EXHIBIT 1
EXECUTION COPY
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EDISON SCHOOLS INC.
SHAKESPEARE ACQUISITION LLC
and
SHAKESPEARE ACQUISITION CORPORATION
AGREEMENT AND PLAN OF MERGER
Dated as of July 13, 2003
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TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
Section 1.01. General Definitions
Section 1.02. Generic Terms
ARTICLE II.
THE MERGER
Section 2.01. The Merger
Section 2.02. Closing
Section 2.03. Effective Time
Section 2.04. Effects of the Merger
Section 2.05. Certificate of Incorporation; Bylaws; Directors
and Officers
Section 2.06. Conversion of Securities
Section 2.07. Surrender of Shares; Stock Transfer Books
Section 2.08. Options; Warrants
Section 2.09. Dissenters' Rights
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 3.01. Organization
Section 3.02. Ownership of Merger Sub
Section 3.03. Authority Relative to this Agreement
Section 3.04. No Conflict; Required Filings and Consents
Section 3.05. Funding
Section 3.06. Certain Agreements
Section 3.07. Brokers
Section 3.08. Litigation
Section 3.09. Information in Disclosure Documents
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01. Organization, Good Standing and Qualification;
Subsidiaries
Section 4.02. Capitalization
Section 4.03. Corporate Authority; Approval and Fairness
Section 4.04. No Conflict; Required Filings and Consents
Section 4.05. Company Contracts
Section 4.06. Company Reports; Financial Statements
Section 4.07. Absence of Certain Changes
Section 4.08. Litigation and Liabilities
Section 4.09. Compliance with Laws; Permits
Section 4.10. Takeover Statutes and Provisions
Section 4.11. Information in Disclosure Documents
Section 4.12. Environmental Matters
Section 4.13. Taxes
Section 4.14. Labor Matters
Section 4.15. Insurance
Section 4.16. Intellectual Property
Section 4.17. Affiliate Transactions
Section 4.18. Company Benefit Plans
Section 4.19. Brokers and Finders
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.01. Conduct of Business by the Company Pending the
Effective Time
Section 5.02. No Solicitation
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.01. Access and Information
Section 6.02. Shareholders Meeting; Proxy Statement
Section 6.03. Public Announcements
Section 6.04. Approvals and Consents; Reasonable Best
Efforts; Cooperation
Section 6.05. Indemnification
Section 6.06. Supplemental Disclosure
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ARTICLE VII.
CONDITIONS PRECEDENT
Section 7.01. Conditions to Each Party's Obligations to
Effect the Merger
Section 7.02. Conditions for Obligations of the Company
Section 7.03. Conditions for Obligations of Parent and Merger
Sub
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
Section 8.01. Termination
Section 8.02. Effect of Termination
ARTICLE IX.
GENERAL PROVISIONS
Section 9.01. Survival
Section 9.02. Enforcement
Section 9.03. Notices
Section 9.04. Expenses
Section 9.05. Headings
Section 9.06. Severability
Section 9.07. Entire Agreement; No Third-Party Beneficiaries
Section 9.08. Assignment
Section 9.09. Governing Law
Section 9.10. Amendment
Section 9.11. Extension; Waiver
Section 9.12. Counterparts
Exhibits
A Amended and Restated Certificate of Incorporation
B Amended and Restated Bylaws
C Directors of Surviving Corporation
D Parent Disclosure Letter
E Company Disclosure Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 13, 2003 (this
"Agreement"), by and among Edison Schools Inc., a Delaware corporation (the
"Company"), Shakespeare Acquisition LLC, a Delaware limited liability company
("Parent"), and Shakespeare Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of Parent ("Merger Sub").
W I T N E S S E T H:
WHEREAS, a Special Committee (as defined below) of the board of
directors of the Company, subject to the terms and conditions set forth herein,
has (i) determined that the merger of Merger Sub with and into the Company, upon
the terms and provisions of and subject to the conditions set forth in this
Agreement (the "Merger") is advisable and in the best interests of the Company's
stockholders (ii) approved this Agreement and the Merger and the other
transactions contemplated hereby and (iii) recommended approval of this
Agreement and the Merger by the board of directors of the Company;
WHEREAS, the board of directors of the Company, subsequent to the
recommendation of the Special Committee, subject to the terms and conditions set
forth herein, has (i) determined that the Merger is advisable and in the best
interests of the Company's stockholders (ii) approved this Agreement and the
Merger and (iii) recommended approval and adoption of this Agreement and the
Merger by the stockholders of the Company;
WHEREAS, the board of directors of Merger Sub has (i) determined
that the Merger is advisable and in the best interests of its stockholder, (ii)
approved this Agreement and the Merger and (iii) recommended approval and
adoption of this Agreement and the Merger by its stockholder;
WHEREAS, by resolutions duly adopted, the board of managers of
Parent has approved this Agreement, the Merger and the transactions and other
agreements contemplated hereby; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the other transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein made
and the representations, warranties, covenants and agreements herein contained,
the parties hereto agree as follows:
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ARTICLE I.
DEFINITIONS
Section 1.01 General Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Acquisition Proposal" has the meaning set forth in Section 5.02.
"Affiliate" has the meaning set forth in Rule 12b-2 promulgated under the
Exchange Act.
"Affiliated Group" has the meaning set forth in Section 1504 of the Code.
"Agreement" has the meaning set forth in the Preamble.
"Approvals" has the meaning set forth in Section 6.04(a).
"Board of Directors" means the Board of Directors of the Company.
"Certificate of Merger" has the meaning set forth in Section 2.03.
"Class A Common Stock" has the meaning set forth in Section 4.02(a).
"Class B Common Stock" has the meaning set forth in Section 4.02(a).
"Closing" has the meaning set forth in Section 2.02.
"Closing Date" means the date on which the Closing takes place pursuant to
Section 2.02.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the Preamble.
"Company Benefit Plan" means each material bonus, severance, hospitalization,
vacation, incentive, deferred compensation, pension, profit-sharing, retirement,
payroll savings, stock option, equity compensation, group insurance, death
benefit, fringe benefit, and welfare plan, trust, agreement or arrangement and
any other employee benefit plan (within the meaning of 3(3) of ERISA) sponsored,
maintained, contributed to or to which there is an obligation to contribute by
the Company, its Subsidiaries, or any ERISA Affiliate, for the benefit of any
current or former employee or director of the Company, or any of its
Subsidiaries or any ERISA Affiliate.
"Company Common Stock" means, together, the Class A Common Stock and the Class B
Common Stock.
"Company Contracts" means, collectively, all Material Contracts and Management
Agreements.
"Company Disclosure Letter" has the meaning set forth in the Preamble to Article
IV.
"Company Intellectual Property" has the meaning set forth in Section 4.16(a).
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"Company Permits" has the meaning set forth in Section 4.09.
"Company Reports" has the meaning set forth in Section 4.06(a).
"Company Requisite Vote" has the meaning set forth in Section 4.03(a).
"Company Shareholders' Meeting" has the meaning set forth in Section 6.02(a).
"Company Stock Options" means all options to purchase shares of Class A Common
Stock or Class B Common Stock under (i) any Option Plan or (ii) any Non-Plan
Option.
"Consent" means any consent, clearance, permit, approval or authorization, or
any declaration, filing or registration, or any application, notice or report,
or any waiver by, to or with, any Person.
"DGCL" means the Delaware General Corporation Law, as amended.
"Dissenting Shares" has the meaning set forth in Section 2.09(a).
"Effective Time" has the meaning set forth in Section 2.03.
"Employees" means any and all individuals employed by the Company or any of its
Subsidiaries (it being understood that Employees shall not include individuals
employed by any school district or charter authority that is a party to any
Management Agreement).
"Environmental Law" means any Law, together with any principle of common law,
pertaining to (A) the protection of health, safety or the environment,
(including air, water, soil and natural resources) or (B) the generation, use,
storage, handling, transportation, release or disposal of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means any trade or business, whether or not incorporated that
together with the Company or any of its Subsidiaries would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA.
"Evercore" has the meaning set forth in Section 4.03(c).
"Exchange Act" has the meaning set forth in Section 3.04(b).
"GAAP" means United States generally accepted accounting principles consistently
applied.
"Governmental Entity" means any legislative, executive or judicial governmental
or regulatory authority, agency, commission, court, arbitration tribunal or
other entity, domestic or foreign, whether federal, state or local.
"Hazardous Substance" means any waste, material or substance listed, defined,
regulated designated or classified as a "pollutant or contaminant," hazardous,
toxic or radioactive under
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any applicable Environmental Law, including petroleum and any derivative or
by-products thereof, asbestos or asbestos-containing materials, PCBs and urea
formaldehyde.
"Indemnified Parties" has the meaning set forth in Section 6.05(a).
"IRS" means the Internal Revenue Service.
"Knowledge" with respect to any matter relating to the Company, means the
knowledge of the executive officers of the Company listed in Section 1.01 of the
Company Disclosure Letter after due inquiry of individuals responsible for such
matter at the Company or its Subsidiaries and their respective Affiliates, and
with respect to any matter relating to Parent and Merger Sub, means the
knowledge of Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx and Xxxxxx Xxxxx after due inquiry
of individuals responsible for such matter at Parent or Merger Sub and their
respective Affiliates.
"Labor Laws" has the meaning set forth in Section 4.14.
"Law" means any federal, state, local, municipal, foreign or other law, statute,
charter, constitution, treaty, ordinance, code, decree, rule or regulation,
enacted, adopted or promulgated by or under the authority of any Governmental
Entity (or under the authority of any national securities exchange or
interdealer quotation service, including the Nasdaq National Market System).
"Liberty Commitments" has the meaning set forth in Section 3.05(a). "Liens"
means any lien, pledge, security interest, option, charge, claim or similar
encumbrance of any kind or nature whatsoever.
"Management Agreement" means any written contract, undertaking, commitment or
agreement entered into by the Company or any of its Subsidiaries with any school
district or charter authority to operate one or more schools (including summer
and after-school programs) or to provide student achievement products and
services.
"Material Adverse Effect" means, with respect to any Person, a material adverse
effect on the business, financial condition, results of operations, assets,
liabilities or other properties of such Person and its Subsidiaries, taken as a
whole; provided, that the following shall not constitute a Material Adverse
Effect: (i) any changes or effects which are substantially due to changes in the
U.S. economy or financial markets generally, (ii) any changes or effects which
are substantially due to changes in the industry in which the Company and its
Subsidiaries operate that affect all Persons active in such industry
substantially in the same manner and to the same extent, (iii) the expiration at
the end of its stated term of any Company Contract in accordance with its terms,
or (iv) any changes resulting from the announcement of the Merger and other
transactions contemplated by this Agreement or the identity of Parent or from
the performance of this Agreement and compliance with the covenants set forth
herein.
"Material Contracts" has the meaning set forth in Section 4.05(a).
"Merger" has the meaning set forth in the Recitals.
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"Merger Sub" has the meaning set forth in the Preamble.
"Non-Plan Options" means the options to purchase shares of Class A Common Stock
or Class B Common Stock (other than those options granted under any Option Plan)
for which the exercise price and number of shares of Company Common Stock
acquirable upon exercise are listed in Section 4.02 of the Company Disclosure
Letter.
"Option Plans" means, collectively, the Company's 1998 Site Option Plan, 1999
Key Stock Incentive Plan, 1999 Stock Option Plan and 1999 Stock Incentive Plan.
"Order" has the meaning set forth in Section 7.01(b).
"Parent" has the meaning set forth in the Preamble.
"Parent Disclosure Letter" has the meaning set forth in the Preamble to Article
III.
"Paying Agent" has the meaning set forth in Section 2.07(a).
"Permit" means any license, certificate, filing, franchise, registration,
notice, permit, approval, finding of suitability, Consent, clearance, waiver,
exemption, Order, authorization, application, right or privilege of any nature,
granted, issued, approved or allowed by any Governmental Entity.
"Per Share Amount" has the meaning set forth in Section 2.06(a).
"Person" means any individual, corporation (including not-for-profit), general
or limited partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind or
nature.
"Proceeding" means any suit, action, litigation, arbitration, administrative
hearing or other judicial, administrative or regulatory proceeding.
"Proxy Statement" has the meaning set forth in Section 3.08.
"Qualified Benefit Plan" means each Company Benefit Plan that is intended to be
qualified under Section 401(a) of the Code.
"Required Parent Consents" has the meaning set forth in Section 3.04(b).
"Required Company Consents" has the meaning set forth in Section 4.04(b).
"Required Governmental Consents" means, collectively, the Required Company
Consents and the Required Parent Consents.
"Representative" means any employee, agent or representative, including any
investment banker, attorney, accountant, auditor, consultant and financing
source (including a lender).
"Restated Bylaws" has the meaning set forth in Section 6.02(a).
"Restated Certificate" has the meaning set forth in Section 6.02(a).
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"SEC" means the United States Securities and Exchange Commission.
"Securities Act" has the meaning set forth in Section 3.04(b).
"Shares" has the meaning set forth in Section 2.06(a).
"Schedule 13E-3" has the meaning set forth in Section 3.08
"Special Committee" means the special committee of the Board of Directors formed
in connection with the transactions contemplated herein.
"Subsequent Company Reports" has the meaning set forth in Section 4.06(a).
"Subsidiary" means, for any Person, any other Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which,
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which), is owned directly or indirectly by such Person.
"Superior Proposal" has the meaning set forth in Section 5.02.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Tax" (including, with correlative meaning, the terms "Taxes", and "Taxable")
means all domestic and foreign, whether federal, state or local, income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severances, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions.
"Tax Return" means all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be
supplied to any Governmental Entity relating to Taxes.
"Termination Fee" has the meaning set forth in Section 8.02(b).
"Warrant Agreements" means, collectively, the (1) Class A Common Stock Purchase
Warrant issued to School Services LLC by the Company, dated July 31, 2002, for
8,079,579 shares of Class A Common Stock, (2) Class A Common Stock Purchase
Warrant issued to School Services LLC by the Company, dated July 31, 2002, for
478,435 shares of Class A Common Stock, (3) Class A Common Stock Purchase
Warrant issued to Xxxxxxx Xxxxx Mortgage Capital, Inc. by the Company, dated
July 31, 2002, for 2,152,959 shares of Class A Common Stock, (4) Stock
Subscription Warrant issued to TBCC Funding Trust II by the Company, dated
October 18, 1999, for 13,500 shares of Class A Common Stock, and 1,500 shares of
Class B Common Stock, (5) WSI A Warrants issued to WSI by the Company, dated
December 30, 1997, for 382,500 shares of Class A Common Stock and 42,500 shares
of Class B Common Stock, (6) WSI B Warrants issued to WSI by the Company, dated
December 30, 1997, for 450,000 shares of Class A Common Stock and 50,000 shares
of Class B Common Stock, (7) "A" Warrants for
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109,838 shares of Class A Common Stock and 12,219 shares of Class B Common
Stock, (8) Tranche 1 Warrants for 63,190 shares of Class A Common Stock and
7,033 shares of Class B Common Stock, and (9) Tranche 2 Warrants for 182,679
shares of Class A Common Stock and 20,312 shares of Class B Common Stock.
"Warrants" means all warrants to purchase shares of Class A Common Stock and
Class B Common Stock under any Warrant Agreement.
"WSI" means WSI, Inc.
Section 1.02 Generic Terms. All words used herein shall be construed to be
of such gender or number as the circumstances require. The words "herein,"
"hereby," "hereof" and "hereto," and words of similar import refer to this
Agreement in its entirety and not to any particular paragraph, clause or
subdivision, unless otherwise specified, and Section and Exhibit references are
to this Agreement unless otherwise specified. Where used herein, (a) the word
"including" shall be deemed followed by the words "without limitation" and (b)
the word "dollar" and the symbol "$" refer to the lawful currency of the United
States.
ARTICLE II.
THE MERGER
Section 2.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time, Merger Sub shall
be merged with and into the Company and the separate corporate existence of
Merger Sub shall cease. The Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Merger Sub in
accordance with the DGCL.
Section 2.02 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., New York City time, as soon as practicable, but
in no event later than the first business day, following satisfaction or waiver
of the conditions set forth in Article VII (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of those conditions) in accordance with the terms of this Agreement,
at the offices of Blank Rome LLP, located at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (or such other place or time as Parent and the Company may jointly
designate in writing).
