Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SOVEREIGN HOLDINGS, INC.,
SOVEREIGN MERGER SUB, INC.
AND
SABRE HOLDINGS CORPORATION
DATED AS OF
DECEMBER 12, 2006
TABLE OF CONTENTS
Article 1. Defined Terms and Interpretation....................................1
Section 1.1 Certain Definitions.........................................1
Section 1.2 Terms Defined Elsewhere.....................................6
Section 1.3 Interpretation..............................................8
Article 2. The Merger..........................................................9
Section 2.1 The Merger..................................................9
Section 2.2 Closing.....................................................9
Section 2.3 Effective Time.............................................10
Section 2.4 Effect of the Merger.......................................10
Section 2.5 Certificate of Incorporation; By-laws......................10
Section 2.6 Directors and Officers.....................................10
Article 3. Conversion of Securities; Exchange of Certificates.................10
Section 3.1 Conversion of Securities...................................10
Section 3.2 Exchange of Certificates...................................11
Section 3.3 Dissenters' Rights.........................................13
Section 3.4 Stock Transfer Books.......................................14
Section 3.5 Company Options and Stock-Based Awards.....................14
Article 4. Representations and Warranties of the Company......................15
Section 4.1 Organization and Qualification; Subsidiaries...............15
Section 4.2 Capitalization; Subsidiaries...............................16
Section 4.3 Authority..................................................17
Section 4.4 No Conflict; Required Filings and Consents.................17
Section 4.5 Compliance with Laws.......................................18
Section 4.6 SEC Filings; Financial Statements..........................18
Section 4.7 Affiliate Transactions.....................................20
Section 4.8 Absence of Certain Changes or Events.......................20
Section 4.9 Benefit Plans; Employees and Employment Practices..........21
Section 4.10 Contracts; Indebtedness....................................23
Section 4.11 Litigation.................................................24
Section 4.12 Environmental Matters......................................25
Section 4.13 Intellectual Property......................................25
Section 4.14 Taxes......................................................26
Section 4.15 Insurance..................................................27
Section 4.16 Real Estate................................................27
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Section 4.17 Board Approval.............................................28
Section 4.18 Brokers....................................................28
Article 5. Representations and Warranties of Parent and Merger Sub............28
Section 5.1 Organization and Qualification.............................29
Section 5.2 Authority..................................................29
Section 5.3 No Conflict; Required Filings and Consents.................29
Section 5.4 Litigation.................................................30
Section 5.5 Ownership of Merger Sub; No Prior Activities...............30
Section 5.6 Financing..................................................30
Section 5.7 Vote Required..............................................31
Section 5.8 Brokers....................................................31
Section 5.9 Ownership of Company Common Stock..........................31
Section 5.10 Solvency of the Surviving Corporation......................31
Article 6. Covenants..........................................................32
Section 6.1 Conduct of Business by the Company Pending the Closing.....32
Section 6.2 Proxy Statement; Company Stockholders' Meeting.............35
Section 6.3 Access to Information; Confidentiality.....................36
Section 6.4 No Solicitation of Transactions............................37
Section 6.5 Best Efforts...............................................39
Section 6.6 Certain Notices............................................40
Section 6.7 Public Announcements.......................................41
Section 6.8 Employee Matters...........................................41
Section 6.9 Indemnification of Directors and Officers..................42
Section 6.10 State Takeover Statutes....................................44
Section 6.11 Section 16 Matters.........................................44
Section 6.12 NDA........................................................45
Section 6.13 Solvency of the Surviving Corporation......................45
Section 6.14 Financing..................................................45
Section 6.15 Cooperation in Securing Financing..........................46
Section 6.16 Subsequent Filings.........................................48
Section 6.17 Cooperation in Obtaining Consents..........................49
Article 7. Closing Conditions.................................................49
Section 7.1 Conditions to Obligations of Each Party Under This
Agreement.................................................49
Section 7.2 Additional Conditions to Obligations of Parent and
Merger Sub................................................49
Section 7.3 Additional Conditions to Obligations of the Company........50
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Section 7.4 Frustration of Closing Conditions..........................50
Article 8. Termination, Amendment and Waiver..................................51
Section 8.1 Termination................................................51
Section 8.2 Effect of Termination......................................52
Section 8.3 Fees and Expenses..........................................53
Section 8.4 Termination Fee............................................53
Section 8.5 Business Interruption Fee..................................53
Section 8.6 Extension; Waiver..........................................54
Section 8.7 Amendment..................................................54
Article 9. General Provisions.................................................54
Section 9.1 Non-Survival of Representations and Warranties.............54
Section 9.2 Notices....................................................55
Section 9.3 Headings...................................................56
Section 9.4 Severability...............................................56
Section 9.5 Entire Agreement...........................................56
Section 9.6 Assignment.................................................57
Section 9.7 Mutual Drafting............................................57
Section 9.8 Governing Law; Consent to Jurisdiction; Waiver of Trial
by Jury...................................................57
Section 9.9 Counterparts...............................................58
EXHIBIT A.1 - Equity Commitment Letter
EXHIBIT A.2 - Limited Guarantee
EXHIBIT B.1 - List of Company Executives
EXHIBIT B.2 - List of Parent and Merger Sub Executives
EXHIBIT C - Merger Sub Certificate of Incorporation and By-laws
EXHIBIT D - Company Representatives for Access to Information
iii
AGREEMENT AND PLAN OF MERGER, dated as of December 12, 2006, by
and among Sovereign Holdings, Inc., a Delaware corporation ("Parent"), Sovereign
Merger Sub, Inc., a Delaware corporation and a wholly-owned direct Subsidiary of
Parent ("Merger Sub"), and Sabre Holdings Corporation, a Delaware corporation
(the "Company"). Each of Parent, Merger Sub and the Company are referred to
herein as a "Party" and together as "Parties".
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have approved and declared advisable the merger of Merger
Sub with and into the Company (the "Merger") upon the terms and subject to the
conditions of this Agreement and Plan of Merger, including the exhibits and
disclosure schedules attached hereto (the "Agreement") and in accordance with
the General Corporation Law of the State of Delaware (the "DGCL");
WHEREAS, the respective Boards of Directors of each of Parent,
Merger Sub and the Company have determined that the Merger is in furtherance of,
and consistent with, their respective business strategies and is in the best
interest of their respective stockholders, and have approved and declared
advisable or adopted, in the case of the Board of Directors of the Company, this
Agreement and the Merger;
WHEREAS, concurrently with the execution of this Agreement, and
as a condition to the willingness of the Company to enter into this Agreement,
TPG Partners V, L.P. and Silver Lake Partners II, L.P. (each, a "Fund") is
entering into an Equity Commitment Letter (the "Equity Commitment Letter") and a
Limited Guarantee (the "Limited Guarantee") in the forms attached as Exhibits
A.1 and A.2, respectively, pursuant to which such Fund is, among other things,
guaranteeing certain obligations of Parent and Merger Sub in connection with
this Agreement and agreeing to provide equity financing to Parent in connection
with the transactions contemplated hereby; and
WHEREAS, Parent, Merger Sub and the Company wish to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement and intending to be legally bound hereby, the Parties agree as
follows:
Article 1.
Defined Terms and Interpretation
Section 1.1 Certain Definitions.
For purposes of this Agreement, the term:
"Affiliate" shall mean a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first-mentioned Person, where "control" (including the
terms "controlled by" and "under common control with") shall mean the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of stock or as trustee or executor, by Contract or
otherwise.
"Benefit Plan" shall mean any employment, consulting,
severance, termination, retirement, profit sharing, bonus, incentive or deferred
compensation, retention bonus or change in control agreement, deferred
compensation, bonus, pension, stock option, restricted stock or other
equity-based benefit, profit sharing, savings, retirement, life, health,
disability, accident, medical, insurance, vacation, paid time off, long term
care, executive or other employee allowance program, other welfare fringe
benefit or other employee compensation or benefit plan, program, arrangement,
agreement, fund or commitment, including any "employee benefit plan" as defined
in Section 3(3) of ERISA, whether or not subject to ERISA.
"Blue Sky Laws" shall mean state securities or "blue sky" Laws.
"Business Day" shall mean any day other than a Saturday, Sunday
and any day which is a legal holiday under the Laws of the State of New York or
the State of Texas or is a day on which banking institutions located in the
State of New York or the State of Texas are authorized or required by Law or
other governmental action to close.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended.
"Company Benefit Plan" shall mean any Benefit Plan for the
benefit or welfare of any current or former director, officer, employee or
independent contractor of the Company or any Company Subsidiary.
"Company By-laws" shall mean the Amended and Restated Bylaws of
the Company, effective as of May 18, 2005.
"Company Certificate" shall mean the Third Restated Certificate
of Incorporation of the Company, as filed with the Secretary of State of the
State of Delaware on May 17, 2005.
"Company Common Stock" shall mean the Class A Common Stock of
the Company, par value $.01 per share.
"Company Material Adverse Effect" shall mean a material adverse
effect on the business, properties, assets, results of operations or financial
condition of the Company and the Company Subsidiaries taken as a whole;
provided, that in no event shall any of the following be taken into account in
determining whether a "Company Material Adverse Effect" has occurred or is
likely or expected to occur: (a) any change in the Company's stock price or
trading volume in and of itself; (b) the public announcement or the pendency of
this Agreement or any of the transactions contemplated herein or any actions
taken at the request or with the express consent of Parent, including the impact
thereof on the relationships of the Company or the Company Subsidiaries with
customers, suppliers, distributors, consultants, employees or independent
contractors or other third parties with whom the Company or any Company
Subsidiary has any relationship; (c) any failure by the Company to meet any
projections or forecasts for any period occurring on or after the date hereof,
in and of itself; (d) changes generally affecting any segment of the industries
in which the Company or the Company Subsidiaries operate; (e) changes generally
affecting the economy or financial markets generally; (f) acts of God,
calamities, national or international political or social conditions including
the engagement by any country in hostilities, whether commenced before or after
the date hereof, and whether or not pursuant to the declaration of a national
emergency or war, or the occurrence of any military or terrorist attack; or (g)
changes in Law or GAAP (or any interpretation thereof); provided, however, that
the foregoing clauses (d), (e) and (f) shall not apply to the extent that the
adverse effect upon the Company and the Company Subsidiaries is
disproportionately greater to the Company and the Company Subsidiaries taken as
a whole, relative to other companies (taking into account the relative size of
their assets and businesses) engaged in the industries in which the Company or
the Company Subsidiaries operate.
2
"Company Permits" shall mean all permits, licenses,
authorizations, franchises, approvals, registrations, qualifications, rights,
variances, certificates, certifications, consents and Orders of all Governmental
Entities necessary to own, lease and operate the properties of the Company
and/or the Company Subsidiaries and for the lawful conduct of their business as
currently conducted.
"Continuing Employee" shall mean any Person who is employed by
the Company or any Company Subsidiary as of the Effective Time (including
Persons on disability or leave of absence, whether paid or unpaid) other than
any Person covered by a collective bargaining or similar labor agreement.
"Contract" shall mean any note, bond, mortgage, indenture,
lease, license, permit, concession, franchise, guarantee, contract, agreement or
other instrument or obligation.
"Environment" shall mean any ambient, workplace or indoor air,
surface water, drinking water, groundwater, land surface, subsurface strata,
river sediment, plant or animal life, natural resources, and real property and
the buildings, structures, improvements and fixtures thereon.
"Environmental Laws" shall mean any Law relating to: (a) the
protection, remediation, preservation, reclamation or cleanup of the
Environment; (b) the management, handling, use, storage, transportation,
treatment, disposal, recycling or Release or threatened Release of any Hazardous
Materials; or (c) the protection of human health and safety, including, without
limitation, occupational health and safety and exposure of employees and other
persons to any Hazardous Materials.
"Equity Interest" shall mean any share, capital stock,
partnership, member or similar interest in any entity and any option, warrant,
right or security convertible, exchangeable or exercisable therefor.
"Exchange Act" shall mean the United States Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles as
applied in the United States.
"Governmental Entity" shall mean any domestic, foreign,
multinational, central, local or municipal governmental, administrative,
judicial or regulatory authority.
"Group" shall have the meaning provided in Section 13(d) of the
Exchange Act, except where the context otherwise requires.
"Guarantee" shall mean, with respect to any Person, (a) any
guarantee of the payment or performance of, or any contingent obligation in
respect of, any Indebtedness or other liability of any other Person and (b) any
other arrangement whereby credit is extended to any obligor (other than such
Person) on the basis of any promise or undertaking of such Person (i) to pay the
Indebtedness or other liability of such obligor, (ii) to purchase any obligation
owed by such obligor, (iii) to purchase or lease assets under circumstances that
are designed to enable such obligor to discharge one or more of its obligations
or (iv) to maintain the capital, working capital, solvency or general financial
condition of such obligor.
3
"Hazardous Materials" shall mean (i) any petroleum or any
fraction thereof, petroleum products or byproducts, radioactive materials,
asbestos or any asbestos-containing materials, polychlorinated biphenyls, (ii)
any pollutant or contaminant, or (iii) any waste, material or substance defined
as a "hazardous substance," "hazardous material," or "hazardous waste" or
regulated or giving rise to liability under any Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indebtedness" of any Person shall mean (a) all obligations or
indebtedness of such Person for or in respect of borrowed money or the deferred
purchase price of property or services, including earn-outs but excluding trade
payables on ordinary trade terms incurred in the ordinary course of business,
(b) all obligations or indebtedness of such Person evidenced by notes, bonds,
debentures or similar instruments, (c) reimbursement obligations with respect to
all letters of credit, surety bonds and similar instruments issued for the
account of such Person, (d) all payment obligations of such Person under any
interest rate and currency protection agreement (including, without limitation,
any swaps, forward contracts, caps, floors, collars and similar agreements) and
commodity swaps, forward contracts and other hedging and similar agreements
(including breakage and associated fees), (e) all obligations of such Person
under capital leases (computed in accordance with GAAP) and (f) all obligations
in the nature of Guarantees of the obligations described in clauses (a) through
(e) above of any other Person, including principal, accrued interest, premium
(if any), and prepayment penalties.
"Intellectual Property" shall mean, collectively, all patents,
patent rights, inventions and discoveries (whether or not patentable or reduced
to practice), trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, logos and other
source or business identifiers, copyrights, trade secrets and all other
confidential or proprietary information and know-how, whether or not reduced to
writing or any other tangible form, and other proprietary intellectual property
rights and computer programs arising under the laws of the United States
(including any state or territory), any other country or group of countries or
any political subdivision of any of the foregoing, whether registered or
unregistered.
"Knowledge" shall mean (i) in the case of the Company, the
actual knowledge of the Persons listed on Exhibit B.1 and (ii) in the case of
Parent, Merger Sub or any other member of the Parent Group, the actual knowledge
of the Persons listed on Exhibit B.2.
"Law" shall mean any foreign, multinational or domestic law,
statute, code, ordinance, rule, regulation, or Order.
"Lien" shall mean any mortgage, deed of trust, pledge, security
interest, encumbrance, lien (statutory or not), easement, right-of-way,
encroachment, third-party right or charge of any kind (including any conditional
sale or other title retention agreement or lease in the nature thereof).
"Multiemployer Plan" shall mean any "multiemployer plan" within
the meaning of Section 3(37) of ERISA.
4
"Multiple Employer Plan" shall mean any "multiple employer
plan" within the meaning of Sections 4063/4064 of ERISA or Section 413(c) of the
Code.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any order, judgment, writ, stipulation,
award, injunction, decree, determination, requirement, arbitration award or
finding of any Governmental Entity.
"Parent Group" shall mean Parent and its Affiliates.
"Person" shall mean an individual, corporation, limited
liability company, partnership, association, trust, estate, unincorporated
organization or other entity or organization.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the Environment, including the abandonment or discarding of
barrels, containers and other receptacles.
"Representative" shall mean any of the Company Representatives
or Parent Representatives.
"Xxxxxxxx-Xxxxx Act" shall mean the United States
Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and regulations
promulgated thereunder.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the United States Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
"Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation or any other Person shall mean any corporation, partnership, joint
venture or other legal entity of which the Company, the Surviving Corporation or
such other Person, as the case may be (either alone or through or together with
any other Subsidiary), owns, directly or indirectly, a majority of the stock or
other Equity Interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.
"Superior Proposal" shall mean a bona fide written Takeover
Proposal (with all of the percentages included in the definition of Takeover
Proposal increased to 50%) which the Company Board determines in good faith
(after consultation with its financial advisors and legal counsel) (i) is
reasonably likely to be consummated in accordance with its terms and (ii) if
consummated, would result in a transaction more favorable (in each case with
respect to clauses (i) and (ii), taking into account, among other things, the
Person or Group making such Takeover Proposal and all legal, financial,
regulatory, fiduciary and other aspects of this Agreement and such Takeover
Proposal, including any conditions relating to financing, regulatory approvals
or other events or circumstances beyond the control of the Party invoking the
condition and taking into account any revisions made or proposed in writing by
Parent or Merger Sub prior to the time of determination) to the holders of
Company Common Stock than the transactions provided for in this Agreement.
"Surviving Corporation Benefit Plan" shall mean any Benefit
Plan for the benefit or welfare of any Continuing Employee, whether maintained
by Parent, the Surviving Corporation or any of their Subsidiaries.
5
"Takeover Proposal" shall mean any inquiry, proposal or offer
relating to (i) the acquisition of more than twenty-five (25) percent of the
outstanding shares of Company Common Stock and any other voting securities of
the Company by any Third Party, (ii) a merger, consolidation, business
combination, reorganization, share exchange, sale of assets, recapitalization,
liquidation, dissolution or similar transaction which would result in any Third
Party acquiring twenty-five (25) percent or more of the fair market value of the
assets of the Company and the Company Subsidiaries, taken as a whole (including
capital stock of Company Subsidiaries), (iii) any other transaction which would
result in a Third Party acquiring twenty-five (25) percent or more of the fair
market value of the assets of the Company and the Company Subsidiaries, taken as
a whole (including capital stock of Company Subsidiaries), immediately prior to
such transaction (whether by purchase of assets, acquisition of stock of a
Company Subsidiary or otherwise) or (iv) any combination of the foregoing.
"Tax Returns" shall mean any report or return (including any
information return) or statement required to be filed with any Governmental
Entity with respect to Taxes.
"Taxes" shall mean any and all taxes, duties, tariffs, imposts
and other similar charges (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Entity, including those on or measured by or referred to as
income, franchise, windfall or other profits, gross receipts, property, sales,
use, net worth, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, excise, withholding, ad valorem, stamp,
transfer, transient, occupancy, accommodation, sales or hotel room taxes,
value-added and provider taxes.
"Third Party" shall mean any Person or Group other than the
Company, the Company Subsidiaries, the Parent Group or any Person in the Parent
Group.
