:
(i) the fact that he is or was a director, officer,
employee, fiduciary or agent of the Company or any Subsidiary of the
Company, or is or was serving at the request of the Company or any
Subsidiary of the Company as a director, officer, employee, fiduciary
or agent of another corporation, partnership, joint venture, trust or
other enterprise; or
(ii) the negotiation, execution or performance of
this Agreement or any of the transactions contemplated hereby, whether
in any case asserted or arising before or after the Effective Time,
the parties hereto agree to cooperate and use their commercially reasonable
efforts to defend against and respond thereto.
(b) The parties further acknowledge and agree that: (i) the
Company shall indemnify and hold harmless, and after the Effective Time, each of
Purchaser and the Surviving Corporation shall, and Purchaser shall cause the
Surviving Corporation to, jointly and severally indemnify and hold harmless, as
and to the full extent permitted by applicable Law, each Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorneys' fees and expenses), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
demand, proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, demand, proceeding or investigation (whether
asserted or arising before or after the Effective Time), (ii) the Company shall,
and after the Effective Time, each of Purchaser and the Surviving Corporation
shall, and Purchaser shall cause the Surviving Corporation to, promptly pay
expenses in advance of the final disposition of any claim, action, suit, demand,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by Law, subject to the provision by such Indemnified Party of an
undertaking to reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that such
Indemnified Party is not entitled to such amounts, (iii) the Indemnified Parties
may retain one counsel satisfactory to them (except in case of a conflict of
interest among two or more Indemnified Parties, in which case more than one
counsel may be retained), and the Company, and after the Effective Time, each of
Purchaser and the Surviving Corporation shall, and Purchaser shall cause the
Surviving Corporation to, pay all reasonable fees and expenses of such counsel
for the Indemnified Parties within thirty (30) days after statements therefor
are received and (iv) the Company and each of Purchaser and the Surviving
Corporation will, and Purchaser will cause the Surviving Corporation to, use
their commercially reasonable efforts to assist in the defense of any such
matter; provided, however, that neither the Company, Purchaser nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and
provided, further, that the Surviving Corporation shall have no obligation
hereunder to any Indemnified Party when and if, but only to the extent that, a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and non-appealable, that indemnification
of such Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law. Any Indemnified Party wishing to claim indemnification under
this Section 6.6, upon learning of any such claim, action, suit, demand,
proceeding or investigation, shall notify the Company and, after the Effective
Time, the Surviving Corporation, thereof; provided, however, that the failure to
so notify shall not affect the obligations of the Company and the Surviving
Corporation except to the extent such failure to notify materially prejudices
such party.
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(c) Purchaser and Newco agree that all rights to
indemnification and advancement of expenses existing in favor of, and all
exculpations and limitations of the personal liability of, the directors,
officers, employees and agents of the Company and the Subsidiaries of the
Company in the Certificate of Incorporation and Bylaws of the Company as in
effect as of the Signing Date with respect to matters occurring at or prior to
the Effective Time, including the Merger, shall continue in full force and
effect for a period of not less than six years from the Effective Time;
provided, however, that all rights to indemnification and advancement of
expenses in respect of any claims asserted or made within such period shall
continue until the disposition of such claim. In addition, the Surviving
Corporation shall, and Purchaser shall cause the Surviving Corporation to,
purchase a six-year "tail" prepaid policy prior to the Effective Time on terms
and conditions no less advantageous to the Indemnified Parties than the existing
directors' and officers' liability insurance maintained by the Company;
provided, however, that if such six-year "tail" prepaid policy is not available
for an annual premium of no more than 250% of the current annual premium, then
six-year "tail" prepaid policies in an amount and scope as great as can be
obtained for an annual premium of 250% of the current annual premium shall be
obtained. The Surviving Corporation shall, and Purchaser shall cause the
Surviving Corporation to, maintain such six-year "tail" prepaid policy in full
force and effect, for its full term, and continue to honor their respective
obligations thereunder.
(d) This Section 6.6 is intended for the irrevocable benefit
of, and to grant third-party rights to, the Indemnified Parties and shall be
binding on all successors and assigns of Purchaser, the Company and the
Surviving Corporation. The obligations of Purchaser and the Surviving
Corporation under this Section 6.6 shall not be terminated or modified by such
parties in a manner so as to adversely affect any Indemnified Party to whom this
Section 6.6 applies without the consent of the affected Indemnified Party. Each
of the Indemnified Parties shall be entitled to enforce the covenants contained
in this Section 6.6. In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving entity of such consolidation or merger
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, proper provision shall be
made so that the successors, assigns and transferees of Purchaser or the
Surviving Corporation, as the case may be, assume the obligations set forth in
this Section 6.6.
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(e) To the extent permitted by Law, all rights of
indemnification and advancement of expenses for the benefit of any Indemnified
Party shall be mandatory rather than permissive.
(f) The rights of the Indemnified Parties and their heirs and
legal representatives under this Section 6.6 shall be in addition to any rights
such Indemnified Parties may have under the Certificate of Incorporation or
Bylaws of the Company or any of its Subsidiaries, or under any other applicable
Laws.
6.7 PROXY STATEMENT.
(a) As promptly as practicable after the execution of this
Agreement, but in no event more than five (5) business days after the Signing
Date, the Company shall prepare and file with the SEC a preliminary version of a
proxy statement (the "PROXY STATEMENT") with respect to the Company Stockholders
Meeting satisfying the requirements of the Securities Exchange Act. The Company
shall cooperate and provide Purchaser (and its counsel) with a reasonable
opportunity to review and comment on the preliminary version of the Proxy
Statement prior to filing such with the SEC. The Company will respond as
promptly as practicable to any comments from the SEC with respect to the
preliminary version of the Proxy Statement, and will use all reasonable efforts
to cause the definitive version of the Proxy Statement to be mailed to its
stockholders as soon as it is legally permitted to do so.
(b) The Company will notify Purchaser promptly upon the
receipt of any comments from the SEC or its staff in connection with the filing
of, or amendments or supplements to, the Proxy Statement. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement, the Company or Purchaser, as applicable, will promptly inform
the other of such occurrence and cooperate in filing with the SEC or its staff,
and/or mailing to stockholders of the Company, such amendment or supplement. The
Company shall cooperate and provide Purchaser (and its counsel) with a
reasonable opportunity to review and comment on any amendment or supplement to
the Proxy Statement prior to filing such with the SEC, and will provide
Purchaser with a copy of all such filings made with the SEC. Except as may be
required by Law, no amendment or supplement to the Proxy Statement will be made
by the Company without the approval of Purchaser, which will not be unreasonably
withheld or delayed.