Section 2.03 Effective Time. Contemporaneously with or immediately
following the Closing, the parties hereto shall (i) file with the Secretary of
State of the State of Delaware a certificate of merger (the "Certificate of
Merger") in such form as is required by, and executed and acknowledged in
accordance with, the DGCL, including Section 251 thereof, and (ii) make all
other filings required under the DGCL to effect the Merger. The Merger shall
become effective at the time the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or such other time as is agreed
upon by the parties and specified in the Certificate of Merger when so filed
(the time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
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Section 2.04 Effects of the Merger. From and after the Effective
Time, the Merger shall have the effects set forth in the DGCL, including Section
259 thereof. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation. As
of the Effective Time, the Surviving Corporation shall be a wholly owned
Subsidiary of Parent.
Section 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers.
(a) From and after the Effective Time, the certificate of
incorporation of the Surviving Corporation shall be the certificate of
incorporation of the Company as amended and restated as set forth in Exhibit A
hereto, until thereafter amended as provided by Law and such certificate of
incorporation.
(b) From and after the Effective Time, the bylaws of the Surviving
Corporation shall be the bylaws of the Company as amended and restated as set
forth in Exhibit B hereto, until thereafter amended as provided by Law, the
certificate of incorporation of the Surviving Corporation and such bylaws.
(c) From and after the Effective Time, the directors of the
Surviving Corporation shall be the individuals identified as directors on
Exhibit C hereto, and the officers of the Company immediately prior to the
Effective Time shall become the officers of the Surviving Corporation, in each
case until their successors are duly elected or appointed and qualified as
provided by Law, the certificate of incorporation of the Surviving Corporation
and the bylaws of the Surviving Corporation. If, at the Effective Time, a
vacancy shall exist on the board of directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by
Law.
Section 2.06 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, Parent,
Merger Sub or the holder of any securities of the Company or Merger Sub:
(a) Except as provided in clause (b) below, each share of Company
Common Stock issued and outstanding immediately before the Effective Time (such
shares of Company Common Stock are hereinafter referred to as the "Shares")
(other than Dissenting Shares) shall, by virtue of the Merger, be converted into
the right to receive from the Surviving Corporation $1.76 (the "Per Share
Amount") in cash payable to the holder thereof, without interest, upon surrender
of the certificate formerly representing such Share or an affidavit with respect
thereto, in each case in accordance with Section 2.07. As of the Effective Time,
all Shares so converted shall no longer be outstanding, shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
or certificates formerly representing any such Shares shall cease to have any
rights with respect thereto, except to receive the aggregate Per Share Amount
applicable thereto in accordance with Section 2.07.
(b) Each share of Company Common Stock that is held by the Company
as treasury stock or any Subsidiary of the Company or held by Parent or Merger
Sub immediately
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before the Effective Time shall automatically be canceled and retired and shall
cease to exist, and no Per Share Amount or other consideration shall be
delivered or deliverable in exchange therefor.
(c) Each share of common stock, $0.01 par value per share, of Merger
Sub issued and outstanding immediately before the Effective Time shall, by
virtue of the Merger, be converted into and become one duly authorized, validly
issued, fully paid and non-assessable share of common stock, $0.01 par value per
share, of the Surviving Corporation.
Section 2.07 Surrender of Shares; Stock Transfer Books.
(a) Before the Effective Time, Merger Sub shall enter into an
agreement with a bank or trust company reasonably satisfactory to the Company to
act as paying agent in the Merger (the "Paying Agent") and to receive the funds
necessary to make the payments contemplated by Section 2.06(a). Parent shall, or
shall cause Merger Sub to, at the Effective Time, deposit, or cause to be
deposited, with the Paying Agent, for the benefit of holders of Shares
immediately prior to the Effective Time, funds in an amount sufficient to make
the payments contemplated by Section 2.06(a) in accordance with the procedures
set forth in Section 2.07(b). In the event such funds shall be insufficient to
make all such payments, Parent shall promptly deposit additional funds with the
Paying Agent in an amount which is equal to the deficiency in the amount of
funds required to make such payments. Funds deposited with the Paying Agent
shall be invested by the Paying Agent as directed by Parent; provided, however,
that such funds may only be invested in (i) obligations of or guaranteed by the
United States, (ii) commercial paper rated A-1, P-1 and (iii) time deposits
with, including certificates of deposits issued by, any office located in the
United States of any bank or trust company organized under federal Laws of the
United States or under the Law of any state of the United States or of the
District of Columbia and that has capital and surplus of at least
$1,000,000,000. Any net profits resulting from, or interest or income produced
by, such investments shall be payable to and the property of the Surviving
Corporation.
(b) As soon as practicable, but in no event later than three
business days, after the Effective Time, the Surviving Corporation shall cause
the Paying Agent to mail to each holder of record of Shares immediately prior to
the Effective Time at such holder's address of record a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to certificates formerly representing Shares shall pass, subject to Section
2.07(d), only upon proper delivery of such certificates to the Paying Agent) and
instructions for use in effecting the surrender of the certificates formerly
representing the Shares in exchange for the Per Share Amount relating thereto,
in such form and with such other provisions as the Company and Merger Sub shall
reasonably agree. Each holder of a certificate formerly representing Shares may
thereafter deliver such certificate to the Paying Agent, as agent for such
holder, to effect the surrender of such certificate on such holder's behalf for
a period ending nine months after the Effective Time. Subject to Section
2.07(d), upon the surrender of certificates formerly representing the Shares
together with a properly executed letter of transmittal and any other documents
reasonably required by the Surviving Corporation or the Paying Agent, the
Surviving Corporation shall cause the Paying Agent to pay the holder of such
certificates in exchange therefor cash in an aggregate amount equal to the Per
Share Amount multiplied by the number of Shares formerly represented by such
certificates. Following the Effective Time and until so
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surrendered, each such certificate (other than certificates representing
Dissenting Shares or shares of Company Common Stock held by the Company or any
Subsidiary of the Company or held by Parent or Merger Sub) shall represent
solely the right to receive the aggregate Per Share Amount payable pursuant to
this Agreement in respect of the number of Shares formerly represented by such
certificate.
(c) If payment of cash in respect of canceled Shares is to be made
to a Person other than the Person in whose name a surrendered certificate is
registered in the stock records of the Company, it shall be a condition to such
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 such
payment in a name other than that of the registered holder of the certificate
surrendered or shall have established to the satisfaction of the Paying Agent
(or, after the date specified in Section 2.07(f), the Surviving Corporation)
that such Tax either has been paid or is not payable.
(d) If any certificate formerly representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may require as indemnity
against any claim that may be made against it with respect to such certificate,
the Paying Agent shall pay in exchange for such lost, stolen or destroyed
certificate cash in an aggregate amount equal to the Per Share Amount multiplied
by the number of Shares formerly represented by such certificate payable
pursuant to this Agreement.
(e) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
any shares of capital stock thereafter on the records of the Company. If, after
the Effective Time, certificates formerly representing Shares are presented to
the Surviving Corporation, they shall be canceled and exchanged for cash as
provided in Section 2.06(a) in accordance with the procedures set forth in this
Section 2.07. No interest shall accrue or be paid on any cash payable upon the
surrender of certificates which immediately before the Effective Time
represented Shares.
(f) Promptly following the date which is nine months after the
Effective Time, the Surviving Corporation may cause the Paying Agent to deliver
to the Surviving Corporation all cash that remains unclaimed, certificates and
other documents in its possession relating to the transactions contemplated
hereby, and any holder of a certificate formerly representing Shares who has not
theretofore complied with this Section 2.07 shall thereafter look only to the
Surviving Corporation only as general creditors thereof for payment of the Per
Share Amount multiplied by the number of Shares formerly represented by such
certificate, subject to any applicable abandoned property, escheat or similar
Law. Thereafter, each holder of a certificate or certificates formerly
representing Shares that did not receive the aggregate Per Share Amount relating
thereto may surrender such certificate or certificates or an affidavit in
accordance with Section 2.07(d) to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar Laws) receive in
consideration thereof the Per Share Amount multiplied by the number of Shares
formerly represented by such certificate or certificates, without any interest
thereon.
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(g) None of Parent, Merger Sub, the Company, the Surviving
Corporation or the Paying Agent, or any employee, officer, director, agent or
Affiliate thereof, shall be liable to any Person in respect of cash delivered by
the Surviving Corporation to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(h) All cash paid upon the surrender of a certificate formerly
representing Shares or an affidavit with respect to a lost, stolen or destroyed
certificate in accordance with the terms of this Article II shall be deemed to
have been paid in full satisfaction of all rights pertaining to the Shares
formerly represented thereby.
(i) The Paying Agent or, after the date specified in Section
2.07(f), the Surviving Corporation, shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock, Company Stock Options or Warrants,
such amounts as the Surviving Corporation or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under any
provision of applicable Tax Law. To the extent that amounts are so withheld by
the Surviving Corporation or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock, Company Stock Options or Warrants in respect
of which such deduction and withholding was made by the Surviving Corporation or
the Paying Agent, as the case may be.
(j) The Surviving Corporation shall be responsible for the payment
of all charges and expenses of the Paying Agent.
Section 2.08 Options; Warrants.
(a) Immediately prior to the Effective Time, the Company shall take
all actions reasonably necessary so that all Company Stock Options and Warrants
to purchase shares of Company Common Stock outstanding on the date hereof under
any Option Plan or Warrant Agreement, as the case may be, shall become fully
vested and exercisable (whether or not currently exercisable) and, at the
Effective Time, each Company Stock Option and each Warrant not theretofore
exercised shall be canceled, together with any and all other rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements or commitments to issue or sell any
shares of capital stock or other securities of the Company or any of its
Subsidiaries, or any securities or obligations convertible or exchangeable into
or exercisable for, or giving any Person a right to subscribe for or acquire,
any securities of the Company or any of its Subsidiaries, including, all Company
Stock Options. Subject to the following sentence and Section 2.07(i), each
holder of a Company Stock Option or a Warrant that is canceled pursuant to the
preceding sentence shall be, in respect of each share of Company Common Stock
issuable upon the exercise of such Company Stock Option or Warrant, as the case
may be, entitled to a cash payment by the Surviving Corporation in an amount
equal to the excess, if any, of (i) the Per Share Amount over (ii) the
applicable exercise price per share of Company Common Stock issuable upon the
exercise of such Company Stock Option or Warrant, as the case may be. The
foregoing cash payment shall be made by the Surviving Corporation to any such
holder of Company Stock Options or Warrants upon or as soon as practicable after
(A) such holder's surrender of all Company Stock Options and Warrants held by
such holder or (B) delivery by such holder of such holder's written agreement or
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acknowledgement that all Company Stock Options and Warrants held by such holder
have been canceled as a result of the Merger in exchange for such cash payment.
(b) Prior to the Effective Time, the Company shall take all
reasonable actions that are necessary or appropriate to give effect to the
transactions contemplated by Section 2.08. Without in any manner limiting the
foregoing sentence, prior to the Effective Time, the Company shall use its
reasonable best efforts to obtain all necessary Consents from all holders of
Company Stock Options and Warrants, to the extent required by the terms of the
applicable Option Plans and Warrant Agreements, or pursuant to the terms of any
Company Stock Option or Warrant granted thereunder, and take all such other
reasonable lawful action as may be necessary to give effect to the transactions
contemplated by this Agreement, including the amendment, modification or
termination of such Option Plans and Warrant Agreements in order to permit the
transactions contemplated by this Agreement.
Section 2.09 Dissenters' Rights.
(a) Notwithstanding anything in this Agreement to the contrary,
Shares that are held by stockholders that have not voted in favor of the Merger,
are entitled to demand and have properly demanded appraisal of their Shares
under the DGCL, and have complied in all respects with the requirements of the
DGCL concerning the right of a stockholder of the Company to demand appraisal of
such Shares and that, as of the Effective Time, have not effectively withdrawn
or lost such right to appraisal (the "Dissenting Shares") shall not be converted
into or represent a right to receive the Per Share Amount, but the holders of
such Dissenting Shares shall be entitled only to such rights as are provided
under Section 262 of the DGCL. Each holder of Dissenting Shares that becomes
entitled to payment for such Dissenting Shares pursuant to Section 262 of the
DGCL shall receive payment for such Dissenting Shares from the Surviving
Corporation in accordance with the DGCL; provided, however, that to the extent
that any holder of Shares has failed to establish the entitlement to appraisal
rights as provided in Section 262 of the DGCL, or shall have failed to perfect
or shall have effectively withdrawn or lost such rights, such holder shall
forfeit the right to appraisal of such Shares and each such Share shall
thereupon be deemed to have been converted, as of the Effective Time, into and
represent the right to receive payment from the Surviving Corporation of the Per
Share Amount in accordance with the procedures set forth in Section 2.07,
without interest thereon.
(b) The Company shall give the Parent and the Merger Sub (i) notice
of any written demands for appraisal, withdrawals of demands for appraisal, and
any other instrument served pursuant to Section 262 of the DGCL, received by the
Company within one business day after such receipt, and (ii) the opportunity to
direct all negotiations and Proceedings with respect to demands for appraisal
under Section 262 of the DGCL. 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 offer to settle any such demands.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure letter of Parent attached
hereto as Exhibit D (the "Parent Disclosure Letter"), Parent and Merger Sub
jointly and severally represent and warrant to the Company as follows:
Section 3.01 Organization. Each of Parent and Merger Sub is duly
formed or incorporated, validly existing and in good standing under the Laws of
the jurisdiction of its formation or incorporation and has all requisite limited
liability company or corporate power and authority to carry on its businesses as
now conducted, except where the failure to have such power or authority would
not prevent or materially delay the consummation of the transactions
contemplated by this Agreement. Liberty Partners Holdings 43, L.L.C. is a
limited liability company. A majority of the membership interests in Liberty
Partners Holdings 43, L.L.C. are held by the entity set forth in Section 3.01 of
the Parent Disclosure Letter.
Section 3.02 Ownership of Merger Sub. The authorized capital stock
of Merger Sub consists of 100 shares of common stock, par value $0.01 per share,
of which all such shares are outstanding on the date hereof. All of the issued
and outstanding shares of Merger Sub are owned by Parent. Merger Sub was formed
solely for the purpose of engaging in the Merger and has not engaged in any
business activities, conducted any operations or incurred any liabilities other
than in connection with the Merger. All of the issued and outstanding shares of
Merger Sub have been duly authorized and validly issued and are fully paid and
nonassessable.
Section 3.03 Authority Relative to this Agreement. Each of Parent
and Merger Sub has all necessary limited liability company or corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by each of Parent and Merger Sub and
the performance by each of Parent and Merger Sub of its obligations hereunder
and the consummation by each of Parent and Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary limited liability
company or corporate action, and no other limited liability company or corporate
proceeding is necessary for the execution and delivery of this Agreement by each
of Parent and Merger Sub, the performance by each of Parent and Merger Sub of
its obligations hereunder or the consummation by each of Parent and Merger Sub
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery hereof by the Company, constitutes a valid
and binding obligation of such Person, enforceable against it in accordance with
its terms, except to the extent that (i) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
Laws, now or hereafter in effect, relating to or limiting the enforcement of
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defense, and to the discretion of the court before which any Proceeding therefor
may be brought.
Section 3.04 No Conflict; Required Filings and Consents.
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(a) The execution and delivery of this Agreement by each of Parent
and Merger Sub does not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby by each of Parent and
Merger Sub will not, (i) conflict with or violate any Law applicable to Parent
or Merger Sub or by which any of their respective properties or assets is bound
or subject, (ii) violate or conflict with the certificate of formation or
limited liability company agreement, or certificate of incorporation or bylaws
or other organizational documents, of Parent or Merger Sub, or (iii) result in
any breach of or constitute a default (or an event which, with notice or lapse
of time or both would become a default) under, or give to others any rights of
modification, termination or cancellation under, or create or accelerate (alone
or upon the occurrence of any subsequent event) any right to payment under, or
result in a modification of, or result in the creation of a Lien on any of the
property or assets of any of Parent or Merger Sub pursuant to, any loan or
credit agreement, note, bond, mortgage, indenture, or any lease or other
contract, undertaking, arrangement, agreement or Permit to which any of Parent
or Merger Sub is a party or by or to which any of Parent or Merger Sub or any of
their respective properties or assets is bound or subject, other than such
conflicts and violations referred to in clause (i) and for such breaches,
defaults, modifications, terminations, cancellations, accelerations and payments
referred to in clause (ii) as would not, individually or in the aggregate,
reasonably be expected to prevent the Parent or Merger Sub from performing its
obligations under this Agreement.