Section 1.2 Terms Defined Elsewhere. The following terms are
defined elsewhere in this Agreement, as indicated below:
"409A Authorities" Section 4.9.7
----------------
"Agreement" Recitals
---------
"AJCA" Section 4.9.7
----
"Antitrust Division" Section 6.5.1
------------------
"Bankruptcy and Equity Exception" Section 4.3.1
-------------------------------
"Business Interruption Fee" Section 8.5
-------------------------
"Certificate of Merger" Section 2.3
---------------------
"Certificates" Section 3.2.2
------------
"Closing" Section 2.2
-------
"Closing Date" Section 2.2
------------
"Commitments" Section 5.6
-----------
"Company" Preamble
-------
6
"Company Adverse Recommendation Change" Section 6.4.2
-------------------------------------
"Company Board" Section 3.5.1
-------------
"Company Disclosure Schedule" Article 4
---------------------------
"Company Financial Advisors" Section 4.17
--------------------------
"Company Financial Statements" Section 4.6.2
----------------------------
"Company Leased Premises" Section 4.16
-----------------------
"Company Material Contract" Section 4.10
-------------------------
"Company Options" Section 3.5.1
---------------
"Company Owned Properties" Section 4.16
------------------------
"Company Preferred Stock" Section 4.2.1
-----------------------
"Company Properties" Section 4.16
------------------
"Company Recommendation" Section 4.17
----------------------
"Company Representatives" Section 6.3.1
-----------------------
"Company SEC Filings" Section 4.6.1
-------------------
"Company Stock-Based Award" Section 3.5.1
-------------------------
"Company Stockholders' Meeting" Section 6.2.3
-----------------------------
"Company Stock Plans" Section 3.5.1
-------------------
"Company Subsidiary" Section 4.1
------------------
"Debt Commitment Letters" Section 5.6
-----------------------
"D&O Insurance" Section 6.9.3
-------------
"DGCL" Recitals
----
"Dissenting Shares" Section 3.1.1
-----------------
"Dissenting Stockholders" Section 3.1.1
-----------------------
"ECMR" Section 6.5.1
----
"Effective Time" Section 2.3
--------------
"Equity Commitment Letter" Recitals
------------------------
"ERISA" Section 4.9.2
-----
"ERISA Affiliate" Section 4.9.4
---------------
"Exchange Fund" Section 3.2.1
-------------
"Executive Officer" Section 6.1(j)
-----------------
"Foreign Employees" Section 4.9.1
-----------------
"FTC" Section 6.5.1
---
7
"Indemnified Parties" Section 6.9.2
-------------------
"IRS" Section 4.9.1
---
"Limited Guarantee" Recitals
-----------------
"Merger" Recitals
------
"Merger Consideration" Section 3.1.1
--------------------
"Merger Sub" Preamble
----------
"NDA" Section 6.3.2
---
"Nonqualified Deferred Compensation Plan" Section 4.9.7
---------------------------------------
"Option Payments" Section 3.5.1
---------------
"Parent" Preamble
------
"Parent Disclosure Schedule" Article 5
--------------------------
"Parent Representatives" Section 6.3.1
----------------------
"Paying Agent" Section 3.2.1
------------
"Permitted Liens" Section 4.16
---------------
"Property Restrictions" Section 4.16
---------------------
"Proxy Statement" Section 6.2.1
---------------
"Purchaser Welfare Benefit Plan" Section 6.8.4
------------------------------
"Regulatory Approvals" Section 6.5.1
--------------------
"Required Information" Section 6.14
--------------------
"Solvency Opinion" Section 6.13
----------------
"Solvent" Section 5.10
-------
"Spinoff Agreement" Section 4.14.7
-----------------
"Stockholder Approval" Section 4.3.1
--------------------
"Surviving Corporation" Section 2.1
---------------------
"Termination Date" Section 8.1(b)(ii)
----------------
"Termination Fee" Section 8.4.1
---------------
"WARN Act" Section 4.9.9
--------
Section 1.3 Interpretation. In this Agreement, unless
otherwise specified, the following rules of interpretation apply:
(a) references to Sections, Schedules, Annexes, Exhibits,
Clauses and Parties are references to sections or sub-sections,
schedules, annexes, exhibits and clauses of, and parties to, this
Agreement;
8
(b) references to any Person include references to such
Person's successors and permitted assigns;
(c) words importing the singular include the plural and vice
versa;
(d) words importing one gender include the other gender;
(e) references to the word "including" do not imply any
limitation;
(f) references to months are to calendar months;
(g) the words "hereof", "herein" and "hereunder" and words
of similar import, when used in this Agreement, refer to this
Agreement as a whole and not to any particular provision of this
Agreement;
(h) references to "$" or "dollars" refer to U.S. dollars;
(i) to the extent this Agreement refers to information or
documents having been made available (or delivered or provided) to
Parent or Merger Sub, the Company shall be deemed to have satisfied
such obligation if the Company or any Company Representatives have
made such information or document available (or delivered or provided
such information or document) to any of Parent, Merger Sub, or any
Parent Representatives;
(j) a defined term has its defined meaning throughout this
Agreement and in each Exhibit and Schedule to this Agreement,
regardless of whether it appears before or after the place where it is
defined; and
(k) references to any specific provisions of any Law shall
also be deemed to be references to any successor provisions or
amendments thereof.
Article 2.
The Merger
Section 2.1 The Merger. Upon the terms and subject to
satisfaction or waiver of the conditions set forth in this Agreement, and in
accordance with the DGCL, Merger Sub shall be merged with and into the Company.
As a result of the Merger, the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation").
Section 2.2 Closing. Subject to the terms and conditions of
this Agreement, the closing of the Merger (the "Closing") shall take place on a
day that is a Business Day (i) at the offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m., New York City time, no later
than the third Business Day following the satisfaction of the conditions set
forth in Article 7 (other than (a) those conditions that are waived in
accordance with the terms of this Agreement by the Party or Parties for whose
benefit such conditions exist and (b) any such conditions, which by their terms,
are not capable of being satisfied until the Closing) or (ii) at such other
place, time and/or date as the Parties may otherwise agree; provided, however,
that, notwithstanding the satisfaction or waiver of the conditions set forth in
Article 7 as of any date, the Parties shall not be required to effect the
Closing until the earlier of (a) a date during the Marketing Period specified by
Parent on no less than three Business Days' notice to the Company and (b) the
final day of the Marketing Period (subject in each case to the satisfaction or
9
waiver (by the party entitled to grant such waiver) of all of the conditions set
forth in Article 7 as of the date determined pursuant to this proviso);
provided, further, that this Agreement may be terminated pursuant to and in
accordance with Section 8.1 hereof such that the Parties shall not be required
to effect the Closing, regardless of whether the final day of the Marketing
Period shall have occurred before such termination. The date upon which the
Closing shall occur is referred to herein as the "Closing Date".
Section 2.3 Effective Time. The Parties shall cause a
certificate of merger (the "Certificate of Merger") to be properly executed and
filed in accordance with the DGCL and the terms of this Agreement. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware or at such other time as is
specified by the Parties as the Effective Time in the Certificate of Merger (the
"Effective Time").
Section 2.4 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, at the Effective Time,
except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 2.5 Certificate of Incorporation; By-laws. At the
Effective Time, the Certificate of Incorporation and the By-laws of the
Surviving Corporation shall, subject to Section 6.9 hereof, be amended in their
entirety to contain the provisions set forth in the Certificate of Incorporation
and the By-laws of Merger Sub, attached as Exhibit C hereto, except that the
name of the Surviving Corporation shall at the Effective Time be changed to the
name of the Company.
Section 2.6 Directors and Officers. The directors of Merger
Sub and the officers of the Company immediately prior to the Effective Time
shall be the initial directors and officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and By-laws
of the Surviving Corporation.
Article 3.
Conversion of Securities; Exchange of Certificates
Section 3.1 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub, the
Company or its stockholders, the following shall occur.
Section 3.1.1 Conversion Generally. Each share of Company
Common Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to
be canceled pursuant to Section 3.1.2 and any shares of Company
Common Stock ("Dissenting Shares") which are held by stockholders
exercising appraisal rights pursuant to Section 262 of the DGCL
("Dissenting Stockholders")), shall be converted, subject to
Section 3.2.4, into the right to receive $32.75 in cash, payable
to the holder thereof, without interest (the "Merger
Consideration"). All such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each Certificate which
immediately prior to the Effective Time represented such shares
10
shall thereafter represent the right to receive the Merger
Consideration therefor. Certificates previously representing
shares of Company Common Stock (other than any shares of Company
Common Stock to be canceled pursuant to Section 3.1.2) shall be
exchanged for the Merger Consideration, without interest, upon
the surrender of such Certificates in accordance with the
provisions of Section 3.2.
Section 3.1.2 Cancellation of Certain Shares. Each share
of Company Common Stock held by Parent, Merger Sub, any
Subsidiary of Parent or Merger Sub, in the treasury of the
Company or by any Company Subsidiary immediately prior to the
Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect
thereto. Following the Effective Time, each certificate
evidencing ownership of shares of Merger Sub common stock shall
evidence ownership of such shares of the Surviving Corporation.
Section 3.1.3 Merger Sub. Each share of common stock, par
value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into
and be exchanged for one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
Section 3.1.4 Change in Shares. If between the date of
this Agreement and the Effective Time the outstanding shares of
Company Common Stock shall have been changed into a different
number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
reverse split, combination or exchange of shares or any other
similar transaction, the Merger Consideration shall be
correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, reverse
split, combination or exchange of shares and to provide to the
holders of Company Common Stock the same economic effect as
contemplated by this Agreement prior to such action, provided,
that nothing herein shall be construed to permit the Company to
take any action with respect to its securities that is prohibited
or not expressly permitted by the terms of this Agreement.
Section 3.2 Exchange of Certificates.
Section 3.2.1 Paying Agent. At the Closing, Parent shall
deposit, or shall cause to be deposited, with a bank or trust
company designated by Parent and reasonably satisfactory to the
Company (the "Paying Agent"), for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with
this Article 3, through the Paying Agent, cash in U.S. dollars in
an amount sufficient to pay the aggregate amount of the Merger
Consideration (such cash being hereinafter referred to as the
"Exchange Fund") payable pursuant to Section 3.1 in exchange for
outstanding shares of Company Common Stock. The Paying Agent
shall, pursuant to irrevocable instructions, deliver the Merger
Consideration contemplated to be paid pursuant to Section 3.1 out
of the Exchange Fund. The Exchange Fund shall be invested by the
Paying Agent as directed by Parent; provided, however, that: (i)
no such investment or losses thereon shall affect the Merger
Consideration payable to the holders of Company Common Stock and
following any losses Parent shall promptly provide additional
funds to the Paying Agent for the benefit of the holders of the
shares of the Company Common Stock in the amount of any such
losses; and (ii) such investments shall be in obligations of or
11
guaranteed by the United States of America or any agency or
instrumentality thereof and backed by the full faith and credit
of the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc. or
Standard & Poor's Corporation, respectively, or in certificates
of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $1 billion (based on the
most recent financial statements of such bank that are then
publicly available). Any net profit resulting from, or interest
or income produced by, such investments shall be payable to the
Surviving Corporation or Parent, as Parent directs. The Exchange
Fund shall not be used for any other purpose.
Section 3.2.2 Exchange Procedures. Promptly following the
Effective Time (but in no event later than three (3) Business
Days following the Effective Time), Parent shall instruct the
Paying Agent to mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the
"Certificates") (i) a letter of transmittal in customary form
(which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and shall be
subject to the consent of the Company prior to the Effective
Time, such consent not to be unreasonably withheld) and (ii)
instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent
together with such letter of transmittal, properly completed and
duly executed, and such other documents as may be reasonably
required pursuant to such instructions (or, if such shares are
held in book-entry or other uncertificated form, upon the entry
through a book-entry transfer agent of the surrender of such
shares on a book-entry account statement (it being understood
that any references herein to "Certificates" shall be deemed to
include references to book-entry account statements relating to
the ownership of shares of Company Common Stock)), the holder of
such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration which such holder has the right
to receive in respect of the shares of Company Common Stock
formerly represented by such Certificate, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid
or accrued on any Merger Consideration payable to holders of
Certificates. In the event of a transfer of ownership of shares
of Company Common Stock which is not registered in the transfer
records of the Company, the Merger Consideration may be issued to
a transferee if the Certificate representing such shares of
Company Common Stock is presented to the Paying Agent,
accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer Taxes
have been paid. Until surrendered as contemplated by this Section
3.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such
surrender the Merger Consideration or the right to demand to be
paid the "fair value" of the shares represented thereby as
contemplated by Section 3.3.
Section 3.2.3 Further Rights in Company Common Stock. All
Merger Consideration paid in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
12
Section 3.2.4 Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed to the holders of
Company Common Stock for one (1) year after the Effective Time
shall be delivered to the Surviving Corporation upon demand, and
any holders of Company Common Stock who have not theretofore
complied with this Article 3 shall thereafter look only to the
Surviving Corporation for the Merger Consideration, without any
interest thereon.
Section 3.2.5 No Liability. None of Parent, the Company or
the Surviving Corporation shall be liable to any holder of shares
of Company Common Stock for any cash from the Exchange Fund
delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
Section 3.2.6 Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by Parent, the
posting by such Person of a bond, in such reasonable and
customary amount as Parent may direct, as indemnity against any
claim that may be made against it with respect to such lost,
stolen or destroyed Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
Merger Consideration without any interest thereon.
Section 3.2.7 Withholding. Parent, the Surviving
Corporation or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock, holder of
Company Options or holder of a Company Stock-Based Award such
amounts as Parent, the Surviving Corporation or the Paying Agent
are required to deduct and withhold under the Code, or any
provision of state, local or foreign tax Law, with respect to the
making of such payment. To the extent that amounts are so
withheld by Parent, 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 Company
Common Stock, holder of Company Options or holder of a Company
Stock-Based Award in respect of whom such deduction and
withholding was made by Parent, the Surviving Corporation or the
Paying Agent.
Section 3.3 Dissenters' Rights. Notwithstanding anything in
this Agreement to the contrary, if any Dissenting Stockholder shall demand to be
paid the "fair value" of its Dissenting Shares, as provided in Section 262 of
the DGCL, such Dissenting Shares shall not be converted into or exchangeable for
the right to receive the Merger Consideration (except as provided in this
Section 3.3) and shall entitle such Dissenting Stockholder only to payment of
the fair value of such Dissenting Shares, in accordance with Section 262 of the
DGCL, unless and until such Dissenting Stockholder withdraws (in accordance with
Section 262(k) of the DGCL) or effectively loses the right to dissent. The
Company shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
for payment of fair value of Dissenting Shares prior to the Effective Time. The
Company shall give Parent notice thereof prior to the Effective Time and Parent
shall have the right to participate at its own expense in all negotiations and
proceedings with respect to any such demands. If any Dissenting Stockholder
shall have effectively withdrawn (in accordance with Section 262(k) of the DGCL)
or lost the right to dissent, then as of the later of the Effective Time or the
occurrence of such event, the Dissenting Shares held by such Dissenting
Stockholder shall be cancelled and converted into and represent the right to
receive the Merger Consideration pursuant to Section 3.1.
13
Section 3.4 Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed (after giving effect to the
items contemplated by this Article 3) and thereafter, there shall be no further
registration of transfers of shares of Company Common Stock theretofore
outstanding on the records of the Company. From and after the Effective Time,
the holders of Certificates shall cease to have any rights with respect to such
shares of Company Common Stock except as otherwise provided herein or by Law. On
or after the Effective Time, any Certificates presented to the Paying Agent or
Parent for any reason shall be converted into the Merger Consideration.
Section 3.5 Company Options and Stock-Based Awards.
Section 3.5.1 Prior to the Effective Time, the Board of
Directors of the Company (or, if appropriate, any committee
thereof) (the "Company Board") shall, in accordance with the
terms of the applicable Company Benefit Plan and consistent with
the requirements of Section 409A of the Code, take all actions
necessary and appropriate to provide that, concurrent with the
Effective Time: (i) each outstanding, unexpired and unexercised
option to purchase Company Common Stock (the "Company Options")
granted under the employee and director stock plans of the
Company or under any individual consultant, employee or director
agreement (the "Company Stock Plans"), whether or not then
exercisable, conditioned or vested, shall fully vest and be
deemed to be exercised and cancelled and each holder of a Company
Option shall be entitled to receive at the Effective Time, in
consideration of the deemed exercise and cancellation of such
Company Option, a payment by the Surviving Corporation (or, at
Parent's option, Parent) in cash (subject to any applicable
withholding or other Taxes required by applicable Law to be
withheld), in an amount equal to the product of (x) the total
number of shares of Company Common Stock subject to such Company
Option (determined on the basis that such Company Option is fully
vested and currently exercisable) and (y) the excess, if any, of
the Merger Consideration over the exercise price per share of
Company Common Stock subject to such Company Option (such amounts
payable hereunder being referred to as the "Option Payments");
and (ii) each right of any kind, contingent or accrued, to
receive shares of Company Common Stock or benefits measured by
the value of a number of shares of Company Common Stock, and each
award of any kind consisting of shares of Company Common Stock,
granted under Company Stock Plans (including stock appreciation
rights, restricted stock, restricted stock units, deferred stock
units, performance shares and dividend equivalents), other than
Company Options (each, a "Company Stock-Based Award"), whether or
not then vested, shall fully vest and each beneficiary of a
Company Stock-Based Award providing for such beneficiary to
receive shares of Company Common Stock shall, in lieu thereof, be
entitled to, and shall be paid pursuant to Section 3.2, the
Merger Consideration pursuant to Section 3.1.1 of this Agreement
in respect of such shares of Company Common Stock. At and after
the Effective Time, each Company Option shall be cancelled and
terminated and shall only entitle such holder to payment of the
Option Payment as described in this Section 3.5.
14
Article 4.
Representations and Warranties of the Company
Subject to (i) any information contained, or incorporated by
reference, in any of the Company's Annual Report on Form 10-K for the year ended
December 31, 2005 and the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 2006, each as filed prior to the date hereof, other than
information in the "Risk Factors" section of such Company SEC Filings and any
other disclosures included in such filings that are predictive or
forward-looking in nature (provided, that the exception under this clause (i)
shall not apply to the representations and warranties set forth in Sections 4.1,
4.2, 4.3, 4.4, 4.6 and 4.18) and to (ii) such exceptions as are disclosed in the
disclosure schedule (the "Company Disclosure Schedule") delivered by the Company
to Parent concurrently with the execution and delivery of this Agreement (it
being understood that (a) the disclosure of any fact or item in any section of
the Company Disclosure Schedule shall apply to the indicated Section of this
Agreement and any other Section of this Agreement to the extent that it is
reasonably apparent that such disclosure is relevant to such other Section of
this Agreement, and (b) the disclosure of any matter or item in the Company
Disclosure Schedule shall not be deemed to constitute an acknowledgement that
such matter or item is required to be disclosed therein or is material to a
representation or warranty set forth in this Agreement and shall not be used as
a basis for interpreting the terms "material," "materially," "materiality" or
"Company Material Adverse Effect" or any word or phrase of similar import and
does not mean that such matter or item would, alone or together with any other
matter or item, reasonably be expected to have a Company Material Adverse
Effect), the Company represents and warrants to Parent and Merger Sub as
follows:
Section 4.1 Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. Each Subsidiary of the Company (each, a
"Company Subsidiary") has been duly organized, and is validly existing and,
where such concept is recognized, in good standing under the Laws of the
jurisdiction of its incorporation or organization, as the case may be, except to
the extent the failure of any such Company Subsidiary to be in good standing
would not, individually or in the aggregate, have a Company Material Adverse
Effect. Section 4.1 of the Company Disclosure Schedule contains a complete list
of all of the Company Subsidiaries. The Company and each Company Subsidiary has
the requisite power and authority and all governmental approvals and Company
Permits necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted, except for such government approvals, the
absence of which, individually or in the aggregate, is not reasonably expected
to have a Company Material Adverse Effect. The Company and each Company
Subsidiary is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification,
licensing or good standing necessary, except for such failures to be so
qualified, licensed or in good standing that, individually or in the aggregate,
are not reasonably expected to have a Company Material Adverse Effect. The
Company has heretofore made available to Parent complete and correct copies of
the certificate of incorporation and by-laws (or similar organizational
documents) of the Company and each material Company Subsidiary, and all
amendments thereto, as currently in effect.