(c) The Proxy Statement shall include, among other things: (i)
subject to Section 6.2, the recommendation of the Board of Directors to the
stockholders of the Company in favor of Company Stockholder Approval; provided,
however, that notwithstanding anything to the contrary in this Agreement, the
Board of Directors may withhold, withdraw, modify or amend its recommendation as
provided in Section 6.2, (ii) the written opinion dated as of June 26, 2006 of
Scura Rise & Partners, LLC, financial advisor to the Company, to the effect that
as of such date the Merger Consideration to be received by the common
stockholders of the Company pursuant to the Merger, taking into account the
amount and form of consideration and taking into account the consideration to be
received by securityholders of the Company pursuant to the Securities Purchase
Agreements, is fair to the common stockholders of the Company from a financial
point of view, and (iii) a statement that stockholders of the Company are or may
be entitled to assert appraisal rights under Section 262 of the DGCL and a copy
of Section 262 of the DGCL.
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6.8 STOCKHOLDERS' APPROVAL.
(a) The Company, acting through its Board of Directors, shall,
in accordance with the provisions of this Agreement, the rules and regulations
of AMEX, the DGCL, any other applicable Law and its Certificate of Incorporation
and Bylaws, promptly and duly call, give notice of, and convene and hold as soon
as practicable following the Signing Date the meeting of the Company's
stockholders (the "COMPANY STOCKHOLDERS MEETING") for the purpose of obtaining
the Company Stockholder Approval. Once the Company Stockholders Meeting has been
called and noticed, the Company shall not postpone or adjourn (other than for
the absence of a quorum and then only to the next possible future date) the
Company Stockholders Meeting without Purchaser's consent unless this Agreement
has been terminated. Without limiting the generality of the foregoing, the
Company agrees that, unless this Agreement has been terminated, its obligations
pursuant to this Section 6.8(a) shall not be affected by (i) any Company Adverse
Recommendation Change, or (ii) the commencement, public proposal, public
disclosure or communication to the Company of any Competing Transaction or
Superior Competing Transaction.
(b) The Company shall use commercially reasonable efforts to
solicit from its stockholders proxies in favor of the Company Stockholder
Approval, and shall take all other action necessary or advisable to secure the
vote or consent of stockholders required by the rules, regulations and listing
standards of the AMEX, the DGCL, any other applicable Law, its Certificate of
Incorporation and Bylaws and any agreement to which it is a party, and to obtain
such approvals, in accordance with the provisions of this Agreement unless the
Board of Directors has made a Company Adverse Recommendation Change.
6.9 SECTION 16 MATTERS. Prior to the Effective Time, the Company shall
take all such steps as may be required (to the extent permitted under applicable
Law) to cause any dispositions of Company Shares or Convertible Securities
resulting from the transactions contemplated by this Agreement and the
Securities Purchase Agreements by each officer and director of the Company who
is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to the Company's equity securities to be exempt under Rule 16b-3
promulgated under the Exchange Act.
6.10 EMPLOYEE MATTERS. Purchaser shall, or shall cause the Surviving
Corporation to, cause each Purchaser employee benefit plan (including, but not
limited to each severance plan or arrangement) in which an individual who as of
the Effective Time was an employee or former employee of the Company and its
Subsidiaries (each, an "AFFECTED EMPLOYEE") participates or will participate to
(i) recognize all service of such Affected Employee with the Company or its
Subsidiaries and their predecessor entities for purposes of vesting,
eligibility, participation and coverage (but excluding, for the avoidance of
doubt, accrual and level of benefits) to the extent such service would be
recognized under the analogous Purchaser employee benefit plan, (ii) honor or
provide appropriate credit for co-payments, deductibles and other expenses
incurred by such Affected Employee or his or her beneficiaries under the
analogous Company employee benefit plans, and (iii) if applicable, waive any
waiting periods or other eligibility limitations and exclusions for preexisting
conditions.
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6.11 PURCHASER'S VOTING OF SECURITIES OF NEWCO AND THE COMPANY.
(a) As promptly as practicable following the execution and
delivery of this Agreement, Purchaser, as the sole holder of voting capital
stock of Newco, shall approve and adopt this Agreement and the transactions
contemplated hereby in accordance with the DGCL.
(b) Purchaser covenants and agrees to cause all Company Shares
which are entitled to vote at the Company Stockholders Meeting and owned of
record or beneficially by Purchaser Companies to be voted in favor of the
adoption of this Agreement (but Purchaser shall not act by written consent with
respect thereto).
(c) Purchaser covenants and agrees that during the First
Purchaser Restricted Period and the Second Purchaser Restricted Period (if any),
without the prior approval of the Company, it shall not act by written consent
in lieu of a meeting of stockholders with respect to any matter in respect of
its Company Shares.
(d) Except with respect to a vote regarding the approval of
any Superior Competing Transaction (in which case Section 6.2(e) hereof shall
apply) or the adoption of this Agreement (in which case Section 6.11(b) hereof
shall apply), Purchaser covenants and agrees that during the First Purchaser
Restricted Period, it shall not, without the prior approval of the Company, vote
any Company Shares with respect to: (i) any extraordinary corporate transaction,
such as a merger, consolidation or other business combination involving the
Company; (ii) a sale, lease or transfer of a material amount of assets of the
Company, or a reorganization, recapitalization, dissolution or liquidation of
the Company; (iii) any change in the individuals who constitute the Company's
board of directors; (iv) any change in the present capitalization of the Company
or any amendment of the Company's Certificate of Incorporation or By-Laws; (v)
any material change in the Company's corporate structure or business; or (vi)
any other action which is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, or materially and adversely affect the Merger
and the transactions contemplated by this Agreement or the Company's ability to
effect a Superior Competing Transaction (except as contemplated by Section
6.2(e)).
(e) Except with respect to a vote regarding the approval of
any Superior Competing Transaction (in which case Section 6.2(e) hereof shall
apply) or the adoption of this Agreement (in which case Section 6.11(b) hereof
shall apply), Purchaser covenants and agrees that during the Second Purchaser
Restricted Period (if any), it shall not vote any Company Shares with respect to
any action described in clauses (i)-(v) of paragraph (d) above if such vote is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially and adversely affect the Company's ability to effect a
Superior Competing Transaction (except as contemplated by Section 6.2(e)).