(b) Except for (i) compliance with the applicable requirements, if
any, of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), and the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act"), and (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware as required by the DGCL (the
requirements and filings referred to in clauses (i) and (ii) being referred to
together as the "Required Parent Consents"), neither Parent nor Merger Sub is
required to obtain or make any Consent of any Governmental Entity or third party
in connection with the execution, delivery or performance of this Agreement or
the consummation of the transactions contemplated hereby, other than such
Consents the failure of which to obtain or make would not, individually or in
the aggregate, reasonably be expected to prevent Parent or Merger Sub from
performing its obligations under this Agreement.
Section 3.05 Funding.
(a) Parent has received written commitments from Liberty Capital
Partners, Inc. (the "Liberty Commitments") (i) to contribute to Parent at or
prior to the Effective Time funds in an aggregate amount up to $112 million in
respect of the amount necessary to pay the aggregate Per Share Amount in respect
of the Shares pursuant to Section 2.06 and all related fees and expenses and
(ii) to lend to Company funds in an aggregate amount up to $70 million in
respect of the repayment of certain outstanding indebtedness of the Company.
Parent will contribute to Merger Sub at or prior to the Effective Time funds in
an aggregate amount up to $112 million in respect of the amount necessary to
pay the aggregate Per Share Amount in respect of the Shares pursuant to Section
2.06 and all related fees and expenses.
(b) The Liberty Commitments are in full force and effect and have
not been withdrawn, amended or modified and there is no breach or default
existing (or which with notice
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or lapse of time or both may exist) thereunder. As of the date hereof, to the
Knowledge of Parent and Merger Sub, there are no facts or circumstances that are
reasonably likely to prevent the conditions described in the Liberty Commitments
from being satisfied. A true and correct copy of each Liberty Commitment is
included in Section 3.05(b) of the Parent Disclosure Letter.
(c) As of the date of this Agreement and immediately prior to the
Effective Time, Parent has no intention that (x) the Surviving Corporation's
indebtedness for borrowed money after the Effective Time shall not consist of
indebtedness for borrowed money as of the date of this Agreement which Parent
currently intends to refinance in an amount that will not exceed (other than in
de minimis amounts) the aggregate principal amount of such indebtedness for
borrowed money as of the date of this Agreement or to replace, in whole or in
part, with equity and (y) it will replace equity invested to purchase the Shares
with newly incurred indebtedness for borrowed money; provided, however, that
nothing herein is intended to prevent the Surviving Corporation from incurring
indebtedness in the ordinary course of business.
Section 3.06 Certain Agreements. Except as previously disclosed in
writing to the Company, to the Knowledge of Parent and Merger Sub, there is no
contract, agreement, commitment, arrangement or understanding between (a) Parent
or Merger Sub, on the one hand, and (b) any officer or director of the Company
or any of its Subsidiaries, on the other hand, relating to the transactions
contemplated by this Agreement.
Section 3.07 Brokers. No broker, finder, investment banker or other
Person (other than Bear Xxxxxxx & Co.) 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.
Section 3.08 Litigation. There are no outstanding Orders of any
Governmental Entity against Parent or Merger Sub and no Proceedings are pending
or, to the Knowledge of either Parent or Merger Sub, threatened against Parent
or Merger Sub, in such case, that, individually or in the aggregate, would
reasonably be expected to prevent Parent or Merger Sub from performing its
obligations under this Agreement.
Section 3.09 Information in Disclosure Documents. None of the
information provided or to be provided in writing by Parent or Merger Sub for
inclusion in the proxy statement or any amendments thereof or supplements
thereto to be distributed in connection with the Company's meeting of
stockholders to vote upon this Agreement (the "Proxy Statement") will, at the
time of the first mailing of the Proxy Statement to the Company's stockholders,
at the time of the Company Shareholders' Meeting to be held in connection with
the Merger and at the time of any amendments thereof or supplements thereto, and
none of the information provided by Parent or Merger Sub in writing for
inclusion in the Rule 13E-3 Transaction Statement on Schedule 13E-3 to be filed
with the SEC (the "Schedule 13E-3") will, at the time of its filing with the
SEC, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Merger Sub with
respect to the statements made or omitted in the Proxy Statement or Schedule
13E-3 relating to the Company, its Subsidiaries and their respective Affiliates
based
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on information provided by the Company, its Subsidiaries and their respective
Affiliates for inclusion or incorporation by reference in the Proxy Statement or
the Schedule 13E-3.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter of the Company attached
hereto as Exhibit E (the "Company Disclosure Letter") (each Section of which
qualifies the numbered representation and warranty only), the Company represents
and warrants to Parent and Merger Sub as follows:
Section 4.01 Organization, Good Standing and Qualification;
Subsidiaries. Each of the Company and each of its Subsidiaries is duly
incorporated, validly existing and in good standing under the Laws of its
jurisdiction of incorporation and has all requisite corporate or similar power
and authority to own and operate its properties and assets and to carry on its
business as presently conducted and is duly qualified to do business and is in
good standing in each jurisdiction where the ownership, lease or operation of
its properties of its business requires such qualification, except where the
lack of such qualification, individually or in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect on the
Company. The Company has made available to Parent a true, complete and correct
copy of the Company's Restated Certificate and Restated Bylaws, and each of its
Subsidiaries' certificates of incorporation and bylaws (or comparable
organizational documents), each as amended to date. The Company's Restated
Certificate and Restated Bylaws and its Subsidiaries' certificates of
incorporation and bylaws (or comparable organizational documents) so delivered
are in full force and effect. Section 4.01 of the Company Disclosure Letter sets
forth a list of each Subsidiary of the Company.
Section 4.02 Capitalization.
(a) The authorized capital stock of the Company consists of
150,000,000 shares of Class A Common Stock, par value $.01 per share ("Class A
Common Stock"), 5,000,000 shares of Class B Common Stock, par value $.01 per
share ("Class B Common Stock"), and 5,000,000 preferred shares, par value $.01
per share, of which 51,484,154 shares of Class A Common Stock, 1,627,933 shares
of Class B Common Stock and no preferred shares are outstanding on the date
hereof. All of the outstanding shares of Class A Common Stock and Class B Common
Stock have been duly authorized and validly issued, and are fully paid and
non-assessable, and not subject to any preemptive right. As of the date of this
Agreement, the Company has reserved for issuance (1) 11,577,245 shares of Class
A Common Stock and 476,214 shares of Class B Common Stock issuable upon exercise
of Company Stock Options outstanding on the date hereof, (2) 12,046,244 shares
of Class A Common Stock and 133,564 shares of Class B Common Stock issuable upon
exercise of Warrants outstanding on the date hereof, and (3) 1,627,933 shares of
Class A Common Stock issuable upon conversion of shares of Class B Common Stock
outstanding on the date hereof. A true and correct list of all Company Stock
Options and Warrants is set forth in Section 4.02 of the Company Disclosure
Letter. Each of the outstanding shares of capital stock or other equity
interests of each of the Company's Subsidiaries has been duly authorized and
validly issued, and is fully paid and non-assessable
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and are owned, beneficially and of record, by a direct or indirect wholly owned
Subsidiary of the Company free and clear of any Lien, and not subject to any
preemptive right. There are no proxies with respect to any shares of any such
Subsidiary. Other than with respect to the Subsidiaries of the Company, the
Company does not own, directly or indirectly, (i) any capital stock or other
equity securities of any corporation or (ii) any direct or indirect equity or
ownership interest, including interests in partnerships and joint ventures, in
any business. The Company does not have outstanding any bonds, debentures, notes
or other obligations the holders of which have the right to vote (or that are
convertible or exchangeable into or exercisable for securities having the right
to vote) with the stockholders of the Company on any matter.
(b) Except as set forth in Section 4.02(a), and except as may result
from the exercise, prior to the consummation of the Merger, of Company Stock
Options or Warrants outstanding on the date hereof, there are no outstanding (i)
shares of capital stock or other voting securities of the Company, (ii)
securities of the Company convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities of the Company or its
Subsidiaries, (iii) options, warrants, stock appreciation rights, or other
rights to acquire from the Company or its Subsidiaries, or obligations of the
Company or its Subsidiaries to issue or sell, any shares of capital stock or
other voting securities of the Company or its Subsidiaries, or (iv) equity
equivalent interests in the ownership or earnings of the Company or its
Subsidiaries or other similar rights.
(c) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the shares of any capital stock of the Company or any of its
Subsidiaries.
(d) No agreement or other document to which the Company or any of
its Subsidiaries is a party grants or imposes on any shares of Company Common
Stock any right, preference, privilege or transfer restriction with respect to
the transactions contemplated hereby (including any rights of first refusal),
except as set forth in the Restated Certificate. All shares of Company Common
Stock that may be issued upon the exercise of outstanding Company Stock Options
or Warrants will be when issued, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Subsidiaries or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in the Company, any of its Subsidiaries or
any other Person.
(e) Section 4.02 of the Company Disclosure Letter sets forth a true
and correct statement of the material terms and conditions of the Non-Plan
Options.
Section 4.03 Corporate Authority; Approval and Fairness.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and,
subject to the required approval and adoption of this Agreement by a majority of
the outstanding Company Common Stock entitled to vote, voting together as a
single class (the "Company Requisite Vote"), to
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consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the performance of its obligations hereunder
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, other than the Company Requisite Vote, and no other corporate action is
necessary to authorize the execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder or the
consummation by the Company of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery hereof by Parent and Merger Sub,
constitutes a valid and binding obligation of the Company, enforceable against
it in accordance with its terms, except that (i) such enforcement may be subject
to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other Laws, now or hereafter in effect, relating to or limiting creditors'
rights generally and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defense, and to the
discretion of the court before which any Proceeding therefor may be brought.
(b) Prior to execution and delivery of this Agreement, each of the
Board of Directors and the Special Committee (at meetings duly called and held)
has (i) approved this Agreement and the Merger and the other transactions
contemplated by this Agreement, (ii) determined that the transactions
contemplated hereby are advisable and in the best interests of the holders of
Company Common Stock and (iii) determined to recommend this Agreement, the
Merger and the other transactions contemplated by this Agreement to the
Company's stockholders for approval and adoption at the Company Shareholders'
Meeting. The Company Requisite Vote is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve and adopt this
Agreement, the Merger and the other transactions contemplated by this Agreement.
(c) The Special Committee has received the opinion of Evercore
Partners, L.P. ("Evercore"), the financial advisor to the Special Committee, to
the effect that, as of the date of such opinion, the Per Share Amount to be
received in the Merger by the holders of Company Common Stock is fair to such
holders from a financial point of view. A true, correct and complete copy of the
written opinion delivered by Evercore, which opinion shall be included in the
Proxy Statement, will be delivered to Parent by the Company within one business
day after its receipt.
Section 4.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not, (i) except for the
Required Company Consents, conflict with or violate any Law applicable to the
Company or any of its Subsidiaries or by which any of their respective
properties or assets is bound or subject, (ii) violate or conflict with the
certificate of incorporation or bylaws or other organizational documents of the
Company or any of its Subsidiaries, or (iii) result in any breach of or
constitute a default (or an event which, with notice or lapse of time or both
would become a default) under, or give to others any rights of modification,
termination or cancellation under, or create or accelerate (alone or upon the
occurrence of any subsequent event) any right to payment under, or result in a
modification of, or
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result in the creation of a Lien on any of the property or
assets of any of the Company or any of its Subsidiaries pursuant to, any loan or
credit agreement, note, bond, mortgage, indenture, or any lease or other
contract, undertaking, arrangement, agreement or Permit to which any such Person
is a party or by which any such Person or any of their respective properties or
assets is bound or subject, including any Company Contract or Company Permit,
other than such conflicts and violations referred to in clause (i) and for such
breaches, defaults, modifications, terminations, cancellations, accelerations
and payments referred to in clause (ii) as would not, individually or in the
aggregate, reasonably be expected to prevent the Company from performing its
material obligations under this Agreement or materially impair the ability of
the Surviving Corporation to conduct the businesses of the Company and its
Subsidiaries after the Effective Time substantially in the manner conducted on
the date hereof.
(b) Except for (i) compliance with the applicable requirements, if
any, of the Exchange Act and the Securities Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware as
required by the DGCL (the requirements and filing referred to in clauses (i) and
(ii) being referred to together as the "Required Company Consents"), neither the
Company nor any of its Subsidiaries is required to obtain or make any Consent of
any Governmental Entity or third party in connection with the execution,
delivery or performance of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, other than such Consents
the failure of which to obtain or make would not, individually or in the
aggregate, reasonably be expected to prevent the Company from performing its
material obligations under this Agreement or materially impair the ability of
the Surviving Corporation to conduct the businesses of the Company and its
Subsidiaries after the Effective Time substantially in the manner conducted on
the date hereof.
Section 4.05 Company Contracts.
(a) As of the date hereof, all of the contracts, undertakings,
commitments or agreements described in any of Item 601(b)(1), (2), (4), (9) or
(10) of Regulation S-K of the rules and regulations issued under the Securities
Act to which the Company or its Subsidiaries is a party ("Material Contracts")
have been filed as exhibits to, or incorporated by reference in, the Company
Reports. Section 4.5(a) of the Company Disclosure Letter sets forth a list of
each Management Agreement to which the Company or any of its Subsidiaries is a
party.
(b) There are no contracts, undertakings, commitments or agreements
to which any of the Company or its Subsidiaries is a party containing any
covenant not to compete with any Person. Neither the Company nor any of its
Subsidiaries is a party to any oral contract, undertaking, commitment or
agreement with any school district or charter authority to operate one or more
schools (including summer and after-school programs) or to provide student
achievement products and services.
(c) Other than such as have been terminated in accordance with their
respective terms or fully performed by the parties thereto, each Company
Contract is in full force and effect and is a valid and binding obligation of
the Company or one or more of its Subsidiaries and, to the Knowledge of the
Company, the other parties thereto, enforceable against each such Person in
accordance with its terms. None of the Company or its Subsidiaries is in
material breach, default or violation (or committed or failed to perform any act
which with
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notice or the lapse of time or both would constitute a material breach, default
or violation) of any material term, condition or provision of any Company
Contract to which the Company or any of its Subsidiaries is a party.
Section 4.06 Company Reports; Financial Statements.
(a) The Company has filed all documents required to be filed on or
prior to the date hereof by it with the SEC since June 30, 2002 (including
exhibits, annexes and documents incorporated by reference therein and any
amendments thereto) (collectively, the "Company Reports"). As of their
respective dates (or, if amended, as of the date of such amendment), the Company
Reports (i) complied in all material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, each as in
effect on the date so filed, and (ii) did not, and all such documents filed with
the SEC after the date hereof (the "Subsequent Company Reports") will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by reference
into the Company Reports (including the related notes and schedules) fairly
presents, or with respect to the Subsequent Company Reports will fairly present,
in all material respects, the consolidated financial position of the Company and
its consolidated Subsidiaries as of its date and each of the consolidated
statements of operations and consolidated statements of stockholder's equity and
cash flows included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents, or with respect to
the Subsequent Company Reports will fairly present, in all material respects,
the consolidated results of operations and cash flows, as the case may be, of
the Company and its consolidated Subsidiaries for the periods set forth therein
(subject, in each case of unaudited financial statements, to notes and normal
year-end audit adjustments that are not material in amount), in each case in
accordance with GAAP as in effect on the date of such financial statements,
except as may be indicated in such financial statements or in the notes thereto
and, in each case of unaudited financial statements, as permitted by the rules
and regulations of the SEC.
(b) Except as set forth in the Company Reports, neither the Company
nor any of its Subsidiaries has incurred any liabilities or obligations
(including Tax liabilities) (whether absolute, accrued, contingent or
otherwise), other than liabilities or obligations incurred in the ordinary
course of business since June 30, 2002, liabilities or obligations under this
Agreement, or liabilities or obligations, that, individually or in the
aggregate, would not reasonably be expected to materially impair the ability of
the Surviving Corporation to conduct the businesses of the Company and its
Subsidiaries substantially in the manner conducted on the date hereof.
Section 4.07 Absence of Certain Changes. Except as set forth in the
Company Reports and except as contemplated by this Agreement, since June 30,
2002, the Company and its Subsidiaries have conducted their respective
businesses and operations in the ordinary course consistent with past practice
and, except as set forth in Section 4.07 of the Company Disclosure Letter, there
has not occurred (i) any event, condition or occurrence, individually or in the
aggregate, having or that would reasonably be expected to have a Material
Adverse Effect on the Company or (ii) any action taken by the Company or any of
its Subsidiaries that, if taken during
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the period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.01 hereof.
