AGREEMENT AND PLAN OF MERGER Among WILSHIRE ENTERPRISES, INC., NWJ APARTMENT HOLDINGS CORP. and NWJ ACQUISITION CORP. Dated as of June 13, 2008
AGREEMENT
AND PLAN OF MERGER
Among
WILSHIRE
ENTERPRISES, INC.,
NWJ
APARTMENT HOLDINGS CORP.
and
NWJ
ACQUISITION CORP.
Dated
as of June 13, 2008
TABLE
OF CONTENTS
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Page
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ARTICLE
I
|
THE
MERGER
|
1
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|
Section
1.1
|
The
Merger
|
1
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|
Section
1.2
|
Closing;
Effective Time.
|
1
|
|
Section
1.3
|
Effects
of the Merger
|
2
|
|
Section
1.4
|
Certificate
of Incorporation; By-laws.
|
2
|
|
Section
1.5
|
Directors
and Officers
|
2
|
|
ARTICLE
II
|
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS
|
2
|
|
Section
2.1
|
Effect
on Capital Stock
|
2
|
|
Section
2.2
|
Treatment
of Options and Restricted Shares.
|
4
|
|
Section
2.3
|
Surrender
of Shares.
|
5
|
|
ARTICLE
III
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
6
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|
Section
3.1
|
Organization
and Qualification
|
7
|
|
Section
3.2
|
Certificate
of Incorporation and By-Laws; Minute Books
|
7
|
|
Section
3.3
|
Subsidiaries
|
7
|
|
Section
3.4
|
Capitalization;
Face Amount of Auction Rate Securities
|
7
|
|
Section
3.5
|
Authority
Relative to this Agreement
|
8
|
|
Section
3.6
|
No
Conflicts
|
8
|
|
Section
3.7
|
Commission
Filings
|
9
|
|
Section
3.8
|
Absence
of Certain Changes or Events
|
10
|
|
Section
3.9
|
Litigation
and Liabilities
|
13
|
|
Section
3.10
|
Employee
Benefits.
|
13
|
|
Section
3.11
|
Taxes
|
15
|
|
Section
3.12
|
Information
Supplied
|
18
|
|
Section
3.13
|
Licenses
and Permits; Governmental Notices
|
19
|
|
Section
3.14
|
Compliance
with Laws
|
19
|
|
Section
3.15
|
Insurance
|
19
|
|
Section
3.16
|
Contracts
|
20
|
|
Section
3.17
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Title
to Properties; Real Property.
|
20
|
|
Section
3.18
|
Labor
Matters
|
23
|
|
Section
3.19
|
Environmental
Matters
|
23
|
|
Section
3.20
|
Rights
Agreement
|
26
|
|
Section
3.21
|
Intellectual
Property
|
26
|
|
Section
3.22
|
Accounts
and Notes Receivable
|
26
|
|
Section
3.23
|
Liabilities
|
26
|
-i-
|
Section
3.24
|
Employees
|
27
|
|
Section
3.25
|
Non-competition
|
27
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|
Section
3.26
|
Brokers
|
27
|
|
Section
3.27
|
No
Other Representations or Warranties
|
27
|
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
|
27
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|
Section
4.1
|
Organization
|
27
|
|
Section
4.2
|
Authority
|
28
|
|
Section
4.3
|
No
Conflict; Required Filings and Consents.
|
28
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|
Section
4.4
|
Absence
of Litigation
|
29
|
|
Section
4.5
|
Proxy
Statement
|
29
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|
Section
4.6
|
Brokers
|
29
|
|
Section
4.7
|
Financing
|
29
|
|
Section
4.8
|
Operations
and Ownership of Parent and Merger Sub.
|
29
|
|
Section
4.9
|
Ownership
of Shares
|
30
|
|
Section
4.10
|
Certain
Agreements
|
30
|
|
Section
4.11
|
Vote/Approval
Required
|
30
|
|
Section
4.12
|
No
Other Information
|
30
|
|
Section
4.13
|
Access
to Information; Disclaimer
|
30
|
|
ARTICLE
V
|
CONDUCT
OF BUSINESS PENDING THE MERGER
|
31
|
|
Section
5.1
|
Conduct
of Business of the Company Pending the Merger.
|
31
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|
Section
5.2
|
Conduct
of Business of Parent and Merger Sub Pending the Merger
|
33
|
|
Section
5.3
|
No
Control of Other Party’s Business
|
34
|
|
Section
5.4
|
Accountant’s
Work Papers
|
34
|
|
Section
5.5
|
Tax
Returns
|
34
|
|
ARTICLE
VI
|
ADDITIONAL
AGREEMENTS
|
34
|
|
Section
6.1
|
Stockholders
Meeting
|
34
|
|
Section
6.2
|
Proxy
Statement
|
35
|
|
Section
6.3
|
Resignation
of Directors
|
35
|
|
Section
6.4
|
Access
to Information; Confidentiality.
|
35
|
|
Section
6.5
|
Acquisition
Proposals.
|
36
|
|
Section
6.6
|
Voting
Agreements
|
38
|
|
Section
6.7
|
Directors’
and Officers’ Indemnification and Insurance.
|
38
|
|
Section
6.8
|
Further
Action; Efforts.
|
39
|
|
Section
6.9
|
Public
Announcements
|
40
|
|
Section
6.10
|
Parent
Financing.
|
40
|
|
Section
6.11
|
Certain
Transfer Taxes
|
41
|
|
Section
6.12
|
Obligations
of Merger Sub
|
41
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|
Section
6.13
|
Takeover
Statute
|
41
|
|
Section
6.14
|
Rule
16b-3
|
42
|
-ii-
|
Section
6.15
|
Advice
of Changes
|
42
|
|
Section
6.16
|
Estoppel
Certificates
|
42
|
|
Section
6.17
|
2007
Tax Returns
|
43
|
|
Section
6.18
|
Tamarac
|
43
|
|
Section
6.19
|
Non-Imputation
Affidavits
|
43
|
|
Section
6.20
|
Guaranty
|
43
|
|
Section
6.21
|
Title
Commitments
|
43
|
|
Section
6.22
|
Earnings
and Profits Report
|
44
|
|
ARTICLE
VII
|
CONDITIONS
OF MERGER
|
44
|
|
Section
7.1
|
Conditions
to Obligation of Each Party to Effect the Merger
|
44
|
|
Section
7.2
|
Conditions
to Obligations of Parent and Merger Sub
|
44
|
|
Section
7.3
|
Conditions
to Obligations of the Company
|
46
|
|
Section
7.4
|
Frustration
of Closing Conditions
|
46
|
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ARTICLE
VIII
|
TERMINATION,
AMENDMENT AND WAIVER
|
46
|
|
Section
8.1
|
Termination
|
46
|
|
Section
8.2
|
Effect
of Termination.
|
48
|
|
Section
8.3
|
Expenses
|
49
|
|
Section
8.4
|
Amendment
|
49
|
|
Section
8.5
|
Waiver
|
49
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|
ARTICLE
IX
|
GENERAL
PROVISIONS
|
50
|
|
Section
9.1
|
Non-Survival
of Representations, Warranties, Covenants and Agreements
|
50
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|
Section
9.2
|
Notices
|
50
|
|
Section
9.3
|
Certain
Definitions
|
51
|
|
Section
9.4
|
Severability
|
52
|
|
Section
9.5
|
Entire
Agreement; Assignment
|
52
|
|
Section
9.6
|
Parties
in Interest
|
53
|
|
Section
9.7
|
Governing
Law
|
53
|
|
Section
9.8
|
Headings
|
53
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|
Section
9.9
|
Counterparts
|
53
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|
Section
9.10
|
Specific
Performance
|
53
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|
Section
9.11
|
Jurisdiction
|
53
|
|
Section
9.12
|
Waiver
of Jury Trial
|
54
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|
Section
9.13
|
Interpretation
|
54
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|
Exhibits:
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||
|
Exhibit
A
|
Certificate
of Incorporation of the Surviving Corporation
|
|
|
Exhibit
B
|
By-Laws
of the Surviving Corporation
|
|
|
Exhibit
C
|
Voting
Agreement
|
|
|
Exhibit
D
|
Form
of Opinion of Company Counsel
|
-iii-
INDEX
OF DEFINED TERMS
|
10-K
|
9
|
generally
accepted accounting principles
|
51
|
|
|
Acquisition
Proposal
|
38
|
Ground
Lease
|
22
|
|
|
affiliate
|
51
|
Ground
Leases
|
22
|
|
|
Agreement
|
1
|
Guarantors
|
43
|
|
|
beneficial
owner
|
51
|
Guaranty
|
43
|
|
|
beneficially
owned
|
51
|
Hazardous
Materials
|
25
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|
|
Book-Entry
Shares
|
5
|
HSR
Act
|
9
|
|
|
business
day
|
51
|
Indemnified
Party
|
39
|
|
|
Cancelled
Shares
|
3
|
Intellectual
Property
|
26
|
|
|
Certificate
of Merger
|
2
|
IRS
|
13
|
|
|
Certificates
|
5
|
knowledge
|
52
|
|
|
Closing
|
1
|
Leases
|
22
|
|
|
Closing
Date
|
1
|
Lenders
|
9
|
|
|
Code
|
13
|
Liabilities
|
27
|
|
|
Common
Share
|
3
|
Liens
|
21
|
|
|
Common
Stock
|
7
|
Material
Adverse Effect
|
52
|
|
|
Company
|
1
|
Merger
|
1
|
|
|
Company
Balance Sheet
|
26
|
Merger
Sub
|
1
|
|
|
Company
Disclosure Schedule
|
6
|
Non-Imputation
Affidavits
|
43
|
|
|
Company
Requisite Vote
|
34
|
Option
|
4
|
|
|
Company
Stock Option Plans
|
8
|
Parent
|
1
|
|
|
Company
Termination Fee
|
48
|
Parent
Disclosure Schedule
|
27
|
|
|
Company’s
Employee Benefit Plan
|
13
|
Parent
Termination Fee
|
49
|
|
|
Company’s
Employee Benefit Plans
|
13
|
Paying
Agent
|
5
|
|
|
Confidentiality
Agreement
|
36
|
Permits
|
19
|
|
|
Contracts
|
20
|
person
|
52
|
|
|
control
|
51
|
Preferred
Stock
|
7
|
|
|
D&O
Tail Policy
|
38
|
Proceeding
|
39
|
|
|
DGCL
|
1
|
Property Restrictions
|
21
|
|
|
Dissenting
Shares
|
3
|
Proxy
Statement
|
35
|
|
|
Dissenting
Stockholder
|
3
|
Real
Property
|
25
|
|
|
DOJ
|
39
|
Recommendation
|
34
|
|
|
Effective
Time
|
2
|
Reportable
Transaction
|
16
|
|
|
Employee
Benefit Plan
|
13
|
Representatives
|
36
|
|
|
Environmental
Damages
|
25
|
Restricted
Shares
|
4
|
|
|
Environmental
Requirements
|
25
|
Rights
Agreement
|
8
|
|
|
ERISA
|
14
|
SEC
Reports
|
9
|
|
|
ERISA
Affiliate
|
14
|
Section
203
|
9
|
|
|
Estoppel
Certificates
|
43
|
Solicitation
Period End-Date
|
36
|
|
|
Exchange
Act
|
9
|
Stockholders
Meeting
|
34
|
|
|
Financing
|
40
|
subsidiaries
|
52
|
|
|
Financing
Commitment
|
29
|
subsidiary
|
52
|
|
|
Former
Real Property
|
25
|
Superior
Proposal
|
38
|
|
|
FTC
|
39
|
Surviving
Corporation
|
1
|
-iv-
|
Tamarac
|
43
|
Taxing
Authority
|
18
|
|
|
Tax
|
18
|
Termination
Date
|
47
|
|
|
Tax
Affiliate
|
15
|
VDR
|
52
|
|
|
Tax
Return
|
18
|
Voting
Agreement
|
38
|
-v-
AGREEMENT
AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER, dated as of June 13, 2008 (this “Agreement”),
among
NWJ APARTMENT HOLDINGS CORP., a Maryland corporation (“Parent”),
NWJ
ACQUISITION CORP., a Delaware corporation and a direct wholly-owned subsidiary
of Parent (“Merger
Sub”),
and
WILSHIRE ENTERPRISES, INC., a Delaware corporation (the “Company”).
WHEREAS,
the parties intend that Merger Sub be merged with and into the Company (the
“Merger”)
with
the Company surviving the Merger on the terms and subject to the conditions
set
forth in this Agreement;
WHEREAS,
the Board of Directors of the Company has (i) determined that it is in the
best interests of the Company and its stockholders, and declared it advisable,
to enter into this Agreement, (ii) approved this Agreement in accordance
with the General Corporation Law of the State of Delaware (the “DGCL”),
and
(iii) resolved to recommend the adoption of this Agreement by the
stockholders of the Company; and
WHEREAS,
the Board of Directors of Parent and the Board of Directors of Merger Sub have
each approved, and the Board of Directors of Merger Sub has declared it
advisable for Merger Sub to enter into, this Agreement,
NOW,
THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE
I
THE
MERGER
Section
1.1 The
Merger.
Upon
the terms and subject to the conditions of this Agreement and in accordance
with
the DGCL, at the Effective Time (as defined herein), Merger Sub shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (the “Surviving
Corporation”)
and a
wholly owned subsidiary of Parent.
Section
1.2 Closing;
Effective Time.
(a) The
closing of the Merger (the “Closing”)
shall
take place at the offices of Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000, or at such other place as shall be mutually agreed
by the parties hereto, as soon as practicable, but in no event later than the
second business day after the satisfaction or waiver of the conditions set
forth
in ARTICLE
VII
(excluding conditions that, by their terms, cannot be satisfied until the
Closing). The date on which the Closing actually occurs is hereinafter referred
to as the “Closing
Date”.
(b) At
the
Closing, the parties hereto shall cause the Merger to be consummated by filing
a
certificate of merger (the “Certificate
of Merger”)
with
the Secretary of State of the State of Delaware, in such form as required by,
and executed and filed in accordance with, the relevant provisions of the DGCL
(the date and time of the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, or such later time as is specified in the
Certificate of Merger and as is agreed to by the parties hereto, being
hereinafter referred to as the “Effective
Time”)
and
shall make all other filings or recordings required under the DGCL in connection
with the Merger.
Section
1.3 Effects
of the Merger.
The
Merger shall have the effects set forth in this Agreement and the applicable
provisions of the DGCL. Without limiting the generality of the foregoing and
subject thereto, at the Effective Time, all the property, rights, privileges,
immunities, powers and franchises of the Company and Merger Sub shall vest
in
the Surviving Corporation and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
Section
1.4 Certificate
of Incorporation; By-laws.
(a) At
the
Effective Time, the certificate of incorporation of the Company shall be amended
so as to read in its entirety as is set forth on Exhibit
A
annexed
hereto, and, as so amended, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended in accordance with its terms
and
as provided by law.
(b) At
the
Effective Time, and without any further action on the part of the Company and
Merger Sub, the by-laws of the Company shall be amended so as to read in their
entirety in the form as is set forth in Exhibit
B
annexed
hereto, and, as so amended, shall be the by-laws of the Surviving Corporation
until thereafter amended in accordance with their terms, the certificate of
incorporation of the Surviving Corporation and as provided by law.
Section
1.5 Directors
and Officers.
The
Company shall use its best efforts to cause the directors of the Company
immediately prior to the Effective Time to submit their resignations to be
effective as of the Effective Time. Immediately after the Effective Time, the
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, each to hold office in accordance with
the certificate of incorporation and by-laws of the Surviving Corporation.
The
officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office until the
earlier of their resignation or removal.
ARTICLE
II
EFFECT
OF THE MERGER ON THE CAPITAL STOCK
OF
THE CONSTITUENT CORPORATIONS
Section
2.1 Effect
on Capital Stock.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the Company, Parent, Merger Sub or the holders of any of the following
securities:
-2-
(a) Conversion
of Common Stock.
Each
share of Common Stock of the Company issued and outstanding immediately prior
to
the Effective Time (each, a “Common
Share”),
other
than (A) any Cancelled Shares (as defined herein) and (B) any Dissenting Shares
(as defined herein), shall be converted into the right to receive the Merger
Consideration (as defined below) in cash, without interest, payable to the
holder thereof upon surrender of such Common Shares in the manner provided
in
Section
2.3,
less
any required withholding taxes.
The
parties intend that to the extent the Merger Consideration is financed using
cash of the Company or the proceeds from borrowings by Merger Sub or the Company
or its subsidiaries, the Merger be treated for tax purposes as if the Company
had redeemed its stock to the extent that the Merger Consideration is
attributable to such cash or proceeds. "Merger Consideration" means $3.88.
(b) Parent,
Merger Sub and Company-Owned Shares.
Each
Common Share that is owned, directly or indirectly, by Parent or Merger Sub
immediately prior to the Effective Time, if any, or that is held in treasury
by
the Company immediately prior to the Effective Time (collectively, the
“Cancelled
Shares”)
shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and shall cease to exist, and no consideration shall
be
delivered in exchange therefor.
(c) Conversion
of Merger Sub Common Stock.
Each
share of capital stock of Merger Sub issued and outstanding immediately prior
to
the Effective Time shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock of the Surviving
Corporation.
(d) Shares
of Dissenting Stockholders.
Notwithstanding anything in this Agreement to the contrary, any Common Shares
which are issued and outstanding immediately prior to the Effective Time and
are
held by a person (a “Dissenting
Stockholder”)
who
has not voted in favor of or consented to the adoption of this Agreement and
has
complied with all the provisions of Section 262 of the DGCL concerning the
right
of holders of Common Shares to require appraisal of their Common Shares
(“Dissenting
Shares”)
shall
not be converted into the right to receive the applicable Merger Consideration,
and the holders of such Dissenting Shares shall be entitled to receive payment
of the fair value of such Dissenting Shares in accordance with the provisions
of
Section 262 of the DGCL; provided,
however,
that if
such Dissenting Stockholder withdraws its demand for appraisal or fails to
perfect or otherwise loses its right of appraisal in respect of its Common
Shares, in any case pursuant to Section 262 of the DGCL, such Common Shares
shall be deemed to be converted as of the Effective Time into the right to
receive the applicable Merger Consideration for each such Common Share in
accordance with the provisions of this Agreement. At the Effective Time, any
holder of Dissenting Shares shall cease to have any rights with respect thereto,
except the rights set forth in Section 262 of the DGCL and as provided in
the previous sentence. The Company shall give Parent prompt notice of any
demands for appraisal of Common Shares received by the Company, withdrawals
of
such demands and any other instruments served pursuant to Section 262 of the
DGCL and shall give Parent the opportunity to participate in all negotiations
and proceedings with respect thereto. The Company shall not, except with the
prior written consent of Parent, voluntarily make any payment with respect
to
any demands for appraisal or settle or compromise, or offer to settle or
compromise, any such demands.
-3-
Section
2.2 Treatment
of Options and Restricted Shares.