(f) Purchaser covenants and agrees that during the First
Purchaser Restricted Period and the Second Purchaser Restricted Period (if any),
it shall not, without the prior approval of the Company, exercise any rights it
may have under the Company Stockholders Agreement, the Company Registration
Rights Agreement or the Company Senior Subordinated Loan Agreement, except that
during the Second Purchaser Restricted Period (if any) it may exercise the
following rights:
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(i) Sections 4 (Preemptive Rights) and 5.2 (Management
and Control) (and, if incidental to an exercise of
Purchaser's rights under said Sections 4 and 5.2, any
rights under Section 7) of the Company Stockholders
Agreement, provided that no consent of the Purchaser
Companies shall be required with respect to a
Superior Competing Transaction,
(ii) Section 2 (Piggyback Registrations) (and, if
incidental to an exercise of Purchaser's rights under
said Section 2, any rights under Sections 3 through
9) of the Company Registration Rights Agreement, and
(iii) Section 5.01 (Information Covenants), 5.02 (Books,
Records and Inspections), 6.01 (Dividends), 6.03(c)
(Limitations on Modifications of Certificate of
Incorporation and Bylaws) and 6.04 (Limitations on
Certain Restrictions of Subsidiaries) (and, if
incidental to an exercise of Purchaser's rights under
said Sections 5.01, 5.02, 6.01 or 6.03(c), any rights
under Sections 7 and 10) of the Company Senior
Subordinated Loan Agreement, provided that no
information need be made available to Purchaser or
its affiliates with respect to a Competing
Transaction except as expressly provided in Section
6.2 of this Agreement;
provided, however, that Purchaser may not take any action pursuant to clauses
(i), (ii) or (iii) above which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially and adversely affect the
Company's ability to effect a Superior Competing Transaction.
(g) Purchaser covenants and agrees that during the First
Purchaser Restricted Period and the Second Purchaser Restricted Period (if any),
it shall not, without the prior approval of the Company, acquire any Company
Shares or Convertible Securities (excluding any purchases made pursuant to the
terms of the Securities Purchase Agreements).
6.12 COMPANY RIGHTS PLAN. The Company covenants and agrees not to amend
the Company Rights Plan in any manner which is intended or could reasonably be
expected to impede, interfere with, delay, postpone, or materially and adversely
affect the ability of any of the Purchaser Companies to (i) commence or, prior
to the termination of this Agreement, consummate the transactions contemplated
by this Agreement or by the Securities Purchase Agreements or the Voting
Agreement (subject to the Company's rights under Section 6.2 and subject to the
Company's ability to negotiate and consummate a Superior Competing Transaction
in accordance with the terms of this Agreement), (ii) effect any conversion,
exercise or exchange of any Convertible Securities acquired pursuant to the
Securities Purchase Agreements, or (iii) after termination of this Agreement,
acquire Company Shares or Convertible Securities (A) which are consummated at a
purchase price of not less than $3.00 per share of Company Common Stock (on an
as-converted-to-common basis, in the case of Convertible Securities), (B) which
do not cause any of the Purchaser Companies to become the beneficial owner of
more than 51% of the shares of Company Common Stock outstanding at the time of
such additional acquisitions and (C) which, in the event there is a Second
Purchaser Restricted Period, are acquired after the expiration of the Second
Purchaser Restricted Period. The Company further covenants and agrees not to
adopt any new stockholder protection rights plan (or similar plan or agreement)
or any other takeover defense which is intended or could reasonably be expected
to impede, interfere with, delay, postpone, or materially and adversely affect
the ability of any of the Purchaser Companies to cause the occurrence of any of
the events described in clauses (i), (ii) or (iii) above.
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ARTICLE VII --
CONDITIONS TO CONSUMMATION OF THE MERGER
ACTIONS AND DELIVERIES AT CLOSING
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order of a
court or Governmental Authority of competent jurisdiction directing that the
transactions contemplated herein not be consummated; provided, however, that
prior to invoking this condition each party shall use all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
(b) All governmental consents, orders and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Effective Time, and all
waiting periods imposed by applicable Law shall have expired or been terminated.
(c) The Company Stockholder Approval shall have been obtained
in accordance with the rules, regulations and listing standards of AMEX, the
DGCL, any other applicable Law, the Company's Certificate of Incorporation and
Bylaws and the Company Stockholder Agreement.
7.2. ACTIONS AND DELIVERIES AT CLOSING.
(a) Purchaser covenants and agrees that, at or prior to the
Signing Date, Purchaser shall have deposited with the Paying Agent all funds
required to pay the Total Merger Consideration in full to all holders of Company
Common Stock and Convertible Securities issued and outstanding at the Effective
Time (other than Company Shares or Convertible Securities owned by Purchaser
Companies).
(b) Purchaser covenants and agrees that, at or prior to the
Effective Time, Purchaser shall cause each of the following to occur:
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(i) Purchaser shall have provided the Company with
funds to repay in full the Company's credit facility with Bank of
America.
(ii) Purchaser shall have provided the Company with
funds to pay in full all Company Change in Control Payments to the Key
Officers who are entitled to receive them at the Effective Time.
(iii) Purchaser shall have provided the Company with
funds to repay in full the Seller Notes (to the extent repayment
thereof is accelerated or required as a result of the transactions
contemplated herein or in the Securities Purchase Agreements).
(iv) Purchaser shall have used commercially
reasonable efforts to negotiate with each of the individuals listed on
Exhibit D hereto as to mutually agreeable terms and conditions for each
such individual's post-merger employment with the Company or engagement
as a consultant by the Company, all as more particularly described on
Exhibit D (the "TRANSITION AGREEMENTS").
ARTICLE VIII --
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the Company Stockholder Approval, by the mutual written consent
of Purchaser and the Company approved by action of their respective board of
directors.
8.2 TERMINATION BY EITHER PURCHASER OR THE COMPANY. This Agreement may
be terminated and the Merger may be abandoned by Purchaser or the Company,
whether before or after the Company Stockholder Approval, upon written notice
if:
(a) any court of competent jurisdiction in the United States
or some other Governmental Authority shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and non-appealable;
(b) the Company Stockholders Meeting shall have been held and
the Company Stockholder Approval shall not have been obtained thereat; or
(c) the Effective Time shall not have occurred on or before
the 180th day following the Signing Date unless otherwise extended in accordance
with the terms of this Agreement (as so extended, the "TERMINATION DATE");
provided, however, that the right to terminate this Agreement pursuant to this
Section 8.2(c) shall not be available to any party whose failure to fulfill any
of its obligations under this Agreement results in such failure to close.
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8.3 TERMINATION BY PURCHASER. This Agreement may be terminated by
Purchaser, whether before or after the Company Stockholder Approval, prior to
the Effective Time, upon written notice if the Company materially breaches the
provisions of Section 6.2 or there is a Company Adverse Recommendation Change.
