EXHIBIT 2.1
_________________________________
AGREEMENT AND PLAN OF MERGER
_________________________________
AMONG
PATRIOT HOLDING CORP.
AND
PATRIOT ACQUISITION CORP.
AND
TRANSPORT CORPORATION OF AMERICA, INC.
____________________________________
DATED OCTOBER 26, 2005
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER...........................................................2
Section 1.01 The Merger...................................................2
Section 1.02 Effective Time of the Merger.................................2
Section 1.03 Closing......................................................2
Section 1.04 Effects of the Merger........................................2
Section 1.05 Articles of Incorporation; Bylaws............................2
Section 1.06 Officers and Directors.......................................2
ARTICLE II CONTRIBUTION; CONVERSION OF SECURITIES..............................3
Section 2.01 Contribution of Shares.......................................3
Section 2.02 Conversion of Capital Stock..................................3
(a) Capital Stock of Sub....................................3
(b) Exchange Ratio for Seller Common Stock..................3
(c) Seller Common Stock Held by Purchaser or Sub............3
Section 2.03 Seller Stock Options.........................................4
Section 2.04 Tax Withholding..............................................4
Section 2.05 Exchange of Certificates.....................................4
Section 2.06 Dissenting Shares............................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER...........................6
Section 3.01 Organization of Seller.......................................6
Section 3.02 Seller Capital Structure.....................................7
Section 3.03 Authority, No Conflict, Required Filings and Consents........8
Section 3.04 SEC Filings; Financial Statements............................9
Section 3.05 No Undisclosed Liabilities..................................10
Section 3.06 Absence of Certain Changes or Events........................10
Section 3.07 Taxes.......................................................11
Section 3.08 Properties..................................................12
Section 3.09 Intellectual Property.......................................13
Section 3.10 Agreements, Contracts, and Commitments......................14
Section 3.11 Litigation..................................................15
Section 3.12 Environmental Matters.......................................15
Section 3.13 Employee Benefit Plans......................................16
Section 3.14 Compliance with Laws........................................18
Section 3.15 Opinion of Financial Advisor................................18
Section 3.16 Rights Agreement............................................18
Section 3.17 Information Supplied........................................18
Section 3.18 Labor Matters...............................................18
Section 3.19 Insurance...................................................19
Section 3.20 Customers...................................................19
Section 3.21 Affiliate Transactions......................................19
Section 3.22 Vote Required...............................................19
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Section 3.23 State Takeover Statutes.....................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB................20
Section 4.01 Organization of Purchaser and Sub...........................20
Section 4.02 Authority; No Conflict; Required Filings and Contracts......20
Section 4.03 Litigation..................................................21
Section 4.04 Compliance with Laws........................................21
Section 4.05 Interim Operations of Sub...................................21
Section 4.06 Financing...................................................21
Section 4.07 Information Supplied........................................22
ARTICLE V CONDUCT OF BUSINESS.................................................22
Section 5.01 Covenants of Seller.........................................22
Section 5.02 Cooperation.................................................24
ARTICLE VI ADDITIONAL AGREEMENTS AND COVENANTS................................25
Section 6.01 No Solicitation.............................................25
Section 6.02 Proxy Statement.............................................27
Section 6.03 Access to Information.......................................28
Section 6.04 Seller Shareholders' Meeting................................28
Section 6.05 Legal Conditions to Merger..................................28
Section 6.06 Payment of Taxes............................................29
Section 6.07 Public Disclosure...........................................29
Section 6.08 Consents....................................................29
Section 6.09 Brokers or Finders..........................................29
Section 6.10 Employees and Employee Benefit Plans........................29
Section 6.11 Notification of Certain Matters.............................30
Section 6.12 Additional Agreements; Reasonable Efforts...................30
Section 6.13 Director and Officer Liability..............................30
Section 6.14 Financing...................................................31
Section 6.15 Section 16 Matters..........................................31
ARTICLE VII CONDITIONS TO MERGER..............................................32
Section 7.01 Conditions to Each Party's Obligation To Effect the Merger..32
(a) Shareholder Approval...................................32
(b) HSR Act................................................32
(c) No Injunctions or Restraints; Illegality...............32
Section 7.02 Additional Conditions to Obligations of Purchaser and Sub...32
(a) Representations and Warranties.........................32
(b) Performance of Obligations of Seller...................33
(c) Consents...............................................33
(d) Financing..............................................33
(e) Seller Rights Agreement................................33
(f) Dissenters' Rights.....................................33
Section 7.03 Additional Conditions to Obligations of Seller..............33
(a) Representations and Warranties.........................33
(b) Performance of Obligations of Purchaser and Sub........33
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(c) Consents...............................................33
ARTICLE VIII TERMINATION AND AMENDMENT........................................34
Section 8.01 Termination.................................................34
Section 8.02 Effect of Termination.......................................35
Section 8.03 Fees and Expenses...........................................35
Section 8.04 Amendment...................................................37
Section 8.05 Extension; Waiver...........................................38
ARTICLE IX MISCELLANEOUS......................................................38
Section 9.01 Nonsurvival of Representations, Warranties, and Agreements..38
Section 9.02 Notices.....................................................38
Section 9.03 Interpretation..............................................39
Section 9.04 Counterparts................................................39
Section 9.05 Entire Agreement, No Third Party Beneficiaries..............39
Section 9.06 Governing Law...............................................39
Section 9.07 Assignment..................................................40
ARTICLE X DEFINITIONS.........................................................40
Section 10.01 Subsidiary..................................................40
Section 10.02 Knowledge...................................................40
Section 10.03 Defined Terms...............................................40
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated October 26,
2005, is by and among PATRIOT HOLDING CORP., a Minnesota corporation
("Purchaser"), PATRIOT ACQUISITION CORP., a Minnesota corporation and a wholly
owned subsidiary of Purchaser ("Sub"), and TRANSPORT CORPORATION OF AMERICA,
INC., a Minnesota corporation ("Seller").