(a) The
Company shall provide that, immediately prior to the Effective Time, each option
to purchase Common Shares (an “Option”)
granted under any Company Stock Option Plan that, in each case, is outstanding
and unexercised as of the Effective Time (whether vested or unvested) shall
be
canceled, and the holder thereof shall be entitled to receive a payment in
cash,
without interest, equal to the product of (A) the number of Common Shares
previously subject to such Option and (B) the excess, if any, of the Merger
Consideration over the exercise price per Common Share previously subject to
such Option, less any required withholding taxes. The Common Shares subject
to
Options having an exercise price less than the Merger Consideration shall be
referred to as the “Cashed-Out Options”. At the Closing the Company shall
deliver to Parent agreements executed by each holder of an outstanding Option
cancelling such option and otherwise agreeing to receive the payments, if any,
provided for in this Section
2.2(a).
The
Surviving Corporation shall pay the holders of Options the cash payments
described in this Section
2.2(a)
on or as
soon as reasonably practicable after the Closing Date, but in any event within
two (2) business days thereafter.
(b) Each
Common Share granted subject to vesting or other lapse restrictions pursuant
to
any Company Stock Option Plan (collectively, “Restricted
Shares”)
which
is outstanding immediately prior to the Effective Time shall vest and become
free of such restrictions immediately prior to the Effective Time and at the
Effective Time each such Restricted Share shall be converted as if it were
a
Common Share into the right to receive the Merger Consideration in accordance
with Section
2.1,
less
any required withholding taxes which withholding taxes shall be paid by the
Paying Agent to the Company.
-4-
Section
2.3 Surrender
of Shares.
(a) At
or
prior to the Effective Time, Parent or Merger Sub shall enter into an agreement
with the Company’s transfer agent or such other person selected by Parent and
who is reasonably acceptable to Company to act as agent for the stockholders
of
the Company in connection with the Merger (the “Paying
Agent”)
to
receive payment of the Merger Consideration to which the stockholders of the
Company shall become entitled pursuant to this ARTICLE
II.
At or
immediately prior to the Effective Time, Merger Sub shall deposit with the
Paying Agent in trust for the benefit of holders of Common Shares, sufficient
funds to immediately pay the aggregate Merger Consideration. Such funds may
be
invested by the Paying Agent as directed by Merger Sub or, after the Effective
Time, the Surviving Corporation; provided
that (i)
no such investment or losses thereon shall affect the Merger Consideration
payable to the holders of Common Shares and following any losses Parent shall
promptly provide additional funds to the Paying Agent for the benefit of the
stockholders of the Company in the amount of any such losses and (ii) such
investments shall be in short-term obligations of the United States of America
with maturities of no more than 30 days or guaranteed by the United States
of
America and backed by the full faith and credit of the United States of America
or in commercial paper obligations rated A-1 or P-1 or better by Xxxxx’x
Investors Service, Inc. or Standard & Poor’s Corporation, respectively. Any
interest or income produced by such investments will be payable to the Surviving
Corporation or Parent, as Parent directs.
(b) Promptly
after the Effective Time (and in any event within two (2) business days
thereafter), the Surviving Corporation shall cause to be mailed to each record
holder, as of the Effective Time, of (i) an outstanding certificate or
certificates which immediately prior to the Effective Time represented Common
Shares (the “Certificates”)
or
(ii) Common Shares represented by book-entry (“Book-Entry
Shares”),
a
form of letter of transmittal (which shall be in customary form and shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent or, in the case of Book-Entry Shares, upon adherence to the
procedures set forth in the letter of transmittal) and instructions for use
in
effecting the surrender of the Certificates, or in the case of Book-Entry Shares
the surrender of such Book-Entry Shares, for payment of the applicable Merger
Consideration therefor. Upon surrender to the Paying Agent of a Certificate
or
of Book-Entry Shares, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, and such
other
documents as may be required pursuant to such instructions, the holder of such
Certificate or Book-Entry Shares shall be entitled to receive in exchange
therefor the applicable Merger Consideration for each Common Share formerly
represented by such Certificate or Book-Entry Shares and such Certificate or
Book-Entry Share shall then be canceled. No interest shall be paid or accrued
for the benefit of holders of the Certificates or Book-Entry Shares on the
Merger Consideration payable in respect of the Certificates or Book-Entry
Shares. If payment of the Merger Consideration is to be made to a person other
than the person in whose name the surrendered Certificate is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that
the
person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. Until surrendered as contemplated
by
this Section
2.3(b),
each
Certificate and each Book-Entry Share shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
applicable Merger Consideration as contemplated by this ARTICLE
II.
-5-
(c) At
any
time following the date that is twelve months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which
have been made available to the Paying Agent and which have not been disbursed
to holders of Certificates or Book-Entry Shares and thereafter such holders
shall be entitled to look to Parent and the Surviving Corporation (subject
to
abandoned property, escheat or other similar laws) with respect to the Merger
Consideration payable upon due surrender of their Certificates or Book-Entry
Shares. The Surviving Corporation shall pay all charges and expenses, including
those of the Paying Agent, in connection with the exchange of Common Shares
for
the Merger Consideration.
(d) After
the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of Common Shares
that were outstanding prior to the Effective Time. After the Effective Time,
Certificates or Book-Entry Shares presented to the Surviving Corporation for
transfer shall be canceled and exchanged for the consideration provided for,
and
in accordance with the procedures set forth in, this ARTICLE
II.
(e) Notwithstanding
anything in this Agreement to the contrary, Parent and the Paying Agent shall
be
entitled to deduct and withhold from the consideration otherwise payable to
any
former holder of Common Shares pursuant to this Agreement any amount as may
be
required to be deducted and withheld with respect to the making of such payment
under applicable Tax (as defined herein) laws.
(f) In
the
event that any Certificate shall have been lost, stolen or destroyed, upon
the
holder’s compliance with the reasonable replacement requirements established by
the Paying Agent, including, if necessary, the posting by the holder of a bond
in customary amount as indemnity against any claim that may be made against
it
with respect to the Certificate, the Paying Agent will deliver in exchange
for
the lost, stolen or destroyed Certificate the applicable Merger Consideration
payable in respect of the Common Shares represented by such Certificate pursuant
to this ARTICLE
II.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Contemporaneously
with the execution and delivery of this Agreement, the Company shall deliver
to
Parent and Merger Sub a disclosure schedule (the “Company
Disclosure Schedule”)
with
numbered sections corresponding to the relevant sections in this Agreement.
Any
exceptions or qualifications set forth in the Company Disclosure Schedule with
respect to a particular representation, warranty or covenant contained herein
shall be deemed to be an exception or qualification with respect to other
applicable representations, warranties and covenants contained in this Agreement
if the applicability of such exceptions or qualifications to any other
applicable representation, warranty or covenant would be readily apparent to
a
person reviewing the Company Disclosure Schedule, regardless of whether an
explicit reference to such representation, warranty or covenant is made. The
Company hereby represents and warrants to Parent and Merger Sub that except
as
set forth on the Company Disclosure Schedule:
-6-
Section
3.1 Organization
and Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
to
carry on its business as it is now being conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing,
in
each jurisdiction where the character of its properties owned or leased or
the
nature of its activities makes such qualification necessary, each of which
is
listed in Section
3.1
of the
Company Disclosure Schedule.
Section
3.2 Certificate
of Incorporation and By-Laws; Minute Books.
The
Certificate of Incorporation and By-Laws in the form attached to Section
3.2
of the
Company Disclosure Schedule are the Certificate of Incorporation and By-Laws
of
the Company as in effect on the date of this Agreement. The minute books of
the
Company and each of its subsidiaries contain true, complete and accurate records
of all meetings and consents in lieu of meetings of their respective Boards
of
Directors, and any committees thereof (or persons performing similar functions),
since the time of their respective organizations. The stock books of the
subsidiaries are true, complete and accurate.
Section
3.3 Subsidiaries. Section
3.3
of the
Company Disclosure Schedule sets forth each direct and indirect subsidiary
of
the Company. Each of the Company’s subsidiaries is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation as set forth in Section
3.3
of the
Company Disclosure Schedule and has the requisite corporate or limited liability
company power to carry on its business as it is now being conducted. Each such
subsidiary of the Company is duly qualified as a foreign corporation or limited
liability company to do business, and is in good standing, in each jurisdiction
where the character of its properties, owned or leased, or the nature of its
activities makes such qualification necessary, each as set forth in Section
3.3
of the
Company Disclosure Schedule. All of the outstanding shares of capital stock
or
limited liability company interests, as applicable, of each of the Company’s
subsidiaries are validly issued, fully paid and nonassessable and are owned
by
the Company or by a wholly owned subsidiary of the Company, free and clear
of
all liens, claims, or encumbrances, and there are no proxies outstanding with
respect to such shares. Section
3.3
of the
Company Disclosure Schedule sets forth a true and complete list of the ownership
interests of the Company in its subsidiaries and in any other corporation,
partnership, joint venture or other business association or entity and other
than as set forth on such schedule, the Company does not, directly or
indirectly, own or control or have any capital or other equity interest or
participation, or any interest convertible, exchangeable or exercisable for,
any
capital or other equity interest or participation in, nor is the Company,
directly or indirectly, subject to any obligation or requirement to provide
funds to or invest in, any person.
Section
3.4 Capitalization;
Face Amount of Auction Rate Securities.
The
authorized capital stock of the Company consists of 15,000,000 shares of common
stock, par value $1.00 per share (the “Common
Stock”),
and
1,000,000 shares of preferred stock, par value $1.00 per share (the “Preferred
Stock”). As of the date hereof, (i) 7,926,248 shares of Common Stock were
outstanding, all of which were validly issued, fully paid and nonassessable,
(ii) 2,087,296 shares of Common Stock were held in the treasury of the Company,
(iii) no shares of Common Stock were reserved for issuance pursuant to the
Company’s 1995 Stock Option and Incentive Plan and 1995 Non-Employee Director
Stock Option Plan and a total of 459,525 shares of Common Stock were reserved
for issuance pursuant to the 2004 Stock Option and Incentive Plan and 2004
Non-Employee Director Stock Option Plan (collectively, the “Company
Stock Option Plans”),
copies of which have heretofore been furnished to the Parent, (iv) 61,633
Restricted Shares have been granted under the Company Stock Option Plans and
remain outstanding, of which 24,632 shares are unvested, and (v) Options to
purchase 135,000 shares of Common Stock were outstanding, having been granted
pursuant to the Company Stock Option Plans. As of the date hereof, no shares
of
Preferred Stock were issued or outstanding. Section
3.4
of the
Company Disclosure Schedule sets forth a true and complete listing of all
Options outstanding as of the date hereof, setting forth the names of the
holders of such Options, the number of Common Shares subject to such Options
and
the exercise prices and vesting schedules of such Options. Pursuant to an
Amended and Restated Stockholder Protection Rights Agreement, dated as of
December 6, 2006, between the Company and Continental Stock Transfer & Trust
Company, as Rights Agent (the “Rights
Agreement”),
the
Company has issued to its stockholders rights to purchase shares of capital
stock of the Company. Except as set forth above and except as set forth in
Section
3.4
of the
Company Disclosure Schedule, there are not now, and at the Effective Time there
will not be, any shares of capital stock or other equity securities of the
Company or of any subsidiary of the Company issued or outstanding or any
options, warrants or other rights, agreements, arrangements or commitments
obligating the Company or any of its subsidiaries to issue or sell any shares
of
capital stock of the Company or of any subsidiary of the Company. Except as
set
forth in Section
3.4
of the
Company Disclosure Schedule, there are no outstanding contracts of the Company
or any subsidiary of the Company to repurchase, redeem or otherwise acquire
any
capital stock or other equity securities of the Company or any subsidiary of
the
Company. No subsidiary of the Company owns any Common Stock of the
Company.
As of
the date hereof, the aggregate face amount of the auction rate securities held
by the Company is $3,000,000.
-7-
Section
3.5 Authority
Relative to this Agreement.
The
Company has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of
the
Company are necessary to authorize this Agreement, the Merger and the
transactions contemplated hereby, except for adoption of this Agreement by
the
Company’s stockholders as described in this Agreement. This Agreement has been
duly executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms.
Section
3.6 No
Conflicts.
Except
as set forth in Section
3.6
of the
Company Disclosure Schedule and the Requisite Stockholder Vote, neither the
Company nor any of its subsidiaries or any of their respective assets is subject
to or obligated under any provision of (i) its respective certificate or
articles of incorporation or by-laws, (ii) any Contract, including any mortgage,
indenture or other document or instrument, (iii) any license, franchise or
permit, or (iv) any law, regulation, order, judgment or decree, in each case
which would be breached, violated or defaulted (with or without due notice
or
lapse of time or both) or in respect of which a right of termination or
acceleration or a loss of a material benefit or any encumbrance on any of its
assets would be created or suffered or which any consent is required to be
obtained or notice required to be given by the Company’s execution and
performance of this Agreement and consummation of the Merger. Except as set
forth in Section
3.6
of the
Company Disclosure Schedule, the consummation of the Merger by the Company
will
not require any consent, approval, authorization or permit of, action by, filing
with or notification to, any governmental entity, except for (i) the adoption
of
this Agreement by the requisite vote of the Company’s stockholders, (ii) the
applicable requirements, if any, of the Securities Exchange Act of 1934 (the
“Exchange
Act”)
and
state securities, takeover and “blue sky” laws, (iii) the applicable
requirements of the American Stock Exchange, and (iv) the filing with the
Secretary of State of the State of Delaware of the Certificate of Merger as
required by the DGCL. No filing or waiting period is required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the “HSR
Act”).
No
state takeover statute or similar statute or regulation or any “fair price”,
“moratorium”, “business combination”, “control share acquisition” or other form
of anti-takeover statute or regulation applies or purports to apply to the
Merger, this Agreement, the Voting Agreements or any of the transactions
contemplated hereby, other than Section 203 of the DGCL (“Section
203”).
Subject to the accuracy of the representation set forth in Section 4.10, by
virtue of resolutions heretofore approved by the Company’s Board of Directors,
the Merger, this Agreement, the Voting Agreements and the transactions
contemplated hereby will not be subject to the restrictions on business
combinations with interested stockholders otherwise applicable to the Merger,
this Agreement, the Voting Agreements or the transactions contemplated hereby
under Section 203 or the Rights Agreement. The Board of Directors of Company
has
taken such actions and votes as are necessary on its part to render the
provisions of Section 203, all other applicable takeover statutes of the DGCL
and the Rights Agreement inapplicable to this Agreement, the Merger, the Voting
Agreements and the transactions contemplated hereby and thereby. Set forth
in
Section
3.6
of the
Company Disclosure Schedule is a list of all indebtedness of the Company or
any
subsidiary including the name of each lender (the “Lenders”),
the
principal amount outstanding as of a recent practical date, whether or not
such
debt is prepayable and upon what terms, whether there is any prepayment penalty
which would become due on prepayment and if such indebtedness is not prepayable,
whether such indebtedness can be defeased and the terms of such
defeasance.
-8-
Section
3.7 Commission
Filings.
The
Company has heretofore delivered to the Parent (i) its Annual Report on
Form 10-K for the year ended December 31, 2007, as filed with the SEC (the
“10-K”)
and
(ii) all other reports filed by the Company with the SEC under the Exchange
Act
since the initial filing of the 10-K (collectively, the “SEC
Reports”).
As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder and applicable to such SEC Reports, and none of the
SEC
Reports contained any untrue statement of a material fact or omitted to state
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company and its
subsidiaries included in the SEC Reports previously provided to the Parent
comply as to form in all material respects with applicable accounting
requirements and published rules of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied
on
a consistent basis during the periods involved (except as may be indicated
in
the notes thereto and except, in the case of unaudited statements, as permitted
by Form 10-Q and Regulation S-X of the SEC) and fairly present the consolidated
financial position of the Company and its subsidiaries as of the dates thereof
and the consolidated results of their operations, changes in stockholders’
equity (to the extent applicable) and statements of cash flows for the periods
then ended, subject, in the case of the unaudited consolidated interim financial
statements, to normal year-end adjustments and any other adjustments described
therein. Except as set forth in Section
3.7
of the
Company Disclosure Schedule, the Company has timely filed all forms, statements
and documents required to be filed by it with the SEC during the past three
years. No subsidiary of the Company is required to make any filing with the
SEC.
Each of the Company’s Chief Executive Officer and Chief Financial Officer has
made all certifications required by Rule 13a-14 or 15d-14 under the Exchange
Act
and Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002 with respect to
the
Company SEC Reports and the statements contained in such certifications are
true
and accurate. The Company has established and maintains disclosure controls
and
procedures for the purposes of Rules 13a-15 and 15d-15 of the Exchange Act
in
all material respects. Those disclosure controls and procedures are designed
to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company’s Chief Executive
Officer and its Chief Financial Officer by others within those entities and
such
disclosure controls and procedures are effective to perform the functions for
which they were established. The Company’s auditors and the Audit Committee of
the Board of Directors have been advised of: (i) any significant deficiencies
in
the design or operation of internal controls which could adversely affect the
Company’s ability to record, process, summarize and report financial data and
(ii) any fraud, whether or not material, that involves management or other
employees who have a role in the Company’s internal controls. Since the date of
the most recent evaluation of such disclosure controls and procedures, there
have been no significant changes in internal controls or in other factors that
could significantly affect internal controls, including any corrective actions
with regard to sufficient deficiencies and material weaknesses. The above
disclosure controls and procedures were evaluated at least one time prior to
December 31, 2007.
-9-
Section
3.8 Absence
of Certain Changes or Events.
Since
December 31, 2007, except as set forth in Section
3.8
of the
Company Disclosure Schedule or SEC Reports filed prior to the date hereof,
neither the Company nor any of its subsidiaries has (i) suffered any Material
Adverse Effect or any event, change or condition likely to cause or have any
such Material Adverse Effect or (ii) conducted its business and operations
other
than in the ordinary course of business and consistent with past practices
except, subsequent to the date hereof, as permitted by Section
5.1
hereof.