8.4 TERMINATION BY THE COMPANY. This Agreement may be terminated by the
Company and the Merger may be abandoned through a resolution adopted by the
Board of Directors at any time prior to the time the Company Stockholder
Approval is obtained at the Company Stockholders Meeting, upon written notice
if: (a) there is a Company Adverse Recommendation Change, and (b) there exists
at such time a proposal or offer for a Competing Transaction that constitutes a
Superior Competing Transaction; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 8.4 unless and until:
(i) the Company shall have complied with the
requirements and time periods set forth in clauses (ii), (iii) and (iv)
of Section 6.2(c);
(ii) the Company shall have paid the Company
Termination Fee to Purchaser in accordance with Section 8.5(b); and
(iii) a definitive agreement to consummate the
Superior Competing Transaction shall have been executed by the Company
and the third party acquiror prior to or simultaneously with the
termination of this Agreement.
8.5 EFFECT OF TERMINATION.
(a) General. In the event of the proper termination and
abandonment of this Agreement pursuant to this Article VIII, this Agreement
(other than as set forth in Section 9.2) shall forthwith become void and have no
effect, without any liability on the part of any party hereto or its affiliates,
directors, officers, employees, stockholders, or other Representatives.
(b) Superior Competing Transaction. In the event of
termination of this Agreement without consummation of the transactions
contemplated hereby:
(i) by Purchaser pursuant to Section 8.3, then the
Company shall make payment to Purchaser by wire transfer of immediately
available funds of a fee in the amount equal to Two Million Five
Hundred Thousand Dollars ($2,500,000) (the "COMPANY TERMINATION FEE"),
payable within five (5) business days following the Company's receipt
of Purchaser's notice of termination, such amount to constitute
liquidated (and exclusive) damages; or
(ii) by the Company pursuant to Section 8.4, then concurrently
with such termination the Company shall make payment to Purchaser by
wire transfer of immediately available funds of the Company Termination
Fee, such amount to constitute liquidated (and exclusive) damages.
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(c) Terminations Requiring No Payment of Fees. For the
avoidance of doubt, in the event of (i) a mutual termination by
Purchaser and the Company under Section 8.1, or (ii) a termination by
either Purchaser or the Company under Section 8.2, then in each case no
party to this Agreement shall be required to make any payments to the
other under this Section 8.5 and no party to this Agreement shall be
entitled to any damages for the breach or breaches giving rise to such
termination.
(d) Acquisition of Purchaser Acquired Securities in Superior
Competing Transaction. The Company agrees that, as a condition to the
consummation of a Superior Competing Transaction in which all or any
portion of the acquisition consideration is in a form other than cash,
it shall cause a portion of the consideration payable to Purchaser in
respect of the Purchaser Acquired Securities in such Superior Competing
Transaction to be paid in the form of cash (such portion being an
amount equal to the aggregate price which Purchaser paid in cash for
the Purchaser Acquired Securities under the Securities Purchase
Agreements), and the balance of the consideration payable to Purchaser
shall consist of the same form of consideration as is paid to the other
stockholders of the Company in such Superior Competing Transaction.
Compliance with this Section 8.5(d) shall be set forth in any
definitive agreement reflecting a Superior Competing Transaction as a
condition precedent to the consummation of the transactions
contemplated thereby.
ARTICLE IX --
MISCELLANEOUS AND GENERAL
9.1 PAYMENT OF EXPENSES. Subject to Section 8.5 and the last sentence
of Section 9.3(c), whether or not the Merger shall be consummated each party
hereto shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby, provided that the Surviving Corporation shall pay, with
funds of the Company and not with funds provided by any of Purchaser Companies,
any and all property or transfer taxes imposed on the Surviving Corporation.
9.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS;
SURVIVAL OF CONFIDENTIALITY. This Article IX and the agreements of the Company,
Purchaser and Newco contained in Section 6.6 (Indemnification of Directors and
Officers) shall survive the consummation of the Merger. This Article IX and the
agreements of the Company, Purchaser and Newco contained in Section 8.5 (Effect
of Termination), the last two sentences of Section 6.4(a), all of Section
6.4(b), Section 6.11, Section 6.12 and the Confidentiality Agreements shall
survive the termination of this Agreement. In addition, if this Agreement is
terminated pursuant to Sections 8.3 or 8.4 hereof, then Sections 6.2(e), (f) and
(g) shall survive the termination of this Agreement solely with respect to votes
in respect of the Superior Competing Transaction giving rise to such termination
and the waiver of appraisal rights in connection therewith. All other
representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Merger or the termination of this Agreement
except in the event of fraud.
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9.3 LIMITATION OF LIABILITY; WAIVER OF JURY TRIAL.
(a) The remedies set forth in Section 8.5 and Section 9.3(c)
shall be the sole and exclusive remedies for any breach of this agreement, other
than for actual fraud. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, NO PARTY TO THIS AGREEMENT SHALL BE LIABLE FOR SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES.
(b) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE
PARTIES TO THIS AGREEMENT IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
(c) Each of the parties hereto agrees, recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other parties to sustain damages for which they
would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach any aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements (without any requirement to post bond or other security and
without having to prove actual damages) and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity. In the event that any party shall seek specific performance under this
Section 9.3(c), the prevailing party, as determined by a court of competent
jurisdiction, shall be entitled to recover all costs and expenses incurred in
connection with or arising out of such proceedings (including reasonable
attorney's fees and expenses incurred in such proceedings and any appeals
thereof).
9.4 MODIFICATION OR AMENDMENT. Subject to the applicable provisions of
the DGCL, at any time prior to the Effective Time, the parties hereto may modify
or amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after the
Company Stockholder Approval, no amendment shall be made which by law or
Contract requires the further approval of stockholders without such further
approval (including but not limited to amendments which change the consideration
payable in the Merger or adversely affect the rights of the Company's
stockholders hereunder).
9.5 WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party, or the time for performance may be extended by such
party, in whole or in part to the extent permitted by applicable Law. Any
agreement on the part of either party hereto to any such extension or waiver
shall be valid only if set forth in any instrument in writing signed on behalf
of such party. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
9.6 COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, including by means of
facsimile, electronic mail or similar means, each such counterpart being deemed
to be an original instrument, and all such counterparts shall together
constitute the same agreement.
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9.7 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(b) Each party to this Agreement irrevocably consents and
agrees that any legal action or proceeding with respect to this Agreement and
any action for enforcement of any judgment in respect thereof will be brought in
the state or federal courts located within the jurisdiction of the United States
District Court for the Southern District of New York, and, by execution and
delivery of this Agreement, each party to this Agreement hereby irrevocably
submits to and accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and
appellate courts from any appeal thereof. Each party to this Agreement further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof in the
manner set forth in Section 9.8. Each party to this Agreement hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing in this Section 9.7 shall be deemed to constitute a
submission to jurisdiction, consent or waiver with respect to any matter not
specifically referred to herein.