15
Section 4.2 Capitalization; Subsidiaries.
Section 4.2.1 The authorized capital stock of the Company
consists of 250,000,000 shares of Company Common Stock and
20,000,000 shares of preferred stock, par value $0.01 per share
(the "Company Preferred Stock"). As of November 30, 2006, there
were (a) 132,904,449 shares of Company Common Stock (other than
treasury shares) issued and outstanding, of which 2,121,871 are
restricted pursuant to their issuance as Company Stock-Based
Awards, (b) 13,027,225 shares of Company Common Stock held in the
treasury of the Company, (c) 16,942,258 shares of Company Common
Stock issuable upon exercise of outstanding Company Options, (d)
967,147 shares of Company Common Stock issuable pursuant to
Company Stock-Based Awards and (e) no shares of Company Preferred
Stock issued and outstanding. Section 4.2.1 of the Company
Disclosure Schedule sets forth as of November 30, 2006, a list of
the holders of Company Options and/or Company Stock-Based Awards,
including (to the extent applicable) the date on which each such
Company Option or Company Stock-Based Award was granted and the
fair market value of the Company's stock on such date, the number
of shares of Company Common Stock subject to such Company Option
or Company Stock-Based Award, the expiration date of such Company
Option or Company Stock-Based Award, the price at which such
Company Option or Company Stock-Based Award may be exercised
under an applicable Company Stock Plan and the vesting
schedule/status of each such Company Option or Company
Stock-Based Award.
Section 4.2.2 All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable and free of preemptive
rights. Except as set forth in Section 4.2.1, there are no
options, warrants or other rights, agreements, arrangements or
commitments of any character to which the Company or any Company
Subsidiary is a party or by which the Company or any Company
Subsidiary is bound relating to the issued or unissued Equity
Interests of the Company, or securities convertible into or
exchangeable for such Equity Interests, or obligating the Company
to issue or sell any shares of its capital stock or other Equity
Interests, or securities convertible into or exchangeable for
such capital stock of, or other Equity Interests in, the Company.
Except as set forth in Section 4.2.1, there are no outstanding
contractual obligations of the Company or any Company Subsidiary
affecting the voting rights of or requiring the repurchase,
redemption or disposition of, any Equity Interests in the
Company. Except as set forth in Section 4.2.1, since November 30,
2006 through the date hereof, the Company has not issued any
shares of its capital stock, or securities convertible into or
exchangeable for such capital stock or any other Equity Interests
in the Company.
Section 4.2.3 Each outstanding share of capital stock or
other Equity Interest of each Company Subsidiary is duly
authorized, validly issued, fully paid, nonassessable and free of
preemptive rights and is held, directly or indirectly, by the
Company or another Company Subsidiary free and clear of all
claims, liens and encumbrances. Except as set forth in Section
4.2.1, there are no subscriptions, options, warrants, rights,
calls, contracts or other commitments, understandings,
restrictions or arrangements relating to the issuance or sale
with respect to any shares of capital stock or other ownership
interests of any Company Subsidiary, including any right of
conversion or exchange under any outstanding security, instrument
or agreement. Section 4.2.3 of the Company Disclosure Schedule
sets forth all material Equity Interests owned, directly or
indirectly, by the Company and the Company Subsidiaries in any
Person other than a Company Subsidiary.
16
Section 4.3 Authority.
Section 4.3.1 The Company has all necessary corporate
power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of the Company and no
stockholder votes are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby other than, with
respect to the Merger, the affirmative vote of holders of a
majority of outstanding shares of Company Common Stock to adopt
this Agreement and approve the transactions provided for herein
(the "Stockholder Approval"). This Agreement has been duly
authorized and validly executed and delivered by the Company and,
assuming this Agreement is a valid and binding obligation of
Parent and Merger Sub, this Agreement constitutes a legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency (including all Laws relating to fraudulent transfers),
reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors' rights and to
general equity principles (the "Bankruptcy and Equity
Exception").
Section 4.3.2 The Company has taken all appropriate
actions so that the restrictions on business combinations
contained in Section 203 of the DGCL will not apply with respect
to or as a result of this Agreement and the transactions
contemplated hereby, including the Merger, without any further
action on the part of the stockholders or the Company Board.
Section 4.4 No Conflict; Required Filings and Consents.
Section 4.4.1 The execution, delivery and performance by
the Company of this Agreement does not (i) assuming the
Stockholder Approval is obtained, conflict with or violate any
provision of the Company Certificate or the Company By-laws or
any equivalent organizational documents of any Company
Subsidiary, (ii) assuming that all consents, approvals and
authorizations described in Section 4.4.2 will have been obtained
prior to the Effective Time and all filings and notifications
described in Section 4.4.2 will have been made and any waiting
periods thereunder will have terminated or expired prior to the
Effective Time, conflict with or violate any Law applicable to
the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or
affected or (iii) require any consent or approval under, result
in any breach of or any loss of any benefit under, 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 right of
termination, vesting, amendment, acceleration or cancellation of,
or result in the creation of a Lien on any property or asset of
the Company or any Company Subsidiary pursuant to, any Contract
to which the Company or any Company Subsidiary is a party or by
which any of their respective properties or assets are bound,
except, with respect to clauses (ii) and (iii), for matters that,
individually or in the aggregate, are not reasonably expected to
have a Company Material Adverse Effect.
17
Section 4.4.2 The execution, delivery and performance of
this Agreement by the Company does not require any consent,
approval or authorization of, or filing with or notification to,
any Governmental Entity, except (i) under the Exchange Act, any
applicable Blue Sky Law, the rules and regulations of the NYSE,
the HSR Act, ECMR, or any other antitrust, competition, trade or
other regulatory Laws, (ii) the filing and recordation of the
Certificate of Merger as required by the DGCL or (iii) where the
failure to obtain such consents, approvals or authorizations, or
to make such filings or notifications would not (a) prevent or
materially delay the consummation of the Merger, (b) otherwise
prevent or materially delay performance by the Company of any of
its material obligations under the Agreement or (c) individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 4.5 Compliance with Laws. Except (i) with respect to
Tax matters (which are addressed in Section 4.14), Intellectual Property (which
is addressed in Section 4.13), environmental matters (which are addressed in
Section 4.12), benefits and employee matters (which are addressed in Section
4.9) and (ii) for matters that, individually or in the aggregate, are not
reasonably expected to have a Company Material Adverse Effect, (a) the Company
and each Company Subsidiary holds all Company Permits necessary for the lawful
conduct of its business or ownership, use, occupancy and operation of its assets
and properties, (b) the Company and each Company Subsidiary is in compliance, in
all respects, with the terms of such Company Permits, except for such matters
for which the Company or Company Subsidiary has received written notice from a
Governmental Entity, which notice asserts a lack of compliance with a particular
Company Permit, but which permits the Company or Company Subsidiary to cure such
non-compliance within a reasonable period of time following the issuance of such
notice and which cure is being undertaken by the Company or Company Subsidiary,
and (c) none of the businesses of the Company or any Company Subsidiary is being
conducted in violation of, any Law applicable to the Company or such Company
Subsidiary or by which any property or asset of the Company or such Company
Subsidiary is bound, except where such violation is subject to a cure within a
reasonable period of time by the Company or Company Subsidiary, which cure is
being undertaken by the Company or Company Subsidiary.
Section 4.6 SEC Filings; Financial Statements.
Section 4.6.1 Company SEC Filings. The Company has timely
filed or furnished to or with the SEC all forms, reports,
statements, certification and other documents required to be
filed or furnished by it under the Securities Act or the Exchange
Act, as the case may be, since December 31, 2005 (collectively,
the "Company SEC Filings"). Each Company SEC Filing, including
any information incorporated by reference therein, (i) as of its
date, complied in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and/or the
Xxxxxxxx-Xxxxx Act, as the case may be and (ii) did not, at the
time it was filed (or, if amended, at the time of such
amendment), 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 the
light of the circumstances under which they were made, not
18
misleading. No Company Subsidiary is subject to the periodic
reporting requirements of the Exchange Act. No executive officer
of the Company has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of
the Xxxxxxxx-Xxxxx Act with respect to any Company SEC Filing.
The Company has made available to Parent true, correct and
complete copies of all written correspondence between the SEC, on
the one hand, and the Company and any of its Subsidiaries, on the
other hand, occurring since December 31, 2005. As of the date of
this Agreement, there are no outstanding or unresolved comments
in comment letters received from the SEC staff with respect to
the Company SEC Filing. To the Knowledge of the Company, none of
the Company SEC Filing is the subject of ongoing SEC review or
outstanding SEC comments.
Section 4.6.2 Financial Statements. Each of the
consolidated financial statements (including, in each case, any
notes thereto) contained in the Company SEC Filings
(collectively, the "Company Financial Statements") was prepared
in accordance with GAAP applied (except as may be indicated in
the notes thereto and, in the case of unaudited quarterly
financial statements, as permitted by Form 10-Q under the
Exchange Act) on a consistent basis during the periods indicated
(except as may be indicated in the notes thereto), and each
presented fairly, in all material respects, the consolidated
financial position of the Company as of the respective dates
thereof and the consolidated income, shareholders equity, results
of operations and changes to consolidated financial position or
cash flows of the Company for the respective periods indicated
therein (subject, in the case of unaudited statements, to normal
adjustments which, individually or in the aggregate, are not
reasonably expected to have a Company Material Adverse Effect).
All of the Company Subsidiaries are consolidated with the Company
for accounting purposes.
Section 4.6.3 Availability of Cash. Other than temporary
restrictions on repatriation imposed by applicable Law or
obligations in connection with Indebtedness, to the Knowledge of
the Company, there is no restriction that would materially impair
the Company's ability to use its cash for payment of the Merger
Consideration at the time of Closing.
Section 4.6.4 No Undisclosed Liabilities. None of the
Company or any consolidated Company Subsidiary has any
liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, whether due or to become due
and whether or not required to be recorded or reflected on a
balance sheet or in the notes thereto prepared in accordance with
GAAP, except for liabilities or obligations (i) which,
individually or in the aggregate, are not reasonably expected to
have a Company Material Adverse Effect, (ii) that were incurred
under this Agreement or in connection with the transactions
contemplated hereby and consistent with Section 6.1 or (iii) that
were disclosed or reserved against in the Company Financial
Statements.
Section 4.6.5 Internal Controls. Since January 1, 2004,
the Company's principal executive officer and its principal
financial officer have disclosed to the Company's auditors and
the audit committee of the Company Board (i) all significant
deficiencies and material weaknesses in the design or operation
of internal controls over financial reporting that are reasonably
likely to adversely affect the Company's ability to record,
19
process, summarize and report financial information and (ii) any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal
controls and the Company has provided to Parent copies of any
material written materials relating to the foregoing. The Company
has established and maintains disclosure controls and procedures
(as such term is defined in Rule 13a-15 under the Exchange Act);
such disclosure controls and procedures are designed to ensure
that material information relating to the Company required to be
included in reports filed under the Exchange Act, including its
consolidated Subsidiaries, is made known to the Company's
principal executive officer and its principal financial officer
by others within those entities, particularly during the periods
in which the periodic reports required under the Exchange Act are
being prepared, and, to the knowledge of the Company, such
disclosure controls and procedures are effective in timely
alerting the Company's principal executive officer and its
principal financial officer to material information required to
be included in the Company's periodic reports required under the
Exchange Act. Since the enactment of the Xxxxxxxx-Xxxxx Act,
neither the Company nor any Company Subsidiary has made any
prohibited loans to any executive officer of the Company (as
defined in Rule 3b-7 under the Exchange Act) or director of the
Company or any Company Subsidiary.
Section 4.6.6 Since December 31, 2003, (i) neither the
Company nor the Company Subsidiaries nor, to the Knowledge of the
Company, any director, officer, employee, auditor, accountant or
representative of the Company or any of the Company Subsidiaries
has received any material complaint, allegation, assertion or
claim regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any of the Company
Subsidiaries or their respective internal accounting controls and
(ii) no attorney representing the Company or any of the Company
Subsidiaries, whether or not employed by the Company or any of
the Company Subsidiaries, has reported to the Company Board or
any committee thereof evidence of a material violation of
securities Laws, breach of fiduciary duty or similar violation by
the Company or any of its officers, directors, employees or
agents.
Section 4.7 Affiliate Transactions. To the Knowledge of the
Company, there are no transactions, or series of related transactions,
agreements, arrangements or understandings, nor are there any currently proposed
transactions, or series of related transactions, that are required to be
disclosed under Item 404 of Regulation S-K promulgated under the Securities Act
that have not been otherwise disclosed in the Company SEC Filings.
Section 4.8 Absence of Certain Changes or Events. Except in
connection with the transactions contemplated hereby, since December 31, 2005
and prior to the date hereof, the Company and the Company Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice. Since December 31, 2005, there has not been any (i) Company
Material Adverse Effect, and there has not been any change, condition, event or
development that would be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect, (ii) any change in accounting
methods, principles or practices affecting the Company or any Company
Subsidiary, except as required or permitted by GAAP, (iii) material change to
any material Tax election of the Company or any Company Subsidiary effective
after December 31, 2005, or settlement of any Tax liability of the Company or
any Company Subsidiary that resulted in a payment in excess of $5,000,000, (iv)
material damage, destruction or other casualty loss with respect to any material
20
asset or property owned by the Company or any Company Subsidiary, which is not
covered by insurance and that has resulted in damages or losses in excess of
$1,000,000 in the aggregate, (v) issuance, reclassification, combination, split,
reverse split, subdivision or redemption, purchase or other acquisition,
directly or indirectly, of any of the Company's capital stock or other Equity
Interests, except pursuant to the exercise of Company Options, Company
Stock-Based Awards, warrants, conversion rights, employee severance, retention,
termination, change of control and other contractual rights, (vi) declaration,
set aside, creation or payment of any dividend or other distribution (whether
payable in cash, stock, property or a combination thereof) with respect to any
of the Company's capital stock (other than ordinary course dividends consistent
with the Company's past practice and other than dividends paid by a wholly-owned
Company Subsidiary to the Company or to any other wholly-owned Company
Subsidiary), (vii) acquisition of (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) or investment in, any interest
in any Person or any division thereof or any assets thereof, outside of the
ordinary course of business consistent with past practice, (viii) adoption or
amendment of any material Company Benefit Plan or Company Stock-Based Award,
(ix) amendment to or change of the Company Certificate, the Company By-laws or
equivalent organizational document of any material Company Subsidiary, (x)
incurrence of Indebtedness or issuance of any debt security or Guarantee, in
each case, outside the ordinary course of business consistent with past
practice, (xi) payment, discharge, settlement or satisfaction of any material
claims, liabilities or obligations (absolute, accrued, contingent or otherwise)
outside the ordinary course of business consistent with past practice or (xii)
adoption or entrance into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any Company Subsidiary.
Section 4.9 Benefit Plans; Employees and Employment
Practices.
Section 4.9.1 Section 4.9.1 of the Company Disclosure
Schedule contains a true, correct and complete list of each
material Company Benefit Plan maintained or contributed to by the
Company or any Company Subsidiary, or to which the Company or any
Company Subsidiary is obligated to contribute, other than any
Company Benefit Plan that is maintained on behalf of employees
outside of the United States (such employees, "Foreign
Employees"). The Company has made available to Parent or its
agents or representatives copies of (i) each material Company
Benefit Plan, (ii) the most recent annual report (Form 5500), if
any, filed with the U.S. Department of Labor with respect to each
such Company Benefit Plan, including all schedules thereto (iii)
the most recent summary plan description for each such Company
Benefit Plan for which a summary plan description is required and
(iv) the most recent determination letter issued by the U.S.
Internal Revenue Service ("IRS") with respect to any such Company
Benefit Plan that is intended to be qualified under Section
401(a) of the Code.
Section 4.9.2 Except for such exceptions that,
individually or in the aggregate, would not reasonably expected
to have a Company Material Adverse Effect, each Company Benefit
Plan is operated in compliance with its terms and any applicable
Laws, including without limitation the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
and/or the Code, and there are no material actions, suits or
claims pending (other than routine claims for benefits) or, to
the Knowledge of the Company or any Company Subsidiary,
threatened or anticipated with respect to any Company Benefit
21
Plan or against the assets of such Company Benefit Plan. No
Company Benefit Plan is under audit or is the subject of an
investigation by the Internal Revenue Service, the U.S.
Department of Labor, the Pension Benefit Guaranty Corporation,
the SEC or any other Governmental Entity, nor, to the Knowledge
of the Company or any Company Subsidiary, is any such audit or
investigation pending or threatened.
Section 4.9.3 Each Company Benefit Plan that is intended
to be qualified under Section 401(a) of the Code has received a
determination letter from the IRS that it is so qualified, and,
to the Company's Knowledge, no fact or event has occurred since
the date of such determination letter that has or could
materially adversely affect the qualified status of any such
Company Benefit Plan.
Section 4.9.4 Neither the Company nor any trade or
business that, together with the Company, would be deemed a
single employer within the meaning of Section 4001 of ERISA (an
"ERISA Affiliate") maintains or contributes to, is obligated to
maintain or contribute to, or has maintained or contributed to,
any Multiemployer Plan, Multiple Employer Plan or any "defined
benefit plan" (as defined in Section 3(35) of ERISA) subject to
Section 302 of ERISA, Section 412 of the Code or Title IV of
ERISA. No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any
Company Benefit Plan within the past 36 months, nor will any such
notice be required to be filed as a result of the transactions
contemplated by this Agreement. No Company Benefit Plan has an
"accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA.
Section 4.9.5 No material deduction for federal income Tax
purposes has been or is expected by the Company or any Company
Subsidiary to be disallowed for remuneration paid by the Company
or any Company Subsidiary by reason of Section 162(m) of the
Code, including by reason of the transactions contemplated
hereby.
Section 4.9.6 Except as set forth in Section 4.9.6 of the
Company Disclosure Schedule, neither the execution or delivery of
this Agreement nor the consummation of the transactions
contemplated by this Agreement will, either alone or in
conjunction with any other event (whether contingent or
otherwise), (i) result in any payment or benefit becoming due or
payable, or required to be provided, to any director, officer,
employee or independent contractor of the Company or any Company
Subsidiary, (ii) increase the amount or value of any benefit or
compensation otherwise payable or required to be provided to any
such director, officer, employee or independent contractor, (iii)
result in the acceleration of the time of payment, vesting or
funding of any such benefit or compensation or (iv) result in any
amount to fail to be deductible by reason of Section 280G of the
Code.