Section 4.08 Litigation and Liabilities. Other than with respect to
environmental matters which are governed by Section 4.12, there are no
outstanding Orders of any Governmental Entity against the Company or any of its
Subsidiaries, any of their respective properties, assets or business, or, any of
the Company's or its Subsidiaries' current or former directors or officers, in
their capacity as such, or any other Person whom the Company or any of its
Subsidiaries has agreed to indemnify, as such, that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect on the Company. Other than with respect to environmental matters which
are governed by Section 4.12, Taxes which are governed by Section 4.13, labor
matters which are governed by Section 4.14 and Company Benefit Plans which are
governed by Section 4.18, there are no Proceedings or, to the Knowledge of the
Company, investigations or inquiries pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries, any of their
properties, assets or business, or, any of the Company's or its Subsidiaries'
current or former directors or officers, in their capacity as such, or any other
Person whom the Company or any of its Subsidiaries has agreed to indemnify, as
such, that, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.09 Compliance with Laws; Permits. (i) Each of the Company
and its Subsidiaries holds, and is in compliance with the terms of, all Permits
necessary for the conduct of its businesses ("Company Permits"), except for
failures to hold or to comply with such Permits, which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect on the Company; and (ii) other than with respect to environmental
matters which are governed by Section 4.12, Taxes which are governed by Section
4.13, labor matters which are governed by Section 4.14 and Company Benefit Plans
which are governed by Section 4.18, the business of the Company and its
Subsidiaries is being conducted in compliance with all applicable Laws and
Permits, except for violations or failures to so comply, that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect on the Company.
Section 4.10 Takeover Statutes and Provisions. The Company has taken
all steps necessary to approve and irrevocably exempt the transactions
contemplated by this Agreement from any applicable takeover Law of any
jurisdiction. Without limiting the generality of the foregoing, the Board of
Directors has approved this Agreement, the Merger and the transactions
contemplated hereby in such manner as is sufficient to render the restrictions
of Section 203 of the DGCL inapplicable to this Agreement, the Merger and all
transactions contemplated hereby.
Section 4.11 Information in Disclosure Documents. None of the
information provided or to be provided by the Company or any of its Subsidiaries
for inclusion in the Proxy Statement will, at the time of the mailing of the
Proxy Statement to the Company's stockholders, at the time of the Company
Shareholders' Meeting to be held in connection with the Merger and at the time
of any amendments thereof or supplements thereto, and none of the information
provided by the Company or any of its Subsidiaries for inclusion in the Schedule
13E-3, will, at the time of its filing with the SEC, contain any untrue
statement of a material fact or omit to state
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any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement and the Schedule 13E-3 will, when filed with
the SEC, comply as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the Company with respect to
the statements made or omitted in the Proxy Statement or Schedule 13E-3 relating
to Parent, Merger Sub and their Affiliates based on information provided by
Parent, Merger Sub and their Affiliates for inclusion or incorporation by
reference in the Proxy Statement or the Schedule 13E-3.
Section 4.12 Environmental Matters. (i) The Company and its
Subsidiaries and their respective assets, businesses and operations, and during
the time such property was owned, leased, occupied, managed or operated by any
of them, their present and former properties ("present or former properties"),
and to the Knowledge of the Company, any Person for whose conduct any of them
has agreed to be liable, have complied with and are currently in compliance in
all materials respects with all applicable Environmental Laws; and (ii) neither
the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company,
any Person for whose conduct any of them has agreed to be liable has received
any written notices, demand letters, request for information or any other
written communication from any Governmental Entity or any third party claiming
that the Company, any Subsidiary or any such Person or their businesses,
operations or present or former properties is or may be, in any material
respect, in violation of, or liable under or, to the Knowledge of the Company,
subject to investigation or inquiry with respect to, any Environmental Law,
where such investigation and inquiry relates to a material liability, including
liability for off-site disposal, personal injuries or property damages, and to
the Knowledge of the Company, no such claims are threatened, except with respect
to such matters as have been fully resolved with no further liability to the
Company or any of its Subsidiaries. None of the Company, its Subsidiaries and
their assets, present or former properties, businesses and operations, nor to
the Knowledge of the Company, any Person for whose conduct any of them has
agreed to be liable, are subject to any material Proceeding or Order arising
under any Environmental Law, except with respect to such matters as have been
fully resolved with no further liability to the Company or any of its
Subsidiaries; and no Hazardous Substance has been disposed of, spilled, leaked
or otherwise released or threatened to be released into the indoor or outdoor
environment, including soils, groundwater or surface water at or from or is
otherwise present on or at any of the present or former properties where such
disposal, spill, leak or release or threat of release or presence would be
reasonably likely to result in a material claim under Environmental Law against
the Company, any of its Subsidiaries, or any Person for whose conduct any of
them has agreed to be liable.
Section 4.13 Taxes.
(a) Each of the Company and its Subsidiaries has filed all material
Tax Returns that it was required to file under applicable Laws. All such Tax
Returns were correct and complete in all material respects when filed and have
been prepared in compliance with all applicable Laws. All material Taxes due and
owing by any of the Company and its Subsidiaries (whether or not shown on any
Tax Return) have been paid. Neither the Company nor any of its Subsidiaries
currently is the beneficiary of any extension of time within which to file any
Tax Return. No claim has been made in writing by any Governmental Entity in a
jurisdiction where
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any of the Company and its Subsidiaries does not file Tax Returns that such
Person is or may be subject to taxation by that jurisdiction. There are no Liens
for Taxes (other than Taxes not yet due and payable) upon any of the properties
or assets of the Company or any of its Subsidiaries.
(b) Each of the Company and its Subsidiaries has withheld and,
without limiting the generality of Section 4.13(a), paid all material Taxes
required to have been withheld and paid in connection with any amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.
(c) No Tax Proceedings or audits are pending or, to the Knowledge of
the Company, threatened in writing, nor, to the Knowledge of the Company, are
there any investigations or inquiries, with respect to the Company or any of its
Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(e) Neither the Company nor any of its Subsidiaries is a party to
any agreement, contract, arrangement or plan that, individually or in the
aggregate, has resulted or would result in the payment of (i) any "excess
parachute payment" within the meaning of Code ss.280G (or any corresponding
provision of Tax Law) or (ii) any amount that will not be fully deductible as a
result of Code ss.162(m) (or any corresponding provision of Tax Law). Neither
the Company nor any of its Subsidiaries (A) has been a member of an Affiliated
Group filing a consolidated United States federal income Tax Return (other than
a group the common parent of which was the Company) or (B) has any liability for
the Taxes of any Person (other than any of the Company and its Subsidiaries)
under Reg. ss.1.1502-6 (or any corresponding provision of Tax Law), as a
transferee or successor, by contract, or otherwise.
(f) None of the Company and its Subsidiaries 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: (A) change in method of accounting for a taxable period
ending on or prior to the Closing Date; (B) "closing agreement" as described in
Code ss.7121 (or any corresponding provision of income Tax Law) executed on or
prior to the Closing Date; or (C) intercompany transactions or any excess loss
account described in Treasury Regulations under Code ss.1502 (or any
corresponding provision of income Tax Law).
(g) Neither the Company nor any of its Subsidiaries has distributed
stock of another Person, or has had its stock distributed by another Person, in
a transaction that was purported or intended to be governed in whole or in part
by Code ss.355 or ss.361.
Section 4.14 Labor Matters. The Company and each of its Subsidiaries
is in compliance with all applicable Laws relating to employment, including
those governing employment practices, the terms and condition of employment,
compensation, payment of wages, health and safety, labor relations and plant
closings, including the Americans with Disabilities Act, the Age Discrimination
in Employment Act, ERISA, the Equal Pay Act, the Fair Labor Standards Act, the
Family and Medical Leave Act, the National Labor Relations Act, the
-23-
Occupational Safety and Health Act and Title VII of the Civil Rights Act of
1964, as amended (collectively, "Labor Laws"), except for violations or failures
to so comply, that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect on the Company. There
is no Proceeding relating to any Employee pending by any Governmental Entity
against the Company or any of its Subsidiaries for the enforcement of any such
Labor Law; and, to the Knowledge of the Company, there is no other Proceeding,
investigation or inquiry pending or threatened by any Governmental Entity
against the Company or any of its Subsidiaries for the enforcement of any such
Labor Law. To the Knowledge of the Company, there is no notice, activity or
Proceeding by any labor union, labor organization or other group seeking to
represent Employees of the Company or any of its Subsidiaries or to organize any
such Employees. To the Knowledge of the Company, neither the Company nor any of
its Subsidiaries is the subject of any pending, or to the Knowledge of the
Company, threatened Proceeding, investigation or inquiry asserting that the
Company or any of its Subsidiaries has committed any material unfair labor
practice or seeking to compel it to bargain with any labor union, labor
organization or other group with respect to the Employees of the Company; nor is
there pending, or to the Knowledge of the Company, threatened, any labor strike,
material dispute, walk out, work stoppage, slow down or lockout involving any
Employees.
Section 4.15 Insurance. All fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or any of its Subsidiaries are in
full force and effect, except for any such failures to maintain insurance
policies that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect on the Company or
materially impair the ability of the Surviving Corporation to conduct its
business.
Section 4.16 Intellectual Property.
(a) The Company and each of its Subsidiaries owns free and clear of
any and all Liens, or is licensed or otherwise possesses rights to use, all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or materials
that are used in and are material to its business as presently conducted
("Company Intellectual Property").
(b) Except for such matters as, individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse
Effect on the Company: (A) neither the Company nor any of its Subsidiaries is,
nor will any such Person be as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder or the consummation of
the transactions contemplated hereby, in violation of any licenses, sublicenses
and other agreements included in the Company Intellectual Property; (B)(i) no
Proceedings with respect to any Company Intellectual Property owned by the
Company or any of its Subsidiaries are pending or, to the Knowledge of the
Company, threatened by any Person, nor, to the Knowledge of the Company, are
there any investigations or inquiries with respect to any Company Intellectual
Property owned by the Company or any of its Subsidiaries, against the Company or
any of its Subsidiaries, and (ii) to the Knowledge of the Company, no
Proceedings, investigations or inquiries with respect to any Company
Intellectual Property not owned by the Company or any of its Subsidiaries are
pending or threatened by any Person against the
-24-
Company or any of its Subsidiaries; and (C) to the Knowledge of the Company,
there is no unauthorized use, infringement or misappropriation by any Person of
any of the Company Intellectual Property owned by the Company or any of its
Subsidiaries.
Section 4.17 Affiliate Transactions. Except as set forth in the
Company Reports or in the next sentence in this Section 4.17, there is no
Company Contract or other contract, agreement, commitment or arrangement
(whether written or oral) between (a) the Company or any of its Subsidiaries, on
the one hand, and (b) any (i) officer or director of the Company or of any of
its Subsidiaries, (ii) record or beneficial owner of five percent or more of any
class of the voting securities of the Company or (iii) Affiliate of any such
officer, director or beneficial owner, on the other hand. Except as set forth in
Section 4.17 of the Company Disclosure Letter, to the Knowledge of the Company,
there is no contract, agreement, commitment, arrangement or understanding
between (a) the Company or any of its Subsidiaries, on the one hand, and (b) any
officer or director of the Company or any of its Subsidiaries, on the other
hand, relating to the transactions contemplated by this Agreement.
Section 4.18 Company Benefit Plans.
(a) The Company has made available to Parent (i) true, correct and
complete copies of each Company Benefit Plan (and all amendments thereto) or an
accurate description thereof; (ii) a copy of the most recent annual report, if
any, with respect to each Company Benefit Plan; (iii) a copy of the most recent
actuarial report, if any, with respect to each Company Benefit Plan; (iv) a copy
of the most recent Summary Plan Description, together with each Summary of
Material Modifications, if either exists, with respect to each Company Benefit
Plan; (v) if the Company Benefit Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof; (vi) the
most recent determination letter received from the IRS with respect to each
Qualified Benefit Plan; and (vii) any other form or filing required to be
submitted to any Governmental Entity with regard to any Company Benefit Plan
that could reasonably be expected to result in a Material Adverse Effect.
(b) The Company has no formal plan or commitment to create any
additional Company Benefit Plan or to amend or change in any material respect
any existing Company Benefit Plan.
(c) Each Qualified Benefit Plan has applied for and received a
currently effective determination letter from the IRS stating that it is so
qualified, and, to the Knowledge of Company, no event has occurred that could
reasonably be expected to cause the loss of such qualification.
(d) Except as would not result in a Material Adverse Effect, all
contributions and premiums required to be paid under the terms of each of the
Company Benefit Plans have, to the extent due, been paid in full or properly
recorded and accrued on the financial statements or records of Company.
(e) No Company Benefit Plan is subject to Title IV of ERISA. No
material liability under Title IV of ERISA has been incurred by Company or any
ERISA Affiliate since
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the effective date of ERISA that has not been satisfied in full, and, to the
Knowledge of the Company, no condition exists that presents a risk to Company,
its Subsidiaries or any ERISA Affiliate of incurring any material liability
under such Title.
(f) All of the Company Benefit Plans are, and have been, operated
and administered 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. The Company and all fiduciaries of the Company Benefit
Plans have complied in all material respects with the provisions of the Company
Benefit Plans and with all applicable Laws, including ERISA and the Code and the
regulations and rulings thereunder.
(g) No Company Benefit Plan is a "multiemployer pension plan," as
such term is defined in Section 3(37) of ERISA.
(h) Except as set forth in the Company Reports, neither the
execution, delivery or performance of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
(including, severance, unemployment compensation, golden parachute or otherwise)
becoming due from the Company under any Company Benefit Plan, (ii) increase in
any material respects any benefit otherwise payable under any Company Benefit
Plan or (iii) result in the acceleration of the time of payment or vesting of
any such material benefit to any extent.
(i) There are no pending material Proceedings involving any Company
Benefit Plan, which have been asserted or instituted against any of the Company
Benefit Plans, the assets of any of the trusts under such plans, the plan
sponsor, the plan administrator or, to the Knowledge of the Company, against any
fiduciary of any of the Company Benefit Plans (other than routine benefit
claims) nor, to the Knowledge of the Company, are there facts which could form
the basis for any such material Proceeding. To the Knowledge of the Company,
there are no investigations or material audits by any Governmental Entity of any
of the Company Benefit Plans, any trusts under such plans, the plan sponsor, the
plan administrator or, any fiduciary of any of the Company Benefit Plans which
have been instituted or notice of which has been received by the Company or any
of its Subsidiaries.