(a) Without
limiting the foregoing, since December 31, 2007, except as set forth in
Section
3.8
of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
has:
(i) amended
or otherwise changed its certificate of incorporation or by-laws or any similar
governing instruments;
(ii) issued,
delivered, sold, pledged, disposed of or encumbered any shares of capital stock,
ownership interests or voting securities, or any options, warrants, convertible
securities or other rights of any kind to acquire or receive any shares of
capital stock, any other ownership interests or any voting securities (including
but not limited to stock appreciation rights, phantom stock or similar
instruments), of the Company or any of its subsidiaries (except for (A) the
issuance of Common Shares upon the exercise of Options or in connection with
other existing stock-based awards, in each case, in accordance with the terms
of
any Company Stock Option Plan, or (B) issuances in accordance with the Rights
Plan);
-10-
(iii) declared,
set aside, made or paid any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock (except
for any dividend or distribution by a subsidiary of the Company to the Company
or another wholly owned subsidiary of the Company);
(iv) reclassified,
combined, split, subdivided, redeemed, purchased or otherwise acquired any
shares of capital stock of the Company (except for the acquisition of Common
Shares tendered by optionees in connection with a cashless exercise of Options
or in order to pay taxes in connection with the exercise of Options or the
lapse
of restrictions in respect of Restricted Shares pursuant to the terms of a
Company Stock Option Plan), or reclassified, combined, split or subdivided
any
capital stock or other ownership interests of any of the Company’s
subsidiaries;
(v) made
any
acquisition of (whether by merger, consolidation or acquisition of stock or
substantially all of the assets), or made any investment in any interest in,
any
corporation, partnership or other business organization or division
thereof;
(vi) sold
or
otherwise disposed of (whether by merger, consolidation or disposition of stock
or assets or otherwise) any corporation, partnership or other business
organization or division thereof or otherwise sold or disposed of any assets,
other than sales or dispositions in the ordinary course of business or pursuant
to existing Contracts;
(vii) other
than in the ordinary course of business consistent with past practice, entered
into or amended in any material respect or failed to renew any Contract;
(viii) authorized
any material new capital expenditures which are, in the aggregate, in excess
of
the Company’s capital expenditure budget set forth on Section
3.8
of the
Company Disclosure Schedule;
(ix) except
for borrowings under the Company’s existing credit facilities, incurred or
modified in any material respect in an manner adverse to the Company the terms
of any indebtedness for borrowed money, or assumed, guaranteed or endorsed,
or
otherwise as an accommodation became responsible for, the obligations of any
person, or made any loans, advances or capital contributions to any other person
(other than a subsidiary of the Company), in each case, other than in the
ordinary course of business consistent with past practice, pursuant to letters
of credit or otherwise;
(x) except
to
the extent required under any Employee Benefit Plan or as required by applicable
law, (A) increased the compensation or fringe benefits of any of its directors,
officers or employees (except in the ordinary course of business with respect
to
employees who are not directors or officers), (B) granted any severance or
termination pay not provided for under any Employee Benefit Plan, (C) entered
into any employment, consulting or severance agreement or arrangement with
any
of its present or former directors, officers or other employees, except for
offers of employment in the ordinary course of business and consistent with
past
practice with employees who are not directors or officers, (D) established,
adopted, entered into or amended in any material respect or terminated any
Employee Benefit Plan or (E) paid or become obligated to pay any bonus,
severance or other amounts to any officer or employee;
-11-
(xi) made
any
change in any accounting principles, except as were appropriate to conform
to
changes in statutory or regulatory accounting rules or generally accepted
accounting principles or regulatory requirements with respect
thereto;
(xii) other
than in the ordinary course of business or as required by applicable law, (A)
made any Tax election or change any method of accounting, (B) entered into
any
settlement or compromise of any Tax liability, (C) filed any amended Tax Return
with respect to any Tax, (D) changed any annual Tax accounting period, (E)
entered into any closing agreement relating to any material Tax or (F)
surrendered any right to claim a Tax refund;
(xiii) settled
or compromised any litigation, other than settlements or compromises of
litigation where the amount paid did not exceed $25,000 or,
if
greater, the total incurred cash reserve amount for such matter, maintained
by
the Company on the Company Balance Sheet at December 31, 2007;
(xiv) waived
any right of value material to the Company or any subsidiary of the
Company;
(xv) adopted
a
plan of liquidation or resolutions providing for the liquidation, dissolution,
merger, consolidation or other reorganization of the Company or any subsidiary
of the Company;
(xvi) revalued
any portion of its assets, properties or businesses including, without
limitation, any write-down of the value of any assets or any write-off of notes
or accounts receivable, other than in the ordinary course of business consistent
with past practice;
(xvii) materially
changed any of its business policies or practices;
(xviii) other
than in the ordinary course of business consistent with past practice, entered
into any Lease (as lessor or lessee); sold, abandoned or made any other
disposition of any of its assets, properties or businesses; granted or suffered
any Lien on any of its assets, properties or businesses; or added or modified
any debt on properties or assets; or
(xix) failed
to
operate its business in the ordinary course, consistent with past
practices;
or
-12-
(b) agreed
to
take any of the actions described Section
3.8(a)(i)
through
Section
3.8(a)(xix).
Section
3.9 Litigation
and Liabilities.
Except
as disclosed in Section
3.9
of the
Company Disclosure Schedule or SEC Reports filed prior to the date hereof,
there
are no actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, properties or any former directors or officers of the Company,
in
their capacity as directors or officers of the Company.
Section
3.10 Employee
Benefits.
(a) Section
3.10
of the
Company Disclosure Schedule contains an accurate and complete list (and if
not
written, a description) of all of the Employee Benefit Plans which the Company,
or any ERISA Affiliate, sponsors, maintains or contributes to, is required
to
contribute to, or has or could reasonably be expected to have any liability
of
any nature with respect to, whether known or unknown, direct or indirect, fixed
or contingent, for the benefit of present or former employees of the Company
and/or its ERISA Affiliates (referred to collectively as the “Company’s
Employee Benefit Plans”
and
individually as a “Company’s
Employee Benefit Plan”).
Accurate and complete copies of all of the Company’s Employee Benefit Plans have
been provided or made available to Buyer as well as the most recent
determination letter issued, if any, or if none, Internal Revenue Service
(“IRS”)
opinion or advisory letter issued with respect to a Company’s Employee Benefit
Plan that is intended to be a qualified plan within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as amended
(“Code”),
all
pending applications for rulings, determination letters, opinions and no action
letters filed with the Department of Labor or the IRS, summary plan
descriptions, service agreements, stop loss insurance policies, if any and
all
related contracts and material documents (including, but not limited to, all
compliance reports and testing results for the past three years), all closing
letters, audit finding letters and revenue agent findings. None of Company’s
Employee Benefit Plans is subject to Title IV of ERISA or Code Section 412.
None of Company’s Employee Benefit Plans is a Multiple Employer Plan or
Multiemployer Plan under Code Section 413(c) or 414(f). None of Company’s
Employee Benefit Plans provides a self-insured health or death benefit. No
leased employees (as defined in Section 414(n) of the Code) are eligible
for, or participate in, the Company’s Employee Benefit Plans. None of Company’s
Employee Benefit Plans promises or provides health or life benefits to retirees
or former employees, except as required by Code Section 4980B, Sections 601
through 609 of ERISA, or comparable state statutes which provide for continuing
health care coverage.
(b) “Employee
Benefit Plan”
means
any employee benefit plan as defined in Section 3(3) of ERISA, any
“voluntary employees’ beneficiary association” within the meaning of
Section 501(c)(9) of the Code, “welfare benefit fund” within the meaning of
Section 419 of the Code, or “qualified asset account” within the meaning of
Section 419A of the Code, and any other material plan, program, policy or
arrangement for or regarding bonuses, commissions, incentive compensation,
severance, vacation, deferred compensation, pensions, profit sharing,
retirement, payroll savings, stock options, stock purchases, stock awards,
stock
ownership, phantom stock, stock appreciation rights, equity compensation,
medical/dental expense payment or reimbursement, disability income or
protection, sick pay, group insurance, self insurance, death benefits, employee
welfare or fringe benefits of any nature, including those benefiting retirees
or
former employees.
-13-
(c) “ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and all rulings
and regulations promulgated thereunder.
(d) “ERISA
Affiliate”
means
any entity, trade or business (whether or not incorporated) that is part of
the
same controlled group with, common control with, part of an affiliated service
group with, or part of another arrangement that includes, the Company or any
ERISA Affiliate within the meaning of Code Section 414(b), (c), (m) or
(o).
(e) Except
as
set forth in Section
3.10(e)
of the
Company Disclosure Schedule, neither the Company nor any ERISA Affiliate has
(i)
established, sponsored, maintained or contributed to (or has or had the
obligation to contribute to) any Employee Benefit Plan, (ii) proposed any
Employee Benefit Plan which it plans to establish, sponsor, maintain or to
which
it will be required to contribute, or (iii) proposed any changes to any of
Company’s Employee Benefit Plans now in effect. Except as set forth in
Section
3.10(e)
of the
Company Disclosure Schedule, each of Company’s Employee Benefit Plans that
provides a self-insured health benefit is subject to a stop-loss insurance
policy in which the Company is an insured party and no facts exist which could
form the basis for any denial of coverage under such policy.
(f) With
respect to the Company’s Employee Benefit Plans, the Company and each ERISA
Affiliate will have made, on or before the Closing Date, all payments (including
premium payments with respect to insurance policies) required to be made by
them
on or before the Closing Date and will have accrued (in accordance with
generally accepted accounting principles) as of the Closing Date all payments
(including premium payments with respect to insurance policies) due but not
yet
payable as of the Closing Date. There has not been, nor will there be, any
Accumulated Funding Deficiencies (as defined in ERISA or the Code) or waivers
of
such deficiencies.
(g) The
Company has delivered or made available to Parent an accurate and complete
copy
of the three most recent Annual Reports (Form 5500 series), accompanying
schedules and any other material form or filing required to be submitted to
any
governmental agency with regard to each of Company’s Employee Benefit Plans and
the most current actuarial report, if any, with regard to each of the Company’s
Employee Benefit Plans.
(h) All
of
the Company’s Employee Benefit Plans are, and have been, operated in compliance
in all material respects with their provisions and with all applicable laws
including ERISA and the Code and the regulations and rulings thereunder. With
respect to each of the Company’s Employee Benefit Plans that is intended to be
qualified under Section 401(a), each such plan has been determined by the
IRS to be so qualified as to form, and each trust forming a part thereof has
been determined by the IRS to be exempt from tax pursuant to Section 501(a)
of the Code, and with respect to each of the Company’s Employee Benefit Plans
that is intended to be a “voluntary employees’ beneficiary association” within
the meaning of Section 501(c)(9) of the Code, each such association has
been determined by the IRS to have such status. To the knowledge of the Company,
no reason exists that would cause such qualified or Section 501(c)(9)
status to be revoked for any period. The Company, its ERISA Affiliates, and
all
fiduciaries of the Company’s Employee Benefit Plans have complied in all
material respects with the provisions of the Company’s Employee Benefit Plans
and in all material respects with all applicable Laws including ERISA and the
Code and the regulations and rulings thereunder. None of the Company’s Employee
Benefit Plans is a “MEWA” as defined in Section 3(40)(A) of ERISA. To the
knowledge of the Company, no non-exempt prohibited transaction under
Section 406 or 407 of ERISA or Section 4975 of the Code has occurred
with respect to any of Company’s Employee Benefit Plans. Neither the Company nor
any ERISA Affiliate has incurred any tax liability or civil penalty, damages,
or
other liabilities arising under Section 502 of ERISA, resulting from any of
the Company’s Employee Benefit Plans.
-14-
(i) Except
as
contemplated by Section
2.2
hereof,
neither the execution and delivery of this Agreement nor the consummation of
the
transactions contemplated hereby will (i) result in any payment (including
any
severance, unemployment compensation or golden parachute payment) becoming
due
from the Company or any ERISA Affiliate under any of the Company’s Employee
Benefit Plans, (ii) increase any benefits otherwise payable under any of the
Company’s Employee Benefit Plans, or (iii) result in the acceleration of the
time of payment or vesting of any such benefits to any extent.
(j) There
are
no pending actions, claims or lawsuits that have been asserted or instituted
against any of the Company’s Employee Benefit Plans, the assets of any of the
trusts under such plans, the plan sponsor, the plan administrator or any
fiduciary of any such plan (other than routine benefit claims), and, to the
knowledge of the Company, there are no facts which could form the basis for
any
such action, claim or lawsuit. There are no investigations or audits by any
government agency of any of the Company’s Employee Benefit Plans, any trusts
under such plans, the plan sponsor, the plan administrator or any fiduciary
of
any such plan that have been instituted or threatened and, to the knowledge
of
the Company, there are no facts which could form the basis for any such
investigation or audit.
(k) To
the
knowledge of the Company, no action or omission of the Company, or any ERISA
Affiliate, or any director, officer, or agent thereof in any way restricts,
impairs or prohibits the Company or any ERISA Affiliate, or any successor,
from
amending, merging, or terminating any of the Company’s Employee Benefit Plans in
accordance with the express terms of any such plan and applicable
law.
(l) To
the
knowledge of the Company, each Company’s Employee Benefit Plan that is a
“nonqualified deferred compensation plan” (as defined in Code Section
409A(d)(1)) has been operated since January 1, 2005 in good faith compliance
with Code Section 409A and the rules and regulations issued thereunder.
Section
3.11 Taxes.
The
Company and each subsidiary of the Company has filed or caused to be filed
timely (taking into account all available extensions) all material federal,
state, local and foreign Tax Returns required to be filed by each of it and
any
member of its consolidated, combined, unitary or similar group (each such
member, a “Tax
Affiliate”).
Such
Tax Returns are accurate and complete in all material respects. Section
3.11
of the
Company Disclosure Schedule contains an accurate and complete list of all Tax
Returns actually filed by the Company or any subsidiary as of the date hereof
with respect to the calendar years 2004, 2005, 2006 and 2007 of the Company
and
each subsidiary of the Company. Accurate and complete copies of all such
federal, state, local and foreign income, sales and use Tax Returns filed by
the
Company and each of its subsidiaries have been delivered or made available
to
Parent. The Company and each of its subsidiaries has paid or caused to be paid
or has made adequate provision or set up an adequate accrual or reserve for
the
payment of, all Taxes shown to be due in respect of the periods for which Tax
Returns are due, and has established (or will establish at least quarterly)
an
adequate accrual or reserve for the payment of all Taxes payable in respect
of
the period subsequent to the last of said periods required to be so accrued
or
reserved. The financial statements filed with the SEC Reports fully accrue
all
actual and contingent liabilities for Taxes with respect to all periods through
the dates thereof in accordance with generally accepted accounting principles.
Neither the Company nor any of its Tax Affiliates nor any of its subsidiaries
has any material liability for Taxes in excess of the amount so paid or accruals
or reserves so established. Neither the Company nor any of its Tax Affiliates
nor any of its subsidiaries is delinquent in the payment of any Tax in excess
of
the amount reserved or provided therefor, and, subject to completion of pending
or scheduled audits, no deficiencies for any Tax, assessment or governmental
charge in excess of the amount reserved or provided therefor have, to the
knowledge of the Company, been threatened, claimed, proposed or assessed. With
respect to each of the Company, its Tax Affiliates and its subsidiaries,
(i) no waiver or extension of time to assess any Taxes has been given or
requested and remains in effect on the date hereof, (ii) no audit by any
taxing authority has ever been conducted, is currently pending or, to the
knowledge of the Company, threatened, (iii) no notice of any proposed Tax
audit, or of any Tax deficiency or adjustment, has been received, and
(iv) to the knowledge of the Company there is no reasonable basis for any
Tax deficiency or adjustment to be assessed.
-15-
(a) The
Company and each of its subsidiaries has disclosed to the Internal Revenue
Service on the appropriate Tax Returns any Reportable Transaction in which
it
has participated and has retained all documents and other records pertaining
to
any Reportable Transaction in which it has participated, including documents
and
other records listed in Treasury Regulation Section 1.6011-4(g) and any other
documents or other records which are related to any Reportable Transaction
in
which it has participated but which are not listed in Treasury Regulation
Section 1.6011-4(g). A “Reportable
Transaction”
means
any transaction listed in Treasury Regulation Section 1.6011-4(b).
(b) Neither
the Company nor any subsidiary of the Company has a contract, agreement plan,
or
other similar type of arrangement currently in place covering any person that,
individually or collectively, could give rise to the payment of any amount
that
would not be deductible by reason of Section 280G of the Code or similar
provision of state or foreign law, or would constitute compensation that would
not be deductible by reason of Section 162(m) of the Code or similar provision
of state or foreign law. Neither the Company nor any subsidiary of the Company
is obligated to make any “gross-up” or similar payment to any person on account
of any Tax under Section 4999 of the Code or similar provision of state or
foreign law.
(c) Neither
the Company nor any subsidiary of the Company is a party to, is bound by nor
has
any obligation under any Tax sharing agreement or similar contract (whether
or
not written) or has liability for Taxes of any person under Treasury Regulation
Section 1.1502-6 or any similar provision of state, local or foreign law, as
a
transferee or successor, by contract or otherwise other than the Company or
its
subsidiaries.
-16-
(d) Neither
the Company nor any subsidiary of the Company has been the “distributing
company” (within the meaning of Section 355(a)(1) of the Code) nor the
“controlled corporation” (within the meaning of Section 355(a)(1) of the Code)
(i) within the two-year period ending as of the date of this Agreement or (ii)
in a distribution that otherwise constitutes part of a “plan” or “series of
transactions” (within the meaning of Section 355(e) of the Code) in conjunction
with this Agreement.
(e) The
Company and each subsidiary of the Company has complied with the provisions
of
the Code relating to the withholding and payment of Taxes, including, without
limitation, the withholding and reporting requirements under Code Sections
1441
through 1464, 3401 through 3406, and 6041 through 6049, as well as similar
provisions under any other Laws, and has, within the time and in the manner
prescribed by law, withheld from employee wages and paid over to the proper
taxing authorities all amounts required. The Company and each of its
subsidiaries has undertaken in good faith to appropriately classify all service
providers as either employees or independent contractors for all Tax purposes.
The Company and each of its subsidiaries has collected and remitted all
applicable sales, use and VAT or other similar Taxes to the applicable taxing
authority.
(f) Neither
the Company nor any subsidiary of the Company has agreed to make, nor is the
Company or any subsidiary of the Company required to make, any adjustment under
Section 481(a) of the Code (or any similar provision of state, local or foreign
law) by reason of a change in accounting method or otherwise, and, no Taxing
Authority has proposed any such adjustment or change in accounting method.
Neither the Company nor any subsidiary of the Company will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing
Date
as a result of any: (i) “closing agreement” as described in Section 7121 of the
Code (or any corresponding provision of state, local or foreign income Tax
law);
(ii) installment sale or open transaction disposition made on or prior to the
Closing Date; (iii) prepaid amount received on or prior to the Closing Date
or
(iv) intercompany transactions or any excess loss accounts described in the
Treasury Regulations promulgated under Section 1502 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law).
Neither the Company nor any subsidiary of the Company is subject to any private
letter ruling of any Taxing Authority or comparable rulings of other Taxing
Authorities. No power of attorney currently in force has been granted by the
Company or any subsidiary of the Company concerning any Tax matter.
(g) Neither
the Company nor any subsidiary of the Company has taken any reporting position
on a Tax Return, which reporting position (i) if not sustained would be
reasonably likely, absent disclosure, to give rise to a penalty for substantial
understatement of federal income Tax under Section 6662 of the Code (or any
predecessor statute or any corresponding provision of any such predecessor
statute, or state, local, or foreign Tax law), and (ii) has not adequately
been
disclosed on such Tax Return in accordance with Section 6662(d)(2)(B) of the
Code (or corresponding provision of any such predecessor statute, or state,
local, or foreign Tax law).