WHEREAS, the Board of Directors of Seller (the "Seller Board"), based upon
the unanimous recommendation of a special committee thereof consisting solely of
independent directors (the "Special Committee"), has unanimously approved this
Agreement and the transactions contemplated hereby, including the merger of Sub
with and into Seller (the "Merger"), has determined that this Agreement and the
transactions contemplated hereby, including the Merger, are advisable to, fair
to, and in the best interests of, the holders of Seller Common Stock (the
"Shareholders" and, each a "Shareholder") and has resolved (subject to the terms
and conditions of this Agreement) to recommend that the Shareholders vote for
approval of this Agreement and the transactions contemplated hereby, including
the Merger;
WHEREAS, prior to the Effective Time, Purchaser may offer to certain
management Shareholders the opportunity to contribute shares of Seller Common
Stock (the "Contributed Shares") to Purchaser in exchange for equity in
Purchaser (the "Contribution"), which are intended to be treated for federal
income tax purposes as a contribution of such Shareholders' Contributed Shares
to Purchaser pursuant to Section 351 of the Code;
WHEREAS, as a condition and inducement to the willingness of Purchaser and
Sub to enter into this Agreement, certain of Seller's shareholders are entering
into voting agreements with Seller, Purchaser and Sub of even date herewith
covering an aggregate number of shares and Seller Stock Options representing, at
the time of signing, 19.75% of Seller's outstanding shares of Seller Common
Stock, whereby they agree to support the Merger (the "Voting Agreements"");
WHEREAS, the respective Boards of Directors of Purchaser and Sub have each
approved this Agreement, the Voting Agreements and the Merger; and
WHEREAS, Purchaser, concurrently with the execution and delivery of this
Agreement, is approving this Agreement and the transactions contemplated hereby,
including the Merger, as the sole shareholder of Sub.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants, and agreements set forth herein and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.01 THE MERGER. Upon the terms and subject to satisfaction or
waiver of the conditions set forth in this Agreement, and in accordance with the
Minnesota Business Corporation Act (the "MBCA"), at the Effective Time, the
separate existence of Sub shall cease and Sub shall be merged with and into
Seller (Sub and Seller are sometimes referred to herein as the "Constituent
Corporations"). As a result of the Merger, the separate corporate existence of
Sub shall cease and Seller shall continue as the surviving corporation of the
Merger (the "Continuing Corporation") and shall be a wholly owned subsidiary of
Purchaser.
Section 1.02 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, articles of merger (the "Articles of Merger") in such form as
required by the relevant provisions of the MBCA shall be duly prepared,
executed, and acknowledged by the Constituent Corporations, and thereafter
delivered to the Secretary of State of the State of Minnesota as provided in the
MBCA. The Merger shall become effective upon the filing of the Articles of
Merger with the Secretary of State of the State of Minnesota or at such later
time thereafter as is provided in the Articles of Merger (the "Effective Time").
Section 1.03 CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Minneapolis time, on a date to be specified by Purchaser
and Seller, which shall be no later than the second business day after
satisfaction or waiver (by the party or parties entitled to the benefit thereof)
of all the conditions set forth in Article VII (the "Closing Date"), at the
offices of Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P., 0000 XxXxxxx Xxxxx, 000
XxXxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, unless another date or place
is agreed to in writing by Purchaser and Seller. All actions taken at the
Closing shall be deemed to have been taken simultaneously at the time the last
of any such actions is taken or completed.
Section 1.04 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 302A.641 subd. 2 of the MBCA.