Section 4.19 Brokers and Finders. Neither the Company nor any of its
Subsidiaries has retained any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with Merger or the
transactions contemplated by this Agreement, except for Evercore.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.01 Conduct of Business by the Company Pending the
Effective Time. Prior to the Effective Time, unless Parent shall otherwise agree
in writing, or unless contemplated by this Agreement or set forth in Section
5.01 of the Company Disclosure Letter, the Company shall conduct, and cause each
of its Subsidiaries to conduct, its business only in the ordinary course and
consistent with past practice, and the Company shall use, and cause each of
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its Subsidiaries to use, its reasonable best efforts to preserve intact the
present business organization, keep available the services of its present
officers and key employees, and preserve the existing business relationships of
the Company and its Subsidiaries. Without limiting the generality of the
foregoing, unless Parent shall otherwise agree in writing, or unless
contemplated by this Agreement or set forth in Section 5.01 of the Company
Disclosure Letter, prior to the Effective Time the Company shall not, nor shall
it permit any of its Subsidiaries to:
(a) (i) amend its certificate of incorporation, bylaws or other
organizational documents, (ii) allow or authorize any stock dividend, stock
split, reverse stock split, division or subdivision, exchange or readjustment,
consolidation, reclassification, recapitalization or other similar transaction,
in each case, with respect to capital stock of the Company, (iii) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property, except for dividends or distributions by a direct or indirect wholly
owned Subsidiary of the Company to such Subsidiary's parent or to another wholly
owned Subsidiary of the Company, or (iv) directly or indirectly redeem or
otherwise acquire any shares of its capital stock or shares of the capital stock
of any of its Subsidiaries;
(b) authorize for issuance, issue (except upon the exercise of
Company Stock Options and Warrants outstanding on the date of this Agreement
under the Option Plans and Warrant Agreements) or sell or agree to issue or sell
any shares of, or any rights to acquire or securities convertible into, or
exercisable or exchangeable for, its capital stock or shares of the capital
stock of any of its Subsidiaries (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise),
in each case other than (i) upon the exercise of Company Stock Options and
Warrants outstanding on the date of this Agreement under the Option Plans and
Warrant Agreements or (ii) issuances by a direct or indirect wholly owned
Subsidiary of the Company to such Subsidiary's parent or to another wholly owned
Subsidiary of the Company;
(c) (i) merge, combine or consolidate with another Person, (ii)
acquire or purchase any (A) equity interest in or (B) the assets of another
corporation, partnership or other business organization or otherwise acquire any
assets outside the ordinary course of business and consistent with past practice
or otherwise enter into any contract, commitment or transaction outside the
ordinary course of business and consistent with past practice (other than any
acquisition or purchase of such assets by the Company in an aggregate amount not
to exceed $1.0 million) or (iii) sell, lease, license, waive, release, transfer,
mortgage, pledge, encumber or otherwise dispose of or allow or cause any Lien
upon any of its assets outside the ordinary course of business and consistent
with past practice (other than any disposition of such assets by the Company in
an aggregate amount not to exceed $1.0 million);
(d) (i) incur, assume, modify or prepay any indebtedness,
obligations or liabilities other than in each case in the ordinary course of
business and consistent with past practice, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person other than a Subsidiary of
the Company, in each case other than in the ordinary course of business and
consistent with past practice or (iii) make any loans, advances (other than for
business expenses incurred in the ordinary course of business and consistent
with past practice) or capital
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contributions to, or investments in, any other Person, other than to any
Subsidiary of the Company;
(e) pay, satisfy, discharge or, except as required by Law, settle
any material claim, liabilities or obligations (absolute, accrued, contingent or
otherwise), other than in the ordinary course of business and consistent with
past practice or pursuant to mandatory terms of any Company Contract in effect
on the date hereof;
(f) modify or amend, or waive any material benefit under any
material agreement, contract or commitment to which the Company or any of its
Subsidiaries is a party or by or to which any of their respective material
assets or properties are bound or subject, including any Company Contract;
(g) authorize or make capital expenditures in excess of $1.0 million
in the aggregate;
(h) permit any material insurance policy naming the Company or any
Subsidiary of the Company as a beneficiary or a loss payee to be canceled or
terminated other than in the ordinary course of business and consistent with
past practice;
(i) (i) adopt, enter into, terminate or, except as required by Law,
amend any employee plan, agreement, contract, arrangement or other Company
Benefit Plan (provided that nothing herein is intended to prevent the Company or
any of its Subsidiaries from hiring or firing Employees in the ordinary course
of business and consistent with past practice), (ii) increase in any material
manner the compensation or fringe benefits of, or pay any material bonus to, any
director, officer or employee of the Company or any of its Subsidiaries, or
(iii) except in the ordinary course of business and consistent with past
practice or other than pursuant to Section 2.08 hereof, take any action to fund
or in any other way secure, or to accelerate or otherwise remove restrictions
with respect to, the payment of compensation or benefits under any Company
Benefit Plan;
(j) make any material change in its accounting or Tax policies or
procedures, except as required by changes in GAAP or as required by Law;
(k) settle any material Proceeding; or
(l) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing.
Section 5.02 No Solicitation. Neither the Company nor any Subsidiary
of the Company nor any of their respective officers or directors shall, and the
Company shall direct and cause its and such Subsidiaries' Representatives not
to, directly or indirectly, (i) initiate, solicit, encourage or otherwise take
any action to facilitate any inquiries or the making of any proposal or offer
with respect to a merger, reorganization, recapitalization, share exchange,
consolidation, sale, purchase, tender offer, exchange offer or similar
transaction involving 10% or more of any class of equity securities (or any
securities exercisable or exchangeable for or convertible into such equity
securities) issued by the Company, including Class A Common Stock and Class B
Common Stock, or any of its Subsidiaries, or any substantial portion of the
Company's or any
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such Subsidiary's assets (any such inquiry, proposal or offer being hereinafter
referred to as an "Acquisition Proposal") or (ii) engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, or afford access to any of the properties, assets or books and
records of the Company or any of its Subsidiaries to, or enter into any
agreement, commitment or arrangement with, any Person relating to an Acquisition
Proposal; provided, however, that, so long as the Company has not breached in
any material respect any of its obligations under this Section 5.02 or Section
6.02, nothing contained in this Agreement shall prevent the Company, its
directors, officers, or Representatives from (A) providing information in
response to a request therefor by a Person who has made an unsolicited bona fide
written Acquisition Proposal involving a majority of the voting power of the
Company Common Stock or a substantial portion of the Company's assets if the
Board of Directors receives from the Person so requesting such information an
executed confidentiality agreement and contemporaneously provides such
information to Parent; (B) engaging in any negotiations or discussions with any
Person who has made an Acquisition Proposal described in clause (A) above; or
(C) withdrawing or modifying in a manner adverse to Parent or Merger Sub its
recommendation in favor of the Merger and this Agreement or recommending to the
stockholders of the Company an unsolicited bona fide written Acquisition
Proposal involving a majority of the voting power of the Company Common Stock or
all or substantially all of the Company's assets, if and only to the extent
that, in each such case referred to in clause (A) or clause (B) above, the Board
of Directors with the authorization of the Special Committee determines in good
faith based on such matters as it deems relevant (after consultation with
outside legal counsel), that failure to take such action would be reasonably
likely to result in a breach of the fiduciary duties of the directors under
applicable Law, and in each such case referred to in clause (C) above, (i) the
Board of Directors with the authorization of the Special Committee determines in
good faith based on such matters as it deems relevant (after consultation with
outside legal counsel), that failure to take such action would be reasonably
likely to result in a breach of the fiduciary duties of the directors under
applicable Law and (ii) the Board of Directors or the Special Committee
determines in good faith based on such matters as it deems relevant (after
consultation with its financial advisor) that such Acquisition Proposal referred
to in clause (C) above, if consummated, would be reasonably likely to result in
a transaction more favorable to the Company's stockholders from a financial
point of view than the transaction contemplated by this Agreement (including
taking into account the financing thereof) (such more favorable Acquisition
Proposal being referred to in this Agreement as a "Superior Proposal"). The
Company shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations by the Company or any Subsidiary of the
Company, or any of their respective officers, directors or Representatives with
any parties conducted heretofore with respect to any Acquisition Proposals. The
Company agrees that it will (y) as promptly as reasonably practicable (but in no
event later than the day after receipt) notify Parent if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, any such Person and (z) identify the material terms and conditions of any
Acquisition Proposal (including any material subsequent changes, modifications
and amendments thereto) and the identity of the Person making such Acquisition
Proposal. Nothing contained in this Agreement shall prohibit the Company, the
Board of Directors or the Special Committee from taking and disclosing to the
Company's stockholders a position with respect to a tender or exchange offer by
a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
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Exchange Act or from taking any other action or making any disclosure as
required by applicable Law.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.01 Access and Information. The Company shall (and shall
cause its Subsidiaries and its and their respective officers and directors, and
shall direct its Representatives to) afford to Parent and its officers, managers
and Representatives access, upon reasonable advance notice and during normal
business hours, throughout the period prior to the Effective Time to all of its
books, environmental and other correspondence, documents, studies, reports and
records and its properties, plants and personnel to do such investigation and
assessments as Parent reasonably deems necessary and, during such period, shall
provide promptly to Parent a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of United States federal
securities Laws and such other documents as Parent may reasonably request;
provided, however, that such access shall only be provided to the extent that
such access would not violate applicable Laws. Unless otherwise required by Law,
each party hereto shall, and it shall cause its Subsidiaries and its and their
respective officers, directors, and Affiliates, and shall direct its
Representatives to, hold in confidence all non-public information so acquired
and to use such information solely for purposes of effecting the transactions
contemplated by this Agreement. No representation or warranty of any party
hereto contained in this Agreement or in any certificate or other document
delivered pursuant hereto shall be deemed waived or otherwise affected by any
investigation made by any other party hereto.
Section 6.02 Shareholders Meeting; Proxy Statement.
(a) In accordance with any applicable Law, the Company's Sixth
Amended and Restated Certificate of Incorporation ("Restated Certificate") and
Second Amended and Restated Bylaws ("Restated Bylaws"), the Company shall call
and hold a meeting of its shareholders as promptly as reasonably practicable
after the date hereof for the purpose of voting upon the approval and adoption
of this Agreement and the transactions contemplated hereby (the "Company
Shareholders' Meeting"), and the Company shall use its reasonable best efforts
to hold such shareholder meeting as promptly as reasonably practicable after the
date on which the Proxy Statement is cleared by the SEC. The Board of Directors
shall submit this Agreement to the stockholders of the Company for approval and
adoption whether or not the Board of Directors at any time changes or modifies
its recommendation in favor of the Merger and this Agreement in compliance with
this Agreement. The Company shall use its reasonable best efforts to solicit
from the stockholders of the Company proxies in favor of the Merger and shall
take all other reasonable action necessary or advisable to secure the vote or
consent of the stockholders of the Company required by the DGCL and the Restated
Certificate and Restated Bylaws to approve and adopt this Agreement and the
Merger. Without limiting the generality of the foregoing, the Company agrees
that its obligation to duly call, give notice of, convene and hold the Company
Shareholders' Meeting, as required by this Section 6.02(a), shall not be
affected by the withdrawal, amendment or modification of the recommendation of
the Board of Directors in favor of the Merger and this Agreement. Except as
permitted by and in accordance with the provisions of Section 5.02, neither the
Board of Directors nor the Special Committee
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may withdraw or modify in a manner adverse to Parent or Merger Sub its approval
or recommendation of this Agreement or the Merger or state publicly its intent
to do so, or approve or recommend any Acquisition Proposal to the shareholders
of the Company or state publicly its intent to do so, or resolve to take any of
the foregoing actions.
(b) As promptly as reasonably practicable after the date of this
Agreement, the Company shall prepare and file with the SEC, and shall use its
reasonable best efforts to have cleared by the SEC, the Proxy Statement in
connection with the Company Shareholders' Meeting, and the parties hereto shall
prepare and file with the SEC, and shall use their reasonable best efforts to
have cleared by the SEC, the Schedule 13E-3. The Company, Parent and Merger Sub
each shall promptly and timely provide all information relating to its
respective businesses or operations necessary for inclusion in the Proxy
Statement or the Schedule 13E-3 to satisfy all requirements of applicable state
and United States federal securities Laws. The Company and Parent (with respect
to Parent and Merger Sub) each shall be solely responsible for any statement,
information or omission in the Proxy Statement or the Schedule 13E-3 relating to
it (and Merger Sub with respect to Parent) or its Affiliates based upon written
information provided by it (or Merger Sub with respect to Parent) for inclusion
in the Proxy Statement or the Schedule 13E-3.
(c) The Company shall notify Parent of the receipt of any comments
of the SEC with respect to the Proxy Statement and the Schedule 13E-3 and of any
requests by the SEC for any amendment or supplement thereto or for additional
information and shall provide a copy of such comments or requests to Parent
promptly after receipt, and shall promptly provide to Parent copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its counsel the reasonable opportunity to
review and comment on any proposed responses to comments, which review shall be
concluded as promptly as possible, but in no event more than three (3) business
days after the receipt of the Company's proposed responses to comments or other
correspondence to the SEC. If at any time after the date the Proxy Statement is
mailed to stockholders and prior to the Company Shareholders' Meeting any
information relating to the Company, Parent or Merger Sub, or any of their
respective Affiliates, officers or directors, is discovered by the Company,
Parent or Merger Sub which is required to be set forth in an amendment or
supplement to the Proxy Statement or the Schedule 13E-3 so that the Proxy
Statement or the Schedule 13E-3 will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and to the extent required
by applicable Law, disseminated to the stockholders. As promptly as reasonably
practicable after the Proxy Statement and Schedule 13E-3 have been cleared by
the SEC (or sooner if permitted by applicable Law), the Company shall mail the
Proxy Statement to the stockholders of the Company. Unless the Board of
Directors with the authorization of the Special Committee shall have withdrawn
or modified its approval or recommendation of this Agreement or the Merger as
permitted by and in accordance with the provisions of Section 5.02, the Proxy
Statement shall include the recommendation of the Board of Directors in favor of
the Merger and this Agreement.
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Section 6.03 Public Announcements. Contemporaneously with the
execution and delivery of this Agreement, the parties hereto shall issue a joint
initial press release announcing the execution of this Agreement in such form as
has been as mutually agreed. Thereafter, (i) the parties hereto shall consult
with one another prior to issuing any press release or otherwise making any
public communications (other than required filings addressed in clause (ii)
below) in connection with the Merger or the other transactions contemplated by
this Agreement and shall provide each other with a meaningful opportunity to
review and approve (such approval not to be unreasonably withheld or delayed)
any such press releases or other public communications, and (ii) prior to making
any required filings with any Governmental Entity, national securities exchange
or interdealer quotation service with respect to the Merger or the other
transactions contemplated by this Agreement, the parties will consult with one
another and will provide each other with a meaningful opportunity to review and
comment upon, such filings, except, with respect to clauses (i) and (ii) above,
as may be required by Law, court process or by obligations pursuant to any
listing agreement with or rules of any national securities exchange or
interdealer quotation service in which event each party hereto shall endeavor,
on a basis reasonable under the circumstances, to consult with and provide a
meaningful opportunity to the other parties hereto to review, approve or comment
as set forth above. Notwithstanding any provision hereof to the contrary, Parent
and Merger Sub may disclose any and all information relating to this Agreement
and the transactions contemplated hereby, including the Merger, the Company and
its Subsidiaries, to their financing sources, including lenders; provided, that
such financing sources execute reasonable confidentiality agreements with
respect to such information. Notwithstanding anything to the contrary in this
Agreement or in any other written or oral understanding or agreement to which
the parties hereto are parties or by which they are bound, each party may
disclose to any Person, without limitation of any kind, the tax treatment and
any facts that may be relevant to the tax structure of the transactions
contemplated by this Agreement; provided, however, that no party (nor any
Representative thereof) may disclose any information that is not necessary to
understanding the tax treatment and tax structure of the transactions
contemplated by this Agreement (including the identity of the parties and any
information that could lead another Person to determine the identity of the
parties) or any information to the extent that such disclosure could result in a
violation of any federal or state securities Law.
Section 6.04 Approvals and Consents; Reasonable Best Efforts;
Cooperation.
(a) Each of the Company, Parent and Merger Sub shall (i) promptly
apply for, diligently pursue, and use their respective reasonable best efforts
to obtain all material Permits and all material Consents of third parties
(including Governmental Entities) required of it to consummate the Merger
(collectively, "Approvals"), (ii) provide such information and communications as
such Persons may reasonably request, and (iii) assist and cooperate with the
other parties hereto to obtain all Approvals that are reasonably necessary, and
to prepare any document or other information reasonably required of it by any
such Persons to consummate the Merger and the other transactions contemplated by
this Agreement.
(b) Each of the Company, Parent and Merger Sub shall use its
reasonable 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 or otherwise to consummate and make effective as expeditiously as
practicable, the Merger and the other transactions contemplated by
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this Agreement, including (i) promptly applying for, diligently pursuing, and
using reasonable best efforts to obtain all material Approvals, (ii) providing
such information and communications to Governmental Entities as they may
reasonably request, (iii) effecting all necessary registrations, filings and
submissions and using reasonable best efforts to have lifted any Order of a
Governmental Entity of competent jurisdiction restraining or prohibiting the
consummation of the Merger and the other transactions contemplated by this
Agreement (and, in such case, proceeding with the consummation of the Merger as
expeditiously as reasonably practicable), including through all possible
appeals, unless waived by the Company and Parent, (iv) assisting and cooperating
with each other to obtain all material Approvals that are necessary, and
preparing any document or other information reasonably required of it to
consummate the Merger, and (v) executing and delivering any additional
certificates, agreements, instruments, reports, schedules, statements, Consents,
documents and information necessary to consummate the Merger, and fully carrying
out the purposes of, this Agreement. Each of the Company, Parent and Merger Sub
agrees that, except as otherwise contemplated by this Agreement, it shall not
take any action, or fail to take any action, which action or failure to act
would reasonably be expected to have a Material Adverse Effect on any of the
parties to this Agreement or prevent or materially delay the ability of any of
the parties hereto to consummate the Merger and the other transactions
contemplated by this Agreement.