(h) No
employee benefit plan or other agreement, policy or arrangement between the
Company or any subsidiary of the Company and any “service provider” (as such
term is defined in Section 409A of the Code and the Treasury Regulations and
Internal Revenue Service guidance thereunder) would subject any person to Tax
pursuant to Section 409A(1) of the Code, whether pursuant to the consummation
of
the transactions contemplated hereby or otherwise. Neither the Company nor
any
subsidiary of the Company is a party to, or otherwise obligated under, any
contract, agreement, plan or arrangement that provides for the gross-up of
the
tax imposed by Section 409A(a)(1)(B) of the Code. The exercise price of any
stock option issued by the Company and each subsidiary of the Company to any
person was not less than the fair market value of the issuing company’s stock on
the date that such stock option was granted.
-17-
(i) Neither
the Company nor any subsidiary of the Company has or has ever had a permanent
establishment or other taxable presence in any country other than the United
States and Canada. The completion of the transactions contemplated hereunder
will not trigger the realization or recognition of intercompany gain or income
to the Company or any subsidiary of the Company under the federal consolidated
return regulations.
(j) For
purposes of this Agreement, the following terms shall have the following
meanings:
“Tax”,
“tax”,
“Taxes”
or
“taxes”
means
(i) all federal, state, local or foreign taxes, charges, fees, imposts, levies
or other assessments, including, all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clause (i), and (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii) payable by reason of any contract, assumption, transferee liability,
operation of law, Treasury Regulation Section 1.1502-6(a) (or any predecessor
or
successor thereof or any analogous or similar provision under law) or
otherwise.
“Taxing
Authority”
means
the Internal Revenue Service and any other governmental
authority of any other jurisdiction responsible for the administration of any
Tax.
“Tax
Return”
means
any return, report or statement required to be filed with respect to any Tax
(including any attachments thereto, and any amendment thereof) including any
information return, claim for refund, amended return or declaration of estimated
Tax, and including, where permitted or required, combined, consolidated or
unitary returns for any group of entities that includes the Company or any
of
its Tax Affiliates.
Section
3.12 Information
Supplied.
Any SEC
Report filed with the SEC or any proxy statement mailed by the Company to the
holders of Common Shares after the date hereof and all amendments and
supplements thereto will comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations
thereunder and will not, at the time of (a) the filing of the SEC Report or
the
first mailing of any proxy statement (and respective amendments thereto) or
(b)
the 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
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by the Parent or Merger Sub expressly
for
inclusion in such proxy statement.
-18-
Section
3.13 Licenses
and Permits; Governmental Notices.
The
Company and its subsidiaries have obtained all material licenses, registrations,
approvals, certificates, authorizations, consents, franchises and permits
(“Permits”)
necessary to conduct their respective businesses and to own and operate their
respective assets and such Permits are valid and in full force and effect.
No
defaults or violations exist or have been recorded in respect of any material
Permit of the Company and its subsidiaries. No proceeding is pending or, to
the
knowledge of the Company, threatened which contemplates the revocation,
limitation or non-renewal of any such material Permit.
(a) Since
December 31, 2005, the Company and its subsidiaries have not received any
written notice regarding, and have not been made a party to, any proceeding,
investigation or arbitration brought by any governmental authority alleging
that
(a) the Company and its subsidiaries are in, or may be in, violation of any
law,
governmental regulation, order, judgment or decree (b) the Company and its
subsidiaries must change any of their business practices to remain in compliance
with any law, governmental regulation or order, (c) the Company and its
subsidiaries have failed to obtain any license or permit required for the
conduct of its business or the ownership of its assets, or (d) the Company
and
its subsidiaries are in default under or violation of any license or
permit.
Section
3.14 Compliance
with Laws.
Except
as set forth in Section
3.14
of the
Company Disclosure Schedule, the Company and its subsidiaries have complied
in a
timely manner in all material respects with all federal, state, county, local
or
foreign statutes and laws, including common law, ordinances, orders, judgments,
decrees or regulations, standards, enforceable guidelines or codes of any
governmental authority, relating to any of the property owned, leased or used
by
them, or applicable to their business, including, but not limited to, the labor,
equal employment opportunity, occupational safety and health, environmental
waste disposal, zoning, building, environmental and antitrust laws.
Section
3.15 Insurance.
During
the past six years, the Company and each of its subsidiaries have been covered
under insurance policies and programs which provide coverage to the Company
and
its subsidiaries by insurers reasonably believed by the Company to be of
recognized financial responsibility and solvency. All material policies of
insurance and fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees, officers and
directors have previously been made available for inspection by the Parent
and
are in full force and effect and insure against risks and liabilities customary
for the businesses in which the Company and its subsidiaries are engaged and
those in effect on the date hereof are listed in Section
3.15
of the
Company Disclosure Schedule. Except as otherwise set forth in Section
3.15
of the
Company Disclosure Schedule or SEC Reports, as of the date hereof, there are
no
material claims by the Company or any subsidiary of the Company under any such
policy or instrument as to which any insurance company is denying liability
or
defending under a reservation of rights clause other than a customary
reservation of rights clause. All necessary notifications of claims have been
made to insurance carriers other than those where the failure to so notify
is
not reasonably expected to have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries has any knowledge of any inaccuracy in any
application for such policies, any failure to pay premiums when due or any
similar state of facts that might form the basis for termination of any such
insurance. Neither the Company nor any of its subsidiaries has been refused
any
insurance with respect to its assets, properties, or businesses, nor has any
coverage been limited, by any insurance carrier to which the Company or any
of
its subsidiaries has applied for any such insurance or with which the Company
or
any of its subsidiaries has carried insurance during the last three years.
Section
3.15
of the
Company Disclosure Schedule sets forth the loss runs of the Company and each
subsidiary of the Company for the last five years.
-19-
Section
3.16 Contracts.
All
contracts, agreements, commitments and other documents to which the Company
or
any of its subsidiaries is a party or by which the Company, any subsidiary
of
the Company, or any of their assets is in any way affected or bound, including
all amendments and supplements thereto and modifications thereof, excluding
those that (a) are terminable without premium or penalty upon no more than
sixty
(60) days notice or (b) involve in their entirety less than $50,000 and in
cases
of (a) and (b) are not otherwise material to the business (collectively, except
as otherwise set forth in this Section
3.16,
“Contracts”),
are
listed in Section
3.16
of the
Company Disclosure Schedule, are legally valid and binding and in full force
and
effect, and the Company and each of its subsidiaries is in compliance in all
material respects with all such Contracts and neither the Company nor any
subsidiary of the Company has received any notice that it is in default or
breach of any of the terms thereof. The Company has previously made available
for inspection by the Parent through the VDR all written Contracts, except
those
that are identified in Section 3.16 of the Company Disclosure Schedule as
available on the SEC's XXXXX website. A summary of the terms of each oral
Contract is set forth on Section
3.16
of the
Company Disclosure Schedule. The Company has previously provided the Parent
with
copies of, and Section
3.16
of the
Company Disclosure Schedule identifies, any agreement with any executive officer
or other key employee of the Company or any subsidiary of the Company (A) the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company or any subsidiary
of
the Company of the nature of any of the transactions contemplated by this
Agreement, (B) providing any compensation guarantee of more than $50,000 per
year or (C) providing severance benefits or other benefits after the termination
of employment of such executive officer or key employee not comparable to
benefits available to employees generally. Except as set forth in the engagement
letter dated January 20, 2006 between the Company and Xxxxxxxx, Xxxxxxxx and
Xxxxxx, as amended by Amendment 1 to Engagement Letter, dated June 15, 2006,
Amendment 2 to Engagement Letter, dated October 9, 2006, Amendment 3 to
Engagement Letter, dated May 24, 2007 and Amendment No. 4 to Engagement Letter
effective January 18, 2008, all expenses of the Company incurred and to be
incurred in connection with this Agreement and the transactions contemplated
hereby, including but not limited to legal and accounting fees are on normal
terms and do not involve any success fees, bonuses or premiums.
Section
3.17 Title
to Properties; Real Property.
(a) Except
as
set forth in Section
3.17
of the
Company Disclosure Schedule, the Company or one of its subsidiaries owns fee
simple title to or leasehold title to each of the Real Properties identified
on
Section
3.17
of the
Company Disclosure Schedule, in each case (except as provided below) free and
clear of liens, mortgages or deeds of trust, claims against title, charges
which
are liens, security interests or other encumbrances on title (“Liens”). Section
3.17
of the
Company Disclosure Schedule sets forth each piece of Real Property owned or
leased by the Company or any subsidiary of the Company, and any Real Property
in
which the Company or any subsidiary of the Company has any other interest,
the
type of interest held in such Real Property and the owner of such interest
in
Real Property.
-20-
(b) None
of
the Real Property is subject to any rights of way, written agreements, or
reservations of an interest in title that are recorded or, if not recorded,
of
which the Company or any subsidiary of the Company has knowledge (collectively,
“Property
Restrictions”),
except for (i) Liens and Property Restrictions set forth in Section
3.17(b)
of the
Company Disclosure Schedule, (ii) Property Restrictions imposed or
promulgated by law or any governmental body or authority with respect to real
property (and, to the knowledge of the Company, the Company or any subsidiary
of
the Company is not in default in any material respect under any such Liens
or
Property Restrictions), including zoning regulations, (iii) Liens and
Property Restrictions disclosed on the title policies or reports or surveys
obtained in connection with this Agreement and provided or made available to
Parent, which Liens or Property Restrictions are set forth on Section
3.17(b)
of the
Company Disclosure Schedule, and (v) mechanics’, carriers’, workmen’s,
repairmen’s liens and other Liens, Property Restrictions and other limitations
of any kind, if any, which are not material in amount, do not materially detract
from the value of or materially interfere with the present use of any of the
Real Property subject thereto or affected thereby, and for which adequate
reserves have been made in the Company’s financial statements included in the
SEC Reports filed prior to the date hereof.
(c) Except
as
listed in Section
3.17(c)
of the
Company Disclosure Schedule, the Company has made available to Parent all valid
policies of title insurance in its possession insuring the Company’s or the
applicable Company subsidiaries’ fee simple or leasehold title to the Real
Property and no claim has been made against any such policy.
(d) Except
as
set forth in Section
3.17(d)
to the
Company Disclosure Schedule, neither the Company nor any subsidiary of the
Company directly or through the actions or inactions of their agents has
(i) failed to obtain or have in full force and effect, any material
certificate, permit or license from any governmental authority having
jurisdiction over any of the Real Property or any agreement, easement or other
right that is necessary to permit the lawful and current use and operation
of
the buildings and improvements on any of the Real Property or that is necessary
to permit the lawful use and operation in all material respects of all
driveways, parking areas, detention ponds, roads and other means of egress
and
ingress to and from any of the Real Property for an unlimited duration, and
(ii) received notice of any violation of any laws, Lien or Property
Restrictions affecting any of the Real Property issued by any party or
governmental authority which has not been cured or contested in good faith
and
neither the Company nor any subsidiary of the Company is in material violation
of any laws that pertain to the Real Property.
(e) Except
as
provided for in Section
3.17(e)
of the
Company Disclosure Schedule and to the knowledge of the Company, neither the
Company nor any subsidiary of the Company has received any written notice to
the
effect nor has knowledge that any condemnation or rezoning proceedings are
pending or threatened with respect to any of the Real Property.
-21-
(f) Except
as
provided for in Section
3.17(f)
of the
Company Disclosure Schedule, the rent rolls for the Real Property, for each
of
the three months ended March 31, 2008, which previously have been made available
to the Parent, list each lease or other right of occupancy that, the Company
or
the subsidiaries are party to as landlord with respect to each applicable piece
of Real Property (the “Leases”),
and
are correct and complete in all respects. The Company has made available to
Parent correct and complete copies of all Leases, including all amendments,
modifications, supplements, renewals, extensions and guarantees related thereto,
as of the date hereof. Except as set forth in Section
3.17
of the
Company Disclosure Schedule, neither the Company nor any subsidiary of the
Company, on the one hand, nor, to the knowledge of the Company or subsidiary
of
the Company, any other party, on the other hand, is in default under any
Lease.
(g) Except
as
provided in Section
3.17(g)
of the
Company Disclosure Schedule, all work required to be performed, payments
required to be made and actions required to be taken prior to the date hereof
pursuant to any agreement entered into with a governmental authority in
connection with or relating to the Real Property including, but not limited
to,
a site approval, zoning reclassification, local improvement district, road
improvement district, environmental remediation, abatement and/or mitigation
have been performed, paid or taken, as the case may be, in accordance with
applicable Laws.
(h) Section
3.17(h) of
the
Company Disclosure Schedule sets forth a correct and complete list of each
ground lease pursuant to which the Company or any of its subsidiaries is a
lessee (individually, “Ground
Lease”)
and
collectively, “Ground
Leases”).
Each
Ground Lease is in full force and effect and is valid, binding and enforceable
in accordance with its terms against (a) the Company or any of its subsidiaries,
and (b) to the knowledge of the Company, the other parties thereto. Except
as
listed in Section
3.17(h)
of the
Company Disclosure Schedule, the Company and all of its subsidiaries have
performed all obligations required to be performed by it to date under each
of
the Ground Leases and neither the Company nor any of its subsidiaries, nor
to
the knowledge of the Company, any other party, is conducting operations and/or
its business in violation of laws or are they in default under any Ground Lease
(and to the Company’s knowledge, no event has occurred which, with due notice or
lapse of time or both, would constitute such a default). Except as listed in
Section
3.17(h)
of the
Company Disclosure Schedule, neither the Company nor any subsidiary of the
Company has received written notice of, or given written notice of, any material
default under any such Ground Lease which remains uncured. No option has been
exercised under any of such Ground Leases, except options whose exercise has
been evidenced by a written document as described in Section
3.17(h)
of the
Company Disclosure Schedule. The Company has made available to Parent a correct
and complete copy of each Ground Lease and all amendments thereto.
(i) Except
as
set forth in Section
3.17(i)
of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
has
granted any unexpired option agreements or rights of first refusal with respect
to the purchase of any Real Property or any portion thereof or any other
unexpired rights in favor of third persons to purchase or otherwise acquire
any
Real Property or any portion thereof or entered into any contract for sale,
ground lease or letter of intent to sell or ground lease any Real Property
or
Ground Lease or any portion thereof.
-22-
(j) Except
as
set forth in Section
3.17(j)
of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
is
a party to any agreement relating to the management of any of the Real Property
by a party other than the Company or any wholly owned subsidiary of the
Company.
(k) Except
as
provided for on Section
3.17(k)
of the
Company Disclosure Schedule, neither the Company nor any subsidiary of the
Company has any construction or alteration work in progress (or commitments
therefor) not in the ordinary course of business or the expected cost of which
would be in excess of $100,000 for any single parcel of Real
Property.
(l) All
of
the buildings and improvements on each parcel of Real Property have been
maintained in a state of good repair. Except (i) as set forth in the property
condition reports delivered to Parent by EBI Consulting or (ii) as listed on
Schedule 3.17(l), there are no material structural defects and there has not
been any material damage or destruction to any of such buildings or
improvements, reasonable wear and tear excepted.
Section
3.18 Labor
Matters.
There
are no collective bargaining or other labor union agreements to which the
Company or any of its subsidiaries is a party or by which any of them is bound.
Since January 1, 2007, neither the Company nor any of its subsidiaries has
encountered any labor union organizing activity, or had any actual or threatened
employee strikes, work stoppages, slowdowns or lockouts.
Section
3.19 Environmental
Matters.
Except
as disclosed in Section
3.19
of the
Company Disclosure Schedule:
(a) Except
as
is customary in the operation or use of real property similar to any Real
Property or Former Real Property, to the Company’s knowledge, the Company and
its subsidiaries have not engaged in or permitted any operation or activity
at
or upon, or any use or occupancy of, any Real Property or Former Real Property
for the purpose of or in any way involving the handling, manufacture, treatment,
storage, use, generation, release, refining, reclaiming, recycling, dumping
or
disposal of any Hazardous Materials, on, under or in any Real Property or Former
Real Property. Except as is customary in the operation or use of real property
similar to any Real Property or Former Real Property, the Company and its
subsidiaries have not transported any Hazardous Materials to, from or across
any
Real Property or Former Real Property. No Hazardous Materials currently are
produced, incorporated in any construction on, deposited, stored or otherwise
located on, under or in any Real Property or Former Real Property.
(b) To
the
Company’s knowledge, no Hazardous Materials have migrated from any Real Property
or Former Real Property to, upon, or beneath other properties, and, to the
Company’s knowledge, no Hazardous Materials have migrated or threaten to migrate
from other properties to, upon, about or beneath any Real Property or Former
Real Property.
(c) No
aboveground or underground improvement, including without limitation treatment
or storage tank of water, gas or oil, is located on any Real Property or Former
Real Property.
-23-
(d) To
the
best of the Company’s knowledge, all Real Property and Former Real Property and
all activities conducted by the Company or its subsidiaries on the Real Property
and any Former Real Property, including without limitation the use, maintenance
and operation of the Real Property or Former Real Property and the use,
maintenance and operation of all aboveground and underground storage tanks,
with
respect to the Real Property currently comply in all material respects and,
at
all times have complied in all material respects, with all Environmental
Requirements and with respect to all Former Real Property, complied in all
material respects while owned, leased or operated by the Company or any
subsidiary, with all Environmental Requirements.
(e) Neither
the Company or its subsidiaries nor, to the Company’s knowledge, any current or
prior owner or occupant of any Real Property or Former Real Property, has
received any notice or other communication concerning or has knowledge of (A)
any violation or alleged violation of Environmental Requirements material to
the
Parent’s decision to consummate the transactions contemplated hereby
individually or in connection with any other information concerning the
environmental condition of the Real Property or Former Real Property, whether
or
not corrected, or (B) any alleged liability for Environmental Damages (as
defined below) in connection with any Real Property or Former Real Property
or
material transported to, from or across any Real Property or Former Real
Property. No writ, injunction, decree, order or judgment relating to the
foregoing is outstanding. There is no lawsuit, claim, proceeding, citation,
directive, summons or investigation pending or, to the Company’s knowledge,
threatened against the Company or any of its subsidiaries relating to any
alleged violation of or liability under any applicable Environmental
Requirements or the presence of any Hazardous Materials on any Real Property
or
Former Real Property.
(f) To
the
Company’s knowledge, there has been no spilling, leaking, pumping, emitting,
emptying, discharging, escaping, leaching, dumping, release, or disposing of
any
Hazardous Materials onto any Real Property or Former Real Property.
(g) To
the
knowledge of the Company, no Real Property or Former Real Property nor any
off-site waste disposal location to which wastes from the Real Property or
Former Real Property have been taken, appear or have appeared on the United
States Environmental Protection Agency’s National Priority List or in any other
list, schedule, log, inventory or record, however defined, maintained by any
governmental authority with respect to sites where Hazardous Materials have
or
may have been disposed of or where there is, has been or may be a release or
threat of a release of any Hazardous Materials.