Section 4.9.7 Each material Company Benefit Plan that is a
"nonqualified deferred compensation plan" within the meaning of
Section 409A(d)(1) of the Code (a "Nonqualified Deferred
Compensation Plan") subject to Section 409A of the Code has been
operated in compliance with Section 409A of the Code since
January 1, 2005, based upon a good faith, reasonable
interpretation of (A) Section 409A of the Code and (B)(1) the
proposed regulations issued thereunder or (2) Internal Revenue
Service Notice 2005-1 (clauses (A) and (B), together, the "409A
22
Authorities"). No material Company Benefit Plan that would be a
Nonqualified Deferred Compensation Plan subject to Section 409A
of the Code but for the effective date provisions that are
applicable to Section 409A of the Code, as set forth in Section
885(d) of the American Jobs Creation Act of 2004, as amended (the
"AJCA"), has been "materially modified" within the meaning of
Section 885(d)(2)(B) of the AJCA after October 3, 2004, based
upon a good faith reasonable interpretation of the AJCA and the
409A Authorities.
Section 4.9.8 Neither the Company nor Company Subsidiary
is a party to any collective bargaining or other labor contracts
and no collective bargaining agreement or other labor contract is
being negotiated by the Company or any Company Subsidiary. There
is no pending, nor, to the Knowledge of the Company or any
Company Subsidiary, threatened, labor dispute, strike, lockout or
work stoppage against the Company or any Company Subsidiary which
may interfere with the respective business activities of the
Company or the Company Subsidiaries, except where such dispute,
strike or work stoppage, individually or in the aggregate, is not
reasonably expected to have a Company Material Adverse Effect.
There is no pending charge or complaint against the Company or
any Company Subsidiary by the National Labor Relations Board or
any comparable Governmental Entity, except where such unfair
labor practice, charge or complaint, individually or in the
aggregate, is not reasonably expected to have a Company Material
Adverse Effect.
Section 4.9.9 None of the Company nor any Company
Subsidiary has, within the last three years, effectuated (i) a
"plant closing" (as defined in the Worker Adjustment and
Retraining Notification Act (the "WARN Act") or any similar Law)
affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the
Company or any of its Subsidiaries or (ii) a "mass layoff" (as
defined in the WARN Act, or any similar Law) affecting any site
of employment or facility of the Company or any of its
Subsidiaries. None of the Company nor any Company Subsidiary has
laid off any employees in the ninety (90) calendar days prior to
the date hereof.
Section 4.10 Contracts; Indebtedness
Section 4.10.1 Except as disclosed in Section 4.9, Section
4.10.1 or Section 4.16.1 of the Company Disclosure Schedule, none
of the Company or any Company Subsidiary is a party to or bound
by any Contract which (i) is a "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K promulgated by
the SEC), (ii) would prohibit or materially delay the
consummation of the Merger, (iii) contains covenants limiting the
ability of the Company or any Company Subsidiary to engage in any
line of business or to compete with any Person or operate at any
location, (iv) involves a joint venture, partnership, or similar
agreement or arrangement relating to the formation, creation,
operation, management or control of any partnership or joint
venture that is material to the business of the Company and the
Company Subsidiaries, taken as a whole, (v) with respect to any
acquisition that is pending or pursuant to which the Company or
any Company Subsidiary has continuing indemnification, "earn-out"
or other contingent payment obligations, in each case that could
result in payments in excess of $5,000,000, or (vi) provides for
any material standstill arrangements that restrict the Company or
23
the Company Subsidiaries from acquiring Equity Interests of any
third Person. Each Contract of the type described in this
Sections 4.10.1 or 4.10.2, whether or not set forth in Sections
4.10.1 or 4.10.2 of the Company Disclosure Schedule (including
Contracts which would be required to be set forth in Sections
4.10.1 or 4.10.2 of the Company Disclosure Schedule if such
Contracts were not filed as exhibits to, or otherwise included
in, the Company SEC Filings), is referred to herein as a "Company
Material Contract." Except for matters that, individually or in
the aggregate, are not reasonably expected to have a Company
Material Adverse Effect, (i) each Company Material Contract is a
legal, valid and binding obligation of the Company or a Company
Subsidiary, as applicable, in full force and effect and
enforceable against the Company or a Company Subsidiary in
accordance with its terms, subject to the Bankruptcy and Equity
Exception, (ii) to the Company's Knowledge, each Company Material
Contract is a legal, valid and binding obligation of the
counterparty thereto, in full force and effect and enforceable
against such counterparty in accordance with its terms, (iii)
neither the Company nor any Company Subsidiary and, to the
Company's Knowledge, no counterparty, is in breach or violation
of, or default under, any Company Material Contract, (iv) none of
the Company or any Company Subsidiary has received any claim of
default under any Company Material Contract, (v) to the Company's
Knowledge, no event has occurred which would result in a breach
or violation of, or a default under, any Company Material
Contract (in each case, with or without notice or lapse of time
or both) and (vi) the Company has not received any notice from
any other party to any Company Material Contract, and otherwise
has no Knowledge that such Third Party intends to terminate, or
not renew any Company Material Contract, or is seeking the
renegotiation thereof in any material respect or substitute
performance thereunder in any material respect. As of the date
hereof, true and correct copies of all Company Material Contracts
are either publicly filed with the SEC or the Company has made
available to Parent copies of such contracts, in each case,
subject to redactions due to confidentiality requirements
thereunder and requests by the counterparties to such Company
Material Contracts for confidential treatment.
Section 4.10.2 Section 4.10.2 of the Company Disclosure
Schedule sets forth (i) a list of any agreement, instrument or
other obligation pursuant to which any Indebtedness of the
Company or any Company Subsidiary in excess of $5,000,000 is
outstanding or may be incurred, (ii) the respective principal
amounts outstanding thereunder as of the date of this Agreement,
and (iii) a list of any agreements that relate to Guarantees by
the Company or any Company Subsidiary of Indebtedness of any
other Person in excess of $5,000,000.
Section 4.11 Litigation. Except for matters that,
individually or in the aggregate, are not reasonably expected to have a Company
Material Adverse Effect, (i) there is no suit, claim, action, proceeding,
arbitration, mediation or investigation pending or, to the Knowledge of the
Company, threatened against the Company or any Company Subsidiary and (ii) none
of the Company or any of the Company Subsidiaries is subject to any outstanding
Order. To the Knowledge of the Company, no officer or director of the Company or
the Company Subsidiaries is a defendant in any claim, action, suit, proceeding,
arbitration, mediation or governmental investigation in connection with his or
her status as an officer or director of the Company or any of its Subsidiaries.
24
Section 4.12 Environmental Matters. Except for matters that,
individually or in the aggregate, are not reasonably expected to have a Company
Material Adverse Effect: (i) the Company and each Company Subsidiary is, and the
Company and, to the Knowledge of the Company, each Company Subsidiary, for the
past five years has been in compliance with all applicable Environmental Laws,
(ii) the Company and each Company Subsidiary possess all Company Permits that
are required under Environmental Laws to conduct the business of the Company and
each Company Subsidiary as it is currently conducted, (iii) there has been no
Release of any Hazardous Material into the Environment by the Company or any
Company Subsidiary or in connection with their current or former properties or
operations, (iv) there are no circumstances or conditions present at the current
or former properties or operations of the Company or any Company Subsidiary or
at any other location that are expected to give rise to liabilities to the
Company or any Subsidiary under any Environmental Law; (v) there has been no
exposure of any person to any Hazardous Material, pollutant or contaminant in
connection with the current or former properties, operations and activities of
the Company and or any Company Subsidiary, (v) none of the Company or any
Company Subsidiary is subject to any orders, decrees or injunctions imposing
obligations under any Environmental Law or is subject to any indemnity agreement
or other contractual agreement imposing liability for obligations of, or costs
incurred by, any third party pursuant to any Environmental Law; and (vi) none of
the Company or any Company Subsidiary has received any written claim or notice
from any Governmental Entity alleging that the Company or any Company Subsidiary
is in violation of, or is potentially liable under, any Environmental Law.
Section 4.13 Intellectual Property. Section 4.13 of the
Company Disclosure Schedule sets forth a list of all (a) issued patents and
pending patent applications, (b) trademark and service xxxx registrations and
applications for registration thereof, (c) copyright registrations and
applications for registration thereof, and (d) internet domain name
registrations, in each case that are owned by the Company or a Company
Subsidiary, including for each item listed in (a) through (c), as applicable,
the owner, the jurisdiction, the serial/application number, the patent or
registration number, the filing date, and the issuance or registration date, and
for each item listed in (d), the registrant, the registrar, and the expiration
date. Except as set forth in Section 4.13 of the Company Disclosure Schedule,
the foregoing registrations and applications that are material to and currently
used in the businesses of the Company and the Company Subsidiaries are, in the
case of registrations, in effect and subsisting, and in the case of
applications, pending, and the Company and the Company Subsidiaries have not
received written notice of any action that challenges the validity or
registration of any such registration or application. Except for matters that,
individually or in the aggregate, are not reasonably expected to have a Company
Material Adverse Effect, (i) the Company and the Company Subsidiaries own or
possess valid rights to use all Intellectual Property necessary to conduct the
business of the Company and the Company Subsidiaries as it is currently
conducted, (ii) during the past two years, none of the Company or any Company
Subsidiary has received written notice of any claim that it is infringing or
misappropriating any Intellectual Property right of any Third Party in
connection with the operation of their business and (iii) to the Company's
Knowledge, no Third Party is currently infringing or misappropriating any
material Intellectual Property owned by the Company or any Company Subsidiary.
The Company and the Company Subsidiaries are using commercially reasonable
efforts to maintain and protect each material item of Intellectual Property that
they own. The Company and the Company Subsidiaries' use and dissemination of
data and information concerning users of their web sites (i) are in material
25
compliance with their applicable privacy policies and terms of use and (ii)
employ commercially reasonable efforts consistent with standard industry
practice to protect personally identifiable information provided by their
customers and website users from unauthorized disclosure or use. Except as would
not have a Company Material Adverse Effect, the Company and the Company
Subsidiaries (i) use commercially reasonable efforts, consistent with their
internal policies and procedures, to maintain the security of their material
information technology systems, websites, databases and networks and the
material information transmitted thereby or stored therein and there is no
action, suit, claim or proceeding pending against them regarding the foregoing
and (ii) have received no complaints in writing during the two years prior to
the date of this Agreement relating thereto. Except as would not have a Company
Material Adverse Effect, employees who materially contributed to the creation or
invention of material Intellectual Property in which the Company or any Company
Subsidiary assert ownership have assigned to the Company or to the relevant
Company Subsidiary all of their rights therein that did not initially vest in
the Company or such Company Subsidiary by operation of law.
Section 4.14 Taxes. Except for matters that, individually or
in the aggregate, are not reasonably expected to have a Company Material Adverse
Effect:
Section 4.14.1 All Tax Returns required to be filed by or
with respect to the Company or any Company Subsidiary for all
taxable periods ending on or before the date hereof have been
timely filed (taking into account any extension of time within
which to file). All such Tax Returns are true, correct, and
complete in all respects.
Section 4.14.2 All Taxes of the Company and each Company
Subsidiary due and payable have been timely paid, other than any
amount which is being contested in good faith by appropriate
proceedings. As of December 31, 2005, the accruals and reserves
for Taxes (without regard to deferred tax assets and deferred tax
liabilities) of the Company and each Company Subsidiary
established in the Company SEC Filings were complete and adequate
to cover any material liabilities for Taxes that are not yet due
and payable or are being contested.
Section 4.14.3 As of the date of this Agreement, no
deficiencies for Taxes have been proposed or assessed in writing
against the Company or any Company Subsidiary by any taxing
authority, and neither the Company nor any Company Subsidiary has
received any written notice of any claim, proposal or assessment
against the Company or any Company Subsidiary for any such
deficiency for Taxes. To the Knowledge of the Company, as of the
date of this Agreement, none of the Tax Returns of the Company or
any Company Subsidiary is currently being examined by the IRS or
relevant state, local or foreign taxing authorities.
Section 4.14.4 The Company and each Company Subsidiary has
duly and timely withheld, collected, paid and reported to the
proper Governmental Entity all Taxes required to have been
withheld, collected, paid or reported. The Company and the
Company Subsidiaries have complied with all information reporting
and backup withholding obligations with respect to all such
payments, and the Company and the Company Subsidiaries have
collected all Tax forms that are required to be collected under
all applicable foreign, federal, state and local Tax laws.
26
Section 4.14.5 There are no liens or other security
interests upon any property or assets of the Company or any
Company Subsidiary for Taxes, except for liens for Taxes not yet
due and payable or the amount or validity of which is being
contested in good faith by appropriate proceedings.
Section 4.14.6 Neither the Company nor any Company
Subsidiary has constituted either a "distributing corporation" or
a "controlled corporation" in a distribution of stock qualifying
for tax-free treatment under Section 355 of the Code in the past
two (2) years.
Section 4.14.7 The Company and the Company Subsidiaries
have complied in all respects with (i) the Agreement on Spinoff
Taxes, dated as of March 15, 2000, entered into by and between
AMR Corporation and the Company, including all amendments thereto
(the "Spinoff Agreement") and (ii) the representation letter
delivered by the Company to AMR Corporation in respect of the
Spinoff Agreement.
Section 4.14.8 There are no circumstances in existence
under which the Company or any Company Subsidiary is required to
make a payment in respect of Taxes under the Spinoff Agreement or
the R&E Credit Carryover Tax Sharing Agreement, including any
amendments thereto.
Section 4.14.9 Neither the Company nor any of the Company
Subsidiaries (i) has any liability for the Taxes of any Person
(other than the Company and the Company Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor,
pursuant to any contractual obligation (other than pursuant to
customary commercial contracts not primarily related to Taxes) or
otherwise for any Taxes of any other Person, or (ii) is a party
to or bound by any Tax indemnity, Tax sharing, Tax allocation or
similar agreement.
Section 4.14.10 Neither the Company nor the Company
Subsidiaries has participated in a listed transaction as defined
in Treasury Regulations Section 1.6011-4(b)(2).
Section 4.15 Insurance. Section 4.15 of the Company
Disclosure Schedule sets forth a true, correct and complete list of all material
insurance policies (including information on the premiums payable in connection
therewith and the scope and amount of the coverage and deductibles provided
thereunder) maintained by the Company or any Company Subsidiary which policies
have been issued by insurers, which are reputable and financially sound and
provide valid and effective coverage for the operations conducted by the Company
and the Company Subsidiaries of a scope and coverage consistent with customary
industry practice.
Section 4.16 Real Estate. Section 4.16(a) of the Company
Disclosure Schedule identifies all real property owned by the Company or the
Company Subsidiaries (the "Company Owned Properties"), and Section 4.16(b) of
the Company Disclosure Schedule identifies all material real property leased by
the Company or the Company Subsidiaries as lessee or sublessee (the "Company
Leased Premises", and together with the Company Owned Properties, the "Company
Properties"). The Company Leased Premises are leased to the Company or a Company
Subsidiary pursuant to written leases, true, correct and complete copies,
including all amendments thereto, of which have been made available to Parent.
Except as would not, individually or in the aggregate, reasonably be expected to
27
have a Company Material Adverse Effect, the Company or a Company Subsidiary owns
fee simple title to each of the Company Owned Properties or has a valid
leasehold interest in each of the Company Leased Properties free and clear of
any rights of way, easements, encumbrances, written agreements or reservations
of an interest in title (collectively, "Property Restrictions"), and other
Liens, except for the following (collectively, the "Permitted Liens"): (i)
Property Restrictions imposed or promulgated by Laws with respect to real
property and improvements, including zoning regulations, (ii) Liens and Property
Restrictions disclosed on existing title reports or existing surveys (in either
case copies of which title reports and surveys have been delivered or made
available to Parent), (iii) mechanics', carriers', workmen's, repairmen's and
similar Liens, incurred in the ordinary course of business and which (a) are not
yet due and payable, (b) are duly budgeted to be paid and (c) do not materially
detract from the value of or materially interfere with the present use of any of
the Company Properties subject thereto or affected thereby, (iv) Liens for Taxes
that are not yet due and payable, and (v) any current Liens for Indebtedness
related to the Company Properties set forth on Section 4.16 of the Company
Disclosure Schedule. Except for matters that, individually or in the aggregate,
are not reasonably expected to have a Company Material Adverse Effect, the
Company Properties and the business conducted thereon comply in all material
respects with the terms of the applicable leases and applicable Laws. To the
Company's Knowledge, the leases in respect of the Company Leased Premises are in
full force and effect and neither the Company nor any Company Subsidiary is in
default thereunder and to the Company's Knowledge, there is no material default
by any of the landlords thereunder. None of the Leases in respect of the Company
Leased Premises requires the consent of the landlord thereunder to the
transactions contemplated by this Agreement, except as would not have a Company
Material Adverse Effect.
Section 4.17 Board Approval. On or prior to the date of this
Agreement, the Company Board has (i) received from each of Xxxxxxx, Sachs & Co.,
Xxxxxx Xxxxxxx & Co., Incorporated and Bear, Xxxxxxx & Co. Inc. (together, the
"Company Financial Advisors"), its opinion, subject to the limitations,
qualifications and assumptions set forth therein, that the Merger Consideration
to be received by the holders of Company Common Stock is fair from a financial
point of view to the holders of Company Common Stock, (ii) determined that this
Agreement and the transactions provided for herein, including the Merger, are
fair to and in the best interest of the Company and the holders of Company
Common Stock, and (iii) adopted resolutions (a) approving this Agreement, (b)
declaring this Agreement and the Merger advisable and (c) recommending to the
holders of Company Common Stock that they vote in favor of adopting this
Agreement in accordance with the terms hereof (the "Company Recommendation").
Section 4.18 Brokers. Other than the Company Financial
Advisors, no broker, finder, financial advisor, investment banker or other
Person is entitled to any brokerage, finder's, financial advisor's or other
similar fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company or any Company Subsidiary.
Article 5.
Representations and Warranties of Parent and Merger Sub
28
Subject to such exceptions as are disclosed in the disclosure
schedule (the "Parent Disclosure Schedule") delivered by Parent to the Company
concurrently with the execution and delivery of this Agreement (it being
understood that (a) the disclosure of any fact or item in any section of the
Parent Disclosure Schedule shall apply to the indicated Section of this
Agreement and any other Section of this Agreement to the extent that it is
reasonably apparent that such disclosure is relevant to such other Section of
this Agreement, and (b) disclosure of any matter or item in the Parent
Disclosure Schedule shall not be deemed to constitute an acknowledgement that
such matter or item is required to be disclosed therein or is material to a
representation or warranty set forth in this Agreement and shall not be used as
a basis for interpreting the terms "material," "materially" or "materiality" or
any word or phrase of similar import), Parent and Merger Sub jointly and
severally represent and warrant to the Company as follows:
Section 5.1 Organization and Qualification. Each of Parent
and Merger Sub is a corporation, duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Each of Parent and Merger Sub
has the requisite power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Each of Parent and Merger Sub is duly qualified or licensed
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification, licensing or good standing necessary. Parent
has heretofore made available to the Company complete and correct copies of the
certificate of incorporation and by-laws of Parent and Merger Sub, together with
all amendments thereto, as currently in effect.