(c) In furtherance of and without limitation of the foregoing, each
of the Company, Parent and Merger Sub shall (i) respond as promptly as
reasonably practicable to any reasonable inquiries or requests received from any
Governmental Entity for additional information or documentation, (ii) promptly
notify the other parties hereto of any written communication to that party or
its Affiliates from any Governmental Entity and, subject to applicable Law,
permit the other parties to review in advance any proposed written communication
to any of the foregoing (and consider in good faith the views of the other
parties in connection therewith), and (iii) provide the other parties hereto,
subject to applicable Law, with copies of all material correspondence, filings,
and communications between them and their Affiliates and their respective
Representatives on the one hand, and any Governmental Entity of their respective
staffs on the other hand, with respect to this Agreement and the Merger; all
with a view towards the prompt completion of the Merger and the transactions
contemplated by this Agreement.
Section 6.05 Indemnification.
(a) In addition to the other rights provided for in this Section
6.05 and not in limitation thereof, from and after the Effective Time, Parent
and the Surviving Corporation shall indemnify and hold harmless, to the fullest
extent permitted under applicable Law (and Parent and the Surviving Corporation
shall also promptly advance all expenses, including fees and expenses of
counsel, as incurred by or on behalf of an Indemnified Party to the fullest
extent permitted under applicable Law provided the Person to whom expenses are
advanced provides any undertaking required under applicable Law to repay such
advances if it is ultimately determined by a final non-appealable judgment of
court of competent jurisdiction that such Person is not entitled to
indemnification), each present and former director, officer, and employee of the
Company or any of its current or former Subsidiaries (including, any members of
any committee of the Board of Directors, including the Special Committee) (each,
individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") in respect of
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any acts or omissions existing or occurring prior to the Effective Time,
including for acts or omissions occurring in connection with the approval and
adoption of this Agreement and the transactions contemplated by this Agreement;
provided, however, that Parent and the Surviving Corporation shall have no
obligation hereunder to any Indemnified Party when, as and if a court of
competent jurisdiction shall determine in a final non-appealable judgment that
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law. Any Indemnified Party which seeks to claim
indemnification under this Section 6.05, upon learning of any such Proceeding
shall promptly notify Parent and the Surviving Corporation thereof; provided,
however, that failure to timely give such notification to Parent or Merger Sub
shall not affect the indemnification provided hereunder except to the extent
that Parent or Merger Sub shall be prejudiced as a result of such failure. The
provisions of this Section are intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties, their heirs and their
representatives. In the event any claim for indemnification is made or asserted
pursuant to this Section 6.05, all rights to indemnification shall continue
until the final disposition of such claim. From and after the Effective Time,
Parent and the Surviving Corporation shall release each Indemnified Party with
respect to each liability and obligation for which Parent and the Surviving
Corporation are obligated to indemnify and hold harmless such Person pursuant to
this Section 6.05(a).
(b) All rights to indemnification and all limitations on liability
existing in favor of any Indemnified Parties as provided in the Restated
Certificate or Restated Bylaws and the certificate of incorporation or bylaws or
similar organizational documents of each of the Company's Subsidiaries, as in
effect as of the date hereof, to the extent relating to acts or omissions
occurring prior to the Effective Time, shall continue in full force and effect
in accordance with their terms from and after the Effective Time. The
certificate of incorporation and bylaws of the Surviving Corporation following
the Effective Time (a form of which is attached as Exhibits A and B hereto)
shall contain the provisions with respect to indemnification and limitations on
liability set forth in the Restated Certificate and Restated Bylaws on the date
hereof, which provisions, to the extent relating to acts or omissions occurring
on or prior to the Effective Time, shall not be amended, repealed or otherwise
modified in any manner that would adversely affect the rights thereunder of the
Indemnified Parties, unless, and only to the extent, such modification is
required by applicable Law.
(c) For five years after the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering each
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms and with respect to coverage and amount not less
favorable than those of such policy in effect on the date hereof.
(d) The obligations of the Company under this Section 6.05 shall not
be terminated or modified in such a manner as to adversely affect any
Indemnified Party to whom this Section applies without the written consent of
such affected Indemnified Party, it is being expressly agreed that this Section
6.05 shall survive the termination of this Agreement. The rights of each
Indemnified Party under this Section 6.05 shall be in addition to any rights
such Person may have under the Restated Certificate or Restated Bylaws and the
certificate of incorporation or bylaws or similar organizational documents of
each of the Company's Subsidiaries, or under the DGCL or any other applicable
Law or under any agreement of any
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Indemnified Party with the Company or any of its Subsidiaries. All rights to
indemnification and all limitations on liability existing in favor of any
Indemnified Party as provided in an agreement between any Indemnified Party and
the Company or a Subsidiary of the Company as in effect as of the date hereof
shall continue in full force and effect in accordance with their terms after the
Effective Time.
(e) If the Surviving Corporation (i) consolidates with or merges
into any other Person and shall not be the continuing or the surviving
corporation or entity of such consolidation or merger, or (ii) transfers or
conveys all or substantially all of its assets to any Person, then, and in each
such case, proper provision shall be made with respect to the obligations set
forth in this Section 6.05 so that such obligations of the Surviving Corporation
are performed in accordance with their terms in such event.
Section 6.06 Supplemental Disclosure. Each party hereto shall give
prompt notice to the other such parties of, to its Knowledge, (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause (A) any representation or warranty of such
party contained in this Agreement to be untrue or incorrect or (B) any covenant,
condition or agreement of such party contained in this Agreement not to be
complied with or satisfied and (ii) any failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.06 shall not have any effect for the purpose of determining the
satisfaction of the conditions set forth in Article VII of this Agreement or
otherwise limit or affect the remedies available to any such party hereunder.
ARTICLE VII.
CONDITIONS PRECEDENT
Section 7.01 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or, to the extent permitted by applicable Law, the
waiver at or prior to the Effective Time of the following conditions:
(a) This Agreement shall have been approved and adopted by the
Company Requisite Vote.
(b) No Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law or writ, judgment,
decree, injunction or other order (whether temporary, preliminary or permanent)
(collectively, an "Order") that is then in effect and restrains, enjoins or
otherwise prohibits consummation of the Merger, and no Governmental Entity shall
have instituted any Proceeding which continues to be pending seeking any such
Order.
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Section 7.02 Conditions for Obligations of the Company. The
obligations of the Company to effect the Merger shall be further subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions precedent, unless waived, to the extent permitted by applicable Law,
in writing by the Company:
(a) Each of Parent and Merger Sub shall have performed and complied
in all material respects with all agreements and covenants contained in this
Agreement that are required to be performed or complied with by it prior to or
at the Effective Time. The representations and warranties of Parent and Merger
Sub set forth in Article III of this Agreement (i) that are qualified with
reference to materiality or Material Adverse Effect shall be true and correct,
and (ii) that are not so qualified shall be true and correct in all material
respects, in each case as of the date hereof and as of the Effective Time as
though made as of the Effective Time (or to the extent such representations or
warranties speak of a specific date, as of such date). The Company shall have
received certificates dated the Closing Date and signed by the Chairman,
President or an Executive Vice-President of each of Parent and Merger Sub,
certifying that the conditions specified in this Section 7.02 have been
satisfied.
Section 7.03 Conditions for Obligations of Parent and Merger Sub.
The obligations of each of Parent and Merger Sub to effect the Merger shall be
further subject to the satisfaction at or prior to the Effective Time of the
following additional conditions precedent, unless waived, to the extent
permitted by applicable Law, in writing by Parent:
(a) The Company shall have performed and complied in all material
respects with all agreements and covenants contained in this Agreement that are
required to be performed or complied with by it prior to or at the Effective
Time (including those covenants and agreements set forth in Sections 5.01(e) and
(i) (without taking into account any exception in such sections relating to
requirements of applicable Law)). The representations and warranties of the
Company set forth in Article IV of this Agreement (i) that are qualified with
reference to materiality or Material Adverse Effect shall be true and correct,
and (ii) that are not so qualified shall be true and correct in all material
respects, in each case as of the date hereof and as of the Effective Time as
though made as of the Effective Time (or to the extent such representations or
warranties speak of a specific date, as of such date). Parent shall have
received a certificate dated the Closing Date and signed by the Chairman,
President or a Vice-President of the Company, certifying that the conditions
specified in this Section 7.03(a) have been satisfied.
(b) Since the date of this Agreement, there shall have been no event
or occurrence which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect on the Company.
(c) There shall not have been instituted or be pending any
Proceeding by any Governmental Entity as a result of this Agreement or any of
the transactions contemplated hereby which, if such Governmental Entity were to
prevail, would reasonably be expected to (i) have a Material Adverse Effect on
Parent or the Surviving Corporation, (ii) render the Merger or the transactions
contemplated by this Agreement illegal or (iii) materially impair the Surviving
Corporation's ability to conduct its business.
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(d) The Company shall have obtained the Consent of each Person
listed in Section 7.03(d) of the Company Disclosure Letter.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, by action taken
or authorized by (i) the board of managers of Parent or (ii) the Special
Committee, as the case may be, whether before or after approval of matters
presented in connection with the Merger by the shareholders of the Company, by
written notice by Parent to the Company, or by the Company to Parent and Merger
Sub, as the case may be, as follows:
(a) By the mutual written consent of the Company and Parent.
(b) By any of Parent or the Company if any Governmental Entity shall
have issued an Order or taken any other action (which Order such party hereto
shall have used its reasonable best efforts to have lifted, vacated or
reversed), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such Order shall
have become final and non-appealable.
(c) By any of Parent or the Company, if (i) the Merger shall not
have been consummated on or before December 31, 2003; or (ii) the shareholders
of the Company fail to approve and adopt this Agreement upon the taking of a
vote at the Company Shareholders' Meeting or any adjournment thereof; provided,
however, that the right to terminate this Agreement under this Section 8.01(c)
shall not be available to any party whose action, failure to act or breach of
any provision of this Agreement has been a principal cause of or resulted in the
failure of the shareholders of the Company to approve and adopt this Agreement.
(d) By the Company, if (i) any of the representations and warranties
of Parent and Merger Sub contained in this Agreement shall fail to be true and
correct such that the condition set forth in Section 7.02 with respect to
representations and warranties would not be satisfied, or (ii) Parent or Merger
Sub shall have breached or failed to comply with any of their respective
obligations under this Agreement such that the condition set forth in Section
7.02 with respect to agreements and conditions would not be satisfied (in either
case other than as a result of a breach by the Company of any of its obligations
under this Agreement) and such failure or breach with respect to any such
representation, warranty or obligation shall continue unremedied for a period of
thirty days after Parent has received written notice from the Company of the
occurrence of such failure or breach.
(e) By Parent, if (i) any of the representations and warranties of
the Company contained in this Agreement shall fail to be true and correct such
that the condition set forth in Section 7.03 with respect to representations and
warranties would not be satisfied, or (ii) the Company shall have breached or
failed to comply with any of its obligations under this
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Agreement such that the condition set forth in Section 7.03 with respect to
agreements and conditions would not be satisfied (in either case other than as a
result of a breach by Parent or Merger Sub of any of their respective
obligations under this Agreement) and such failure or breach with respect to any
such representation, warranty or obligation shall continue unremedied for a
period of thirty days after the Company has received written notice from Parent
of the occurrence of such failure or breach.
(f) By Parent, if prior to the Company Shareholders' Meeting the
Board of Directors or the Special Committee (w) withdraws or modifies in a
manner adverse to Parent or Merger Sub its approval or recommendation of this
Agreement or the Merger or states publicly its intent to do so, or fails to
reconfirm such recommendation within one business day of a written request by
Parent for such reconfirmation, (x) approves or recommends any Superior Proposal
to the shareholders of the Company or states publicly its intent to do so, (y)
fails to recommend against the acceptance of any tender or exchange offer that
constitutes an Acquisition Proposal within ten business days from the
commencement thereof (including, by means of taking no position with respect to
the acceptance thereof by the shareholders), or (z) resolves to take any of the
foregoing actions (but, in the case of a termination solely under clause (x),
only after the three business day period referenced in Section 8.01(g) below).
(g) By the Company, if the Board of Directors or the Special
Committee authorizes the Company to enter into a definitive acquisition, merger
or similar agreement with respect to any Superior Proposal; provided, however,
that the Company may not terminate this Agreement pursuant to this Section
8.01(g) unless (i) three business days shall have elapsed after delivery to
Parent of a written notice of such authorization by the Board of Directors or
the Special Committee and, during such three business day period, the Company
shall have reasonably cooperated with Parent, including informing Parent of the
material terms and conditions of such Superior Proposal and the identity of the
Person or group making such Superior Proposal, with the intent of enabling
Parent to agree to a modification of the terms and conditions of this Agreement
so that the transactions contemplated hereby may be effected, and (ii) at the
end of such three business day period, the Board of Directors or the Special
Committee of the Company shall continue reasonably to believe that such
Acquisition Proposal constitutes a Superior Proposal and promptly thereafter the
Company shall enter into a definitive acquisition, merger or similar agreement
to effect such Superior Proposal; and provided, further, that the Company may
only exercise its right to terminate this Agreement pursuant to this Section
8.01(g) if the Company has complied with its obligations under Section 5.02 and
simultaneously paid the amounts payable under Section 8.02(b).
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Section 8.02 Effect of Termination.
(a) In the event of termination of this Agreement by any of the
Company or Parent as provided in Section 8.01, the Merger shall be deemed
abandoned and this Agreement shall forthwith become null and void and have no
further force or effect, without any further liability or obligation on the part
of the Company, Parent or Merger Sub or any of the officers, directors,
managers, shareholders, Affiliates or Representatives of any of them, other than
(i) those provisions of this Agreement that survive termination hereof pursuant
to Section 9.01 and (ii) nothing herein shall relieve any party for willful
breach of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
(b) If (x) Parent shall have terminated this Agreement pursuant to
Section 8.01(f), (y) the Company shall have terminated this Agreement pursuant
to Section 8.01(g) or (z) (i) either Parent shall have terminated this Agreement
pursuant to Section 8.01(e) (but only if such termination by Parent is due to an
intentional breach or intentional compliance failure by the Company) or the
Company shall have terminated this Agreement pursuant to Section 8.01(c), (ii)
after the date of this Agreement and on or before the date of termination an
Acquisition Proposal involving 25% or more of any class of equity securities (or
any securities exercisable or exchangeable for or convertible into such equity
securities) issued by the Company or any of its Subsidiaries, or 25% or more of
the Company's or any such Subsidiary's assets, shall have been publicly
announced or disclosed, and (iii) within twelve months after such termination as
provided in this clause (z) the Company enters into a definitive acquisition,
merger or similar agreement to effect any such Acquisition Proposal, or effects
any such Acquisition Proposal, then, in the case of clauses (x), (y) or (z), the
Company shall (A) pay Parent a termination fee of $3.0 million ("Termination
Fee") plus (B) reimburse to Parent documented fees and expenses reasonably
incurred by Parent and Merger Sub (including those incurred by H. Xxxxxxxxxxx
Xxxxxxx on their behalf) in connection with this Agreement (including attorneys'
fees and fees of financial advisors) in an amount not to exceed $1.5 million.
Any amounts payable under this Section 8.02(b) shall be paid in same day funds
contemporaneously with a termination described in either clause (x) or (y) of
this Section 8.02(b), and contemporaneously with the Company entering into an
agreement or effecting an Acquisition Proposal described in clause (z), and no
notice of termination pursuant to such sections shall be effective and this
Agreement shall not terminate, until such Termination Fee is received by Parent.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.01 Survival. Article II, this Article IX and the covenants
and agreements of the Company, Parent and Merger Sub contained in Section 6.05
shall survive the consummation of the Merger. This Article IX and the covenants
and agreements of the Company, Parent and Merger Sub contained in the
penultimate sentence of Section 6.01, Section 6.03, Section 8.02 shall survive
the termination of this Agreement. All other representations, warranties,
covenants and agreements in this Agreement shall not survive the consummation of
the Merger or the termination of this Agreement.
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Section 9.02 Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at Law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any United States federal court located in the
State of Delaware or any Delaware state court 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 and (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 a United States federal
or state court sitting in the State of Delaware. Each party hereto irrevocably
waives its right to a jury trial in any Proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby.