9.8 NOTICES. Any notice, request, instruction, consent or other
document to be given hereunder by any party to the other parties shall be in
writing and shall be deemed duly given (i) on the date delivered, if delivered
personally, (ii) three (3) business days after being sent by registered or
certified mail, return receipt requested, postage prepaid, (iii) one (1)
business day after being sent via a reputable nationwide overnight courier
service guaranteeing next business day delivery, or (iv) on the date sent by
facsimile transmission, if a confirming copy is sent by overnight courier, in
each case to the intended recipient addressed as follows:
(a) If to the Company, to
CD&L, Inc.
00 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxx Xxxx, Xx.
Fax: 000.000.0000
with copies to:
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CD&L, Inc.
00 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Fax: 000.000.0000
and
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxxxx, Esq.
Fax: 000.000.0000
(b) If to Purchaser or Newco, to
Velocity Express Corporation
Xxx Xxxxxxxxxxx Xxxxx Xxxxx
Xxxxxxxx X, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: General Counsel
Fax: 000.000.0000
with copies to:
Xxxx Xxxxxx, PC
000 Xxxx X. Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxxx, Esq.
Fax: 000.000.0000
and
Xxxxxx and Xxxxxx, P.A.
2200 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax: 000.000.0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice.
9.9 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the
schedules and the other documents and the instruments referred to herein), the
Voting Agreement, the Transition Agreements and the Confidentiality Agreements
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof, and (b) shall not be assigned by operation
of law or otherwise.
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9.10 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and assigns. Nothing in this Agreement, express or implied, other than the right
to receive the consideration payable in the Merger pursuant to Article III
hereof following the Effective Time, is intended to or shall confer upon any
other Person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement; provided however, that the provisions of Section
6.6 shall inure to the benefit of and be enforceable by the Indemnified Parties.
9.11 CERTAIN DEFINITIONS/INTERPRETATION.
(a) As used herein:
"COMPANY BENEFICIARY" any director, officer, employee or
former employee (or any of their beneficiaries) of the Company or any of its
Subsidiaries who is a beneficiary under any Company Benefit Plans.
"COMPANY BENEFIT PLANS" means all (A) employee welfare benefit
and employee pension benefit plans as defined in Sections 3(1) and 3(2) of
ERISA, including, but not limited to, plans that provide retirement income or
result in a deferral of income by employees for periods extending to termination
of employment or beyond, and plans that provide medical, surgical, or hospital
care benefits or benefits in the event of sickness, accident, disability, death
or unemployment and (B) other material employee benefit agreements or
arrangements, including without limitation deferred compensation plans,
incentive plans, bonus plans or arrangements, stock option plans, stock purchase
plans, stock award plans, golden parachute agreements, severance pay plans,
dependent care plans, cafeteria plans, employee assistance programs, scholarship
programs, employee discount programs, employment contracts, retention incentive
agreements, noncompetition agreements, consulting agreements, confidentiality
agreements, vacation policies, and other similar plans, agreements and
arrangements that were in effect as of the Signing Date, or were approved before
that date but are not yet effective, for the benefit of any Company Beneficiary,
or with respect to which the Company or any of its Subsidiaries may have any
liability.
"COMPANY CHANGE IN CONTROL PAYMENTS" means severance and
change of control payments to be made to the Company's Key Officers which (i) in
the aggregate do not exceed $5,467,002 (plus approximately $68,571 for
continuing insurance costs) (with certain individual amounts set forth on Part
9.11 of the Company Disclosure Memorandum), (ii) are made as a result of or in
connection with the consummation of the transactions contemplated by this
Agreement and/or any subsequent employment termination, and (iii) the Company is
required to make pursuant to the terms of an employment agreement, severance
agreement or other Contract between the Company and such Key Officers, copies of
which have been provided or made available to Purchaser prior to the Signing
Date.
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"COMPANY ERISA AFFILIATE" means any entity (whether or not
incorporated) that is treated as a single employer with the Company under
Section 414 of the Code.
"COMPANY INDEPENDENT CONTRACTORS" means all independent
contractors who provide delivery, courier or similar services on behalf of the
Company and its Subsidiaries as of the Signing Date.
"COMPANY MATERIAL OCCURRENCE" means any claim, change, effect,
event, occurrence or development which individually or in the aggregate would
reasonably be expected to be materially adverse to the business, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole.
"COMPANY NOTES" means the $4.0 million aggregate outstanding
principal amount of notes designated as the Series A Convertible Subordinated
Debentures.
"COMPANY REGISTRATION RIGHTS AGREEMENT" means the Registration
Rights Agreement dated April 14, 2004 by and among the Company and the
securityholders of the Company listed as "Lenders" therein.
"COMPANY RIGHT" means a right to purchase one one-hundredth of
a share of Preferred Stock of the Company, subject to adjustment, issued
pursuant to the Company Rights Plan.
"COMPANY RIGHTS PLAN" means the Stockholder Protection Rights
Agreement, dated as of December 27, 1999, between the Company and American Stock
Transfer & Trust Company, as Rights Agent, and amended as of April 14, 2004 (as
amended).
"COMPANY SENIOR SUBORDINATED LOAN AGREEMENT" means the Amended
and Restated $8,000,000 Senior Subordinated Loan Agreement amended and restated
as of April 14, 2004 among the Company and the parties set forth as "Lenders"
therein.
"COMPANY STOCKHOLDERS AGREEMENT" means the Stockholders
Agreement dated as of April 14, 2004 by and among the Company and the
securityholders of the Company listed as "Stockholders" therein.
"CONTRACTS" means all written or oral contracts, agreements,
leases, instruments or legally binding contractual commitments, together with
all amendments thereto.
"CONVERTIBLE SECURITIES" means any securities convertible or
exchangeable into or exercisable for shares of capital stock of the Company,
other than the Company Series A Preferred and the Seller Notes.
"ENVIRONMENTAL AUTHORITY" shall mean any federal, state, or
local governmental body, department, agency or subdivision responsible for the
due administration and/or enforcement of any Environmental Law.
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"ENVIRONMENTAL LAWS" shall mean any and all federal, state or
local laws, rules, orders, regulations, statutes, common law, ordinances, codes,
decrees or requirements of any Governmental Authority regulating, relating to or
imposing liability or standards of conduct concerning any Regulated Materials,
environmental protection, or protection of public health, safety and welfare
involving Regulated Materials as in effect as of the Effective Time of the
Merger or at any time in the past.