Section 5.2 Authority. Each of Parent and Merger Sub has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions provided
for herein. The execution and delivery of this Agreement, by each of Parent and
Merger Sub, and the consummation by Parent and Merger Sub of the transactions
provided for herein have been duly and validly authorized by all necessary
corporate action on the part of Parent and Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub and no vote of Parent's
stockholders are necessary to authorize this Agreement or to consummate the
transactions provided for herein. This Agreement has been duly authorized and
validly executed and delivered by Parent and Merger Sub and, assuming this
Agreement is a valid and binding obligation of the Company and the other
Parties, this Agreement constitutes a legal, valid and binding obligation of
Parent and Merger Sub, enforceable against each of them in accordance with its
terms, subject to the Bankruptcy and Equity Exception.
Section 5.3 No Conflict; Required Filings and Consents.
Section 5.3.1 The execution, delivery and performance by
Parent and Merger Sub of this Agreement do not (i) conflict with
or violate any provision of the certificate of incorporation or
by-laws of Parent or Merger Sub, (ii) assuming that all consents,
approvals and authorizations described in Section 4.4.2 will have
been obtained prior to the Effective Time and all filings and
notifications described in Section 4.4.2 will have been made and
any waiting periods thereunder will have terminated or expired
prior to the Effective Time, conflict with or violate any Law
applicable to any member of the Parent Group or by which any
property or asset of any member of the Parent Group is bound or
affected or (iii) result in any breach of, any loss of any
benefit under, 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 right of termination, amendment, acceleration
or cancellation of, or result in the creation of a Lien on any
property or asset of Parent or Merger Sub pursuant to any
Contract.
29
Section 5.3.2 The execution, delivery and performance by
Parent and Merger Sub of this Agreement do not require any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity or other Person, except
(i) under the Exchange Act, any applicable Blue Sky Laws, the
rules and regulations of the NYSE, the HSR Act, ECMR or any other
antitrust, competition, trade or other regulatory Laws, (ii) the
filing and recordation of the Certificate of Merger as required
by the DGCL, and (iii) as would not prevent or materially delay
the consummation of the transactions contemplated hereby.
Section 5.4 Litigation. There is no material suit, claim,
action, proceeding or investigation pending or, to the Knowledge of Parent,
threatened against Parent or Merger Sub and neither Parent nor Merger Sub is
subject to any outstanding Order. There is no suit, claim, action, proceeding,
arbitration or investigation pending or to the Knowledge of Parent, threatened
against Parent or Merger Sub which seeks to, or would reasonably be expected to,
restrain, enjoin or delay the consummation of the Merger or any of the other
transactions provided for herein or which seeks damages in connection therewith
and no injunction has been entered or issued with respect to the transactions
provided for herein.
Section 5.5 Ownership of Merger Sub; No Prior Activities.
Parent owns 100% of the issued and outstanding capital stock of Merger Sub. Each
of Parent and Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement. Except for obligations or
liabilities incurred in connection with its formation and the transactions
contemplated by this Agreement, Merger Sub has not and will not have incurred,
directly or indirectly, through any Subsidiary or Affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any Person.
Section 5.6 Financing. Parent has delivered to the Company
true, complete and correct signed counterpart(s) of (i) the Equity Commitment
Letter, (ii) the Limited Guarantee and (iii) the debt commitment letter(s), and
any related fee letter(s) or any provisions relating to "market flex" in such
fee letter(s), dated as of the date hereof, by and among Sovereign Holdings,
Inc., Deutsche Bank AG New York Branch; Deutsche Bank AG Cayman Islands Branch;
Deutsche Bank Securities, Inc.; Xxxxxxx Xxxxx Capital Corporation and Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, pursuant to which the lenders party
thereto have agreed, subject to the terms and conditions set forth therein, to
provide or cause to be provided, the debt financing set forth therein in
connection with the transactions provided for herein to Parent (as the same may
be amended pursuant to Section 6.14 the "Debt Commitment Letters" and, together
with the Equity Commitment Letter and the Limited Guarantee, the "Commitments").
As of the date hereof, except as permitted by Section 6.14, none of the
Commitments has been amended and such Commitments are (solely to the Knowledge
of Parent and Merger Sub, in the case of the Debt Commitment Letters) in full
force and effect. The Commitments are subject to no contingencies or conditions
other than those set forth in the copies thereof delivered to the Company. No
event has occurred (solely to the Knowledge of Parent and Merger Sub in the case
of the Debt Commitment Letters) which, with or without notice, lapse of time or
both, would constitute a default or breach on the part of Parent or Merger Sub
under any term or condition of the Commitments. As of the date hereof, Parent
30
has no reason to believe that it will be unable to satisfy on a timely basis any
term or condition of Closing that is required to be satisfied by it as a
condition of the Commitments or that the financing contemplated by the
Commitments will not be made available to Parent on the Closing Date. Parent has
fully paid any and all commitment fees and other fees required by the
Commitments to be paid as of the date hereof. Subject to the terms and
conditions of the Commitments and this Agreement, the Commitments together with
cash on hand of the Company on the Closing Date would provide Parent with
financing at the Effective Time sufficient to (i) consummate the Merger upon the
terms contemplated by this Agreement, (ii) effect any other repayment or
refinancing of debt contemplated in connection with the Merger or the
Commitments and (iii) pay all related fees and expenses.
Section 5.7 Vote Required. No vote of the holders of any
class or series of capital stock or other Equity Interests of Parent or Merger
Sub is necessary to approve the Merger.
Section 5.8 Brokers. No broker, finder, financial advisor,
investment banker or other Person (other than Deutsche Bank Securities, Inc. and
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated), the fees and expenses of
which will be paid by Parent) is entitled to any brokerage, finder's, financial
advisor's or other similar fee or commission in connection with the Merger based
upon arrangements made by or on behalf of Parent or Merger Sub.
Section 5.9 Ownership of Company Common Stock. Neither Parent
nor Merger Sub is, nor at any time during the last three (3) years has been, an
"interested stockholder" of the Company as defined in Section 203 of the DGCL.
Section 5.10 Solvency of the Surviving Corporation. As of the
Effective Time, assuming satisfaction of the conditions to Parent's obligation
to consummate the Merger, or waiver of such conditions, and after giving effect
to all of the transactions contemplated by this Agreement, and actions taken in
connection with the financing of these transactions, the Surviving Corporation
shall be Solvent. For purposes of this Agreement, the Surviving Corporation
shall be deemed "Solvent" so long as, as of the Effective Time: (i) each of the
Surviving Corporation and its Subsidiaries will not have incurred debts beyond
its ability to pay such debts as they mature or become due, (ii) the then
present fair salable value of the assets of each of the Surviving Corporation
and its Subsidiaries will exceed the amount that will be required to pay their
liabilities (including the amount necessary to provide for contingent
liabilities) and their respective debts as they become absolute and mature,
(iii) the assets of each of the Surviving Corporation and its Subsidiaries, in
each case at a fair valuation, will exceed their respective debts (including the
amount necessary to provide for contingent liabilities) and (iv) each of the
Surviving Corporation and its Subsidiaries will not have unreasonably small
capital to carry on their respective business, either (a) as presently conducted
or (b) as intended by Parent to be conducted. No transfer of property is being
made and no obligation is being incurred in connection with the transactions
contemplated by this Agreement with the intent to hinder, delay or defraud any
present or future creditors of the Surviving Corporation and its Subsidiaries.
31
Article 6.
Covenants
Section 6.1 Conduct of Business by the Company Pending the
Closing. The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 6.1 of the Company Disclosure
Schedule, as required by this Agreement, as required by applicable Law or as
consented to in writing by Parent (such consent not to be unreasonably withheld
or delayed), the Company will, and will cause each Company Subsidiary to, (i)
conduct its business in the ordinary course consistent with past practice and
(ii) endeavor to keep available the services of the current officers, key
employees and consultants of the Company and each Company Subsidiary and to
preserve the current relationships of the Company and each Company Subsidiary
with each of the customers, suppliers and other Persons with whom the Company or
any Company Subsidiary has significant business relations as is reasonably
necessary to preserve substantially intact its business organization. Without
limiting the foregoing, and as an extension thereof, except as set forth in
Section 6.1 of the Company Disclosure Schedule, as otherwise permitted or
contemplated by this Agreement, as required by applicable Law or as consented to
in writing by Parent (such consent not to be unreasonably withheld or delayed),
the Company shall not, and shall not permit any Company Subsidiary to, between
the date of this Agreement and the Effective Time, directly or indirectly, do,
or agree to do, any of the following:
(a) amend or otherwise change the Company Certificate, the
Company By-laws or equivalent organizational documents;
(b) issue, deliver, sell, pledge or encumber, or authorize,
propose or agree to the issuance, delivery, sale, pledge or
encumbrance of, any shares of the capital stock of the Company or
any Equity Interest in any Company Subsidiary or securities
convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares
of the capital stock of the Company or any Equity Interest in any
Company Subsidiary (other than pursuant to the exercise of
Company Options, Company Stock-Based Awards, warrants, conversion
rights and other contractual rights existing on the date hereof);
(c) declare, set aside, make or pay any dividend or other
distribution (whether payable in cash, stock, property or a
combination thereof) with respect to any of its capital stock
(other than dividends paid by a wholly-owned Company Subsidiary
to the Company or to any other wholly-owned Company Subsidiary),
other than ordinary course dividends in amounts and at times
consistent with the Company's past practice, not to exceed $0.18
per share per full fiscal quarter, or enter into any agreement
with respect to the voting of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock or other Equity Interests, except pursuant to the
exercise of Company Options, Company Stock-Based Awards,
warrants, conversion rights, employee severance, retention,
termination, change of control and other contractual rights
existing on the date hereof;
(e) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) or make any
investment in any interest in any Person or any division thereof
or any assets thereof, except any such acquisitions or
investments that are for consideration not in excess of
$5,000,000 in the aggregate;
32
(f) incur any Indebtedness or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person (other than
a wholly-owned Company Subsidiary) for borrowed money, except for
(i) Indebtedness incurred under the Company's existing credit
facilities or renewals or any refinancing thereof, (ii)
Indebtedness owing by any wholly-owned Company Subsidiary to the
Company or any other wholly-owned Company Subsidiary, (iii)
Indebtedness incurred in the ordinary course to refinance any
existing Indebtedness, after consultation with Parent, in an
amount not to exceed, and on terms no less favorable in the
aggregate than, such existing Indebtedness and repayable within
180 days, and (iv) with respect to capital expenditures permitted
pursuant to Section 6.1(i);
(g) grant any Lien in any of its material assets to secure
any Indebtedness for borrowed money, except in connection with
Indebtedness permitted under Section 6.1(f) or Section 6.1(h);
(h) except as otherwise permitted pursuant to Section
6.1(e), authorize, or make any commitment with respect to, any
single capital expenditure which is in excess of $10,000,000 or
capital expenditures which are, in the aggregate, in excess of
$30,000,000 per fiscal quarter in 2007 for the Company and the
Subsidiaries taken as a whole, or which would exceed the
Company's existing plan for annual capital expenditures for 2006;
(i) enter into any new line of business outside of its
existing business segments;
(j) make any deposits or contributions of cash or other
property to or take any other action to fund or in any other way
secure the payment of compensation or benefits under the Company
Benefit Plans or agreements subject to the Company Benefit Plans
or any other plan, agreement, contract or arrangement of the
Company or any Company Subsidiary, or adopt, enter into,
terminate, modify or amend any Company Benefit Plan, increase in
any manner the compensation or benefits of any director, officer,
employee or independent contractor of the Company or pay any
benefit not provided for by any existing Company Benefit Plan, in
each case except (i) as reasonably necessary to comply with
applicable Law, including Section 409A of the Code, (ii) to
address the requirements of written Contracts the Company or any
Company Subsidiary has entered into prior to the date hereof, and
listed in the Company Disclosure Schedule, (iii) in connection
with entering into or extending any employment or other
compensatory agreements in the ordinary course of business and
consistent with past practice with any individuals, other than
(A) any individual who is or will become an officer at or above
the level of a senior vice president (an "Executive Officer") or
(B) directors of the Company or any Company Subsidiary, (iv)
general salary increases in the ordinary course of business and
consistent with past practice, other than to an Executive Officer
or a director of the Company or any Company Subsidiary or (v) as
contemplated pursuant to Section 6.8.1;
33
(k) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, contingent or
otherwise), other than (i) performance of contractual obligations
in accordance with their terms, (ii) payment, discharge,
settlement or satisfaction in the ordinary course of business in
accordance with past practice that involve the payment of
monetary damages not in excess of $2,000,000 individually or
$6,000,000 in the aggregate (iii) payment, discharge, settlement
or satisfaction in accordance with their terms, of claims,
liabilities or obligations, which payment, discharge, settlement
or satisfaction have been (x) disclosed in the most recent
financial statements (or the notes thereto) of the Company
included in the Company SEC Filings filed prior to the date
hereof (to the extent such settlements do not exceed amounts
reserved for such claims in the Financial Statements)or
contemplated by documents made available to Parent prior to the
date hereof or (y) incurred since the date of such financial
statements in the ordinary course of business;
(l) except as otherwise contemplated by this Agreement,
including Section 6.4, or as otherwise required by Law or
Governmental Entity, adopt or enter into a plan of complete or
partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the
Company or any Company Subsidiary (other than the Merger);
(m) enter into any agreement or understanding or arrangement
with respect to the voting or registration of Equity Interests of
the Company or any Company Subsidiary;
(n) renew or enter into any non-compete, exclusivity,
non-solicitation or similar agreement that would restrict or
limit, in any material respect, the operations of the Company or
the Company Subsidiaries;
(o) enter into, amend, waive any right under, or terminate
(other than expirations in accordance with their terms) any
Company Material Contract (other than immaterial or
administrative amendments or amendments or waivers favorable to
the Company) or any material transaction with any Affiliate of
the Company;
(p) knowingly commit or agree to take any of the foregoing
actions or any action which would result in any of the conditions
to the Merger set forth in Article 7 not being satisfied;
(q) except as permitted pursuant to Sections 6.1(b) or
6.1(k), agree to grant or grant any stock-related, cash-based,
performance or similar awards or bonuses;
(r) make or forgive any loans to employees, officers or
directors or any of their respective Affiliates or family
members;
(s) terminate any officer or director or terminate any
employee with an employment agreement with the Company or any
Company Subsidiary in violation of such employment agreement;
(t) enter into, amend, or extend any collective bargaining
or other labor agreement;
(u) make or change any material Tax election or tax
accounting method;
34
(v) sell, lease or dispose of any of its properties or
assets for consideration in excess of $3,000,000 (without giving
effect to any purchase price adjustment in connection therewith),
other than (A) pursuant to Contracts in force on the date of this
Agreement, (B) dispositions of obsolete assets or (C) transfers
among the Company and the Company Subsidiaries so long as such
transfers have a valid business purpose;
(w) enter into any leases for real property or purchase any
real property or amend or terminate any existing lease for real
property (except that the Company and the Company Subsidiary, as
applicable, may exercise any option to extend the term of a lease
related to Company Leased Premises pursuant to its terms);
(x) make any loans or advances to any Person other than a
Company Subsidiary;
(y) convene any regular meeting (or any adjournment thereof)
of the stockholders of the Company other than the regular annual
meeting or any special meeting in connection with the Stockholder
Approval; or
(z) fail to keep in force insurance policies or replacement
or revised provisions providing insurance coverage with respect
to the assets, operations and activities of the Company and the
Company Subsidiaries as in effect.
Section 6.2 Proxy Statement; Company Stockholders' Meeting.
Section 6.2.1 Proxy Statement. Subject to the terms and
conditions of this Agreement, as promptly as practicable (and in
any event within 30 days) after the date hereof, the Company
shall prepare and file with the SEC a proxy statement relating to
the Company Stockholders' Meeting (together with any amendments
thereof or supplements thereto, the "Proxy Statement"). The
Company, after consultation with Parent, will use commercially
reasonable efforts to respond to any comments made by the SEC
with respect to the Proxy Statement. Parent and Merger Sub shall
furnish all information as the Company may reasonably request in
connection with such actions and the preparation of the Proxy
Statement. Subject to the terms and conditions of this Agreement,
as promptly as practicable after the clearance of the Proxy
Statement by the SEC, the Company shall mail the Proxy Statement
to the holders of shares of Company Common Stock. Subject to and
without limiting the rights of the Company Board pursuant to
Section 6.4.2, the Proxy Statement shall include the Company
Recommendation. The Company will advise Parent, promptly after it
receives notice thereof, of any request by the SEC for amendment
of the Proxy Statement or comments thereon and responses thereto
or requests by the SEC for additional information. If at any time
prior to the Effective Time, any event or circumstance relating
to Parent or Merger Sub, or their respective officers or
directors, should be discovered by Parent which should be set
forth in an amendment or a supplement to the Proxy Statement,
Parent shall promptly inform the Company. If at any time prior to
the Effective Time, any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers
or directors, should be discovered by the Company which should be
set forth in an amendment or a supplement to the Proxy Statement,
the Company shall promptly inform Parent. All documents that the
Company is responsible for filing in connection with the
transactions contemplated herein will comply as to form and
substance in all material respects with the applicable
requirements of the Exchange Act and other applicable Laws.
35
Section 6.2.2 Information Supplied. None of the
information supplied or to be supplied by Parent, the Company or
any of their respective Affiliates, directors, officers,
employees, agents or Representatives expressly for inclusion or
incorporation by reference in the Proxy Statement or any other
documents filed or to be filed with the SEC in connection with
the transactions contemplated hereby, will, as of the time such
documents (or any amendment thereof or supplement thereto) are
mailed to the holders of shares of Company Common Stock and at
the time of the Company Stockholders' Meeting, contain any untrue
statement of a material fact, or omit to state any material fact
required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. All documents that Parent, Merger Sub or
the Company are responsible for filing with the SEC in connection
with the Merger will comply as to form and substance in all
material respects with the applicable requirements of the
Securities Act, the Exchange Act and any other applicable Laws
and will not contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 6.2.3 Stockholders' Meeting. Subject to Section
6.4, the Company shall call and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") as promptly as
practicable following the date on which the Proxy Statement is
cleared by the SEC for the purpose of obtaining the Stockholder
Approval.
Section 6.2.4 No Restriction. Nothing in this Section 6.2
shall be deemed to prevent the Company or the Company Board from
taking any action they are permitted or required to take under,
and in compliance with, Section 6.4 or are required to take under
applicable Law. Nothing contained in this Agreement shall give
Parent or Merger Sub, directly or indirectly, the right to
control or direct the Company's or the Company Subsidiaries'
operations prior to the Effective Time.
Section 6.3 Access to Information; Confidentiality.