Section 9.03 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be delivered personally or by
facsimile, and shall be deemed to have been duly given or made (i) on the
business day of such delivery as evidenced by the receipt of the personal
delivery service, if personally delivered, or as evidenced by the confirmation
of receipt generated by the sending party's facsimile, if sent by facsimile, or
(ii) on the next business day as evidenced by the receipt of the overnight
courier, if delivered by nationally recognized overnight courier, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):
(a) if to Parent or Merger Sub:
Shakespeare Acquisition LLC
x/x Xxxxxxx Xxxxxxxx
0000 Xxxxxx of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: G. Xxxxxxx Xxxxxxx
Facsimile: 000-000-0000
with copies to:
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. XxXxxxx, Esquire
Facsimile: 215-569-5555
and
-00-
Xxxxxxxxxx, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esquire
Facsimile: 000-000-0000
(b) if to the Company:
Edison Schools Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: H. Xxxxxxxxxxx Xxxxxxx
Facsimile: 000-000-0000
with copies to:
Xxxxxx X. Xxxxxxxx
c/o Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esquire
Facsimile: 000-000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esquire
Facsimile: 000-000-0000
Section 9.04 Expenses. Except as set forth in Section 8.02(b), all
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party hereto incurring
such fees, costs and expenses.
Section 9.05 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.06 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
public policy or otherwise then all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the maximum extent possible.
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Section 9.07 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the Exhibits hereto) constitutes the entire agreement and
supersedes any and all other prior agreements and undertakings, both written and
oral, among the parties hereto, or any of them, with respect to the subject
matter hereof. This Agreement shall inure to the sole benefit of the parties
hereto, and their respective successors and permitted assigns, and is not
intended to confer upon any Person (other than the parties hereto) any rights,
interests or remedies hereunder; provided, however, that the Indemnified Parties
referred to in Section 6.05 hereof shall be third party beneficiaries entitled
to enforce the provisions of such Section.
Section 9.08 Assignment. Neither this Agreement nor any rights,
interests, remedies or obligations hereunder shall be assigned by any party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties hereto, except that Parent may assign any or all of
its rights, interests, remedies, or obligations hereunder to any of its wholly
owned Subsidiaries without the prior written consent of the other parties
hereto.
Section 9.09 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware without regard
to principles of conflicts of Laws.
Section 9.10 Amendment. This Agreement may be amended by the parties
hereto at any time in a writing executed and delivered by all such parties,
whether before or after the Company Requisite Vote has been obtained; provided,
however, that (i) no such amendment by the Company shall be effective unless it
is authorized by the Board of Directors with the authorization of the Special
Committee and (ii) after the Company Requisite Vote has been obtained, there
shall be made no amendment that by Law requires further approval by stockholders
of the Company without the further approval of such stockholders.
Section 9.11 Extension; Waiver. At any time prior to the Effective
Time, either the Company (acting through the Board of Directors with the
authorization of the Special Committee), on one hand, or Merger Sub and Parent,
on the other hand, may (a) extend the time for performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained herein or in
any document delivered pursuant hereto or (c) waive compliance by any other
party or parties with any of the covenants, agreements or conditions contained
herein, including any of those set forth in Section 5.01; provided, however,
that after the Company Requisite Vote has been obtained, there shall be made no
waiver or extension that by Law requires further approval by stockholders of the
Company without the further approval of such stockholders. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid and
enforceable against such party only if set forth in an instrument in writing
signed by such party. The failure or delay by any party hereto to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights nor shall any single or partial exercise by
any party to this Agreement of any of its rights under this Agreement preclude
any other or further exercise of such rights or any other rights under this
Agreement.
Section 9.12 Counterparts. This Agreement may be executed in
counterparts, each of which when executed shall be deemed to be an original but
all of which together shall constitute one and the same agreement.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Merger to be duly executed and delivered as of the date
first written above by its duly authorized officer.
EDISON SCHOOLS INC.
By: /s/ H. Xxxxxxxxxxx Xxxxxxx
------------------------------------
Name: H. Xxxxxxxxxxx Xxxxxxx
Title: Chief Executive Officer
SHAKESPEARE ACQUISITION LLC
By: /s/ H. Xxxxxxxxxxx Xxxxxxx
-------------------------------------
Name: H. Xxxxxxxxxxx Xxxxxxx
Title: Manager
SHAKESPEARE ACQUISITION
CORPORATION
By: /s/ H. Xxxxxxxxxxx Xxxxxxx
-------------------------------------
Name: H. Xxxxxxxxxxx Xxxxxxx
Title: Chief Executive Officer
EXHIBIT A
SEVENTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EDISON SCHOOLS INC.
The undersigned, _______________, hereby certifies that:
A. He is the duly elected and acting Chief Executive Officer of Edison
Schools Inc., a Delaware corporation (the "Corporation").
B. The name of the corporation is Edison Schools Inc. The Corporation,
originally known as The Edison Project Inc., filed its original Certificate of
Incorporation with the Secretary of State of the State of Delaware on October
31, 1996. The Certificate of Incorporation was amended and restated on November
18, 1996 and on December 30, 1997, amended on May 27, 1998, amended and restated
on June 4, 1999 and on July 2, 1999, amended on July 29, 1999 to change the name
of the Corporation to Edison Schools Inc., and amended and restated on October
27, 1999 and November 17, 1999. All amendments to the Certificate of
Incorporation reflected herein have been duly authorized and adopted by the
Corporation's Board of Directors and stockholders in accordance with the
provisions of Sections 242 and 245 of the Delaware General Corporation Law.
C. The text of the Certificate of Incorporation is hereby amended and
restated in its entirety to read as follows:
FIRST: The name of the corporation (herein referred to as the
"Corporation") is: Edison Schools Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 00 Xxxx Xxxxx Xxxxxx, Xxxx xx Xxxxx, Xxxxxx of Xxxx, 00000.
The name of its registered agent at such address is Vanguard Corporate Services,
Ltd.
THIRD: The purposes of the Corporation are to engage in, promote, conduct
and carry on any lawful acts or activities for which corporations may be
organized under the Delaware General Corporation Law (the "DGCL").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 100 shares of common stock, par value $0.01 per
share.
FIFTH: Elections of directors need not be by written ballot unless
otherwise provided in the By-Laws of the Corporation.
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SIXTH: From and after the time the merger contemplated by the certificate
of merger filed in accordance with the Agreement and Plan of Merger dated as of
July 13, 2003 by and among Corporation, Shakespeare Acquisition LLC, a Delaware
limited liability company, and Shakespeare Acquisition Corporation, a Delaware
corporation, becomes effective pursuant to Delaware law (such time being herein
referred to as the "Effective Time"), to the fullest extent permitted by the
DGCL as it now exists or as it may hereafter be amended, no director shall be
personally liable to the Corporation or any of its stockholders for any monetary
damages for any breach of fiduciary duty by such director. Notwithstanding the
foregoing sentence, a director shall be liable to the extent provided by
applicable law (i) for breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit.
SEVENTH: To the extent relating to acts or omissions of any present or
former director, officer and employee of the Corporation occurring prior to the
Effective Time, the following provisions of this Article SEVENTH shall apply:
1. Except to the extent that the DGCL prohibits the elimination or
limitation of liability of directors for breaches of fiduciary duty, no director
of the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty as a
director, notwithstanding any provision of law imposing such liability. No
amendment to or repeal of this provision shall apply to or have any effect on
the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment.
2. (a) Actions, Suits and Proceedings Other than by or in the Right of the
Corporation. The Corporation shall indemnify each person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. Notwithstanding
anything to the contrary in this Section 2, except as set forth in Section 2(g)
below, the Corporation shall not indemnify an Indemnitee
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seeking indemnification in connection with a proceeding (or part thereof)
initiated by the Indemnitee unless the initiation thereof was approved by the
Board of Directors of the Corporation. Notwithstanding anything to the contrary
in this Section 2, the Corporation shall not indemnify an Indemnitee to the
extent such Indemnitee is reimbursed from the proceeds of insurance, and in the
event the Corporation makes any indemnification payments to an Indemnitee and
such Indemnitee is subsequently reimbursed from the proceeds of insurance, such
Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.
(b) Actions or Suits by or in the Right of the Corporation. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and, to the extent permitted by law,
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses (including attorneys' fees)
which the Court of Chancery of Delaware shall deem proper.
(c) Indemnification for Expenses of Successful Party.
Notwithstanding the other provisions of this Section 2, to the extent that an
Indemnitee has been successful, on the merits or otherwise, in defense of any
action, suit or proceeding referred to in Sections 2(a) and 2(b) of this
Article, or in defense of any claim, issue or matter therein, or on appeal from
any such action, suit or proceeding, he shall be indemnified against all
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection therewith. Without limiting the foregoing, if any
action, suit or proceeding is disposed of, on the merits or otherwise (including
a disposition without prejudice), without (i) the disposition being adverse to
the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the
Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv)
an adjudication that the Indemnitee did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and (v) with respect to any criminal proceeding, an adjudication
that the Indemnitee had reasonable cause to believe his conduct was unlawful,
the Indemnitee shall be considered for the purposes hereof to have been wholly
successful with respect thereto.
(d) Notification and Defense of Claim. As a condition precedent to
his right to be indemnified, the Indemnitee must notify the Corporation in
writing as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is
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so notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 2(d). The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Section 2. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
(e) Advance of Expenses. Subject to the provisions of Section 2(f)
below, in the event that the Corporation does not assume the defense pursuant to
Section 2(d) of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Section 2, any expenses (including
attorneys' fees) incurred by an Indemnitee in defending a civil or criminal
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition of such matter; provided,
however, that the payment of such expenses incurred by an Indemnitee in advance
of the final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified by the Corporation as authorized in this Section 2.
Such undertaking shall be accepted without reference to the financial ability of
the Indemnitee to make such repayment.
(f) Procedure for Indemnification. In order to obtain
indemnification or advancement of expenses pursuant to Section 2(a), 2(b), 2(c)
or 2(e) of this Article, the Indemnitee shall submit to the Corporation a
written request, including in such request such documentation and information as
is reasonably available to the Indemnitee and is reasonably necessary to
determine whether and to what extent the Indemnitee is entitled to
indemnification or advancement of expenses. Any such indemnification or
advancement of expenses shall be made promptly, and in any event within 60 days
after receipt by the Corporation of the written request of the Indemnitee,
unless with respect to requests under Section 2(a), 2(b) or 2(e) the Corporation
determines within such 60-day period that the Indemnitee did not meet the
applicable standard of conduct set forth in Section 2(a) or 2(b), as the case
may be. Such determination shall be made in each instance by (a) a majority vote
of the directors of the Corporation consisting of persons who are not at that
time parties to the action, suit or proceeding in question ("disinterested
directors"), whether or not a quorum, (b) a majority vote of a committee of
disinterested directors designated by majority vote of disinterested directors,
whether or not a quorum, (c) a majority vote of a quorum of the outstanding
shares of stock of all
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classes entitled to vote for directors, voting as a single class, which quorum
shall consist of stockholders who are not at that time parties to the action,
suit or proceeding in question, (d) independent legal counsel (who may, to the
extent permitted by law, be regular legal counsel to the Corporation) or (e) a
court of competent jurisdiction.
(g) Remedies. The right to indemnification or advances as granted by
this Section 2 shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 2(f). Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Section 2 shall be on the Corporation. Neither the failure of the
Corporation to have made a determination prior to the commencement of such
action that indemnification is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation pursuant to Section 2(f) that the Indemnitee
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the Indemnitee has not met the applicable
standard of conduct. The Indemnitee's expenses (including attorneys' fees)
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such proceeding shall also be
indemnified by the Corporation.
(h) Subsequent Amendment. No amendment, termination or repeal of
this Section 2 or of the relevant provisions of the DGCL or any other applicable
laws shall affect or diminish in any way the rights of any Indemnitee to
indemnification under the provisions hereof with respect to any action, suit,
proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the final adoption of such amendment,
termination or repeal.
(i) Other Rights. The indemnification and advancement of expenses
provided by this Section 2 shall not be deemed exclusive of any other rights to
which an Indemnitee seeking indemnification or advancement of expenses may be
entitled under any law (common or statutory), agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in any other capacity while holding office for the
Corporation, and shall continue as to an Indemnitee who has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee. Nothing contained in this
Section 2 shall be deemed to prohibit, and the Corporation is specifically
authorized to enter into, agreements with officers and directors providing
indemnification rights and procedures different from those set forth in this
Section 2. In addition, the Corporation may, to the extent authorized from time
to time by its Board of Directors, grant indemnification rights to other
employees or agents of the Corporation or other persons serving the Corporation
and such rights may be equivalent to, or greater or less than, those set forth
in this Section 2.
(j) Partial Indemnification. If an Indemnitee is entitled under any
provision of this Section 2 to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the
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Corporation shall nevertheless indemnify the Indemnitee for the portion of such
expenses (including attorneys' fees), judgments, fines or amounts paid in
settlement to which the Indemnitee is entitled.
(k) Insurance. The Corporation may purchase and maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) against any expense,
liability or loss incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under the DGCL.
(l) Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Section 2 with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the date of such merger or consolidation.
(m) Savings Clause. If this Section 2 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Section 2 that shall not have been invalidated and to the fullest extent
permitted by applicable law.
(n) Definitions. Terms used herein and defined in Section 145(h) and
Section 145(i) of the DGCL shall have the respective meanings assigned to such
terms in such Section 145(h) and Section 145(i).
(o) Subsequent Legislation. If the DGCL is amended after adoption of
this Section 2 to expand further the indemnification permitted to Indemnitees,
then the Corporation shall indemnify such persons to the fullest extent
permitted by the DGCL, as so amended.
EIGHTH: In furtherance and not in limitation of the rights, powers,
privileges and discretionary authority granted or conferred by the DGCL or other
statutes or laws of the State of Delaware, the Board of Directors of the
Corporation is expressly authorized:
1. To make, amend, alter or repeal the By-Laws of the Corporation;
2. To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation;
3. To set apart out of any funds of the Corporation available for
dividends, a reserve or reserves for any proper purpose and to reduce any such
reserve in the manner in which it was created; and
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4. To adopt from time to time By-Law provisions with respect to
indemnification of directors, officers, employees, agents and other persons as
it shall deem expedient and in the best interests of the Corporation and to the
extent permitted by law.
NINTH: The books of the Corporation may be kept (subject to any provision
contained in the statutes) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
By-Laws of the Corporation.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provisions herein contained, in the manner now or hereafter
prescribed by statute, and all rights, powers, privileges and discretionary
authority granted or conferred herein upon stockholders or directors are granted
subject to this reservation, provided, however, that Article SEVENTH may only be
amended, altered, changed or repealed in accordance with its terms.
The foregoing Seventh Amended and Restated Certificate of Incorporation
has been duly adopted by this Corporation's Board of Directors and stockholders
in accordance with the applicable provisions of Sections 242 and 245 of the
General Corporation Law of the State of Delaware.
The undersigned does hereby make this certificate on behalf of the
Corporation and does hereby declare and certify that it is the Corporation's act
and deed and the facts stated herein are true, and accordingly does hereunto
execute this Seventh Amended and Restated Certificate of Incorporation on this
___ day of ____, 2003.
---------------------------------------
[name], Chief Executive Officer (seal)
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EXHIBIT B
THIRD AMENDED AND RESTATED BY-LAWS
OF
EDISON SCHOOLS INC.
These By-Laws are adopted by this Corporation and are supplemental to the
Delaware General Corporation Law as the same shall from time to time be in
effect.
ARTICLE I. NAME AND SEAL
Section 101. Name. The name of the Corporation is Edison Schools Inc.
Section 102. State of Incorporation. The Corporation has been incorporated
under the laws of the State of Delaware.
Section 103. Seal. The corporate seal of the Corporation shall have
inscribed thereon the name of the Corporation, the year of its organization, the
words "Corporate Seal", and the name of the State of Incorporation. The seal may
be used by any person authorized by the Board of Directors of the Corporation or
by these By-Laws by causing the seal or a facsimile thereof to be impressed or
affixed, or in any manner reproduced.
ARTICLE II. REGISTERED AND PRINCIPAL OFFICES
Section 201. Registered Office. The registered office of the Corporation
in the State of Incorporation shall be located at such place within the State of
Delaware as the Board of Directors may from time to time determine.