"ENVIRONMENTAL PERMITS" shall mean all governmental approvals,
authorizations, registrations, permits and licenses, including those related to
environmental quality and the emission, discharge, storage, handling, treatment,
use, generation or transportation of Regulated Materials required by
Environmental Laws or otherwise required for the Company to conduct its
business.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"FIRST PURCHASER RESTRICTED PERIOD" means the period
commencing upon the Signing Date and terminating upon the earliest to occur of
(i) the Effective Time, and (ii) the date of termination of this Agreement for
any reason.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, or
local governmental or regulatory body, or any department, agency, subdivision,
commission, board, bureau, agency, authority, instrumentality or unit thereof.
"IRS" means the U.S. Internal Revenue Service.
"ISRA" means the New Jersey Industrial Site Recovery Act,
N.J.S.A. 13:1K-6 et seq.
"KEY OFFICERS" means each of the individuals listed on Exhibit
E hereto.
"KNOWLEDGE OF THE COMPANY" or "THE COMPANY'S KNOWLEDGE" means
any fact, circumstance, event or other matter that (a) any of Xxxxxx X. Xxx
Xxxx, Xx., Xxxxxxx X. Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxx, or Xxxx X.
Xxxxxxxxx actually knows, or (b) any of the individuals referred to in the
preceding clause (a) should know or would reasonably be expected to know in the
normal discharge of his assigned duties and responsibilities.
"PERFORMANCE SHARES" shall have the meaning ascribed thereto
in the Company's Year 2000 Stock Incentive Plan.
"PERFORMANCE UNITS" shall have the meaning ascribed thereto in
the Company's Year 2000 Stock Incentive Plan.
"PERSON" shall mean any individual, corporation, partnership
(general or limited), association, limited liability company, trust, estate or
other entity.
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"PURCHASER MATERIAL OCCURRENCE" means any change, effect,
event, occurrence or development which individually or in the aggregate would
reasonably be expected to be materially adverse to the business, financial
condition or results of operations of Purchaser and its Subsidiaries, taken as a
whole.
"REGULATED MATERIALS" shall mean any pollutant, contaminant,
hazardous material, hazardous waste, infectious medical waste, hazardous or
toxic substance defined or regulated as such in or under any Environmental Law,
including, without limitation, petroleum, crude oil or fractions thereof,
petroleum products, waste or used oil, natural or synthetic gas, materials
exhibiting the characteristics of ignitability, corrosivity, reactivity or
extraction procedure toxicity, as such terms are defined in connection with
hazardous materials or hazardous wastes or hazardous or toxic substances in any
Environmental Law.
"RELEASE" shall have the same meaning as provided in the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, sec. 101(22), 42 U.S.C. sec. 9601(22) and shall also include any
"discharge" as defined in the New Jersey Spill Compensation and Control Act,
N.J.S.A. 58:10-23.11b.
"SECOND PURCHASER RESTRICTED PERIOD" has the following
meaning:
(a) in the event of the termination of this Agreement by the
Company pursuant to Section 8.4 in connection with a Superior Competing, the
period commencing upon such termination and ending upon the earlier to occur of
(i) the consummation of such Superior Competing Transaction or (ii) the
termination of the definitive agreement with respect to such Superior Competing
Transaction; and
(b) in the event of the termination of this Agreement by
Purchaser pursuant to Section 8.3 at a time in which there exists a proposal or
offer for a Competing Transaction, the period commencing upon such termination
and ending as follows: (i) if the Company does not enter into a definitive
agreement with respect to such Competing Transaction within thirty (30) days of
termination, the Second Purchaser Restricted Period shall end upon the
thirty-first (31st) day; or (ii) if the Company enters into a definitive
agreement with respect to such Competing Transaction within thirty (30) days of
termination, the Second Purchaser Restricted Period shall end upon the earlier
to occur of the consummation of such Competing Transaction or the termination of
such definitive agreement.
"SELLER NOTES" shall mean the promissory notes set forth on
Exhibit F hereto.
"SEPARATION TIME" shall have the meaning ascribed thereto in
the Company Rights Plan.
"SHARES OF RESTRICTED STOCK" shall have the meaning ascribed
thereto in the Company's Year 2000 Stock Incentive Plan.
"SUBSIDIARY" shall mean, when used with reference to any
entity, any corporation a majority of the outstanding voting securities of which
are owned directly or indirectly by such former entity (other than a corporation
having no current operations and no material assets).
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"TAX" or "TAXES" shall mean all taxes of any kind, including,
without limitation, those on or measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, estimated, excise, severance, stamp, occupation, premium,
value added, property or windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
Governmental Authority, domestic or foreign.
"TAX RETURN" shall mean any return, report, statement or
information required to be filed with any Governmental Authority with respect to
Taxes.
The following capitalized terms defined elsewhere in this
Agreement are defined in the sections indicated below.
TERM SECTION
---- -------
Affected Employee .............................................................................................6.10
Agreement .............................................................................................Introduction
AMEX ..........................................................................................................4.13
As Converted Total Company Shares ..............................................................................4.2
Board of Directors ........................................................................................Recitals
Certificates ...................................................................................................3.1
Closing ........................................................................................................1.4
Code ...........................................................................................................3.9
Company ...............................................................................................Introduction
Company Adverse Recommendation Change...........................................................................6.2
Company Affiliate .............................................................................................4.21
Company 2005 Audit Date.........................................................................................4.5
Company Beneficiary ...........................................................................................9.11
Company Benefit Plans .........................................................................................9.11
Company Change in Control Payments ............................................................................9.11
Company Common Stock ...........................................................................................3.1
Company Equity Holders .........................................................................................3.4
Company ERISA Affiliate .......................................................................................9.11
Company Independent Contractors ...............................................................................9.11
Company Insurance Policies .....................................................................................4.8
Company Intellectual Property .................................................................................4.12
Company's Knowledge or Knowledge of Company ...................................................................9.11
Company Material Contracts ....................................................................................4.19
Company Notes .................................................................................................9.11
Company Note Repayment Limit ..................................................................................9.11
Company Option .................................................................................................3.7
Company Option Plans ...........................................................................................3.7
Company Real Property .........................................................................................4.25
Company Representatives ........................................................................................6.2
Company Registration Rights Agreement ..........................................................................7.2
Company Right .................................................................................................9.11
Company Rights Plan ...........................................................................................9.11
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XXXX XXXXXXX
---- -------
Company SEC Reports ............................................................................................4.5
Company Series A Approval ......................................................................................4.4
Company Series A Preferred .....................................................................................3.1
Company Stockholder Approval ...................................................................................4.4
Company Stockholders Agreement .................................................................................4.4
Company Stockholders Meeting ...................................................................................6.9
Company Shares .................................................................................................3.1
Company Termination Fee ........................................................................................8.4
Company Voting Agreement ..................................................................................Recitals
Company Warrant ................................................................................................3.7
Competing Transaction ..........................................................................................6.2
Confidentiality Agreements .....................................................................................6.4
Contracts .....................................................................................................9.11
Convertible Securities ........................................................................................9.11
Convertible Security Instruments ...............................................................................3.1
DGCL.......................................................................................................Recitals
Dissenting Shares ..............................................................................................3.3