Section 6.3.1 Access to Information. Subject to Section
6.3.2, from the date of this Agreement to the Effective Time, the
Company shall, and shall instruct each Company Subsidiary and
each of its and their respective directors, officers, employees,
accountants, consultants, legal counsel, advisors, and agents and
other representatives (collectively, "Company Representatives")
to: (i) provide to Parent and Merger Sub and each of their
respective officers, directors, employees, accountants,
consultants, legal counsel, advisors, agents and other
representatives (collectively, "Parent Representatives") access
at reasonable times during normal business hours, upon reasonable
prior notice to a Company Representative designated in Exhibit D
hereto, to the officers, employees, agents, properties, offices
and other facilities of the Company or such Company Subsidiary
and to the books and records thereof and (ii) furnish or cause to
be furnished such reasonably available information concerning the
business, properties, Contracts, assets, liabilities, personnel
and other aspects of the Company and the Company Subsidiaries as
Parent, Merger Sub or the Parent Representatives may reasonably
request. Subject to Section 6.3.2, from the date of this
Agreement to the Effective Time, Parent shall, and shall instruct
36
Merger Sub and the Parent Representatives to, (i) provide the
Company and the Company Representatives access at reasonable
times during normal business hours, upon prior notice, to the
officers, employees, agents, properties, offices and other
facilities of Parent and Merger Sub and to the books and records
thereof and (ii) furnish or cause to be furnished such reasonably
available information concerning the business, properties,
Contracts, assets, liabilities, personnel and other aspects of
Parent and Merger Sub as the Company or the Company
Representatives may reasonably request for the purpose of
confirming that Parent is in compliance with its obligations
under Section 6.5 and confirming satisfaction of the condition
contained in Section 7.3.2.
Section 6.3.2 Confidentiality and Restrictions. With
respect to the information disclosed pursuant to Section 6.3.1,
the Parties shall comply with, and shall cause their respective
Representatives to comply with, all of their respective
obligations under the Non-Disclosure and Standstill Agreement,
dated as of October 11, 2006, between the Company and Silver Lake
Management Company, L.L.C. and the Non-Disclosure and Standstill
Agreement, dated as of October 13, 2006, between the Company and
Tarrant Partners, L.P. and Newbridge Capital LLC (together, as
such agreements may be amended from time to time, the "NDA") or
any similar agreement entered into between the Company and any
Person to whom the Company, any Company Subsidiary or any Company
Representative provides information pursuant to this Section 6.3,
it being understood and agreed by the Parties that,
notwithstanding Section 6.3.1, (i) the Company, the Company
Subsidiaries and the Company Representatives shall have no
obligation to furnish, or provide any access to, any information
to any Person not a party to the NDA or any similar agreement
with respect to such information, (ii) Section 6.3.1 shall not
require the Company to take or allow actions that would
unreasonably interfere with the Company's or any Company
Subsidiary's operation of its business and (iii) the Company
shall not be required to provide access to or furnish any
information if to do so would contravene any agreement to which
the Company or any Company Subsidiary is party, or violate any
applicable Law, or where such access to information may involve
the waiver of a disclosure of privilege or otherwise be
materially adverse to the interests of the Company or any Company
Subsidiary.
Section 6.4 No Solicitation of Transactions.
Section 6.4.1 The Company shall, and shall cause each
Company Subsidiary, and shall use commercially reasonable efforts
to cause the Company Representatives to, immediately cease and
cause to be terminated any discussions or negotiations with any
parties (other than Parent, Merger Sub and the Parent
Representatives) that may be ongoing as of the date hereof with
respect to a Takeover Proposal. The Company shall not, and shall
cause each Company Subsidiary and shall use commercially
reasonable efforts to cause the Company Representatives not to,
(i) directly or indirectly solicit, initiate, or knowingly
encourage any Takeover Proposal, (ii) enter into any agreement or
agreement in principle with respect to a Takeover Proposal or
(iii) participate in any way in any negotiations or discussions
regarding, or furnish or disclose to any Third Party any
information with respect to, any Takeover Proposal; provided,
however, that at any time prior to obtaining the Stockholder
Approval, in response to a bona fide written Takeover Proposal
that was not solicited in violation of this Agreement by the
37
Company, a Company Subsidiary or a Company Representative, after
the date hereof and that the Company Board determines in good
faith constitutes, or could reasonably be expected to lead to, a
Superior Proposal, the Company may, subject to compliance with
Section 6.4.2, (x) furnish information and/or draft agreements
with respect to the Company and the Company Subsidiaries to the
Person making such Takeover Proposal (and its officers,
directors, employees, accountants, consultants, legal counsel,
advisors, agents and other representatives) pursuant to a
customary confidentiality agreement; provided, that all such
information and a summary of the material terms of any such draft
agreements have previously been made available to Parent or is
made available to Parent prior to, or concurrently with, the time
it is provided to such Person and (y) participate in discussions
or negotiations with the Person making such Takeover Proposal
(and its officers, directors, employees, accountants,
consultants, legal counsel, advisors, agents and other
representatives) regarding such Takeover Proposal.
Section 6.4.2 Notwithstanding any provision of this
Section 6.4 and Section 6.2 to the contrary, the Company Board
may (i) withdraw (or not continue to make) or modify in a manner
adverse to Parent the Company Recommendation, (ii) approve or
recommend a Superior Proposal (any action described in the
foregoing clause (i) or this clause (ii), a "Company Adverse
Recommendation Change"), and/or (iii) enter into an agreement
regarding a Superior Proposal if (x) in the case of an action
described in any such clause above, the Company Board has
determined in good faith that the failure to take such action is
likely to be inconsistent with the fiduciary duties of the
members of the Company Board to the holders of shares of Company
Common Stock under applicable Law, (y) in the case of an action
described in clause (ii) or clause (iii) above, (A) the Company
has given Parent five (5) Business Days' prior written notice of
its intention to take such action and (B) the Company Board shall
have considered in good faith any proposed changes to this
Agreement proposed in writing by Parent and shall not have
determined that the Superior Proposal would no longer constitute
a Superior Proposal if such changes were to be given effect, and
(z) in the case of an action described in clause (iii) above, (A)
the Company has complied in all material respects with its
obligations under this Section 6.4 and (B) the Company shall have
terminated this Agreement in accordance with the provisions of
Section 8.1(c)(ii) hereof and (provided, that neither of Parent
nor Merger Sub is in material default hereunder) the Company
shall pay Parent the Termination Fee in accordance with Section
8.4.
Section 6.4.3 The Company shall promptly advise Parent
orally and in writing of the Company's receipt of any request for
information or any Takeover Proposal and the material terms and
conditions of such request or Takeover Proposal. Promptly upon
determination by the Company Board that a Takeover Proposal
constitutes a Superior Proposal, the Company shall deliver to
Parent a written notice advising it that the Company Board has
made such determination, specifying the material terms and
conditions of such Superior Proposal and the identity of the
Person making such Superior Proposal.
Section 6.4.4 Notwithstanding anything to the contrary
contained herein, nothing in this Section 6.4 shall prohibit or
restrict the Company or the Company Board from (i) taking and/or
disclosing to the stockholders of the Company a position
contemplated by Rule 14e-2 promulgated under the Exchange Act or
(ii) making any disclosure to the stockholders of the Company if,
in the good faith judgment of the Company Board, such disclosure
would be necessary under applicable Law (including Rule 14d-9 and
Rule 14e-2 promulgated under the Exchange Act); provided,
however, that in no event shall this Section 6.4.4 affect the
obligations of the Company specified in Section 6.4.2.
38
Section 6.5 Best Efforts.
Section 6.5.1 Subject to the terms and conditions of this
Agreement, including Section 6.4, each of the Parties shall use
its best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable
under applicable Laws to consummate and make effective, in the
most expeditious manner practicable, the transactions provided
for in this Agreement, including, but not limited to, (i)
preparing and filing as soon as practicable (but in no event
later than ten (10) Business Days after the date of this
Agreement in respect of any such filings required in connection
with the HSR Act) of all forms, registrations and notices
required to be filed to consummate the transactions contemplated
by this Agreement and the taking of such actions as are necessary
to obtain any requisite approvals, consents, Orders, exemptions
or waivers by, or to avoid an action or proceeding by, any Third
Party or Governmental Entity relating to antitrust, competition,
trade or other regulatory matters (collectively, "Regulatory
Approvals"), including (a) filings pursuant to the HSR Act, with
the United States Federal Trade Commission ("FTC") and the
Antitrust Division of the United States Department of Justice
("Antitrust Division") (b) filings pursuant to Council Regulation
(EC) No. 139/2004, as amended ("ECMR"), with the European
Commission ("EC") and (c) the preparation and filing, as soon as
practicable, of any form or report required by any other
Governmental Entity relating to any Regulatory Approval, (ii)
causing the satisfaction of all conditions set forth in Article 7
(including the prompt termination of any waiting period under the
HSR Act (including any extension of the initial thirty (30) day
waiting period thereunder)), (iii) defending all lawsuits or
other legal, regulatory or other proceedings to which it is a
party challenging or affecting this Agreement or the consummation
of the transactions contemplated by this Agreement, in each case
until the issuance of a final, non-appealable Order, (iv) seeking
to have lifted or rescinded any injunction or restraining order
or other Order which may adversely affect the ability of the
parties to consummate the transactions contemplated by this
Agreement, in each case until the issuance of a final,
non-appealable Order.
Section 6.5.2 At the request of Parent (which request,
subject to Section 6.5.1, may be based on Parent's sole
discretion), the Company shall agree to divest, hold separate or
otherwise take or commit to take any action that limits its
freedom of action, ownership or control with respect to, or its
ability to retain or hold, any of the businesses, assets,
properties or services of the Company or any of the Company
Subsidiaries; provided, that any such action may be conditioned
upon the consummation of the Merger and the transactions
contemplated by this Agreement.
Section 6.5.3 Each Party shall furnish all information
required to be included in any application or other filing to be
made pursuant to the rules and regulations of any Governmental
39
Entity in connection with the transactions provided for in this
Agreement. Parent and the Company shall have the right to review
in advance, and to the extent reasonably practicable each will
consult the other on, all the information relating to the other
and each of their respective Subsidiaries and Affiliates that
appears in any filing made with, or written materials submitted
to, any Third Party or any Governmental Entity in connection with
the Merger.
Section 6.5.4 Each Party shall (i) subject to Section
6.5.5 below, respond as promptly as reasonably practicable under
the circumstances to any inquiries received from the FTC or the
Antitrust Division and to all inquiries and requests received
from any State Attorney General, the EC or other Governmental
Entity in connection with Regulatory Approvals and antitrust
matters, (ii) not extend any waiting period under the HSR Act or
ECMR (except with the prior written consent of the other Parties
hereto, which consent shall not be unreasonably withheld or
delayed) and (iii) not enter into any agreement with the FTC, the
Antitrust Division or the EC not to consummate the Merger and the
transactions contemplated by this Agreement.
Section 6.5.5 In connection with and without limiting the
foregoing, each Party shall, subject to applicable Law and except
as prohibited by any applicable representative of any applicable
Governmental Entity: (a) promptly notify the other Parties of any
written communication to that Party from the FTC, the Antitrust
Division, any State Attorney General, the EC or any other
Governmental Entity, including regulatory authorities, and permit
the other Parties to review in advance (and to consider any
comments made by the other Parties in relation to) any proposed
written communication to any of the foregoing; (b) not agree to
participate or participate in any substantive meeting or
discussion with any Governmental Entity in respect of any
filings, investigation or inquiry concerning this Agreement or
the Merger unless it consults with the other Parties in advance
and, to the extent permitted by such Governmental Entity, gives
the other Parties the opportunity to attend and participate
thereat; and (c) furnish the other Parties with copies of all
correspondence, filings, and written communications (and
memoranda setting forth the substance thereof) between them and
its Affiliates and their respective representatives on the one
hand, and any Governmental Entity, including any regulatory
authority, or members or their respective staffs on the other
hand, with respect to this Agreement and the Merger.
Section 6.5.6 Subject to the terms and conditions herein
provided, neither Parent nor Merger Sub shall, and each of Parent
and Merger Sub shall cause each member of the Parent Group not
to, take or cause or permit to be taken any action (including the
acquisition of businesses or assets) which would reasonably be
expected to materially delay, restrict or prevent consummation of
the Merger.
Section 6.6 Certain Notices. From and after the date of this
Agreement until the Effective Time, each Party hereto shall promptly notify the
other Party of (i) the existence of any event or circumstance that would be
likely to cause any condition to the obligations of any Party to effect the
Merger and the other transactions provided for in this Agreement not to be
satisfied or (ii) the failure of the Company, Merger Sub or Parent, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it pursuant to this Agreement which would
reasonably be expected to result in any condition to the obligations of any
40
Party to effect the Merger and the other transactions provided for in this
Agreement not to be satisfied; provided, however, that the delivery of any
notice pursuant to this Section 6.6 shall not cure any breach of any
representation or warranty requiring disclosure of such matter at or prior to
the execution of this Agreement or otherwise limit or affect the remedies
available hereunder to the Party receiving such notice.
Section 6.7 Public Announcements. None of the Parties shall
(and each of the Parties shall cause its Representatives and, in the case of
Parent, the other members of the Parent Group, if applicable, not to) issue any
press release or make any public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
(i) the Company, in the event the disclosing party is Parent, Merger Sub, any
other member of the Parent Group, if applicable, or any of their respective
Representatives, or (ii) Parent, in the event the disclosing party is the
Company or any of its Representatives, such consent not to be unreasonably
withheld or delayed; provided, however, that if a Party determines, based upon
advice of counsel, that disclosure is required by applicable Law or the rules or
regulations of any stock exchange upon which the securities of such Party is
listed, such Party may make such disclosure to the extent so required; provided,
further, that such disclosure is made in consultation with the other Parties to
this Agreement.
Section 6.8 Employee Matters.
Section 6.8.1 In addition to the matters set forth in this
Section 6.8, the Parties hereby agree to the matters set forth on
Section 6.8.1 of the Company Disclosure Schedule with respect to
employee matters.
Section 6.8.2 Obligations with Respect to Continuing
Employees. Parent hereby agrees that, for the period immediately
following the Effective Time through and including the one (1)
year anniversary of the Effective Time, it shall, or it shall
cause the Surviving Corporation and its Subsidiaries to, (i)
provide each Continuing Employee with at least the same level of
base salary or wages and targeted annual incentive opportunity
and on substantially the same terms and conditions as was
provided to the Continuing Employee immediately prior to the
Effective Time, and (ii) maintain Surviving Corporation Benefit
Plans providing benefits (except to the extent any such plan
provides equity-based compensation) that are substantially no
less favorable in the aggregate to the benefits provided to the
Continuing Employees pursuant to the Company Benefit Plans in
effect immediately prior to the Effective Time. Consistent with
the foregoing, from and after the Effective Time, Parent shall,
or shall cause the Surviving Corporation and its Subsidiaries to,
honor in accordance with their terms as in effect on the date
hereof all Contracts, agreements, arrangements, programs,
policies, plans and commitments of the Company and the Company
Subsidiaries, as in effect immediately prior to the Effective
Time that are applicable to any current or former employees or
directors of the Company or any Company Subsidiary, including
without limitation the severance plans and policies adopted by
the Company Board. In addition, Parent hereby agrees that for the
period immediately following the Effective Time through and
including the two (2) year anniversary of the Effective Time, it
shall, or shall cause the Surviving Corporation and its
Subsidiaries to, continue to maintain the Company's severance
policies as in effect at the Effective Time. Nothing herein shall
be deemed to be a guarantee of employment for any Continuing
Employee, or to restrict the right of the Surviving Corporation
or its Subsidiaries to terminate any Continuing Employee. Nothing
herein shall be deemed to constitute an amendment of any Company
Benefit Plan or to prevent the Surviving Corporation or any of
its Subsidiaries from making any change in any Company Benefit
Plan, including any change required by Law or deemed necessary or
appropriate to comply with applicable law or regulation.
41
Section 6.8.3 Credit for Service. Continuing Employees
shall receive credit for purposes of eligibility to participate
and vesting (but not for accrual purposes, except for vacation
and severance, if applicable) under any Surviving Corporation
Benefit Plan under which each Continuing Employee may be eligible
to participate on or after the Effective Time to the same extent
recognized by the Company or any of the Company Subsidiaries
under comparable Company Benefit Plans immediately prior to the
Effective Time; provided, however, that such crediting of service
shall not operate to duplicate any benefit or the funding of any
such benefit.
Section 6.8.4 Welfare Plans. With respect to any Surviving
Corporation Benefit Plan that is a welfare benefit plan, program
or arrangement (a "Purchaser Welfare Benefit Plan") and in which
a Continuing Employee may be eligible to participate on or after
the Effective Time, Parent shall, or it shall cause the Surviving
Corporation and its Subsidiaries to, (i) waive, or use
commercially reasonable efforts to cause its insurance carrier to
waive, all limitations as to pre-existing, waiting period or
actively-at-work conditions, if any, with respect to
participation and coverage requirements applicable to each
Continuing Employee under such Purchaser Welfare Benefit Plan to
the same extent waived under a comparable Company Benefit Plan in
which such Continuing Employee participated immediately prior to
the Effective Time, and (ii) provide credit to each Continuing
Employee (and his/her beneficiaries) for any co-payments,
deductibles and out-of-pocket expenses paid by such Continuing
Employee (and his/her beneficiaries) under the comparable Company
Benefit Plan during the relevant plan year, up to and including
the Effective Time.
Section 6.9 Indemnification of Directors and Officers.
Section 6.9.1 From and after the Effective Time until six
(6) years from the Effective Time, unless otherwise required by
Law, the certificate of incorporation and by-laws of the
Surviving Corporation and the comparable organizational documents
of its Subsidiaries shall contain provisions no less favorable
with respect to the elimination of liability of directors and
indemnification of directors, officers, employees and agents in
office on or prior to the date hereof than are set forth in the
Company Certificate and the Company By-laws (or the equivalent
documents of the relevant Company Subsidiary) as in effect on the
date hereof; provided, however, that in the event any claim or
claims are asserted against any individual entitled to the
protections of such provisions within such six (6) year period,
such provisions shall not be modified until the final disposition
of any such claims.
Section 6.9.2 From and after the Effective Time, Parent
and the Surviving Corporation, jointly and severally, shall
indemnify and hold harmless, to the fullest extent permitted
under applicable Law and, without limiting the foregoing, as
required pursuant to any indemnity agreements of the Company or
any Company Subsidiary, each present and former director and
officer of the Company and each Company Subsidiary (collectively,
42
the "Indemnified Parties") against any costs or expenses
(including attorneys' fees and expenses), judgments, fines,
losses, claims, settlements, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to (i) any and all
matters pending, existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, and (ii) any and all representations and
warranties made by Parent and/or Merger Sub under Article 5
hereof, including any matter arising under any claim that the
transactions contemplated herein, and any actions taken by Parent
and/or Merger Sub with respect thereto (including any disposition
of assets of the Surviving Corporation or any of its Subsidiaries
which is alleged to have rendered the Surviving Corporation
and/or any of its Subsidiaries insolvent). Without limiting the
foregoing, Parent and the Surviving Corporation, jointly and
severally, shall also advance costs and expenses (including
attorneys' fees) as incurred by any Indemnified Party within
fifteen (15) days after receipt by Parent of a written request
for such advance, provided, that the Person to whom expenses are
advanced provides an undertaking in customary form, consistent
with the practices of the Company prior to the Effective Time, to
repay such advances if it is ultimately determined that such
Person is not entitled to indemnification (it being understood
and agreed that Parent and the Surviving Corporation shall not
require the posting of any bond or any other security for such
undertaking).