(h) To
the
knowledge of the Company, there are no conditions in, on, under or about any
Real Property that may reasonably be expected to:
(i) materially
restrict its development or use for commercial or industrial
purposes;
(ii) materially
increase the cost of developing, operating or maintaining the Real Property
for
commercial or industrial purposes;
-24-
(iii) present
any material risk of harm to any persons or things on or off the Real Property;
or
(iv) materially
diminish or impair the value or marketability of the Real Property.
(i) For
purposes of this Agreement:
(i) “Environmental
Damages”
means
all claims, judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, Liens, costs and expenses of defense of a
claim
(whether or not such claim is ultimately defeated), good faith settlements
of
judgment, and costs and expenses of reporting, investigating, removing and/or
remediating Hazardous Materials, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, including without
limitation reasonable attorneys’ fees and disbursements and consultants’ fees,
any of which arise out of or relate to the existence of Hazardous Materials
at,
upon, or beneath the Real Property or Former Real Property, migrating or
threatening to migrate from the Real Property or Former Real Property or
transported to, from, or across any Real Property or Former Real
Property.
(ii) “Environment
Requirements”
means
all applicable statutes, regulations, rules, ordinances, codes, policies,
advisories, actions, licenses, permits, orders, approvals, plans, authorizations
and similar items of all federal, state and local governmental branches,
agencies, departments, commissions, boards, bureaus or instrumentalities having
jurisdiction and all applicable judicial and administrative and regulatory
decrees, judgments and orders and all covenants running with the land that
relate to the protection of health or the environment, including without
limitation those that relate to the existence, handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, recycling, reclaiming
or
disposal of Hazardous Materials or the protection of the air, surface water,
groundwater or land or preservation of wetlands, floodplains or other
environmentally sensitive areas.
(iii) “Former
Real Property”
means
any real property in which the Company or its subsidiaries heretofore held
but
no longer hold a fee, leasehold or other legal, beneficial or equitable
interest, and “Real
Property”
means
any real property in which the Company or its subsidiaries holds a fee,
leasehold or other legal, beneficial or equitable interest.
(iv) “Hazardous
Materials”
means
any substance: (A) the presence of which requires reporting, investigation,
removal or remediation under any Environmental Requirement; (B) that is
defined as a “hazardous waste,” “hazardous substance” or “pollutant” or
“contaminant” under any Environmental Requirement; (C) that is toxic,
explosive, corrosive, flammable, ignitable, infectious, radioactive, reactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated under any
Environmental Requirement; (D) the presence of which on any Real Property
or Former Real Property causes a nuisance upon any Real Property or Former
Real
Property or to adjacent properties or poses a hazard to the health or safety
of
Persons on or about any Real Property or Former Real Property; (E) the
presence of which on adjacent properties constitutes a trespass by the Company
or its subsidiaries; (F) that contains gasoline, diesel fuel or other
petroleum hydrocarbons; (G) that contains PCBs, asbestos or urea
formaldehyde foam insulation; or (H) that contains mold.
-25-
(j) The
Company and its subsidiaries have complied in all material respects with all
Environmental Requirements at the Real Property and Former Real
Property.
Section
3.20 Rights
Agreement.
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby or the execution and delivery of the Voting
Agreements will trigger the exercisability of any right under the Rights
Agreement or otherwise affect any rights or obligations under the Rights
Agreement.
Section
3.21 Intellectual
Property.
Each of
the Company and each of its subsidiaries has good title to or possesses adequate
licenses or other valid rights to use all Intellectual Property (as defined
in
this Section
3.21)
used by
such entity in its business or necessary to conduct its business, free and
clear
of all Liens, and has paid all maintenance fees, renewals or expenses related
to
such Intellectual Property. To the knowledge of the Company, neither the use
of
such Intellectual Property nor the conduct of the businesses of the Company
and
its subsidiaries in accordance with each such entity’s past practice,
misappropriates, infringes upon or conflicts with any Intellectual Property
of
any third party, except where such use or conduct would not constitute a
Material Adverse Effect. No order, decree, judgment, temporary restraining
order
or preliminary or permanent injunction has been rendered by any governmental
entity relating to such Intellectual Property. For purposes of this Agreement,
the term “Intellectual
Property”
means
all intellectual property, including all (i)(a) patents, inventions,
discoveries, processes, technology, know-how and related improvements; (b)
copyrights and works of authorship in any media, including computer programs,
databases, data and related items, and Internet site content;
(c) trademarks, service marks, trade names, brand names, corporate names,
domain names and URLs, logos and trade dress; (d) trade secrets and proprietary
or confidential information; (ii) registrations, applications, recordings,
and licenses or other agreements related thereto; and (iii) rights to obtain
renewals, extensions, continuations, continuations-in-part, reissues, divisions
or other legal protections related thereto.
Section
3.22 Accounts
and Notes Receivable.
All
accounts and notes receivable reflected in the Company’s March 31, 2008 balance
sheet included in the SEC Reports (the “Company Balance Sheet”) and all accounts
receivable arising subsequent to March 31, 2008, have arisen in the ordinary
course of business, represent valid obligations to the Company and its
subsidiaries and, subject only to consistently recorded reserves for bad debts
in a manner consistent with past practice, have been collected or are to the
knowledge of the Company collectible in the aggregate recorded amounts thereof
in accordance with their terms.
Section
3.23 Liabilities.
As of
March 31, 2008, the Company and its subsidiaries did not have any direct or
indirect indebtedness, liability, claim, loss, damage, deficiency, obligation
or
responsibility, known or unknown, fixed or unfixed, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured, subordinated or
unsubordinated, matured or unmatured, accrued, absolute, contingent or
otherwise, including, without limitation, liabilities on account of Taxes,
other
governmental, regulatory or administrative charges or lawsuits brought, of
a
kind required by generally accepted accounting principles to be set forth on
a
financial statement (collectively, “Liabilities”), that were not fully and
adequately reflected or reserved against on the Company Balance Sheet (less
Liabilities that have been discharged in the ordinary course of business since
March 31, 2008) or reflected on Section
3.23
of the
Company Disclosure Schedule. To the knowledge of the Company there are no
circumstances, conditions, events or arrangements that may hereafter give rise
to any Liabilities, individually or in the aggregate, material to the Company
or
any of its subsidiaries or any successor to their respective businesses except
in the ordinary course of business or as otherwise set forth on Section
3.23
of the
Company Disclosure Schedule.
-26-
Section
3.24 Employees. Section
3.24
of the
Company Disclosure Schedules sets forth each employee of the Company and each
of
its subsidiaries. Section
3.24
of the
Company Disclosure Schedule identifies all agreements relating to the employment
and compensation of such employees, and if such agreements are not in written
form, the material terms of such agreements.
Section
3.25 Non-competition.
Neither
the Company nor any of its subsidiaries is, and after the Effective Time,
neither the Surviving Corporation nor Parent will be (by reason or any agreement
to which the Company or any of its subsidiaries is a party), subject to any
non-competition or similar restriction on their respective
business.
Section
3.26 Brokers.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company, other than arrangements with Xxxxxxxx,
Xxxxxxxx and Xxxxxx. A true and complete copy of the engagement letter between
the Company and Xxxxxxxx, Xxxxxxxx and Xxxxxx has previously been delivered
to
the Parent. No compensation is due or payable to Xxxxxxxx, Xxxxxxxx and Xxxxxx
in connection with this Agreement and the transactions contemplated hereby
except as set forth in such engagement letter.
Section
3.27 No
Other Representations or Warranties.
The
Company acknowledges that Parent and Merger Sub make no representations or
warranties as to any matter whatsoever except as expressly set forth in
ARTICLE
IV.
The
representations and warranties set forth in ARTICLE
IV
are made
solely by Parent and Merger Sub, and no Representative of Parent and Merger
Sub
shall have any responsibility or liability related thereto.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF
PARENT
AND MERGER SUB
Parent
and Merger Sub hereby, jointly and severally, represent and warrant to the
Company that, except as set forth on the disclosure schedule delivered by Parent
and Merger Sub to the Company prior to the execution of this Agreement (the
“Parent
Disclosure Schedule”):
Section
4.1 Organization.
Each of
Parent and Merger Sub is a corporation duly organized, validly existing and
in
good standing under the laws of the jurisdiction in which it is incorporated
and
has the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power or authority would not prevent, materially delay or materially impede
the consummation of the transactions contemplated by this Agreement. Neither
Parent nor Merger Sub is in violation of its organizational or governing
documents.
-27-
Section
4.2 Authority.
Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by each of Parent and Merger Sub and the
consummation by each of Parent and Merger Sub of the transactions contemplated
hereby have been duly and validly authorized by all necessary action by the
Boards of Directors of Parent and Merger Sub and, prior to the Effective Time,
will be duly and validly authorized by all necessary action by Parent as the
sole stockholder of Merger Sub, and no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize this Agreement, to perform
their respective obligations hereunder, or to consummate the transactions
contemplated hereby (other than the filing with the Secretary of State of the
State of Delaware of the Certificate of Merger as required by the DGCL). This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming due authorization, execution and delivery hereof by the
Company, constitutes a legal, valid and binding obligation of each of Parent
and
Merger Sub enforceable against each of Parent and Merger Sub in accordance
with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and any implied covenant of
good
faith and fair dealing.
Section
4.3 No
Conflict; Required Filings and Consents.
(a) The
execution, delivery and performance by Parent and Merger Sub of this Agreement
does not, and the consummation of the transactions contemplated hereby,
including any financing, and the compliance with the provisions of this
Agreement will not (i) conflict with or violate the respective certificate
of
incorporation or by-laws (or similar organizational documents) of Parent or
Merger Sub, (ii) assuming that all consents, approvals and authorizations
contemplated by clauses (i) through (iii) of subsection (b) below have been
obtained, and all filings described in such clauses have been made, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or Merger Sub or by which either of them or any of their respective
properties are bound or (iii) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) or result in the loss of a benefit under, or give rise
to any right of termination, cancellation, amendment or acceleration of, any
contract to which Parent or Merger Sub is a party or by which Parent or Merger
Sub or its or any of their respective properties are bound, except, in the
case
of clauses (ii) and (iii), for any such conflict, violation, breach, default,
acceleration, loss, right or other occurrence which would not prevent,
materially delay or materially impede the consummation of the transactions
contemplated hereby.
-28-
(b) The
execution, delivery and performance of this Agreement by each of Parent and
Merger Sub and the consummation of the transactions contemplated hereby by
each
of Parent and Merger Sub do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
governmental entity, except for (i) the applicable requirements, if any, of
the
Exchange Act and state securities, takeover and “blue sky” laws, (ii) the
applicable requirements of the American Stock Exchange, (iii) the filing with
the Secretary of State of the State of Delaware of the Certificate of Merger
as
required by the DGCL, and (iv) any such consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain
would not prevent, materially delay or materially impede the consummation of
the
transactions contemplated hereby.
Section
4.4 Absence
of Litigation.
There
are no suits, claims, actions, proceedings, arbitrations, mediations or
investigations pending or, to the knowledge of Parent, threatened against Parent
or any of its subsidiaries, other than any such suit, claim, action, proceeding
or investigation that would not prevent, materially delay or materially impede
the consummation of the transactions contemplated hereby. Neither Parent nor
any
of its subsidiaries nor any of their respective properties is or are subject
to
any order, writ, judgment, injunction, decree or award that would prevent,
materially delay or materially impede the consummation of the transactions
contemplated hereby.
Section
4.5 Proxy
Statement.
None of
the information supplied or to be supplied by Parent or Merger Sub for inclusion
or incorporation by reference in the Proxy Statement will, at the date it is
first mailed to the stockholders of the Company and at the time of the
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 the light of the circumstances under which
they
are made, not misleading. Notwithstanding the foregoing, Parent and Merger
Sub
make no representation or warranty with respect to any information supplied
by
the Company or any of its representatives which is contained or incorporated
by
reference in the Proxy Statement. Parent and Merger Sub will take all
commercially reasonable efforts to supply information necessary for the Proxy
Statement as promptly as practicable.
Section
4.6 Brokers.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by
this
Agreement based upon arrangements made by and on behalf of Parent or Merger
Sub,
other than Olympus Capital Group LLC. No compensation is due or payable to
Olympus Capital Group LLC in connection with this Agreement and the transactions
contemplated hereby except as set forth in such engagement letter and such
compensation will be paid by the Surviving Corporation.
Section
4.7 Financing.
Merger
Sub has, or as of the Closing Date will have, sufficient funds to pay (i) the
Merger Consideration and (ii) all of its related fees and expenses. A copy
of
the commitment letter dated February 15, 2008 (the “Financing
Commitment”)
has
been made available to the Company.
Section
4.8 Operations
and Ownership of Parent and Merger Sub.
-29-
(a) Merger
Sub has been formed solely for the purpose of engaging in the transactions
contemplated hereby and prior to the Effective Time will have engaged in no
other business activities and will have incurred no liabilities or obligations
other than as contemplated herein.
(b) As
of the
date of this Agreement, the authorized capital stock of Merger Sub consists
of
3,000 shares
of
common stock, par value $0.01 per share, 1,000 shares of which are validly
issued and outstanding. All of the issued and outstanding capital stock of
Merger Sub is, and immediately prior to the Effective Time will be, owned by
Parent.
Section
4.9 Ownership
of Shares.
As of
the date hereof, none of Parent, Merger Sub or their respective affiliates
owns
(or, at any time during the past three years, owned) (directly or indirectly,
beneficially or of record) any Common Shares and none of Parent, Merger Sub
or
their respective affiliates holds (or, at any time during the past three years,
held) any rights to acquire or vote any Common Shares except pursuant to this
Agreement.
Section
4.10 Certain
Agreements.
Other
than the Voting Agreements, there are no contracts between Parent or Merger
Sub,
on the one hand, and any member of the Company’s management or directors, on the
other hand, as of the date hereof that relate in any way to the Company or
the
transactions contemplated by this Agreement. Prior to the Board of Directors
of
the Company approving this Agreement, the Merger and the other transactions
contemplated hereby for purposes of the applicable provisions of the DGCL,
neither Parent nor Merger Sub, alone or together with any other person, was
at
any time, or became, an “interested stockholder” thereunder or has taken any
action that would cause the restrictions on business combinations with
interested stockholders set forth in Section 203 of the DGCL to be applicable
to
this Agreement, the Merger, or any transactions contemplated by this
Agreement.
Section
4.11 Vote/Approval
Required.
No vote
or consent of the holders of any class or series of capital stock of Parent
is
necessary to approve this Agreement or the Merger or the transactions
contemplated hereby. The vote or consent of Parent as the sole stockholder
of
Merger Sub is the only vote or consent of the holders of any class or series
of
capital stock of Merger Sub necessary to adopt this Agreement or approve the
Merger or the transactions contemplated hereby.
Section
4.12 No
Other Information.
Parent
and Merger Sub acknowledge that the Company makes no representations or
warranties as to any matter whatsoever except as expressly set forth in
ARTICLE
III.
The
representations and warranties set forth in ARTICLE
III
are made
solely by the Company, and no Representative of the Company shall have any
responsibility or liability related thereto.
Section
4.13 Access
to Information; Disclaimer.
Parent
and Merger Sub each acknowledges and agrees that it (a) has had an opportunity
to discuss the business of the Company and its subsidiaries with the management
of the Company, (b) has had reasonable access to (i) the books and records
of
the Company and its subsidiaries and (ii) the electronic dataroom maintained
by
the Company for purposes of the transactions contemplated by this Agreement,
(c)
has been afforded the opportunity to ask questions of and receive answers from
officers of the Company and (d) has conducted its own independent investigation
of the Company and its subsidiaries, their respective businesses and the
transactions contemplated hereby, and has not relied on any representation,
warranty or other statement by any Person on behalf of the Company or any of
its
subsidiaries, other than the representations and warranties of the Company
expressly contained in ARTICLE
III
of this
Agreement or elsewhere in this Agreement and that all other representations
and
warranties are specifically disclaimed. Notwithstanding any information given
or
made available to Parent and Merger Sub, Parent and Merger Sub are entitled
to
rely exclusively on the Company’s representations and warranties set forth
herein.
-30-
ARTICLE
V
CONDUCT
OF BUSINESS PENDING THE MERGER
Section
5.1 Conduct
of Business of the Company Pending the Merger.
(a) Between
the date of this Agreement and the Effective Time, except as otherwise
contemplated by this Agreement, as disclosed in the SEC Reports filed prior
to
the date of this Agreement, as set forth in Section
5.1
of the
Company Disclosure Schedule, as required by law or unless Parent shall otherwise
consent in writing (which consent shall not be unreasonably withheld, delayed
or
conditioned), (A) the business of the Company and its subsidiaries shall be
conducted in its ordinary course of business and the Company shall use its
reasonable best efforts to preserve substantially intact its business
organization, and material business relationships, (B) the Company shall
perform its obligations under this Agreement, and (C) without limiting the
foregoing, neither the Company nor any of its subsidiaries shall:
(i) amend
or
otherwise change its Certificate of Incorporation or By-Laws or any similar
governing instruments;
(ii) issue,
deliver, sell, pledge, dispose of or encumber any shares of capital stock,
ownership interests or voting securities, or any options, warrants, convertible
securities or other rights of any kind to acquire or receive any shares of
capital stock, any other ownership interests or any voting securities (including
but not limited to stock appreciation rights, phantom stock or similar
instruments), of the Company or any of its subsidiaries (except for (A) the
issuance of Common Shares upon the exercise of Options or in connection with
other stock-based awards outstanding as of the date of this Agreement, in each
case, in accordance with the terms of any Company Stock Option Plan, or (B)
issuances in accordance with the Rights Plan);
(iii) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock (except
for any dividend or distribution by a subsidiary of the Company to the Company
or another wholly owned subsidiary of the Company);
(iv) reclassify,
combine, split, subdivide, redeem, purchase or otherwise acquire any shares
of
capital stock of the Company (except for the acquisition of Common Shares
tendered by optionees in connection with a cashless exercise of Options or
in
order to pay taxes in connection with the exercise of Options or the lapse
of
restrictions in respect of Restricted Shares pursuant to the terms of a Company
Stock Option Plan), or reclassify, combine, split or subdivide any capital
stock
or other ownership interests of any of the Company’s subsidiaries;
-31-
(v) make
any
acquisition of (whether by merger, consolidation or acquisition of stock or
substantially all of the assets), or make any investment in any interest in,
any
corporation, partnership or other business organization or division
thereof;
(vi) sell
or
otherwise dispose of (whether by merger, consolidation or disposition of stock
or assets or otherwise) any corporation, partnership or other business
organization or division thereof or otherwise sell or dispose of any assets,
other than sales or dispositions in the ordinary course of business or pursuant
to existing Contracts;
(vii) other
than in the ordinary course of business consistent with past practice, enter
into or amend in any material respect any Contract;
(viii) authorize
any material new capital expenditures which are, in the aggregate, in excess
of
the Company’s capital expenditure budget set forth on Section
3.8
of the
Company Disclosure Schedule;
(ix) except
for borrowings under the Company’s existing credit facilities, incur or modify
in any material respect in an manner adverse to the Company the terms of any
indebtedness for borrowed money, or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any person,
or
make any loans, advances or capital contributions to any other person (other
than a subsidiary of the Company), in each case, other than in the ordinary
course of business consistent with past practice, pursuant to letters of credit
or otherwise;
(x) except
to
the extent required under any Employee Benefit Plan or as required by applicable
law, (A) increase the compensation or fringe benefits of any of its directors,
officers or employees (except in the ordinary course of business with respect
to
employees who are not directors or officers), (B) grant any severance or
termination pay not provided for under any Employee Benefit Plan, (C) enter
into
any employment, consulting or severance agreement or arrangement with any of
its
present or former directors, officers or other employees, except for offers
of
employment in the ordinary course of business and consistent with past practice
with employees who are not directors or officers, (D) establish, adopt, enter
into or amend in any material respect or terminate any Employee Benefit Plan
or
(E) pay or become obligated to pay any bonus, severance or other amounts to
any
officer or employee other than as set forth in Section
3.24
of the
Company Disclosure Schedule;
(xi) make
any
change in any accounting principles, except as may be appropriate to conform
to
changes in statutory or regulatory accounting rules or generally accepted
accounting principles or regulatory requirements with respect
thereto;
(xii) other
than in the ordinary course of business or as required by applicable law, (A)
make any Tax election or change any method of accounting, (B) enter into any
settlement or compromise of any Tax liability, (C) file any amended Tax Return
with respect to any Tax, (D) change any annual Tax accounting period, (E) enter
into any closing agreement relating to any material Tax or (F) surrender any
right to claim a Tax refund;
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(xiii) settle
or
compromise any litigation, other than settlements or compromises of litigation
where the amount paid does not exceed $250,000 or,
if
greater, the total incurred cash reserve amount for such matter, as of the
date
of this Agreement, maintained by the Company on the Company Balance Sheet at
March 31, 2008;
(xiv) waive
any
right of value material to the Company or any subsidiary of the
Company;
(xv) adopt
a
plan of liquidation or resolutions providing for the liquidation, dissolution,
merger, consolidation or other reorganization of the Company or any subsidiary
of the Company other than the dissolution of any inactive subsidiary of the
Company mutually agreed to by the Company and the Parent;
(xvi) except
as
may be required by generally accepted accounting principles, revalue any portion
of its assets, properties or businesses including, without limitation, any
write-down of the value of any assets or any write-off of notes or accounts
receivable, other than in the ordinary course of business consistent with past
practice;
(xvii) materially
change any of its business policies;
(xviii) other
than in the ordinary course of business consistent with past practice, enter
into any lease (as lessor or lessee); sell, abandon or make any other
disposition of any of its assets, properties or businesses; grant or suffer
any
Lien on any of its assets, properties or businesses; or
(xix) agree
to
take any of the actions described in Section
5.1(a)(i)
through
Section
5.1(a)(xviii).