Effective Time .................................................................................................1.2
Emulated Shares ................................................................................................6.2
Environmental Authority .......................................................................................9.11
Environmental Laws ............................................................................................9.11
Environmental Permits .........................................................................................9.11
ERISA .........................................................................................................9.11
Exchange Act ...................................................................................................4.4
First Purchaser Restricted Period .............................................................................9.11
GAAP ...........................................................................................................4.5
Governmental Authority.........................................................................................9.11
Indemnified Parties ............................................................................................6.6
ISRA ..........................................................................................................9.11
Irrevocable Proxies .......................................................................................Recitals
Laws ..........................................................................................................4.13
Letter of Transmittal ..........................................................................................3.4
Licenses ......................................................................................................4.22
Liens ..........................................................................................................4.2
Merger .........................................................................................................1.1
Merger Consideration ...........................................................................................3.1
Emulated Shares ................................................................................................4.2
Newco .................................................................................................Introduction
Newco Common Stock .............................................................................................3.2
Order .........................................................................................................4.13
PCBs ..........................................................................................................4.11
Paying Agent ...................................................................................................3.2
Paying Agent Agreement .........................................................................................3.4
Performance Shares ............................................................................................9.11
Performance Units .............................................................................................9.11
Person.........................................................................................................9.11
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XXXX XXXXXXX
---- -------
Proxyholder ....................................................................................................6.2
Proxy Shares ...................................................................................................6.2
Proxy Statement ................................................................................................6.7
Purchaser .............................................................................................Introduction
Purchaser Companies ............................................................................................3.1
Purchaser Material Occurrence .................................................................................9.11
Purchaser Restricted Period ...................................................................................9.11
Real Property Lease ...........................................................................................4.25
Regulated Materials ...........................................................................................9.11
Release .......................................................................................................9.11
Remaining Equity-Based Awards ..................................................................................3.7
Representatives ................................................................................................6.4
SEC ............................................................................................................4.5
Second Purchaser Restricted Period ............................................................................9.11
Securities Purchase Agreements ............................................................................Recitals
Securities Act .................................................................................................4.4
Separation Date ...............................................................................................9.11
Shares of Restricted Stock ....................................................................................9.11
Signing Date ..........................................................................................Introduction
SOX.............................................................................................................4.5
Subsidiary ....................................................................................................9.11
Superior Competing Transaction .................................................................................6.2
Superior Per Share Price........................................................................................8.5
Surviving Corporation ..........................................................................................1.1
Tax Return ....................................................................................................9.11
Tax, Taxes ....................................................................................................9.11
Termination Date ...............................................................................................8.2
Third Party ....................................................................................................6.2
Total Merger Consideration ....................................................................................3.10
Transition Agreements ..........................................................................................7.2
Treasury Shares ................................................................................................3.1
(c) In interpreting this Agreement, the following rules of
construction shall apply:
(i) Where the context requires, the use of the
singular form in this Agreement will include the plural, the
use of the plural will include the singular, and the use of
any gender will include any and all genders.
(ii) The word "including" (and, with
correlative meaning, the word "include") means that the
generality of any description preceding such word is not
limited, and the words "shall" and "will" are used
interchangeably and have the same meaning.
(iii) References in this Agreement to "Articles",
"Sections", or "Exhibits" shall be to Articles, Sections or
Exhibits of or to this Agreement unless otherwise specifically
provided.
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(iv) References to any agreement or contract are
to such agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms
hereof and thereof.
(v) References to any statute and related
regulation shall include any amendments of the same and any
successor statutes and regulations.
(vi) References to any Person include the
successors and permitted assigns of such Person.
(vii) References "from" or "through" any date
mean, unless otherwise specified, "from and including" or
"through and including," respectively.
9.12 OBLIGATION OF PURCHASER. Whenever this Agreement requires Newco to
take any action, such requirement shall be deemed to include an undertaking on
the part of Purchaser to cause Newco to take such action and a guarantee of the
performance thereof.
9.13 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.14 CAPTIONS. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be executed by their respective duly authorized
officers as of the date first above written.
VELOCITY EXPRESS CORPORATION
By: /s/ X. X. Xxxxx, Xx.
-------------------------------------
Name: X. X. Xxxxx, Xx.
Title: CFO
CD&L, INC.
By: /s/ Xxxxxx X. Xxx Xxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxx Xxxx, Xx.
Title: Chairman
CD&L ACQUISITION CORP.
By: /s/ X. X. Xxxxx, Xx.
-------------------------------------
Name: X. X. Xxxxx, Xx.
Title: CFO
[SIGNATURE PAGE TO MERGER AGREEMENT]
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EXHIBIT A
AMENDMENT NO. 2
TO
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
This Amendment No. 2 (this "Amendment"), dated as of July 3, 2006, is
between CD&L, Inc., a Delaware corporation formerly known as Consolidated
Delivery & Logistics, Inc. (the "Company"), and American Stock Transfer & Trust
Company, a New York corporation (the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into a Stockholder
Protection Rights Agreement, dated as of December 27, 1999, and amended as of
April 14, 2004 (as amended, the "Rights Agreement"); and
WHEREAS, Section 5.4 of the Rights Agreement provides that, prior to
the Flip-in Date, the Company and the Rights Agent may amend the Rights
Agreement in any respect without the approval of any holders of Rights; and
WHEREAS, the Board of Directors of the Company has approved this
Amendment;
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Amendment of Section 1.1
(a) Section 1.1 of the Rights Agreement is amended by adding
thereto the following definitions:
"'Merger Agreement' shall mean the Agreement and Plan of
Merger, dated as of July 3, 2006, by and among Velocity
Express Corporation, a Delaware corporation ("Purchaser"),
CD&L Acquisition Corp., a Delaware corporation and wholly
owned subsidiary of Purchaser ("Newco"), and the Company, as
the same may be amended from time to time.
'Company Voting Agreement' shall mean the Company Voting
Agreement (as defined in the Merger Agreement).
'Securities Purchase Agreements' shall mean the Securities
Purchase Agreements (as defined in the Merger Agreement)."
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(b) Section 1.1 of the Rights Agreement is amended further by
deleting the definition of "Expiration Time" in its entirety and inserting the
following in lieu thereof:
"'Expiration Time' shall mean the earliest of (i) the Exchange
Time, (ii) the Redemption Time, (iii) the close of business on
the tenth anniversary of the Record Time or (iv) immediately
prior to the Effective Time (as defined in the Merger
Agreement)."