Section 6.9.3 For a period of six (6) years after the
Effective Time, Parent shall or shall cause the Surviving
Corporation to maintain in effect the Company's current
directors' and officers' liability insurance (the "D&O
Insurance") in respect of acts or omissions occurring at or prior
to the Effective Time, covering each Person currently covered by
the D&O Insurance (a complete and accurate copy of which has been
heretofore made available to Parent), on terms with respect to
the coverage, deductible and amounts no less favorable than those
of the D&O Insurance in effect on the date of this Agreement;
provided, however, that (i) in satisfying its obligations under
this Section 6.9.3, neither Parent nor the Surviving Corporation
shall be obligated to pay an aggregate amount in excess of 300%
of the annual premium currently paid by the Company (which
premiums are set forth in Section 6.9.3 of the Company Disclosure
Schedule), it being understood and agreed that Parent or the
Surviving Corporation shall nevertheless be obligated to provide
the maximum amount of such coverage as may be obtained for such
300% amount and (ii) in the event of the application of clause
(i), any present or former officer or director, upon reasonable
written notice thereof (which notice shall be provided reasonably
promptly following such Person's knowledge of the application of
clause (i), and shall set forth in reasonable detail for each
such Person to be covered the policy coverage, premiums,
deductibles, limitations and other pertinent information), who
desires to obtain additional coverage such that, when combined
with the coverage obtained by Parent or the Surviving Corporation
in accordance with clause (i), it provides insurance coverage
equivalent to the D&O Insurance in effect on the date hereof, may
so elect and Parent shall or shall cause the Surviving
Corporation to acquire such additional coverage on behalf of such
Person; provided, further, that in the event any present or
former officer or director makes such an election, such former
officer or director shall pay the portion of the premium of such
D&O Insurance attributable to his or her election in excess of
the amount which Parent or the Surviving Corporation is obligated
43
to pay pursuant to this Section 6.9. The Company may, and at
Parent's request shall use its reasonable best efforts to,
acquire a six year tail policy for Persons currently covered by
D&O Insurance that is consistent with the first sentence of this
Section 6.9.3 so long as the one time premium payment for such
tail policy is not more than 300% of the annual premium currently
paid by the Company and as set forth in Section 6.9.3 of the
Company Disclosure Schedule. Such policy shall be prepaid at the
Effective Time and shall be non-cancelable. If the Company
acquires such a tail policy, Parent's obligations pursuant to the
first sentence of this Section 6.9.3 shall be deemed completely
satisfied. The obligation to maintain insurance provided in this
Section 6.9.3 shall continue in full force and effect for a
period of not less than six (6) years from and after the
Effective Time; provided, that in the event any claim or claims
are asserted or made within such six (6) year period, Parent or
the Surviving Corporation shall ensure that such insurance
remains in full force and effect with respect to such claims
until final disposition thereof.
Section 6.9.4 If Parent or the Surviving Corporation or
any of its successors or assigns shall (i) consolidate with or
merge into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger
or (ii) transfer all or substantially all of its properties and
assets to any Person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of
Parent or the Surviving Corporation (or acquiror of such assets),
as the case may be, shall assume all of the obligations of Parent
or the Surviving Corporation set forth in this Section 6.9.
Section 6.9.5 The rights of each Indemnified Party under
this Section 6.9 shall be in addition to any right such Person
might have under the Company Certificate and the Company By-laws,
the certificate of incorporation and the by-laws of the Surviving
Corporation or any comparable organizational documents of their
Subsidiaries, or under any agreement of any Indemnified Party
with the Company, the Surviving Corporation or any of their
respective Subsidiaries.
Section 6.9.6 The provisions of this Section 6.9 shall
survive the consummation of the Merger and are intended to be for
the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their respective heirs and representatives.
Section 6.10 State Takeover Statutes. Parent, the Company and
their respective Boards of Directors shall (i) take all reasonable action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to this Agreement or the transactions
provided for in this Agreement and (ii) if any state takeover statute or similar
statute becomes applicable to this Agreement or the transactions contemplated by
this Agreement, take all reasonable action necessary to ensure that the
transactions provided for in this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement or the
transactions provided for in this Agreement.
Section 6.11 Section 16 Matters. Prior to the Effective Time,
the Company shall take all such steps as may reasonably be necessary and
permitted to cause the transactions contemplated by this Agreement, including
any dispositions of shares of Company Common Stock (including derivative
securities with respect to such shares of Company Common Stock) by each
individual who is or will be subject to the reporting requirements of Section
16(a) of the Exchange Act with respect to the Company, to be exempt under Rule
16b-3 promulgated under the Exchange Act.
44
Section 6.12 NDA. The NDA shall continue in full force and
effect in accordance with its terms until the earlier of (i) the Effective Time
or (ii) the expiration of the NDA according to its terms.
Section 6.13 Solvency of the Surviving Corporation. At or
immediately prior to the Effective Time, Parent shall use its commercially
reasonable efforts to cause to be delivered to the Company an opinion from an
independent expert of nationally recognized reputation, addressed to the Company
Board and dated as of the Closing Date, supporting the conclusion that, after
giving effect to all of the transactions contemplated by this Agreement, each of
Parent and the Surviving Corporation will be Solvent (or the equivalent thereof,
as determined in the reasonable discretion of the Company) (such opinion, the
"Solvency Opinion"). Each of Parent and the Company shall, in connection
therewith, use their commercially reasonable efforts to (i) make available their
respective officers, agents and other Representatives on a customary basis and
upon reasonable notice and (ii) provide or make available such information
concerning the business, properties, Contracts, assets and liabilities of the
Company as may reasonably be requested in connection with delivering the
Solvency Opinion.
Section 6.14 Financing. Each of 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 to
arrange, and close concurrently with the Closing, debt financing on terms and
conditions described in or comparable to the Debt Commitment Letters (including
using reasonable best efforts to obtain rating agency approvals, maintain in
effect the Commitments, satisfy on a timely basis all conditions applicable to
Parent and Merger Sub to obtaining the financing contemplated by the Commitments
(including by consummating the financing contemplated by the Equity Commitment
Letter), negotiate definitive agreements with respect to the Debt Commitment
Letter on terms and conditions contained therein or with respect to any
replacement commitments, satisfy all conditions applicable to Parent and Merger
Sub in such definitive agreements that are within its control and, if necessary,
borrow pursuant to the Debt Commitment Letters in the event any "flex"
provisions are exercised). Parent shall keep the Company informed on a
reasonably current basis in reasonable detail of the status of its efforts to
comply with the terms of, and satisfy the conditions contemplated by, the
financing contemplated by the Commitments in accordance with this Section 6.13
and shall not permit any amendment or modification to be made to, or any waiver
of any provision or remedy under, the Commitments without obtaining the prior
written consent of the Company; provided, that Parent and Merger Sub may amend
the Debt Commitment Letters to add lenders, lead arrangers, bookrunners,
syndication agents or similar entities who had not executed the Commitments as
of the date of this Agreement, or otherwise so long as the terms are not less
beneficial in any material respect to Parent or Merger Sub (as reasonably
determined by the Company), including with respect to conditions precedent, than
those in the Commitments as in effect on the date of this Agreement. For the
avoidance of doubt, in the event that on the final day of the Marketing Period
(x) all or a portion of the debt financing structured as high yield debt or
contemplated to be sold pursuant to Rule 144A of the Securities Act has not been
consummated, (y) all conditions to Closing contained in Sections 7.1 and 7.2
shall have been satisfied or waived (other than those conditions which by their
nature will not be satisfied until the Closing) and (z) the bridge financing
45
contemplated by the Debt Commitment Letters (or alternative bridge financing) is
available on terms and conditions described in the Debt Commitment Letters (or
amendments thereof), then on such date Parent shall borrow under and use the
proceeds of the bridge financing (or such alternative bridge financing). Parent
shall give the Company prompt notice of any material breach by any party of the
Commitments, any termination of any of the Commitments or any other
circumstance, event or condition that would reasonably be likely to impede,
prevent or delay the consummation of the financing contemplated by the
Commitments, to the extent it becomes aware of such breach, termination,
circumstance, event or condition. If any portion of the financing contemplated
by the Commitments becomes unavailable on the terms and conditions set forth in
the Commitment Letters, Parent shall use its reasonable best efforts to arrange
alternative financing from alternative sources on terms not materially less
beneficial to Parent and Merger Sub (as determined in the reasonable judgment of
Parent) in an amount sufficient to consummate the transactions contemplated by
this Agreement as promptly as practicable following the occurrence of such
event. For the avoidance of doubt, if the financing provided for by the
Commitments has not been or cannot be obtained, Parent and Merger Sub shall
continue to be obligated to consummate the Merger on the terms contemplated by
this Agreement and subject only to the satisfaction or waiver of the conditions
set forth in Sections 7.1 and 7.2, the limitations set forth in Section 8.5, and
to Parent's rights under Section 8.1, regardless of whether Parent and Merger
Sub have complied with all of their other obligations under this Agreement
(including their obligations under this Section 6.14).
Section 6.15 Cooperation in Securing Financing. From the date
of this Agreement until the Closing Date, the Company shall, and shall cause
each Company Subsidiary and its and their respective Representatives to, provide
to Parent and Merger Sub all cooperation requested by Parent that is reasonably
necessary, proper or advisable in connection with obtaining the financing
contemplated by the Debt Commitment Letters including (i) participation in
meetings, presentations, road shows, due diligence sessions and sessions with
rating agencies, (ii) assisting with the preparation of materials for rating
agency presentations, offering documents, business projections and similar
marketing documents required in connection with the debt financing contemplated
by the Debt Commitment Letters, (iii) as promptly as practical, furnishing
Parent and its debt financing sources all financial statements, pro forma
financial information, financial data, audit reports and other information of
the type required by Regulation S-X and Regulation S-K under the Securities Act
and the other accounting rules and regulations of the SEC as may reasonably be
requested by Parent of the type and form customarily included in private
placement memoranda pursuant to Rule 144A of the Securities Act (all such
information in this clause (iii), the "Required Information"), (iv) cooperating
in satisfying the conditions set forth in paragraphs C, D and E of Exhibit E of
the Debt Commitment Letter (to the extent the satisfaction of such condition
requires the cooperation of the Company), (v) issuing customary representation
letters to auditors and using commercially reasonable efforts to obtain (A)
accountants' comfort letters and consents to the use of accountants' audit
reports relating to the Company, (B) legal opinions and (C) other documentation
and items contemplated by the Debt Commitment Letters as reasonably requested by
Parent; provided that nothing herein shall require such cooperation to the
extent it would interfere unreasonably with the business or operations of the
Company or the Company Subsidiaries, (vi) promptly providing monthly financial
statements (excluding footnotes) to the extent available and prepared by the
Company in the ordinary course of business consistent with past practice, (vii)
executing and delivering, as of the Effective Time, any pledge and security
46
documents, other definitive financing documents, or other certificates or
documents contemplated by the Debt Commitment Letters as may be reasonably
requested by Parent (including a certificate of the Chief Financial Officer of
the Company or any Company Subsidiary with respect to solvency matters (it being
understood and agreed that such Chief Financial Officer may rely on the
representations of Parent in Section 5.10 and on the Solvency Opinion) and
consents of accountants for use of their reports in any materials relating to
the debt financing contemplated by the Debt Commitment Letters) and otherwise
reasonably facilitating the pledging of collateral (including obtaining
releases, terminations, waivers, consents, estoppels and approvals as may be
required in connection therewith) contemplated by the Debt Commitment Letters
and (viii) as of the Effective Time, taking all corporate actions necessary to
authorize the consummation of the debt financing contemplated by the Debt
Commitment Letters. The Company will periodically update any such Required
Information to be included in an offering document to be used in connection with
such debt financing so that Parent may ensure that any such offering document
does not contain any untrue statement of material fact or omit to state any
material fact necessary in order to make the statements contained therein not
misleading. The Company hereby consents to the use of its and the Company
Subsidiaries' logos in connection with the debt financing contemplated by the
Debt Commitment Letters; provided, that notwithstanding anything in this Section
6.15 to the contrary, no officer or director of the Company shall be required to
execute any documents, including, without limitation, any registration statement
to be filed with the SEC, any pledge or security documents or other definitive
financing documents and none of the Company or any Company Subsidiary shall be
required to pay any commitment or other similar fee or incur any other liability
in connection with the financing contemplated by the Commitments prior to the
Effective Time. Parent shall, promptly upon request by the Company, reimburse
the Company for all reasonable out-of-pocket costs incurred by the Company or
the Company Subsidiaries in connection with any actions taken pursuant to this
Section 6.15. Parent and Merger Sub shall, on a joint and several basis,
indemnify and hold harmless the Company, the Company Subsidiaries and the
Company Representatives for and against any and all liabilities, losses,
damages, claims, costs, expenses, interest, awards, judgments and penalties
suffered or incurred by them in connection with the arrangement of the financing
contemplated by the Commitments and any information (including all Required
Information) utilized in connection therewith. All non-public or otherwise
confidential information regarding the Company and the Company Subsidiaries
obtained by Parent or the Parent Representatives pursuant to this Section 6.15
shall be kept confidential by Parent in accordance with the NDA.
For purposes of this Agreement, "Marketing Period" shall mean
the first period of 30 consecutive calendar days after the Initiation Date (A)
throughout and at the end of which (1) Parent and its financing sources shall
have the Required Information and (2) nothing has occurred and no condition
exists that would cause any of the conditions set forth in Section 7.2.1 and
7.2.2 (other than the receipt of the certificates referred to in Section 7.2.3)
to fail to be satisfied assuming the Closing were to be scheduled for any time
during such 30-consecutive-calendar-day period, and (B) at the end of which the
conditions set forth in Section 7.1 shall be satisfied; provided, that (v) the
Marketing Period shall end no earlier than 5 Business Days after the date the
Stockholder Approval is obtained; (w) the Marketing Period shall end on any
earlier date that is the date on which the debt financing is consummated; (x)
for purposes of calculating such 30-consecutive-calendar-day period, August 17
through September 3, 2007 shall not be counted or taken into account; (y) the
Marketing Period shall not be deemed to have commenced if, prior to the
47
completion of the Marketing Period, (A) the Company's independent registered
accounting firm shall have withdrawn its audit opinion with respect to any
financial statements contained in the Required Information, in which case the
Marketing Period will not be deemed to commence at the earliest unless and until
a new unqualified audit opinion is issued with respect to the consolidated
financial statements for the applicable periods by the Company's independent
registered accounting firm or another independent registered accounting firm
reasonably acceptable to Parent, (B) the Company shall have publicly announced
any intention to restate any of its financial information, in which case the
Marketing Period will not be deemed to commence at the earliest unless and until
such restatement has been completed and the Company SEC Filings have been
amended or the Company has announced that it has concluded that no restatement
shall be required in accordance with GAAP or (C) the Company shall have failed
to file any report with the SEC by the date required under the Securities Act,
in which case the Marketing Period will not be deemed to commence at the
earliest unless and until all such reports have been filed; (z) if the financial
statements included in the Required Information that is available to Parent on
the first day of any such 30-consecutive-calendar-day period would not be
sufficiently current on any day during such 30-consecutive-calendar-day period
to permit (i) a registration statement using such financial statements to be
declared effective by the SEC on the last day of the 30-consecutive-calendar-day
period or (ii) the Company's independent registered accounting firm to issue a
customary comfort letter to purchasers (in accordance with its normal practices
and procedures) on the last day of the 30-consecutive-calendar-day period, then
a new 30-consecutive-calendar-day period shall commence upon Parent receiving
updated Required Information that would be sufficiently current to permit the
actions described in (i) and (ii) on the last day of such
30-consecutive-calendar-day period.
For purposes of this Agreement, "Initiation Date" shall mean
the later to occur of (A) the date the definitive Proxy Statement is first
mailed to the Company's shareholders and (B) the first Business Day after the
date the Company files with the SEC its Annual Report on Form 10-K for the
fiscal year ended December 31, 2006. Subject to compliance with the provisions
of this Agreement, nothing shall prohibit Parent or Merger Sub from entering
into agreements relating to the financing of the transactions contemplated
hereby or the operation of Parent, Merger Sub or the Surviving Corporation,
including adding other equity providers or operating partners, it being
understood and agreed for the avoidance of doubt that Parent, Merger Sub or the
Surviving Corporation shall be prohibited from taking any such action that would
be reasonably likely to adversely affect the ability of Parent and Merger Sub to
consummate the transactions contemplated hereby.
Section 6.16 Subsequent Filings. Until the Effective Time,
the Company will timely file with the SEC each form, report and document
required to be filed by the Company under the Exchange Act. As of their
respective dates, none of such reports shall contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, unless any such untrue statements or
omissions is cured in a timely manner. The audited consolidated financial
statements and unaudited interim financial statements of the Company included in
such reports shall be prepared in accordance with GAAP applied on a consistent
basis (except as may be indicated in the notes thereto) and shall fairly
present, in all material respects, the financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the results of their
operations, cash flows and changes in financial position for the periods then
ended.
48
Section 6.17 Cooperation in Obtaining Consents. The Company
shall use its commercially reasonable efforts to provide all cooperation
reasonably requested by Parent in connection with obtaining any third party
consent to the consummation of the transactions contemplated hereby to the
extent reasonably determined by the Parties to be required pursuant to the terms
of any Contract listed or required to be listed in Section 4.4 of the Company
Disclosure Schedule or any other Company Material Contract; provided, however,
that in no event shall the Company be required to amend any such Contract or
make any payment to any counterparty thereto in connection with obtaining such
consent, unless such amendment or payment is conditioned upon consummation of
the Merger.
Article 7.
Closing Conditions
Section 7.1 Conditions to Obligations of Each Party Under
This Agreement. The respective obligations of each Party to effect the Merger
and the other transactions contemplated herein shall be subject to the
satisfaction, or waiver, at or prior to the Closing Date of the following
conditions:
Section 7.1.1 Stockholder Approval. The Stockholder
Approval shall have been obtained.
Section 7.1.2 HSR Act; Regulatory Approvals. All filing
and waiting periods applicable (including any extensions thereof)
to the consummation of the Merger under the HSR Act shall have
expired or been terminated and any Regulatory Approvals of any
non-U.S. Governmental Entity required under applicable Law to
consummate the Merger shall have been obtained.
Section 7.1.3 No Injunctions or Restraints. No Law or
Order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition
preventing the consummation of the Merger or any other
transactions contemplated by this Agreement shall be in effect;
provided, however, that the right to assert that this condition
has not been satisfied shall not be available to any Party who
fails to comply with its obligations under Section 6.5.
Section 7.2 Additional Conditions to Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to effect the Merger
and the other transactions contemplated herein are also subject to the following
conditions, any one or more of which may be waived in writing by Parent.
Section 7.2.1 Representations and Warranties. (a) The
representations and warranties of the Company contained in
Sections 4.2.1 and 4.2.2 shall be true and correct in all but de
minimis respects as of the Closing Date as if made at and as of
the Closing Date (except for those representations and warranties
49
which address matters only as of an earlier date which shall have
been true and correct as of such earlier date), (b) the
representations and warranties of the Company contained in
Sections 4.1, 4.2.3, 4.3, and 4.18 shall be true and correct in
all material respects as of the Closing Date as if made at and as
of the Closing Date (except for those representations and
warranties which address matters only as of an earlier date which
shall have been true and correct as of such earlier date), and
(c) the remaining representations and warranties of the Companies
set forth in this Agreement (disregarding for these purposes any
exception in such representations and warranties relating to
materiality or a Company Material Adverse Effect) shall be true
and correct as of the Closing Date as if made at and as of the
Closing Date (except for those representations and warranties
which address matters only as of an earlier date which shall have
been true and correct as of such earlier date), except for such
failures to be true and correct which, individually or in the
aggregate, do not result in a Company Material Adverse Effect.