Section 202. Offices. The principal office of the Corporation and any
other offices of the Corporation shall be located at such places, within and
without the State of Delaware, as the Board of Directors may from time to time
determine or as the business of the Corporation may require.
ARTICLE III. STOCKHOLDERS
Section 301. Place of Meetings. All meetings of the stockholders shall be
held at such place or places, within or without the State of Delaware, as shall
be determined by the Board of Directors from time to time.
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Section 302. Annual Meetings. The annual meeting of the stockholders, for
the election of directors and the transaction of other business which is
properly brought before such meeting, shall be held at such place and at such
time as the Board of Directors shall fix. Any business which is a proper subject
for stockholder action may be transacted at the annual meeting, irrespective of
whether the notice of said meeting contains any reference thereto, except as
otherwise provided by applicable statute or regulation.
Section 303. Special Meetings. Special meetings of the stockholders may be
called at any time by the Board of Directors, the Chairman of the Board, the
Non-Executive Chairman, or by the stockholders entitled to cast at least
one-half of the votes which all stockholders are entitled to cast at the
particular meeting.
Section 304. Absentee Participation in Meetings. Any stockholder may
participate in a meeting of the stockholders by using of a conference telephone
or a similar communications equipment, by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section shall constitute presence in person at such meeting.
Section 305. Conduct of Stockholders' Meetings. Subject to Section 903
hereof, the Chairman of the Board, if any, shall preside at all stockholders'
meetings, or, in his or her absence, the Non-Executive Chairman or his or her
designee. The officer presiding over the stockholders' meeting may establish
such rules and regulations for the conduct of the meeting as he or she may deem
to be reasonably necessary or desirable for the orderly and expeditious conduct
of the meeting. The revocation of a proxy shall not be effective until written
notice thereof has been given to the Secretary of the Corporation.
Section 306. Majority Written Consent. Any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE IV. DIRECTORS AND BOARD MEETINGS
Section 401. Management by Board of Directors. The business and affairs of
the Corporation shall be managed by its Board of Directors. The Board of
Directors may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws directed or required to be exercised or done by the
stockholders.
Section 402. Number of Directors. The Board of Directors shall consist of
not less than three (3) nor more than nine (9) directors. The number of
directors to be elected, subject to the
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foregoing limits, shall be determined by resolution of the Board of Directors.
The number of directors to be elected may be increased or decreased beyond the
foregoing limits set forth in the first sentence of this Section 402 by the
affirmative vote of the stockholders entitled to vote a majority of all shares
of common stock of the Corporation issued and outstanding. The directors shall
be elected by the stockholders at the annual meeting of stockholders to serve
until the next annual meeting of stockholders. Each director shall serve until
his or her successor shall have been elected and shall qualify, even though his
or her term of office as herein provided has otherwise expired, except in the
event of his or her earlier resignation or removal.
Section 403. Term of Directors. Each director shall serve until his or her
successor is elected and qualifies, or until his or her earlier resignation or
removal.
Section 404. Resignations. Any director may resign at any time. Such
resignation shall be in writing, but the acceptance thereof shall not be
necessary to make it effective.
Section 405. Removal. Directors of the Corporation may be removed at any
time, with or without cause, by the affirmative vote of the stockholders
entitled to vote a majority of all shares of common stock of the Corporation
issued and outstanding.
Section 406. Compensation of Directors. Unless the Board of Directors
otherwise determines, directors shall not be entitled to any compensation for
their services as directors. Any director may serve the Corporation in other
capacities and be entitled to such compensation therefor as is determined by the
Board of Directors.
Section 407. Regular Meetings. Regular meetings of the Board of Directors
shall be held on such day and at such hour as the Board shall from time to time
designate. The Board of Directors shall meet for organization purposes at the
first regular meeting following the annual meeting of stockholders at which the
directors are elected. Notice of regular meetings of the Board of Directors need
not be given.
Section 408. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, if any, or the Non-Executive
Chairman or his or her designee or any stockholder entitled to cast at least a
majority of the votes which all stockholders are entitled to cast. Notice of the
time and place of every special meeting, which need not specify the business to
be transacted thereat and which may be either verbal or in writing, shall be
given by the Secretary to each member of the Board.
Section 409. Reports and Records. The reports of officers and committees
shall be filed with the Secretary of the Board. The Board of Directors shall
keep complete records of its proceedings in a minute book kept for that purpose.
When a director shall request it, the vote of each director upon a particular
question shall be recorded in the minutes.
Section 410. Executive Committee. The Board of Directors may, without
limiting its right to establish other committees, establish an Executive
Committee of the Board which shall consist of any three (3) or more directors.
The Executive Committee shall have and exercise the
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authority of the Board of Directors in the management and affairs of the
Corporation, except as otherwise provided in the resolution establishing the
Executive Committee.
Section 411. Audit Committee. The Board of Directors may establish an
Audit Committee of the Board. The Audit Committee shall consist of at least
three (3) directors, none of whom shall be an officer or salaried employee of
the Corporation or its subsidiaries or any other individual having a
relationship which, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director, and at least one of which whose background and experience are
financial or business management related. Meetings of the Audit Committee may be
called at any time by the Chairman of the Audit Committee and shall be called
whenever two (2) or more members of the Audit Committee so request in writing.
The Audit Committee shall have the authority, powers and responsibilities as
shall be set forth in a written charter approved by the Board of Directors.
Section 412. Absence or Disqualification of Committee Members. In the
absence or disqualification of any member of any committee or committees
established by the Board of Directors, the member or members thereof present at
any meeting of such committee or committees, and not disqualified from voting,
whether or not he, she, or they constitute a quorum, may unanimously appoint
another director to act at the meeting in the place of any such absent or
disqualified member.
Section 413. Absentee Participation in Meetings. Any director may
participate in a meeting of the Board of Directors, a meeting of a committee
established by the Board of Directors, or a meeting of the stockholders, by use
of a conference telephone or similar communications equipment, by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting pursuant to this section shall constitute presence in person at
such meeting.
Section 414. Chairman of the Board. The Board of Directors may choose a
Chairman of the Board who shall preside at the meetings of the Board and perform
such other duties as may be prescribed by the Board of Directors.
Section 415. Unanimous Written Consent. Any action required or permitted
to be taken at a meeting of the Board of Directors or any committee thereof, may
be taken without a meeting if all members of the Board of Directors or the
committee, as the case may be, consent thereto in writing, and such written
consent is filed with the minutes of the Board.
ARTICLE V. OFFICERS
Section 501. Officers. The officers of the Corporation shall be a Chief
Executive Officer, a President, a Secretary, a Treasurer, one or more Vice
Presidents, and such other officers or assistant officers as the Board of
Directors may from time to time deem advisable. Except for the Chief Executive
Officer, President, Secretary and Treasurer, the Board may refrain from filling
any of the said offices at any time and from time to time. Officers shall be
elected by the Board of Directors at the time and in the manner as the Board of
Directors from
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time to time shall determine. Each Officer shall hold office for a term
extending until the first regular meeting of the Board of Directors following
the annual meeting of stockholders and until his or her successor shall have
been elected and shall qualify, except in the event of his or her earlier
resignation or removal.
Section 502. Chief Executive Officer. The Chief Executive Officer shall
have general supervision of all of the departments and business of the
Corporation; he or she shall prescribe the duties of the other officers and
employees and see to the proper performance thereof. The Chief Executive Officer
shall be responsible for having all orders and resolutions of the Board of
Directors carried into effect. As authorized by the Board of Directors, he or
she shall execute on behalf of the Corporation and may affix or cause to be
affixed a seal to all instruments requiring such execution, except to the extent
that signing and execution thereof shall have been expressly delegated to some
other officer or agent of the Corporation. The Chief Executive Officer shall
perform such other duties as may be prescribed by the Board of Directors.
Section 503. President and Vice Presidents. The President and the Vice
Presidents shall perform such duties and do such acts as may be prescribed by
the Board of Directors or the Chief Executive Officer. Subject to the provisions
of this Section, the President and the Vice Presidents, in order of their
seniority, shall perform the duties and have the powers of the Chief Executive
Officer in the event of his or her absence or disability.
Section 504. Treasurer. The Treasurer shall act under the direction of the
Audit Committee, or if such Committee is not established, the Board of
Directors. The Treasurer shall also be the Chief Financial Officer and shall be
the principal financial and accounting officer of the Corporation. Subject to
the direction of the Audit Committee, or if such Committee is not established,
the Board of Directors, he or she shall have custody of the Corporation funds
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking appropriate vouchers for such
disbursements, and shall on request render to the Board of Directors and the
Audit Committee, at their respective meetings, an account of all his
transactions as Treasurer and Chief Financial Officer and of the financial
condition of the Corporation.
Section 505. Secretary. The Secretary shall act under the direction of the
Chief Executive Officer. Unless a designation to the contrary is made at a
meeting, the Secretary shall attend all meetings of the Board of Directors and
all meetings of the stockholders and record all of the proceedings of such
meetings in a book to be kept for that purpose, and shall perform like duties
for the standing committees when required. The Secretary shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Chief Executive Officer or the Board of Directors. The Secretary shall keep
in safe custody the seal of the Corporation, and, when authorized by the Chief
Executive Officer or the Board of Directors, cause it to be affixed to any
instruments requiring it.
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Section 506. Assistant Officers. Any assistant officers elected by the
Board of Directors shall have such duties as may be prescribed by the Board of
Directors, the Chief Executive Officer, or the officer to whom they are an
assistant. Assistant officers shall perform the duties and have the power of the
officer to whom they are an assistant in the event of such officer's absence or
disability.
Section 507. Non-Executive Chairman. The Board of Directors may elect a
Non-Executive Chairman. If the Board of Directors elects a Non-Executive
Chairman, he or she shall, in the absence or disability of the Chairman of the
Board, perform the duties and exercise the powers of the Chairman of the Board
and shall perform such other duties as may be prescribed by the Board of
Directors.
Section 508. Compensation. The salaries and compensation of all officers
shall be fixed from time to time by the Board of Directors and no officer shall
be prevented from receiving such salary by reason of the fact that he or she is
also a director of the Corporation.
Section 509. General Powers. The officers are authorized to do and perform
such corporate acts as are necessary in the carrying on of the business of the
Corporation, subject always to the directions of the Board or Directors.
Section 510. Vacancies. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise, shall be filled by the
Board of Directors.
ARTICLE VI. PERSONAL LIABILITY OF DIRECTORS; INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
Section 601. Personal Liability of Directors. Subject to the Certificate
of Incorporation, to the fullest extent permitted by the Delaware General
Corporation Law as it now exists or as it may hereafter be amended, no director
shall be personally liable to the Corporation or any of its stockholders for any
monetary damages for any breach of fiduciary duty by such director.
Notwithstanding the foregoing sentence, a director shall be liable to the extent
provided by applicable law (i) for breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv)
for any transaction from which the director derived an improper personal
benefit.
Section 602. Indemnification Of Directors, Officers and Employees. Subject
to the Certificate of Incorporation, the Corporation will indemnify any person,
to the fullest extent permitted by the Delaware General Corporation Law, against
all costs, charges and expenses incurred or sustained by any such person in
connection with any action, suit or proceeding to which such person may be made
a party by reason of such person being an officer, director or employee of the
Corporation or of any subsidiary or affiliate of the Corporation.
Notwithstanding the foregoing, the Corporation's obligations to indemnify any
person pursuant to this Section 602 shall not be applicable and shall have no
force or effect if such person is found to have engaged in self-dealing,
misappropriation of funds, fraud or a material violation of
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the Corporation's written financial policies, as approved by the Board of
Directors (or a committee thereof) and the Corporation shall not be obliged to
advance reimbursement of such person with regard to any such costs, charges and
expenses in the event that self-dealing, misappropriation of funds, fraud or a
material violation of the Corporation's written financial policies, as approved
by the Board of Directors (or a committee thereof), is alleged by the
Corporation or the Board of Directors.
Section 603. Optional Indemnification. The Corporation may, to the fullest
extent permitted by applicable law, indemnify, and advance or reimburse expenses
for, persons in all situations other than that covered by this Article VI.
ARTICLE VII. SHARES OF CAPITAL STOCK
Section 701. Authority to Sign Share Certificates. Every share certificate
shall be signed by the Chief Executive Officer, President or one of the Vice
Presidents and by the Secretary or one of the Assistant Secretaries.
Section 702. Lost or Destroyed Certificates. Any person claiming a share
certificate to be lost, destroyed or wrongfully taken shall receive a
replacement certificate if such stockholder: (a) requests such replacement
certificate before the Corporation has notice that the shares have been acquired
by a bona fide purchaser; (b) files with the Corporation an indemnity agreement
satisfactory in form and substance to the Board of Directors or Chief Executive
Officer or the Secretary; and (c) satisfies any other reasonable requirements
(including, without limitation, providing a surety bond) fixed by the Board of
Directors.
Section 703. Transfer of Shares. Upon surrender to the Corporation or its
transfer agent of a certificate for shares, duly endorsed for transfer by the
person named in the certificate or by an attorney lawfully constituted in
writing, or accompanied by proper evidence of succession, assignment or
authority to transfer, the Corporation shall record the transfer of such shares
upon its books, issue a new certificate or certificates to the person or persons
entitled thereto, and cancel the surrendered certificate.
ARTICLE VIII. AMENDMENT OR REPEAL
Section 801. Amendment or Repeal by Stockholders. These By-Laws may be
amended or repealed, in whole or in part, by a vote of a majority of all of the
shares of common stock of the Corporation issued and outstanding at any annual
or special meeting of the stockholders duly convened after notice to the
stockholders of that purpose.
Section 802. Amendment or Repeal by the Board of Directors. These By-Laws
may be amended or repealed, in whole or in part, by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of the
Board duly convened after notice to the Board of Directors of that purpose.
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Section 803. Recording Amendments and Repeals. The text of all amendments
and repeals to these By-Laws shall be attached hereto, and a notation of the
date of each such amendment or repeal and a notation of whether such amendment
or repeal was adopted by the Board of Directors or the stockholders shall be
made in Section 1002 hereof.
ARTICLE IX. MISCELLANEOUS
Section 901. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 902. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer(s) or other person(s) as the Board
of Directors may from time to time designate.
Section 903. Designation of Presiding and Recording Officer. At any
meeting of the stockholders, the stockholders who are present shall have the
right to designate any person, whether or not an officer, director or
stockholder, to preside over or record the proceedings of such meeting.
Section 904. Record Date. The Board of Directors may fix any time
whatsoever (whether or not the same is more than fifty days) prior to the date
of any meeting of stockholders, or the date fixed for the payment of any
dividend or distribution, or the date for the allotment of rights, or the date
when any change or conversion or exchange of shares will be made or will go into
effect, as a record date for the determination of the stockholders entitled to
notice of, or to vote at any such meeting, or entitled to receive payment of any
such dividend or distribution, or to receive any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or exchange of
shares.
Section 905. Text of Proposed Resolution in Written Notice. Whenever the
language of a proposed resolution is included in a written notice to
stockholders, the stockholders' meeting considering the resolution may adopt it
with such clarifying or other amendments as do not enlarge its original purpose,
without further notice to stockholders not present in person or by proxy.
Section 906. Emergency By-Laws. In the event of any emergency resulting
from warlike damage or an attack on the United States or any nuclear or atomic
disaster, and until the termination of such emergency, the following By-Law
provisions shall be in effect, notwithstanding any other provisions of these
By-Laws:
(a) A special meeting of the Board of Directors may be called by any
officer or director upon one hour's notice, and
(b) The director or directors in attendance at the meeting shall
constitute a quorum.
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Section 907. Severability. If any provision of these By-Laws is illegal or
unenforceable as such, such illegality or unenforceability shall not affect any
other provision of these By-Laws and such other provisions shall continue in
full force and effect.
ARTICLE X. ADOPTION OF BYLAWS AND RECORD OF
AMENDMENTS AND REPEALS
Section 1001. Adoption and Effective Date. These By-Laws have been adopted
as the By-Laws of the Corporation as of ____________, 2003, and shall be
effective as of that date.
Section 1002. Amendments or Repeals of By-Laws.
Date Amended Section Involved or Repealed
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EXHIBIT C
Directors of Surviving Corporation
Xxxxxxxxxxx X. Xxxx
Xxxxx X. Xxxxxxx, Xx.
H. Xxxxxxxxxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx
C-1
EXHIBIT D
Parent Disclosure Letter
D-1
EXHIBIT E
Company Disclosure Letter
E-1