2. Addition of New Section 5.19.
The Rights Agreement is amended by adding a Section 5.19
thereof which shall read as follows:
"Section 5.19. Exception For Purchaser. Notwithstanding any
provision of this Agreement to the contrary, neither a Flip-in
Date, Flip-over Transaction or Event, Separation Time nor a
Stock Acquisition Date shall be deemed to have occurred, none
of the Purchaser, Newco or any of their Affiliates or
Associates shall be deemed to have become an Acquiring Person,
and no holder of any Rights shall be entitled to exercise such
Rights under, or be entitled to any rights pursuant to, this
Agreement, in any such case by reason of: (a) the approval,
execution or delivery of the Merger Agreement, the Company
Voting Agreement, the Securities Purchase Agreements or any
amendments thereof, provided that any such amendment is
approved in advance by the Board of Directors of the Company;
(b) the commencement or, prior to termination of the Merger
Agreement, the consummation of any of the transactions
contemplated by the Merger Agreement, including the Merger (as
defined in the Merger Agreement), or by the Company Voting
Agreements or the Securities Purchase Agreements; (c) any
conversion, exercise or exchange of any of the Company's
securities acquired pursuant to the Securities Purchase
Agreements; or (d) in the event of a termination of the Merger
Agreement, any additional acquisitions of the Company's
securities by any of Purchaser, Newco or any of their
Affiliates or Associates (i) which are consummated after
termination of the Merger Agreement at a purchase price of not
less than $3.00 per share of Common Stock (on an as-converted
basis, in the case of Convertible Securities (as defined in
the Merger Agreement)) (ii) which do not cause any of
Purchaser, Newco or any of their Affiliates or Associates to
become the Beneficial Owner of more than 51% of the shares of
Common Stock outstanding at the time of such additional
acquisitions, and (iii) which, in the event there is a Second
Purchaser Restricted Period (as defined in the Merger
Agreement), occur after the expiration of the Second Purchaser
Restricted Period."
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3. Effectiveness.
This Amendment shall be deemed effective as of the date hereof as if
executed by both parties hereto on such date. Except as amended hereby, the
Rights Agreement shall remain in full force and effect and shall be otherwise
unaffected hereby.
4. Miscellaneous.
This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state. This Amendment may be executed in any
number of counterparts, including by means of facsimile, electronic mail or
similar means, each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument. If any term, provision, covenant or restriction of this
Amendment is held by a court of competent jurisdiction or other authority to be
invalid, illegal, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Amendment shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to be duly executed as of the date set forth above.
CD&L, INC.
By:
---------------------------------------------
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
---------------------------------------------
Name:
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EXHIBIT B
Securityholders Who are Parties to the Company Voting Agreement
Xxxxxx X. Xxx Xxxx, Xx.
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxx
Xxxx XxXxxxxxx
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EXHIBIT C
Restated Certificate of Incorporation of the Surviving Corporation
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CD&L, INC.
FIRST: The name of the corporation (hereinafter called the
"CORPORATION") is CD&L, Inc.
SECOND: The address of the Corporation's registered office in
the State of Delaware is c/o Corporation Service Company, 0000 Xxxxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The name of its
registered agent at such office is Corporation Service Company.
THIRD: The nature of the business and the purposes to be
conducted and promoted by the Corporation is to conduct any lawful business, to
promote any lawful purpose, and to engage in any lawful act or activity for
which corporations may be organized under the DGCL.
FOURTH: The total number of shares of which the Corporation
shall have authority to issue is one thousand (1,000) shares, par value $0.004
per share. All such shares shall be of one class and shall be designated Common
Stock.
FIFTH: The name and the mailing address of the incorporator
are as follows:_______________________________.
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this Corporation
under ss.291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for this Corporation
under ss.279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
-63
EIGHTH: For the management of the business and for the conduct
of the affairs of the Corporation, and in further definition, limitation, and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the Corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of Directors
shall be fixed by, or in the manner provided in, the Bylaws. The phrase
"whole Board" and the phrase "total number of directors" shall be deemed to
have the same meaning, to wit, the total number of directors which the
Corporation would have if there were no vacancies. No election of directors
need be by written ballot.
2. After the original or other By-laws of the Corporation have
been adopted, amended, or repealed, as the case may be, in accordance with
the provisions of ss.109 of the DGCL, and, after the Corporation has
received any payment for any of its stock, the power to adopt, amend, or
repeal the By-laws of the Corporation may be exercised by the Board of
Directors of the Corporation.
3. Whenever the Corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder thereof
to notice of, and the right to vote at, any meeting of stockholders.
Whenever the Corporation shall be authorized to issue more than one class
of stock, no outstanding share of any class of stock which is denied voting
power under the provisions of the certificate of incorporation shall
entitle the holder thereof to the right to vote at any meeting of
stockholders except as the provisions of paragraph (2) of subsection (b) of
ss. 242 of the DGCL shall otherwise require; provided, that no share of any
such class which is otherwise denied voting power shall entitle the holder
thereof to vote upon the increase or decrease in the number of authorized
shares of said class.
NINTH: The personal liability of the directors of the
Corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of ss. 102 of the DGCL, as the
same may be amended and supplemented.
TENTH: The Corporation shall, to the fullest extent permitted
by the provisions of ss. 145 of the DGCL, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
-64
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended, altered, or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the Corporation by
this certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
-65
EXHIBIT D
Transition Agreements
Xxxxxxx X. Xxxxxxx (full time employment)
Xxxxxxx Xxxxxx (full time employment)
Xxxxxx X. Xxxxx (full time employment)
Xxxxxxxx Xxxxxx (full time employment)
Xxxx Xxxxxxx (full time employment)
Xxxxxxx X. Xxxxxxx (full time employment)
Xxxx X. Xxxxxxxxx (full time employment)
-66
EXHIBIT E
Key Officers
Xxxxxx X. Xxx Xxxx, Xx.
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxxx
Xxxx X. Xxxxxxxxx
Xxxx Xxxxxxx
J. Xxxxxx Xxxx
Xxxxxx Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxxx Xxxxxx
Xxxx XxXxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxx
-67
EXHIBIT F
Seller Notes
1. That certain promissory note dated June 24, 2004 issued to Xxxxx Xxxxxx in
the original principal amount of $411,675.79.
2. That certain promissory note dated June 24, 2004 issued to Westwind Express,
Inc. in the original principal amount of $887,210.61
3. That certain promissory note dated June 24, 2004 issued to Xxxxx X. Xxxxxxx
in the original principal amount of $1,096,657.42
4. That certain promissory note dated March 28, 2002 issued to Xxxxx Xxxxxx in
the original principal amount of $122,707.00.
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