Section 7.2.2 Agreements and Covenants. The Company shall
have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
Section 7.2.3 Officer's Certificate. Parent shall have
received a certificate of an executive officer of the Company
confirming the satisfaction of the conditions set forth in
Sections 7.2.1 and 7.2.2.
Section 7.2.4 Absence of Company Material Adverse Effect.
Since the date of this Agreement, there shall not have been any
event, change, effect, development, condition or occurrence that
has had or would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 7.3 Additional Conditions to Obligations of the
Company. The obligation of the Company to effect the Merger and the other
transactions contemplated herein are also subject to the following conditions,
any one of which may be waived in writing by the Company.
Section 7.3.1 Representations and Warranties. The
representations and warranties of Parent and Merger Sub set forth
in this Agreement shall be true and correct as of the Closing
Date as if made at and as of the Closing Date (except for those
representations and warranties which address matters only as of
an earlier date which shall have been true and correct as of such
earlier date), disregarding for these purposes any exception in
such representations and warranties relating to materiality,
except for such failures to be true and correct which,
individually or in the aggregate, do not have a material adverse
effect on the ability of Parent or Merger Sub to perform its
obligations hereunder or which would prevent or materially
impede, interfere with, hinder or delay the consummation of the
Merger.
Section 7.3.2 Agreements and Covenants. Parent and Merger
Sub shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to
be performed or complied with by Parent and/or Merger Sub on or
prior to the Closing Date.
Section 7.3.3 Officer's Certificate. The Company shall
have received a certificate of an executive officer of Parent
confirming the satisfaction of the conditions set forth in
Sections 7.3.1 and 7.3.2.
Section 7.4 Frustration of Closing Conditions. None of the
Company, Parent or Merger Sub may rely on the failure of any condition set forth
in Article 7 to be satisfied if such failure was caused by such Party's failure
to act in good faith to comply with this Agreement and consummate the
transactions provided for herein.
50
Article 8.
Termination, Amendment and Waiver
Section 8.1 Termination. This Agreement may be terminated,
and the Merger contemplated hereby may be abandoned, at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating Party or Parties, whether before or after the Stockholder Approval:
(a) By mutual written consent of Parent and the Company;
(b) by either Parent or the Company (if, in the case of the
Company, it has not materially violated Section 6.4):
(i) if the Stockholder Approval is not obtained at the
Company Stockholders' Meeting or any adjournment thereof at
which this Agreement has been voted upon;
(ii) if the Merger shall not have been consummated by
the date that is nine (9) months from the date hereof (the
"Termination Date"); provided, however, that if the
Marketing Period has not ended on or prior to the date that
is nine (9) months from the date hereof, then the
Termination Date shall be extended to the earlier of (x) ten
(10) months from the date hereof and (y) the end of the
Marketing Period (and in such event, the term "Termination
Date" shall mean the earlier of such extended date); or
(iii) if there shall be any Law that makes consummation
of the Merger illegal or otherwise prohibited (unless the
consummation of the Merger in violation of such Law would
not reasonably be expected to have a Company Material
Adverse Effect) or any Order of any Governmental Entity
having competent jurisdiction is entered enjoining the
Company, Parent or Merger Sub from consummating the Merger
and such Order has become final and nonappealable (unless
the consummation of the Merger in violation of such Order
would not reasonably be expected to have a Company Material
Adverse Effect) and, prior to termination pursuant to this
Section 8.1(b)(iii) each of the Parties shall have used its
best efforts to resist, appeal, obtain consent under,
resolve or lift, as applicable, the Law or Order and shall
have complied in all material respects with its obligations
under Section 6.5; provided, however, that the right to
terminate this Agreement pursuant to this Section
8.1(b)(iii) shall not be available to any Party whose breach
of any provision of this Agreement results in the imposition
of any such Order or the failure of such Order to be
resisted, resolved or lifted, as applicable.
(c) by the Company:
(i) if (x) Parent or Merger Sub shall have breached any
of the covenants or agreements contained in this Agreement
to be complied with by Parent or Merger Sub such that the
closing condition set forth in Section 7.3.2 would not be
satisfied, (y) there exists a breach of any representation
or warranty of Parent or Merger Sub contained in this
51
Agreement such that the closing condition set forth in
Section 7.3.1 would not be satisfied or (z) Parent or Merger
Sub fails to obtain proceeds pursuant to the Commitments (or
any alternative financing) sufficient to consummate the
transactions contemplated by this Agreement within three (3)
Business Days after satisfaction or waiver of the conditions
set forth in Article 7 (excluding conditions that, by their
terms, cannot be satisfied until the Closing, but which
would be reasonably capable of being satisfied at Closing)
or such later date as is specified in Section 2.2, and, in
the case the breach under (x) or (y) is unintentional, such
breach is incapable of being cured by the Termination Date
or is not cured within thirty (30) Business Days after
Parent or Merger Sub receives written notice of such breach
from the Company; or
(ii) if prior to the obtaining of the Stockholder
Approval (w) the Company Board has received a Superior
Proposal, (x) the Company Board determines in good faith
that such termination is necessary for the members of the
Company Board to comply with their fiduciary duties to the
holders of Company Common Stock under applicable Law, (y)
the Company has complied in all material respects with
Section 6.4 and (z) not later than the day of such
termination, the Company pays the Termination Fee to Parent
in accordance with Section 8.4.
(d) by Parent:
(i) (x) if the Company shall have breached any of the
covenants or agreements contained in this Agreement to be
complied with by the Company such that the closing condition
set forth in Section 7.2.2 would not be satisfied or (y)
there exists a breach of any representation or warranty of
the Company contained in this Agreement such that the
closing condition set forth in Section 7.2.1 would not be
satisfied, and, in the case the breach under (x) or (y) is
unintentional, such breach is incapable of being cured by
the Termination Date or is not cured by the Company within
thirty (30) Business Days after the Company receives written
notice of such breach from Parent or Merger Sub; or
(ii) if, prior to the obtaining of the Stockholder
Approval (x) a Company Adverse Recommendation Change shall
have occurred, (y) the Company has failed to include the
Company Recommendation in the Proxy Statement or (z) the
Company Board approves or recommends a Takeover Proposal to
the holders of Company Common Stock or approves or
recommends that holders of Company Common Stock tender their
shares of Company Common Stock in any tender offer or
exchange offer that is a Takeover Proposal.
Section 8.2 Effect of Termination. Except as otherwise set
forth in this Section 8.2, in the event of a termination of this Agreement by
either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Parent, Merger Sub or the Company or their respective officers or directors;
provided, however, that the provisions of this Section 8.2, Sections 8.3, 8.4,
8.5 and Article 9 and the NDA shall remain in full force and effect and survive
any termination of this Agreement; provided, further, that, subject to Section
8.5, no Party shall be relieved or released from any liabilities or damages
arising out of its willful and material breach of any provision of this
Agreement. In no event shall any Party be liable for punitive damages.
52
Section 8.3 Fees and Expenses. Except as otherwise expressly
set forth in this Agreement, all fees and expenses incurred in connection
herewith and the transactions contemplated hereby shall be paid by the Party
incurring such expenses, whether or not the Merger is consummated.
Section 8.4 Termination Fee.
Section 8.4.1 If this Agreement is terminated pursuant to
Section 8.1(c)(ii) and neither Parent nor Merger Sub is in
material default of this Agreement at the time of such
termination, then the Company shall pay Parent $135,000,000 (the
"Termination Fee") not later than the day of such termination. If
this Agreement is terminated pursuant to Section 8.1(b)(i) or
Section 8.1(d)(ii) and neither Parent nor Merger Sub is in
material default of this Agreement at the time of such
termination, then, in the event that, (i) after the date hereof
and prior to such termination, any Third Party shall have
publicly made, proposed, communicated or disclosed an intention
to make a bona fide Takeover Proposal, which bona fide Takeover
Proposal has not been retracted or rescinded by the time of the
Company Stockholders' Meeting and (ii) within nine (9) months of
the termination of this Agreement the Company enters into a
definitive agreement with such Third Party with respect to a
Takeover Proposal (with all percentages in the definition of
Takeover Proposal increased to fifty (50) percent) or any
Takeover Proposal is consummated by such Third Party (with all
percentages in the definition of Takeover Proposal increased to
fifty (50) percent), then the Company shall pay, or cause to be
paid to, Parent the Termination Fee immediately upon consummation
of such Takeover Proposal. The Termination Fee shall be paid by
wire transfer of immediately available funds to an account
designated in writing to the Company by Parent and shall be the
sole and exclusive remedy of Parent and/or Merger Sub against the
Company in circumstance in which the Termination Fee is payable.
For the avoidance of doubt, in no event shall the Company be
obligated to pay, or cause to paid, the Termination Fee on more
than one occasion.
Section 8.4.2 The Company acknowledges that the agreements
contained in this Section 8.4 are an integral part of the
transactions contemplated in this Agreement, that the damages
resulting from termination of this Agreement under circumstances
where a Termination Fee are payable are uncertain and incapable
of accurate calculation and that the amounts payable pursuant to
Section 8.4.1 are reasonable forecasts of the actual damages
which may be incurred and constitute liquidated damages and not a
penalty, and that, without these agreements, Parent would not
enter into this Agreement; accordingly, if the Company fails to
promptly pay the Termination Fee and, in order to obtain such
payments Parent commences a suit which results in a judgment
against the Company for the Termination Fee, the Company shall
pay to Parent its costs and expenses (including reasonable
attorneys' fees) in connection with such suit.
Section 8.5 Business Interruption Fee. In the event that this
Agreement is terminated pursuant to Sections 8.1(b)(ii) and all conditions set
forth in Sections 7.1 and 7.2 (other than Section 7.2.3) are then satisfied or
capable of being satisfied, 8.1(c)(i)(x), 8.1(c)(i)(y) as a result of an
53
intentional breach, or 8.1(c)(i)(z), Parent shall pay the Company a business
interruption fee in an aggregate amount of $175,000,000 (the "Business
Interruption Fee"), which amount shall not be subject to offset or deduction of
any kind and shall be the sole and exclusive remedy of the Company against
Parent and/or Merger Sub in circumstances in which the Business Interruption Fee
is payable. The Business Interruption Fee shall be paid by wire transfer of
immediately available funds to an account specified by the Company in writing to
Parent on the second Business Day following termination of this Agreement by the
Company. For the avoidance of doubt, in no event shall Parent be obligated to
pay, or cause to paid, the Business Interruption Fee on more than one occasion.
Without limiting the foregoing, in no event shall Parent or Merger Sub be
subject to any liability in excess of the amount of the Business Interruption
Fee in respect of (i) any claims for monetary damages that the Company may bring
against Parent or Merger Sub pursuant to or in connection with this Agreement,
(ii) all other such amounts paid by Parent or Merger Sub to the Company with
respect to all claims that had previously been brought by the Company against
Parent and/or Merger Sub and (iii) any amounts paid by Parent to the Company
pursuant to this Section 8.5. Parent acknowledges that the agreements contained
in this Section 8.5 are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, the Company would not enter
into this Agreement; accordingly, if Parent fails to promptly pay the Business
Interruption Fee and, in order to obtain such payment the company commences a
suit which results in a judgment against Parent for the Business Interruption
Fee, Parent shall pay to the Company its costs and expenses (including
reasonable attorney's fees) in connection with such suit.
Section 8.6 Extension; Waiver. At any time prior to the
Effective Time, the Parties may, to the extent permitted by applicable Law,
subject to Section 8.7, (i) extend the time for the performance of any of the
obligations or other acts of the other Parties, (ii) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any approval of this
Agreement by the Company's stockholders, there may not be any extension or
waiver of this Agreement which decreases the Merger Consideration or which
adversely affects the rights of the Company's stockholders hereunder without the
approval of such stockholders. Any agreement on the part of a Party to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such Party. The failure of any Party to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 8.7 Amendment. This Agreement may be amended by the
Parties by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Agreement by the stockholders of the Company, no amendment that, by Law
or in accordance with the rules of any relevant stock exchange, requires further
approval by such stockholders may be made without further stockholder approval.
This Agreement may not be amended except by an instrument in writing signed by
Parent and the Company.
Article 9.
General Provisions
Section 9.1 Non-Survival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
54
Time. None of the covenants or agreements of the Parties in this Agreement shall
survive the Effective Time, other than (i) the covenants and agreements
contained in this Article 9, the agreements of Parent, Merger Sub and the
Company in Article 3 (Conversion of Securities; Exchange of Certificates),
Section 6.8 (Employee Matters), Section 6.9 (Indemnification of Directors and
Officers) and Section 8.3 (Fees and Expenses) and (ii) those other covenants and
agreements contained herein that by their terms apply, or that are to be
performed in whole or in part, after the Effective Time, which shall survive the
consummation of the Merger until fully performed.
Section 9.2 Notices. Any notices or other communications
required or permitted under, or otherwise in connection with this Agreement,
shall be in writing and shall be deemed to have been duly given when delivered
in person or upon confirmation of receipt when transmitted by facsimile
transmission or by electronic mail (but only if followed by transmittal by
national overnight courier or hand for delivery on the next Business Day) or on
receipt after dispatch by registered or certified mail, postage prepaid,
addressed, or on the next Business Day if transmitted by national overnight
courier, in each case as follows:
If to Parent or Merger Sub, addressed to it at:
Sovereign Holdings, Inc.
c/o TPG Partners V, L.P.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attn.: Xxxxx Xxxx, Esq.
Facsimile: (000) 000-0000
with a mandated copy to:
Silver Lake Partners II, L.P.:
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Facsimile: (000) 000-0000
and with a mandated copy to:
Texas Pacific Group
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
55
and with a mandated copy to:
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx
Xxxxx X. Xxxxxxxx
Facsimile: (000) 000 0000
If to the Company, addressed to it at:
Sabre Holdings Corporation
0000 Xxxxx Xxxxx XX 0000
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a mandated copy to:
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Section 9.3 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 9.4 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any Party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties
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 greatest
extent possible.
Section 9.5 Entire Agreement. This Agreement (together with
the Exhibits, Parent Disclosure Schedule, Company Disclosure Schedule and the
other documents delivered pursuant hereto), the Commitments and the NDA
constitute the entire agreement of the Parties and supersede all prior
agreements and undertakings, both written and oral, between the Parties, or any
of them, with respect to the subject matter hereof and thereof and, except as
otherwise expressly provided herein, are not (other than in the case of Article
3 and Section 6.9) intended to confer upon any other Person any rights or
remedies hereunder. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NONE OF PARENT,
56
MERGER SUB AND THE COMPANY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND
EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR
ANY OF ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND
LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE MERGER, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
Section 9.6 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
Parties (whether by operation of law or otherwise) without the prior written
consent of the other Parties; provided, that Parent or Merger Sub may assign any
of their respective rights and obligations to any direct or indirect
wholly-owned Subsidiary of Parent. No assignment by any Party shall relieve such
Party of any of its obligations hereunder. Subject to the foregoing, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and permitted assigns.
Section 9.7 Mutual Drafting. Each Party has participated in
the drafting of this Agreement, which each Party acknowledges is the result of
extensive negotiations between the Parties.
Section 9.8 Governing Law; Consent to Jurisdiction; Waiver of
Trial by Jury.
Section 9.8.1 This Agreement shall be governed by, and
construed, interpreted and enforced in accordance with, the Laws
of the State of Delaware, without regard to conflict of law
principles that would result in the application of any Laws other
than the Laws of the State of Delaware.
Section 9.8.2 The Parties hereto agree that irreparable
damage would occur in the event that any provision of this
Agreement were not performed by the Company in accordance with
the terms hereof and that, prior to the termination of this
Agreement pursuant to Article 8, Parent and Merger Sub shall be
entitled to specific performance of the terms hereof, in addition
to any other remedy at law or equity. The Parties acknowledge
that the Company shall not be entitled to an injunction or
injunctions to prevent breaches of this Agreement by Parent or
Merger Sub or any remedy to enforce specifically the terms and
provisions of this Agreement and that the Company's sole and
exclusive remedies with respect to any such breach shall be the
remedies set forth in Section 8.5. Any legal action, suit or
proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby shall be brought solely in the
Chancery Court of the State of Delaware; provided, that if (and
only after) such courts determine that they lack subject matter
jurisdiction over any such legal action, suit or proceeding, such
legal action, suit or proceeding shall be brought in the Federal
courts of the United States located in the State of Delaware;
provided, further, that if (and only after) both the Chancery
Court of the State of Delaware and the Federal courts of the
United States located in the State of Delaware determine that
they lack subject matter jurisdiction over any such legal action,
suit or proceeding, such legal action, suit or proceeding shall
be brought in the United States District Court for the Southern
District of New York. Each Party hereby irrevocably submits to
57
the exclusive jurisdiction of such courts in respect of any legal
action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, and hereby
waives, and agrees not to assert, as a defense in any such
action, suit or proceeding, any claim that it is not subject
personally to the jurisdiction of such courts, that the action,
suit or proceeding is brought in an inconvenient forum, that the
venue of the action, suit or proceeding is improper or that this
Agreement or the transactions contemplated hereby may not be
enforced in or by such courts. Each Party agrees that notice or
the service of process in any action, suit or proceeding arising
out of or relating to this Agreement or the transactions
contemplated hereby shall be properly served or delivered if
delivered in the manner contemplated by Section 9.2.
Section 9.9 Counterparts. This Agreement may be executed by
facsimile and in one or more counterparts, and by the different Parties in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
[signature page follows]
58
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SOVEREIGN HOLDINGS, INC.
By:
---------------------------------
a duly authorized signatory
SOVEREIGN MERGER SUB, INC.
By:
---------------------------------
a duly authorized signatory
SABRE HOLDINGS CORPORATION
By:
---------------------------------
a duly authorized signatory
[Agreement and Plan of Merger Signature Page]
Exhibit A.1
-----------
EQUITY COMMITMENT LETTER
(see attached)
A-1
Exhibit A.2
-----------
LIMITED GUARANTEE
(see attached)
A-2
Exhibit B.1
-----------
LIST OF COMPANY EXECUTIVES
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx Xxxxx
Xxxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxx X. Xxxxxxxx
Xxxx Xxxx
Xxx Xxxxxx
Xxxxxxx Xxxxx
Xxxx Xxxxx
Xxxx Xxxxxxxx
Xx Xxxx
Xxx XxXxxx
B-1
Exhibit B.2
-----------
LIST OF PARENT AND MERGER SUB EXECUTIVES
Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
Xxx XxXxxxxx
Xxxxx Xxx
Xxxxx Xxxxxxx
Xxx Xxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxx
Xxx Xxxxxxxx
Xxx Xxxxxx
Xxxx Xxxxxxxxx
Xxxxxxx Xxxx
Xxxxx Xxxxx
B-2
Exhibit C
---------
MERGER SUB CERTIFICATE OF INCORPORATION AND BY-LAWS
(see attached)
C-1
Exhibit D
COMPANY REPRESENTATIVES FOR ACCESS TO INFORMATION
Xxxx Xxxxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxx Xxxxxxxxx
Xxxxxxxx Xxxxxx
Xxx Xxxxx
Xxxx Xxxxxxxx
Xxxx Xxxxxx
D-1