(b) Between
the date of this Agreement and the Effective Time, the Company will timely
file
all reports required to be filed under all United States securities laws and
regulations and by the American Stock Exchange.
(c) Between
the date of this Agreement and the Effective Time, the Company shall not, and
shall cause each of is subsidiaries not to, directly or indirectly, take any
action (i) to cause its representations and warranties set forth in ARTICLE
III
to be
untrue in any material respect; or (ii) that would, or would reasonably be
expected to, individually or in the aggregate, prevent, materially delay or
materially impede the consummation of the Merger or the other transactions
contemplated by this Agreement.
Section
5.2 Conduct
of Business of Parent and Merger Sub Pending the Merger.
Each of
Parent and Merger Sub agrees that, between the date of this Agreement and the
Effective Time, it shall not, directly or indirectly, take any action (i) to
cause its representations and warranties set forth in ARTICLE
IV
to be
untrue in any material respect; or (ii) that would, or would reasonably be
expected to, individually or in the aggregate, prevent, materially delay or
materially impede the consummation of the Merger or the other transactions
contemplated by this Agreement. Parent shall, promptly following execution
of
this Agreement, approve and adopt this Agreement in its capacity as sole
stockholder of Merger Sub and deliver to the Company evidence of its vote or
action by written consent approving and adopting this Agreement in accordance
with applicable law and the certificate of incorporation and bylaws of Merger
Sub.
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Section
5.3 No
Control of Other Party’s Business.
Nothing
contained in this Agreement shall give Parent, directly or indirectly, the
right
to control or direct the Company’s or its subsidiaries’ operations prior to the
Effective Time, and nothing contained in this Agreement shall give the Company,
directly or indirectly, the right to control or direct Parent’s or its
subsidiaries’ operations prior to the Effective Time. Prior to the Effective
Time, each of the Company and Parent shall exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision over its
and
its subsidiaries’ respective operations.
Section
5.4 Accountant’s
Work Papers.
Between
the date hereof and the Effective Time, the Company shall permit Parent and
its
advisors access to the work papers of the Company’s accountants in connection
with the audit of the Company’s financial statements for fiscal year
2007.
Section
5.5 Tax
Returns.
The
Company shall and shall cause its subsidiaries to file all Tax Returns required
to be filed by each of them prior to the Effective Time.
ARTICLE
VI
ADDITIONAL
AGREEMENTS
Section
6.1 Stockholders
Meeting.
The
Company, acting through its Board of Directors, shall (a) as soon as
reasonably practicable following the date of this Agreement, take all action
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders for the purpose of adopting this Agreement (the “Stockholders
Meeting”),
(b) include in the Proxy Statement the recommendation of the Board of
Directors that the stockholders of the Company vote in favor of the adoption
of
this Agreement (the “Recommendation”)
and
(c) use its reasonable best efforts to obtain the adoption of this Agreement
by
the holders of a majority of the outstanding shares of Common Stock (the
“Company
Requisite Vote”);
provided
that the
Board of Directors of the Company may fail to make or may withdraw, modify
or
change the Recommendation and/or may fail to use such efforts if it shall have
determined in good faith, after consultation with outside legal counsel to
the
Company, that such action is required by its fiduciary duties under applicable
law. Notwithstanding anything to the contrary contained in this Agreement,
unless this Agreement is terminated in accordance with Section
8.1,
the
Company, regardless of whether the Board of Directors of the Company has
approved, endorsed or recommended an Acquisition Proposal or has withdrawn,
modified or amended the Recommendation, but in compliance with the DGCL, will
call, give notice of, convene and hold the Stockholders Meeting as soon as
reasonably practicable after the date of this Agreement and will submit this
Agreement for adoption by the stockholders of the Company at the Stockholders
Meeting. The Company and Parent will discuss the advisability of the Company
retaining the services of a proxy solicitation company in connection with the
Stockholders Meeting.
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Section
6.2 Proxy
Statement.
As soon
as reasonably practicable following the date of this Agreement, the Company
shall, with the assistance of Parent, prepare and file with the SEC a proxy
statement (the “Proxy
Statement”).
Parent, Merger Sub and the Company will cooperate with each other in the
preparation of the Proxy Statement. Without limiting the generality of the
foregoing, each of Parent and Merger Sub will furnish to the Company the
information relating to it required by the Exchange Act and the rules and
regulations promulgated thereunder to be set forth in the Proxy Statement.
The
Company shall not file the preliminary Proxy Statement, or any amendment or
supplement thereto, without providing Parent a reasonable opportunity to review
and comment thereon (which comments shall be reasonably considered by the
Company). The Company shall use its reasonable best efforts to resolve all
SEC
comments with respect to the Proxy Statement as promptly as practicable after
receipt thereof and to cause the Proxy Statement in definitive form to be
cleared by the SEC and mailed to the Company’s stockholders as promptly as
reasonably practicable following filing with the SEC. The Company agrees to
consult with Parent prior to responding to SEC comments with respect to the
preliminary Proxy Statement. Each of Parent, Merger Sub and the Company agree
to
correct any information provided by it for use in the Proxy Statement which
shall have become false or misleading. The Company shall as soon as reasonably
practicable notify Parent of the receipt of any comments from the SEC with
respect to the Proxy Statement and any request by the SEC for any amendment
to
the Proxy Statement or for additional information.
Section
6.3 Resignation
of Directors.
At the
Closing, the Company shall deliver to Parent evidence reasonably satisfactory
to
Parent of the resignation of all directors of the Company and, as specified
by
Parent reasonably in advance of the Closing, all directors of each subsidiary
of
the Company, in each case, effective at the Effective Time.
Section
6.4 Access
to Information; Confidentiality.
(a) From
the
date hereof to the Effective Time or the earlier termination of this Agreement,
upon reasonable prior written notice, the Company shall, and shall use its
reasonable best efforts to cause its subsidiaries, officers, directors and
employees to, afford the officers, employees, auditors and other authorized
representatives of Parent reasonable access, consistent with applicable law,
at
all reasonable business hours to its officers, employees, properties, offices,
and other facilities and to all books and records, and shall furnish Parent
with
all financial, operating and other data and information, including without
limitation, rent rolls, as Parent, through its officers, employees or authorized
representatives, may from time to time reasonably request in writing.
Notwithstanding the foregoing, any such investigation or consultation shall
be
conducted in such a manner as not to interfere unreasonably with the business
or
operations of the Company or its subsidiaries or otherwise result in any
significant interference with the prompt and timely discharge by such employees
of their normal duties. Neither the Company nor any of its subsidiaries shall
be
required to provide access to or to disclose information where such access
or
disclosure would violate or prejudice its rights or the rights of any of its
officers, directors or employees, jeopardize any attorney-client privilege
or
contravene any law, rule, regulation, order, judgment, decree or binding
agreement entered into prior to the date of this Agreement.
(b) Each
of
Parent and Merger Sub will hold and treat and will cause its officers, employees
and other representatives to hold and treat in confidence all documents and
information concerning the Company and its subsidiaries furnished to Parent
or
Merger Sub in connection with the transactions contemplated by this Agreement
in
accordance with the Confidentiality Agreement, dated June 8, 2007, between
the
Company and Parent (the “Confidentiality
Agreement”)
which
Confidentiality Agreement shall remain in full force and effect in accordance
with its terms.
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Section
6.5 Acquisition
Proposals.
(a) During
the period beginning on the date of the first public announcement of this
Agreement and continuing until 5:00
pm (EDT)
on the date that is thirty (30) days after such date (the “Solicitation
Period End-Date”)
the
Company shall have the right to directly or indirectly, including through its
Representatives, (i) initiate, solicit and encourage Acquisition Proposals,
including by way of providing access to non-public information pursuant to
one
or more confidentiality agreements on terms no less favorable to the Company
or
less restrictive on such Person than those contained in the Confidentiality
Agreement (except for such changes specifically necessary in order for the
Company to be able to comply with its obligations under this Agreement),
provided that the Company shall promptly provide to Parent any material
non-public information concerning the Company or its subsidiaries that is
provided to any Person given such access which was not previously made available
to Parent; and (ii) enter into and maintain discussions or negotiations with
respect to potential Acquisition Proposals or otherwise cooperate with or assist
or participate in, or facilitate, any such inquiries, proposals, discussions
or
negotiations.
(b) Except
as
set forth in Section
6.5(a),
the
Company shall not, nor shall the Company authorize or permit any of its
subsidiaries or any of the directors, officers, employees, attorneys or
investment bankers (“Representatives”)
of the
Company or any of its subsidiaries to, (i) directly or indirectly,
initiate, solicit or knowingly encourage any inquiries with respect to, or
the
making of any Acquisition Proposal, (ii) engage in any negotiations or
discussions concerning, or provide access to its properties, books and records
or any confidential information or data to, any person relating to an
Acquisition Proposal, (iii) approve, endorse or recommend, or propose publicly
to approve, endorse or recommend, any Acquisition Proposal, (iv) execute or
enter into, any letter of intent, agreement in principle, merger agreement,
acquisition agreement or other similar agreement relating to any Acquisition
Proposal or (v) take any action to exempt any person from the restrictions
on
business combinations contained in Section 203; provided,
however,
it is
understood and agreed that any determination or action by the Board of Directors
of the Company permitted under Section
6.5(c)
or
Section
6.5(d),
shall
not be deemed to be a breach or violation of this Section
6.5(b)
or give
Parent a right to terminate this Agreement pursuant to Section
8.1(e)(ii).
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(c) Notwithstanding
anything to the contrary in Section
6.5(b),
nothing
contained in this Agreement shall prevent the Company or its Board of Directors
from (i) taking and disclosing to its stockholders a position contemplated
by
Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act (or any similar
communication to stockholders in connection with the making or amendment of
a
tender offer or exchange offer) (provided
that
neither the Company nor its Board of Directors may recommend any Acquisition
Proposal unless permitted by Section
6.5(d)
and the
Company may not fail to make, or withdraw, modify or change in a manner adverse
to Parent all or any portion of, the Recommendation unless permitted by
Section
6.1);
(ii)
prior to obtaining the Company Requisite Vote, providing access to its
properties, books and records and providing information or data in response
to a
request therefor by a person or group who has made an Acquisition Proposal
that
the Board of Directors of the Company has determined in good faith to be
credible if the Board of Directors receives from the person so requesting such
information an executed confidentiality agreement on terms no less favorable
to
the Company or less restrictive on such person than those contained in the
Confidentiality Agreement (except for such changes specifically necessary in
order for the Company to be able to comply with its obligations under this
Agreement) and furnishes such information to Parent (to the extent such
information has not previously been furnished by the Company to Parent);
(iii) prior to obtaining the Company Requisite Vote, contacting and
engaging in discussions with any person or group and their respective
Representatives who has made an Acquisition Proposal solely for the purpose
of
clarifying such Acquisition Proposal and any material terms thereof and the
conditions to consummation so as to determine whether there is a reasonable
possibility that such Acquisition Proposal could lead to a Superior Proposal;
(iv) prior to obtaining the Company Requisite Vote, contacting and engaging
in any negotiations or discussions with any person or group and their respective
Representatives who has made an Acquisition Proposal that the Board of Directors
of the Company has determined in good faith to be credible (which negotiations
or discussions are not solely for clarification purposes); or (v) prior to
obtaining the Company Requisite Vote, (A) withdrawing, modifying or
changing in any adverse manner the Recommendation (which shall be permitted
only
to the extent permitted by Section
6.1
or
(B) recommending an Acquisition Proposal that the Board of Directors of the
Company has determined in good faith to be credible, if and only to the extent
that in connection with the foregoing clauses (ii), (iv) and (v)(B), the Board
of Directors of the Company shall have determined in good faith, after
consultation with its legal counsel and financial advisors that, (x) in the
case
of clause (v)(B) above only, such Acquisition Proposal, if accepted, is
reasonably capable of being consummated, taking into account legal, financial,
regulatory, timing and similar aspects of the proposal and the person making
the
proposal, and would, if consummated, result in a Superior Proposal and
(y) in the case of Clauses (ii) and (iv) above only, such Acquisition
Proposal constitutes a Superior Proposal or is reasonably likely to lead to
a
Superior Proposal. The Company shall also promptly notify Parent of the receipt
of any Acquisition Proposal after the date hereof, which notice shall include
a
copy of the Acquisition Proposal.
(d) Notwithstanding
anything in this Section
6.5
to the
contrary, if, at any time prior to obtaining the Company Requisite Vote, the
Company’s Board of Directors determines in good faith, after consultation with
its financial advisors and outside legal counsel, in response to an Acquisition
Proposal that did not otherwise result from a breach of Section
6.5
that
such proposal is a Superior Proposal, the Company or its Board of Directors
may
terminate this Agreement concurrently with entering into a definitive agreement
with respect to such Superior Proposal; provided,
however,
that
the Company shall not terminate this Agreement pursuant to this sentence, and
any purported termination pursuant to this sentence shall be void and of no
force or effect, unless the Company prior to terminating this Agreement shall
have provided Parent with at least three (3) Business Days prior written notice
of the Company’s decision to terminate, such notice shall indicate in reasonable
detail the material terms and conditions of such Superior Proposal, including
the amount and form of the proposed consideration and whether such proposal
is
subject to any material conditions and provide a copy thereof to Parent and
Parent is afforded an opportunity during such three Business Days to match
or
exceed the terms of such Superior Proposal. An
election by the Company to terminate this Agreement pursuant to this
Section
6.5(d)
shall be
void and of no force or effect unless or until the Company enters into a
definitive agreement with respect to such Superior Proposal and pays to Parent
the Company Termination Fee.
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(e) For
purposes of this Agreement, the following terms shall have the meanings assigned
below:
(i) “Acquisition
Proposal”
means
any bona fide written proposal solicited pursuant to Section
6.5(a)
or any
unsolicited bona fide written proposal or offer from any person or group of
persons (other than Parent, Merger Sub or their respective affiliates) relating
to any direct or indirect acquisition or purchase of a business that constitutes
15% or more of the net revenues, net income or assets of the Company and its
subsidiaries, taken as a whole, or 15% or more of any class or series of Company
securities, any tender offer or exchange offer that if consummated would result
in any person or group of persons beneficially owning 15% or more of any class
or series of capital stock of the Company, or any merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company (or any
subsidiary or subsidiaries of the Company whose business constitutes 15% or
more
of the net revenues, net income or assets of the Company and its subsidiaries,
taken as a whole).
(ii) “Superior
Proposal”
means
an Acquisition Proposal involving (A) assets that generate 60% of the
consolidated total revenues, or (B) assets that constitute 60% of the
consolidated total assets of the Company and its subsidiaries or (C) 60% of
the
total voting power of the equity securities of the Company, in each case that
the Board of Directors of the Company in good faith determines would, if
consummated, result in a transaction that is more favorable to the stockholders
of the Company than the transactions contemplated hereby (x) after consultation
with a financial advisor and (y) after taking into account all such factors
and matters deemed relevant in good faith by the Board of Directors of the
Company, including legal (with the advice of outside counsel), financial
(including the financing terms of any such proposal), regulatory, timing or
other aspects of such proposal and the transactions contemplated hereby.
Section
6.6 Voting
Agreements.
Concurrently herewith, each director and officer of the Company and the Estate
of Siggi X. Xxxxxx has entered into a Voting Agreement (the “Voting
Agreement”)
dated
as of the date hereof, in the form attached hereto as Exhibit
C,
agreeing (i) not to sell his, her or its shares in the Company prior to the
Stockholders Meeting and (ii) to vote his, her or its shares in the Company
in favor of adoption of this Agreement.
Section
6.7 Directors’
and Officers’ Indemnification and Insurance.
(a) The
Company may, and in any event, Parent will cause the Surviving Corporation
to,
purchase, at or prior to the Effective Time, a six-year prepaid directors and
officers liability insurance “tail policy” for the Company’s existing directors
and officers as shall be approved by Parent and the Company (the “D&O
Tail Policy”).
For a
period of six years following the Effective Time, Parent agrees, and agrees
to
cause the Surviving Corporation and its subsidiaries, to honor and perform
under, all indemnification agreements entered into by the Company or any of
its
subsidiaries prior to the date hereof and which are listed in Section
3.16
of the
Company Disclosure Schedule and to provide exculpation, indemnification and
reimbursement of expenses to the Company's existing and former officers and
directors on terms no less favorable than those provided in Articles Eleventh
and Seventeenth of the certificate of incorporation and the by-laws of the
Company as in effect on the date hereof whether or not a comparable provision
is
contained in the Certificate of Incorporation of the Surviving
Corporation.