Section 1.05 ARTICLES OF INCORPORATION; BYLAWS. The Articles of
Incorporation of Seller in effect immediately prior to the Effective Time shall
be, from and after the Effective Time, the Articles of Incorporation of the
Continuing Corporation (the "Surviving Charter"), until amended as provided in
the Surviving Charter or by applicable law. The Bylaws of Sub in effect
immediately prior to the Effective Time shall be, from and after the Effective
Time, the Bylaws of the Continuing Corporation (the "Surviving Bylaws"), until
amended in accordance with the Surviving Charter, the Surviving Bylaws or by
applicable law.
Section 1.06 OFFICERS AND DIRECTORS. The officers and directors of Sub
immediately prior to the Effective Time shall be the officers and directors of
the Continuing Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
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ARTICLE II
CONTRIBUTION; CONVERSION OF SECURITIES
Section 2.01 CONTRIBUTION OF SHARES. Immediately prior to the Effective
Time, any Contributed Shares to be contributed by certain Shareholders to
Purchaser pursuant to the Contribution shall be contributed by such Shareholders
to Purchaser in exchange for equity of Purchaser, with the equity of Purchaser
to be issued in exchange for each Contributed Share having a value equal to the
Merger Consideration, and shall be on terms and conditions mutual acceptable to
Purchaser and such Shareholders, in lieu of payment of the Merger Consideration
with respect to the Contributed Shares.
Section 2.02 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the Shareholders or holders
of any capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, $0.01 par value per share, of the Continuing Corporation.
(b) EXCHANGE RATIO FOR SELLER COMMON STOCK. Each share of Seller
Common Stock issued and outstanding immediately prior to the Effective Time
(other than the Contributed Shares and the shares to be cancelled or
converted pursuant to Section 2.02(c) or Section 2.06) shall be converted
into the right to receive $10.00 in cash, without interest (the "Merger
Consideration").
(c) SELLER COMMON STOCK HELD BY PURCHASER OR SUB. Each share of
Seller Common Stock issued and outstanding immediately prior to the
Effective Time and held by Purchaser or Sub shall be cancelled without any
consideration being paid therefor.
The Merger Consideration shall be appropriately adjusted to reflect any
stock split, stock dividend, recapitalization, exchange, subdivision,
combination of, or other similar change in Seller Common Stock following
the date of this Agreement. As of the Effective Time, all shares of Seller
Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and holders of certificates
which immediately prior to the Effective Time represented shares of Seller
Common Stock (the "Certificates") shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such Certificates in accordance with Section 2.05 (other than
as set forth in Section 2.01, Section 2.02(c) or Section 2.06).
Section 2.03 SELLER STOCK OPTIONS.
(a) Each outstanding option to purchase shares of Seller Common
Stock (a "Seller Stock Option") under Seller's 1986 Stock Option Plan, as
amended, 1995 Stock Plan, as amended, and the Non-Plan Non-Qualified Stock
Option Agreement dated November 12, 2001 by and between Seller and Xxxxxxx
X. Xxxxxx (the "Seller Option Plans"), whether vested or unvested, shall
either be exercised by the holder thereof prior to the Effective Time or be
cancelled immediately prior to the Effective Time in exchange for payment
of an amount in cash equal to the product of (i) the number of unexercised
shares of Seller Common Stock subject to such Seller Stock Option
immediately prior to the Effective Time and (ii) the excess, if any, of the
Merger Consideration over the per share exercise price of such Seller Stock
Option.
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(b) Prior to the Effective Time, the Seller Board (or, if
appropriate, a committee administering the stock plans of Seller) shall
amend Seller's Employee Stock Purchase Plan (the "Seller ESPP") to halt
purchases under the Seller ESPP such that no issuances of any shares of
Seller Common Stock shall be made following the date of this Agreement.
(c) Except as provided herein or as otherwise agreed by the
parties, Seller and the Seller Board (or, if appropriate, a committee
administering the stock plans of Seller) shall take all actions reasonably
necessary prior to or as of the Effective Time such that each of the Seller
Option Plans, and any other plan, program or arrangement with any current
or former employee, officer, director or consultant providing for the
issuance or grant of any interest in respect of the capital stock of
Seller, shall terminate as of the Effective Time. Seller and the Seller
Board (or, if appropriate, a committee administering the stock plans of
Seller) shall take all reasonably necessary actions to ensure that,
following the Effective Time, no current or former employee, officer,
director or consultant shall have any option to acquire any shares of
Seller Common Stock or any other equity interest in Seller under the Seller
Option Plans or any other plan, program or arrangement maintained by
Seller.