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(b) Notwithstanding
anything herein to the contrary, if a present or former officer of director
of
the Company or any of its subsidiaries (an “Indemnified
Party”)
is a
party to or is otherwise involved (including as a witness) in any threatened
or
pending claim, action, suit, proceeding or investigation whether civil, criminal
or administrative (“Proceeding”)
(whether arising before, at or after the Effective Time) on or prior to the
sixth anniversary of the Effective Time, the provisions of this Section
6.7
shall
continue in effect until the final disposition of such Proceeding.
(c) This
covenant is intended to be for the benefit of, and shall be enforceable by,
each
Indemnified Party and their respective heirs and legal representatives.
Section
6.8 Further
Action; Efforts.
(a) Subject
to the terms and conditions of this Agreement, each party will use its best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Merger and the other transactions contemplated
by
this Agreement. Each
party shall cooperate in all respects with each other in connection with any
filing or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party, keep the other party
informed of any communication received by such party from, or given by such
party to, the Federal Trade Commission (the “FTC”),
the
Antitrust Division of the Department of Justice (the “DOJ”)
or any
other U.S. or foreign governmental authority and of any communication received
or given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby and permit the other
party
to review any communication given by it to, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any such other
governmental authority or, in connection with any proceeding by a private party,
with any other person, and to the extent permitted by the FTC, the DOJ or such
other applicable governmental authority or other person, give the other party
the opportunity to attend and participate in such meetings and conferences;
provided,
however,
that a
party hereto may request entry into a joint defense agreement as a condition
to
providing any such materials and that, upon receipt of that request, the parties
shall work in good faith to enter into a joint defense agreement to create
and
preserve attorney-client privilege in a form and substance mutually acceptable
to the parties.
(b) In
furtherance and not in limitation of the covenants of the parties contained
above, if any objections are asserted with respect to the transactions
contemplated by this Agreement under any antitrust law or if any suit is
instituted (or threatened to be instituted) by the FTC, the DOJ or any other
applicable governmental authority or any private party challenging any of the
transactions contemplated hereby as violative of any antitrust law or which
would otherwise prohibit or materially impair or materially delay the
consummation of the transactions contemplated hereby, each of Parent and the
Company shall use its reasonable commercial efforts to resolve any such
objections or suits so as to permit consummation of the transactions
contemplated by this Agreement; provided,
however,
that
neither Parent nor any of its affiliates shall be required to (i) divest, hold
separate (including by trust or otherwise) or otherwise dispose of, sell, assign
or transfer any of their respective businesses, assets, investments, securities
or rights of any kind or nature or (ii) defend, contest or resist any action
or
proceeding or seek to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
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(c) In
the
event that any administrative or judicial action or proceeding is instituted
(or
threatened to be instituted) by a governmental entity or private party
challenging the Merger or any other transaction contemplated by this Agreement,
or any other agreement contemplated hereby, (i) each of Parent, Merger Sub
and
the Company shall cooperate in all respects with each other and use its
respective best efforts to contest and resist any such action or proceeding
and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement, and (ii) Parent and Merger Sub must defend,
at their cost and expense, any action or actions, whether judicial or
administrative, in connection with the transactions contemplated by this
Agreement.
Section
6.9 Public
Announcements.
Each of
the Company, Parent and Merger Sub agrees that no public release or announcement
concerning the transactions contemplated hereby shall be issued by any party
without the prior written consent of the Company and Parent (which consent
shall
not be unreasonably withheld or delayed), except as such release or announcement
may be required by law or the rules or regulations of any applicable United
States securities exchange or regulatory or governmental body to which the
relevant party is subject, wherever situated, in which case the party required
to make the release or announcement shall use its reasonable best efforts to
provide the other party reasonable time to comment on such release or
announcement in advance of such issuance, it being understood that the final
form and content of any such release or announcement, to the extent so required,
shall be at the final discretion of the disclosing party.
Section
6.10 Parent
Financing.
(a) Parent
shall use its commercially reasonable best efforts to obtain the financing
(the
“Financing”)
pursuant to the terms and conditions set forth in the Financing Commitment.
Parent shall notify the Company if at any time prior to the Closing Date the
Financing Commitment shall expire or be terminated, modified or amended for
any
reason. Parent shall not amend the Financing Commitment without the Company's
prior consent except to increase the amount of such Financing; provided,
however, no such increase in the Financing shall be deemed part of the Financing
for purposes of satisfying Section
7.2(d).
The
Parties acknowledge that the Financing Commitment expired prior to the date
of
this Agreement. Parent shall use its commercially reasonable best efforts to
obtain a renewal, extension or reissuance of such Financing Commitment as soon
as practicable after the date hereof, but in no event later than the first
date
on which the Company has the right, under applicable federal securities laws,
to
mail the Proxy Statement to stockholders in connection with the Stockholders
Meeting. The Company shall provide, and shall cause its subsidiaries to, and
shall use commercially reasonable efforts to cause the respective officers,
employees and Representatives, including legal and accounting, of the Company
and its subsidiaries to provide, all cooperation reasonably requested by Parent
in connection with (i) the Financing, including providing such access and
documentation and taking such action as is specified in the Financing Commitment
and (ii) the satisfaction of the conditions in the Financing Commitment that
require action by the Company.
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(b) If
the
Financing Commitment expires, is terminated or otherwise becomes unavailable
prior to the Closing, in whole or in part, for any reason, Parent shall (i)
immediately notify the Company of such expiration, termination or other
unavailability and the reasons therefor and (ii) provided that the reasons
therefor are unrelated to any representation or warranty of Company contained
herein being untrue or incorrect or any breach by Company of any of its
obligations hereunder, or otherwise attributable to the performance of the
Company, use commercially reasonable best efforts promptly to arrange for
alternative financing to replace the Financing contemplated by such expired,
terminated or otherwise unavailable commitments or agreements in an amount
sufficient to consummate the transactions contemplated by this Agreement
provided, however, Parent shall have no obligation to obtain or consummate
any
Financing on terms less favorable or more onerous than those contained in the
Financing Commitment.
(c) Parent
has advised the Company that in order to consummate the Financing, the
applicable lenders will require certain representations and warranties about
the
Company and its subsidiaries and certain facts and levels of performance to
be
true and correct notwithstanding that as between Parent and the Company, the
conditions set forth in Section
7.2(a)
shall
have been met. Parent has no obligation to cure any matters relating to the
Company and its subsidiaries in connection with its obligation to obtain the
Financing and the Company acknowledges and accepts that the Financing may not
be
consummated and the condition set forth in Section
7.2(d)
may not
be satisfied as a result of matters relating to the Company and its subsidiaries
and their respective businesses and assets, notwithstanding the Company’s,
Parent’s and Merger Sub’s compliance with the terms of this Agreement and the
Financing Commitment and the Company accepts this fact.
Section
6.11 Certain
Transfer Taxes.
Any
liability arising out of any real estate transfer Tax with respect to interests
in real property owned directly or indirectly by the Company or any of its
subsidiaries immediately prior to the Merger, if applicable and due with respect
to the Merger, shall be borne by the Surviving Corporation and expressly shall
not be a liability of stockholders of the Company.
Section
6.12 Obligations
of Merger Sub.
Parent
shall take all action necessary to cause Merger Sub and after the Merger the
Surviving Corporation, to perform their respective obligations under this
Agreement.
Section
6.13 Takeover
Statute.
If any
“fair price,” “moratorium,” “business combination,” “control share acquisition”
or other form of anti-takeover statute or regulation shall become applicable
to
the Merger or the other transactions contemplated by this Agreement after the
date of this Agreement, each of the Company and Parent and the members of their
respective Boards of Directors shall grant such approvals and take such actions
as are reasonably necessary so that the Merger and the other transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated herein and otherwise act to eliminate or minimize the effects
of
such statute or regulation on the Merger, and the other transactions
contemplated hereby.
Nothing
in this Section
6.14
shall be
construed to permit Parent or Merger Sub to do any act that would constitute
a
violation or breach of, or as a waiver of any of the Company’s rights under, any
other provision of this Agreement.
-41-
Section
6.14 Rule
16b-3.
Prior
to the Effective Time, the Company shall be permitted to take such steps as
may
be reasonably necessary or advisable hereto to cause dispositions of Company
equity securities (including derivative securities) pursuant to the transactions
contemplated by this Agreement by each individual who is a director or officer
of the Company to be exempt under Rule 16b-3 promulgated under the Exchange
Act.
Section
6.15 Advice
of Changes.
The
Company shall give prompt written notice to the Parent of: (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty of the Company contained
in
this Agreement, if made on or as of the date of such event or as of the Closing
Date, to be untrue or inaccurate in any material respect, except for changes
permitted by this Agreement and except to the extent that any representation
and
warranty is made as of a specified date, in which case, such representation
and
warranty shall be true, complete and accurate as of such date; (ii) any
material failure of the Company or of any officer, director, employee,
consultant or agent of the Company, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it or them under
this
Agreement; (iii) any event of which it has knowledge which will result, or
in the opinion of such party, has a reasonable prospect of resulting, in the
failure to satisfy conditions specified in ARTICLE
VII
hereof;
(iv) any notice of, or other communication relating to, a default (or event
which, with notice or lapse of time or both, would constitute a default)
received by the Company or any of its subsidiaries subsequent to the date hereof
and prior to the Closing Date, under any contract or other agreement material
to
the Company or any subsidiary of the Company; (v) any notice or other
communication from any person alleging that the consent of such person is or
may
be required in connection with the transactions contemplated hereby;
(vi) any notice or other communication from any foreign, federal, state,
county or local government or any other communication from any other
governmental, regulatory or administrative agency or authority in connection
with the transactions contemplated hereby; (vii) any adverse change
material to the Company or any subsidiary of the Company, or the occurrence
of
any event which, so far as reasonably can be foreseen at the time of its
occurrence, would result in a Material Adverse Effect; or (viii) any matter
hereafter arising which, if existing, occurring or known at the date hereof,
would have been required to be disclosed to the Parent; provided,
however,
that no
such notification shall affect the representations or warranties of the Company
or the conditions to the obligations of the Company hereunder. Parent shall
also
give notice to the Company of any of the above matters as if this Section
6.15
were
restated substituting Parent and Merger Sub for references to the
Company.
Section
6.16 Estoppel
Certificates.
At
least five (5) business days prior to the Closing, the Company shall deliver
to
Parent copies, and at the Closing, the Company shall deliver originals, of
estoppel certificates from the tenants of the non-multifamily Real Property
(and
all guarantors of the tenant’s obligations under the Leases of such Real
Property) identified in Section
6.16
of the
Company Disclosure Schedule, in a form reasonably promulgated by Parent’s
lenders of the Financing or any other financing for the subject property, dated
not earlier than thirty (30) days prior to the Closing, and consistent with
the
Company’s representations made in this Agreement and containing no adverse
modifications or adverse additional matters (including default or similar claims
or audit requests) (the “Estoppel
Certificates”
).
-42-
Section
6.17 2007
Tax Returns.
The
Company shall prepare or cause to be prepared and file or cause to be filed
all
Tax Returns for the Company and each of its subsidiaries required to be filed
on
or prior to the Closing Date, including applicable extensions (including timely
filing of Tax Returns for the fiscal year ended December 31, 2007.) Any such
Tax
Returns shall be prepared in a manner consistent with the historic Tax
accounting practices of the Company (except as may be required under applicable
Tax law). The Company shall pay all Taxes shown as due on such Tax Returns.
The
Company shall provide to Parent copies of such Tax Returns that are to be filed
on or prior to the Closing Date at least fifteen (15) calendar days prior to
the
due date of such Tax Returns (including applicable extensions). The Company
shall accept any and all reasonable comments of Parent with respect to such
Tax
Returns.
Section
6.18 Tamarac.
On May
23, 2008, the Company closed on the sale of the Company’s Real Property known as
Tamarac Office Plaza located in Tamarac, Florida (“Tamarac”)
for a
total purchase price of $2,000,000. The Company deposited the sale proceeds
into
a 1031 account in order to qualify such sale for tax deferred treatment under
Section 1031 of the Code; provided, however, that the Company shall not be
responsible or liable to Parent, Merger Sub or the Surviving Corporation for
(i)
whether such a sale qualifies, in fact, for Section 1031 treatment under the
Code or (ii) any failure of such a sale and exchange to meet the timing
requirements of Section 1031 of the Code. Parent
shall, within 45 days after May 23, 2008, provide written instructions to the
Company identifying one or more properties for purposes of such 1031 exchange
and indicating the amount of funds to be transferred from such 1031 account
and
the recipient of such funds, and the Company shall comply with such
instructions. If no properties are identified within such 45 days and/or Parent
so instructs, the Company shall cause the return of any unused funds in the
account to be transferred back to the Company. Each of the parties hereto shall
cooperate in order to qualify the sale of Tamarac for 1031 treatment, subject
to
the limitations described above.
Section
6.19 Non-Imputation
Affidavits.
At or
prior to the Effective Time, the Company shall deliver or cause to be delivered
a non-imputation affidavit for each Real Property from an applicable officer
of
the owner of such Real Property in reasonable and customary form required by
the
title company issuing title.
Section
6.20 Guaranty.
Concurrently herewith NWJ Companies Inc. and Xxxxxxxx X. Xxxxxxxx III
(collectively the “Guarantors”)
are
executing and delivering to the Company a guarantee (the “Guaranty”)
of
Parent’s obligations to pay the Parent Termination Fee pursuant to Section
8.2(b)(iii).
Section
6.21 Title
Commitments.
At
or
prior to the Closing, the Company shall and shall cause the subsidiaries
to (a) remove as of record any mechanic's liens, judgments and franchise
tax liens on the Parent's title report for the Real
Property (i) arising between the effective date of such title reports
and the Effective Time or (ii) that are identified in the column of
Schedule
6.21
titled
"Liens/Judgments" to be removed by the Company or its subsidiaries,
and (b) otherwise reasonably satisfy all requirements identified
in the column of Schedule
6.21 titled
"Requirements" of the Company and its subsidiaries.
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Section
6.22 Earnings
and Profits Report.
The
Company shall use its commercially reasonable efforts to cause Xxxxx Xxxxxxxx
LLC to provide its final report concerning the Company's accumulated earnings
and profits for federal income tax purposes covering the work performed by
such
accounting firm through the date hereof. If Parent or Merger Sub request the
Company to engage an accounting firm or other professional to perform any
additional work covering this subject matter, the Company shall do so and Parent
shall promptly reimburse the Company for any and all expenses incurred by the
Company in so doing.
ARTICLE
VII
CONDITIONS
OF MERGER
Section
7.1 Conditions
to Obligation of Each Party to Effect the Merger.
The
respective obligations of each party to effect the Merger shall be subject
to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this
Agreement shall have been adopted by the stockholders of the Company by the
Company Requisite Vote;
(b) no
suit,
action, claim, proceeding or investigation shall have been instituted or
threatened by or before any court of any foreign, federal, state, county or
local government or any other governmental, regulatory or administrative agency
or authority seeking to restrain, prohibit of invalidate the Merger or the
consummation of the transactions contemplated hereby or to seek damages in
connection with such transactions or that might affect the right of the
Surviving Corporation to own, operate or control, after the Closing, the assets,
properties and businesses of the Company and its subsidiaries or which has,
or
may have a Material Adverse Effect;
(c) no
law,
statute, rule, regulation, executive order, decree, ruling, injunction or other
order (whether temporary, preliminary or permanent) shall have been enacted,
entered, promulgated or enforced by any United States or state court or United
States governmental entity which prohibits, restrains or enjoins the
consummation of the Merger; and
(d) the
D&O Tail Policy shall be purchased pursuant to Section
6.7;
Section
7.2 Conditions
to Obligations of Parent and Merger Sub.
The
obligations of Parent and Merger Sub to effect the Merger shall be further
subject to the satisfaction (or waiver by Parent) at or prior to the Effective
Time of the following conditions:
(a) the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all respects (without giving effect to any “materiality,”
“Material Adverse Effect” or similar qualifiers contained in any such
representations and warranties) as of the Effective Time as though made on
and
as of such date (unless any such representation or warranty is made only as
of a
specific date, in which event such representation and warranty shall be so
true
and correct as of such specified date), except where the failure of any such
representations or warranties to be so true and correct, in the aggregate,
has
not had and is not reasonably expected to have a Material Adverse
Effect;
-44-
(b) the
Company shall have performed in all material respects the obligations, and
complied in all material respects with the agreements and covenants, required
to
be performed by, or complied with by, it under this Agreement at or prior to
the
Effective Time;
(c) Parent
shall have received a certificate of the Chief Executive Officer and the Chief
Financial Officer of the Company, certifying that the conditions set forth
in
Section
7.2(a)
and
Section
7.2(b)
have
been satisfied;
(d) all
material consents, waivers, licenses, variances, exemptions, franchises,
permits, approvals and authorizations from parties to any contract or other
agreement (including amendments and modifications thereto) with the Company
or
any subsidiary of the Company that may be required in connection with the
performance by the Company of its obligations under this Agreement shall have
been obtained, excluding any and all consents that may be required under any
mortgage or other agreement related to any such mortgage listed on
Schedule 3.6;
(e) Parent
shall have closed the Financing or will close the Financing concurrently with
the Merger in the principal amount of not less than $31,100,000;
(f) not
more
than ten percent (10%) of the outstanding Common Stock immediately prior to
the
Effective Time shall constitute Dissenting Shares;
(g) Parent
shall have received the documents set forth on Schedule 7.2(g) of the Company
Disclosure Schedule;
(h) Parent
shall have obtained from Chicago Title Insurance Company a new title policy
for
each piece of Real Property, in amounts and in form and substance reasonably
acceptable to Parent and the lenders of the Financing, but no Lien or Property
Restriction set forth on the Company Disclosure Schedule shall be deemed
reasonable grounds not to accept a title policy except any required to be
removed pursuant to Section 6.21;
(i) Parent
shall have received an ALTA survey for each piece of Real Property certified
to
the applicable lender on such Real Property on the Closing Date and Chicago
Title Insurance Company, showing no material encroachment or other adverse
state
of facts rendering title to such Real Property unmarketable, but no (1) Lien
or
Property Restriction set forth on the Company Disclosure Schedule or (2) state
of facts shown on the surveys identified on Schedule 7.2(i) of the Company
Disclosure Schedule, shall be deemed reasonable grounds not to accept a survey
except any required to be removed pursuant to Section 6.21;
(j) Parent
shall have received the Estoppel Certificates;
-45-
(k) Parent
shall have received certificates of good standing for the Company and each
of
its subsidiaries in the jurisdiction in which each is formed and each
jurisdiction in which the Company or such subsidiary is qualified to do business
or owns Real Property;
(l) Parent
shall have received the resignation of all directors of the Company;
(m) Parent
shall have received an opinion of counsel to the Company in the form attached
hereto as Exhibit
D;
and
(n) Parent
shall have received written agreements from each holder of any outstanding
Option terminating such Option and agreeing to accept the consideration pursuant
to Section
2.2.
Section
7.3 Conditions
to Obligations of the Company.
The
obligation of the Company to effect the Merger shall be further subject to
the
satisfaction (or waiver by the Company) at or prior to the Effective Time of
the
following conditions:
(a) the
representations and warranties of Parent and Merger Sub set forth in this
Agreement shall be true and correct in all respects, in each case as of the
Effective Time as though made on and as of such date (unless any such
representation or warranty is made only as of a specific date, in which event
such representation and warranty shall be true and correct in all material
respects as of such specified date), except where the failure of any such
representations and warranties to be so true and correct, in the aggregate,
has
not had and is not reasonably expected to have a Material Adverse
Effect;
(b) each
of
Parent and Merger Sub shall have performed in all material respects the
obligations, and complied in all material respects with the agreements and
covenants, required to be performed by or complied with by it under this
Agreement at or prior to the Closing Date; and
(c) the
Company shall have received certificates of the Chief Executive Officer or
other
senior executive officer of Parent, certifying that the conditions set forth
in
Section
7.3(a)
and
Section
7.3(b)
have
been satisfied.
Section
7.4 Frustration
of Closing Conditions.
Neither
the Company nor Parent may rely, either as a basis for not consummating the
Merger or terminating this Agreement and abandoning the Merger, on the failure
of any condition set forth in Section
7.1,
Section
7.2
or
Section
7.3,
as the
case may be, to be satisfied if such failure was caused by such party’s breach
in any material respect of any provision of this Agreement.
ARTICLE
VIII
TERMINATION,
AMENDMENT AND WAIVER
Section
8.1 Termination.
This
Agreement may be terminated and the Merger contemplated hereby may be abandoned
at any time prior to the Effective Time, notwithstanding approval thereof by
the
stockholders of the Company:
-46-
(a) by
mutual
written consent of Parent, Merger Sub and the Company;
(b) by
Parent
or the Company if any court of competent jurisdiction or other governmental
entity located or having jurisdiction within the United States shall have issued
a final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or
other action is or shall have become final and nonappealable; provided
that the
party seeking to terminate this Agreement pursuant to this Section
8.1(b)
shall
have used such best efforts as may be required pursuant to Section
6.9
to
prevent, oppose and remove such restraint, injunction or other
prohibition;
(c) by
either
Parent or the Company if the Effective Time shall not have occurred on or before
the date which is six (6) months from the date hereof (the “Termination
Date”);
provided,
however,
that
the right to terminate this Agreement pursuant to this Section
8.1(c)
shall
not be available to the party seeking to terminate if any action of such party
(or, in the case of Parent, Merger Sub) or the failure of such party (or, in
the
case of Parent, Merger Sub) to perform any of its obligations under this
Agreement required to be performed at or prior to the Effective Time has been
the cause of, or resulted in, the failure of the Effective Time to occur on
or
before the Termination Date and such action or failure to perform constitutes
a
breach of this Agreement, including pursuant to Section
6.9;
(d) by
the
Company:
(i) if
there
shall have been a breach of any representation, warranty, covenant or agreement
on the part of Parent or Merger Sub contained in this Agreement such that the
conditions set forth in Section
7.3(a)
or
Section
7.3(b)
would
not be satisfied and, in either such case, such breach is incapable of being
cured by the Termination Date; provided
that the
Company shall not have the right to terminate this Agreement pursuant to this
Section
8.1(d)(i)
if the
Company is then in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement; or
(ii) prior
to
the adoption of this Agreement by the stockholders of the Company, in accordance
with, and subject to the terms and conditions of, Section
6.5(d);
or
(iii) if
Parent
has not obtained a renewal, extension or reissuance of the Financing Commitment
by the first date on which the Company has the right, under applicable federal
securities laws, to mail the Proxy Statement to stockholders in connection
with
the Stockholders Meeting;
(e) by
Parent:
(i) if
there
shall have been a breach of any representation, warranty, covenant or agreement
on the part of the Company contained in this Agreement such that the conditions
set forth in Section
7.2(a)
or
Section
7.2(b)
would
not be satisfied and, in either such case, such breach is incapable of being
cured by the Termination Date; provided
that
Parent shall not have the right to terminate this Agreement pursuant to this
Section
8.1(e)(i)
if
Parent or Merger Sub is then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement;
-47-
(ii) if
the
Board of Directors of the Company shall have withdrawn, modified or changed
the
Recommendation in a manner adverse to Parent or Merger Sub or shall have
recommended to the stockholders of the Company an Acquisition Proposal other
than the Merger; or
(iii) if
the
condition set forth in Section
7.2(d)
has not
been met and cannot, through no fault of Parent or Merger Sub, be met by the
Termination Date, provided that neither Parent nor Merger Sub is then in
material breach of any of its representations, warranties, covenants or
agreements contained in this Agreement;
(f) by
either
Parent or the Company if, upon a vote taken thereon at the Stockholders Meeting
or any postponement or adjournment thereof, this Agreement shall not have been
adopted by the Company Requisite Vote.
Section
8.2 Effect
of Termination.
(a) In
the
event of the termination of this Agreement pursuant to Section
8.1,
this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party hereto, except as provided in Section
6.4(b),
Section
6.9,
this
Section
8.2,
Section
8.3
and
ARTICLE
IX,
which
shall survive such termination. The parties acknowledge and agree that nothing
in this Section
8.2
shall be
deemed to affect their right to specific performance under Section
9.10.
(b) In
the
event that:
(i) this
Agreement is terminated by the Company pursuant to Section
8.1(d)(ii)
or by
Parent pursuant to Section
8.1(e)(ii),
then
the Company shall pay $1,585,000 (the “Company
Termination Fee”)
to
Parent, at or prior to the time of termination in the case of a termination
pursuant to Section
8.1(d)(ii)
or as
promptly as reasonably practicable in the case of a termination pursuant to
Section
8.1(e)(ii)
(and, in
any event, within two business days following such termination), payable by
wire
transfer of same day funds; or
(ii) this
Agreement is terminated by either Parent or the Company pursuant to Section
8.1(c)
or
Section
8.1(f)
and (A)
at any time after the date of this Agreement and prior to the taking of a vote
to adopt this Agreement at the Stockholders Meeting or any postponement or
adjournment thereof an Acquisition Proposal that the Board of Directors of
the
Company has determined to be credible shall have been made directly to the
Company’s stockholders or any person shall have publicly announced an intention
to make an Acquisition Proposal, or an Acquisition Proposal shall have otherwise
become publicly known, and in each case such Acquisition Proposal shall have
not
been withdrawn prior to such taking of a vote to adopt this Agreement and
(B) within six months after such termination, the Company shall have
consummated any Acquisition Proposal, then, in any such event, the Company
shall
pay to Parent the Company Termination Fee, such payment to be made upon the
earlier of the Company entering into an agreement providing for, or
consummating, such Acquisition Proposal, by wire transfer of same day funds.
For
the purpose of this Section
8.2(b)(ii),
all
references in the definition of the term Acquisition Proposal to "15% or more”
will be deemed to be references to “more than 40%”;
or
-48-
(iii) this
Agreement is terminated by the Company pursuant to Section
8.1(d)(i),
then
Parent shall pay the Company a fee of $2,000,000 (the “Parent
Termination Fee”)
in
immediately available funds no later than two business days after such
termination by the Company. Notwithstanding anything to the contrary in this
Agreement, the Company’s right to receive payment of the Parent Termination Fee
pursuant to this Section
8.2(b)(iii)
or the
guarantee thereof pursuant to the Guaranty shall be the exclusive remedy of
the
Company and its subsidiaries against Parent, Merger Sub, the Guarantors or
any
of their respective stockholders, partners, members, directors, officers or
agents for any loss or damage suffered or incurred as a result of the failure
of
the Merger to be consummated and any breach or alleged breach by any of them
of
this Agreement.
(c) Each
of
the Company, Parent and Merger Sub acknowledges that the agreements contained
in
this Section
8.2
are an
integral part of the transactions contemplated by this Agreement. In the event
that the Company shall fail to pay the Company Termination Fee when due, the
Company shall reimburse Parent for all reasonable costs and expenses actually
incurred by the Parent (including reasonable fees and expenses of counsel)
in
connection with any action (including the filing of any lawsuit) taken to
collect payment of such amounts. In the event that Parent shall fail to pay
the
Parent Termination Fee when due, the Parent shall reimburse the Company for
all
reasonable costs and expenses actually incurred by the Company (including
reasonable fees and expenses of counsel) in connection with any action
(including the filing of any lawsuit) taken to collect payment of such
amounts.
Section
8.3 Expenses.
Except
as otherwise specifically provided herein, each party shall bear its own
expenses in connection with this Agreement and the transactions contemplated
hereby. Notwithstanding the foregoing, however, all costs and expenses
associated with the preparation of Phase I environmental reports, title
commitments, surveys, zoning reports, lien searches and property condition
reports obtained in connection with the transactions contemplated hereby will
be
borne by the Company and all costs and expenses associated with the preparation
of real property appraisals obtained in connection with the transactions
contemplated hereby will be borne by the Parent. Expenses incurred in connection
with the filing, printing and mailing of the Proxy Statement shall be borne
by
the Company.
Section
8.4 Amendment.
This
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective
Time,
whether before or after adoption of this Agreement by the stockholders of the
Company; provided,
however,
that,
after adoption of this Agreement by the stockholders of the Company, no
amendment may be made which by law or in accordance with the rules and
regulations of the American Stock Exchange requires the further approval of
the
stockholders of the Company without such further approval. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto
and specifically referencing this Agreement.
Section
8.5 Waiver.
At any
time prior to the Effective Time, any party hereto may (a) extend the time
for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) subject
to
the requirements of applicable law, waive compliance with any of the agreements
or conditions contained herein. Any such extension or waiver shall be valid
if
set forth in an instrument in writing signed by the party or parties to be
bound
thereby and specifically referencing this Agreement. The failure of any party
to
assert any rights or remedies shall not constitute a waiver of such rights
or
remedies.
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ARTICLE
IX
GENERAL
PROVISIONS
Section
9.1 Non-Survival
of Representations, Warranties, Covenants and Agreements.
Subject
to Section
8.2(a)
hereof,
none of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and agreements, shall survive the Effective Time, except for (a)
those
covenants and agreements contained herein that by their terms apply or are
to be
performed in whole or in part after the Effective Time and (b) this
ARTICLE
IX.
Section
9.2 Notices.
All
notices, requests, claims, demands and other communications hereunder shall
be
in writing and shall be given (and shall be deemed to have been duly given
upon
receipt) by delivery in person, by facsimile or by registered or certified
mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
| (a) |
if
to Parent or Merger Sub:
|
c/o
NWJ
Companies
0
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxxx X. Xxxxxxxx III
Facsimile:
(000) 000-0000
with
an additional copy (which shall not constitute notice) to:
Blank
Rome LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx Xxxxxxxx, Esq.
Facsimile:
(000) 000-0000
| (b) |
if
to the Company:
|
Wilshire
Enterprises, Inc.
0
Xxxxxxx
Xxxxxx
Xxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxx Xxxxxx Xxxx, Chairman and CEO
Facsimile:
000-000-0000
-50-
with
an additional copy (which shall not constitute notice) to:
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention: Xxxxx
X.
Xxxxxxxxx, Esq. and Xxxxx X. Xxxxx, Esq.
Facsimile: (000)
000-0000
Section
9.3 Certain
Definitions.
For
purposes of this Agreement, the term:
(a) “affiliate”
of
a
person means a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the
first mentioned person;
(b) “beneficial
owner”
with
respect to any Common Shares means a person who shall be deemed to be the
beneficial owner of such Common Shares (i) which such person or any of its
affiliates or associates (as such term is defined in Rule 12b-2 under the
Exchange Act) beneficially owns, directly or indirectly, (ii) which such
person or any of its affiliates or associates (as such term is defined in Rule
12b-2 of the Exchange Act) has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the passage
of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants, options or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its affiliates
or associates has any agreement, arrangement or understanding for the purpose
of
acquiring, holding, voting or disposing of any Common Shares (and the term
“beneficially
owned”
shall
have a corresponding meaning);
(c) “business
day”
means
any day on which the principal offices of the SEC in Washington, D.C. are open
to accept filings or, in the case of determining a date when any payment is
due,
any day on which banks are not required or authorized by law to close in New
York, New York;
(d) “control”
(including the terms “controlled”,
“controlled
by”
and
“under
common control with”)
means
the possession, directly or indirectly or as trustee or executor, of the power
to direct or cause the direction of the management policies of a person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) “generally
accepted accounting principles”
means
the generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity
as
may be approved by a significant segment of the accounting profession in the
United States, in each case, as applicable, as of the time of the relevant
financial statements referred to herein;
-51-
(f) “knowledge”
(i) with respect to the Company or any subsidiary of the Company means the
actual knowledge of any officer of the Company, after due inquiry to the
management company of the Company’s Real Property and (ii) with respect to
Parent or Merger Sub means the actual knowledge of any of the officers of
Parent;
(g) “Material
Adverse Effect”
means
any fact, circumstance, event, change, effect or occurrence that, individually
or in the aggregate with all other facts, circumstances, events, changes,
effects, or occurrences, has or would be reasonably expected to have a material
adverse effect on or with respect to the business, assets, results of operations
or financial condition of the Company and its subsidiaries taken as a whole,
or
on the ability of the Company to consummate the transactions contemplated
hereby, provided,
however,
that a
Material Adverse Effect shall not include any change in the price of the
Company’s Common Stock or facts, circumstances, events, changes, effects or
occurrences (i) generally affecting the economy of the United States or
(ii) generally affecting the industry in which the Company or its
subsidiaries operate.
(h) “person”
means
an individual, corporation, partnership, limited liability company, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(i) “subsidiary”
or
“subsidiaries”
of
the
Company, the Surviving Corporation, Parent or any other person means any
corporation, partnership, joint venture or other legal entity of which the
Company, the Surviving Corporation, Parent or such other person, as the case
may
be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests
the
holder of which is generally entitled to vote for the election of the board
of
directors or other governing body of such corporation or other legal
entity.
(j) “VDR”
means
the virtual data room maintained on the Company's behalf at Xxxxxxxx Xxxxxxxx
Xxxxxx, 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000 for purposes of
providing diligence materials to Parent.
Section
9.4 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the fullest extent possible. Notwithstanding anything
in
this Section
9.4
to the
contrary, under no circumstances shall the rights of any holders of Common
Stock
as third party beneficiaries under clause (d) of Section
9.6
be
enforceable by any such holders or any other person acting for or on their
behalf other than the Company (or any successor in interest
thereto).
Section
9.5 Entire
Agreement; Assignment.
This
Agreement (including the Exhibits hereto and the Company Disclosure Schedule)
and the Confidentiality Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any
of
them, with respect to the subject matter hereof and thereof. This Agreement
shall not be assigned by operation of law or otherwise without the prior written
consent of each of the other parties.
-52-
Section
9.6 Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, 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, other than (a) with
respect to the provisions of Section
6.7
which
shall inure to the benefit of the persons or entities benefiting therefrom
who
are intended to be third-party beneficiaries thereof, (b) at and after the
Effective Time, the rights of the former holders of Common Shares to receive
the
Merger Consideration in accordance with the terms and conditions of this
Agreement and (c) at and after the Effective Time, the rights of the former
holders of Options and Restricted Shares to receive the payments contemplated
by
the applicable provisions of Section
2.2,
in each
case, at the Effective Time in accordance with the terms and conditions of
this
Agreement, and (d) prior to the Effective Time, the rights of the holders of
Common Shares to pursue claims for damages and other relief, including equitable
relief, for Parent’s or Merger Sub’s breach of this Agreement; provided,
however,
that
the rights granted to the holders of Common Stock pursuant to the foregoing
clause (d) of this Section
9.6
shall
only be enforceable on behalf of such holders by the Company (or any successor
in interest thereto) in its sole and absolute discretion.
Section
9.7 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware (without giving effect to choice of law principles
thereof).
Section
9.8 Headings.
The
descriptive headings contained in this Agreement are included for convenience
of
reference only and shall not affect in any way the meaning or interpretation
of
this Agreement.
Section
9.9 Counterparts.
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but
all of which taken together shall constitute one and the same
agreement.
Section
9.10 Specific
Performance.
Parent
and Merger Sub shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement by the Company and to enforce specifically the terms
and provisions of this Agreement, in addition to any other remedy to which
such
party is entitled at law or in equity.
Section
9.11 Jurisdiction.
Each of
the parties hereto (a) consents to submit itself to the personal
jurisdiction of the Court of Chancery of the State of Delaware or any court
of
the United States located in the State of Delaware, in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than
the Court of Chancery of the State of Delaware or, if under applicable law
exclusive jurisdiction is vested in the federal courts, any court of the United
States located in the State of Delaware and (d) consents to service of
process being made through the notice procedures set forth in Section
9.2.
Without
limiting other means of service of process permissible under applicable law,
each of the Company, Parent and Merger Sub hereby agrees that service of any
process, summons, notice or document by U.S. registered mail to the respective
addresses set forth in Section
9.2
shall be
effective service of process for any suit or proceeding in connection with
this
Agreement or the transactions contemplated hereby.
-53-
Section
9.12 Waiver
of Jury Trial.
EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY
LEGAL PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section
9.13 Interpretation.
When
reference is made in this Agreement to a Section, such reference shall be to
a
Section of this Agreement unless otherwise indicated. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof,”
“herein,” “hereby” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The word “or” shall not be exclusive. References to
dollars of “$” are to United States of America dollars. This Agreement shall be
construed without regard to any presumption or rule requiring construction
or
interpretation against the party drafting or causing any instrument to be
drafted.
[Remainder
of Page Left Blank Intentionally]
-54-
IN
WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
|
NWJ
APARTMENT HOLDINGS CORP.,
|
||||
|
a
Maryland corporation
|
||||
|
By:
|
/s/
Xxxxxxxx X. Xxxxxxxx, III
|
|||
|
Name:
|
Xxxxxxxx
X. Xxxxxxxx, III
|
|||
|
Title:
|
President
|
|||
|
NWJ
ACQUISITION CORP.,
|
||||
|
a
Delaware corporation
|
||||
|
By:
|
/s/
Xxxxxxxx X. Xxxxxxxx, III
|
|||
|
Name:
|
Xxxxxxxx
X. Xxxxxxxx, III
|
|||
|
Title:
|
President
|
|||
|
WILSHIRE
ENTERPRISES, INC.,
|
||||
|
a
Delaware corporation
|
||||
|
By:
|
/s/
Xxxxxx Xxxxxx Xxxx
|
|||
|
Name:
|
Xxxxxx
Xxxxxx Izak
|
|||
|
Title:
|
Chairman
of the Board and
|
|||
|
Chief
Executive Officer
|
||||