Section 2.04 TAX WITHHOLDING. Purchaser or the Paying Agent shall be
entitled to deduct and withhold from any amounts otherwise payable pursuant to
this Agreement to any Shareholder or other person such amounts as Purchaser or
the Paying Agent is required to deduct and withhold with respect to the making
of such payment under the Internal Revenue Code of 1986, as amended, (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Purchaser or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
Shareholder or other person in respect of which such deduction and withholding
was made by Purchaser or the Paying Agent.
Section 2.05 EXCHANGE OF CERTIFICATES.
(a) At or prior to the Effective Time, Purchaser shall deposit,
or shall cause to be deposited, with LaSalle Bank, N.A. (the "Paying
Agent"), for the benefit of the Shareholders, for exchange in accordance
with this Section 2.05, cash in an amount required to be paid pursuant to
this Article II (such cash being hereinafter referred to as the "Exchange
Fund").
(b) After the Effective Time (and in any event within two
business days of the Effective Time), Purchaser shall cause the Paying
Agent to mail to each holder of record of a Certificate or 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 delivery of the Certificates to the Paying Agent and shall
be in such form and have such other provisions as Purchaser and Seller may
reasonably agree prior to the Effective Time and (ii) instructions for
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 a duly executed and completed, in accordance
with its terms, letter of transmittal, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor, the amount of cash which
the number of shares of Seller Common Stock previously represented by such
Certificate shall have been converted into the right to receive pursuant to
this Article II and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the Merger Consideration.
In the event of a transfer of ownership of shares of Seller Common Stock
which is not registered on the transfer records of Seller, payment of the
Merger Consideration may be issued to such transferee if the Certificate
representing such shares of Seller Common Stock held by such transferee is
presented to the Paying Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
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(c) In case of any lost, mislaid, stolen, or destroyed
Certificate, the holder thereof may be required, as a condition precedent
to the delivery to such holder of the consideration described in Section
2.02, to deliver to Purchaser a bond in such reasonable sum as Purchaser
may direct as indemnity against any claim that may be made against the
Paying Agent, Purchaser, or the Continuing Corporation with respect to the
Certificate alleged to have been lost, mislaid, stolen, or destroyed.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of the Continuing Corporation of the shares of Seller
Common Stock that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Continuing
Corporation for transfer, they shall be canceled and exchanged for the
consideration described in Section 2.02.
(e) Any portion of the Exchange Fund which remains undistributed
to holders of Certificates 180 days after the Effective Time shall be
delivered to Purchaser, upon demand therefor, and holders of Certificates
who have not theretofore complied with this Section 2.05 shall thereafter
look only to Purchaser for the Merger Consideration payable in respect of
such shares of Seller Common Stock, without any interest thereon.
(f) None of Purchaser, Sub, the Continuing Corporation or the
Paying Agent shall be liable to any person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not
have been surrendered prior to two years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration
would otherwise escheat to or become the property of any Governmental
Entity), any such Merger Consideration shall, to the extent permitted by
applicable laws, become the property of Purchaser, free and clear of all
claims or interest of any person previously entitled thereto.
(g) The Paying Agent shall invest the cash in the Exchange Fund,
as directed by Purchaser, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Purchaser upon termination
of the Exchange Fund pursuant to this Article II.
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Section 2.06 DISSENTING SHARES.
(a) Notwithstanding any other provisions of this Article II,
shares of Seller Common Stock outstanding immediately prior to the
Effective Time and held by a Shareholder who has not voted in favor of the
Merger and who has properly exercised dissenters' rights in respect of such
shares of Seller Common Stock in accordance with Sections 302A.471 and
302A.473 of the MBCA, shall not be converted into or represent a right to
receive the Merger Consideration as provided in Section 2.02, but shall be
entitled to receive the fair value of the shares represented thereby in
accordance with Section 302A.473; provided, however, that, if any such
Shareholder shall have failed to perfect or withdraws or otherwise loses
such Shareholder's dissenters' rights, each such Shareholder's shares of
Seller Common Stock shall thereupon be deemed to have been converted as of
the Effective Time into the right to receive the Merger Consideration,
without any interest thereon, pursuant to Section 2.02. Shares of Seller
Common Stock in respect of which dissenters' rights have been exercised
shall be treated in accordance with Sections 302A.471 and 302A.473 of the
MBCA.
(b) Seller shall give Purchaser prompt notice of any demands
received by Seller, along with copies of all documents with respect to each
such demand, for the exercise of dissenters' rights and the opportunity to
participate jointly with Seller in all negotiations and proceedings with
respect to such demands. Seller will not voluntarily make any payment with
respect to any demands delivered to Seller in connection with the exercise
of dissenters' rights and will not, except with the prior written consent
of Purchaser, settle or offer to settle any such demands. If, after the
Effective Time, such holder fails to perfect or withdraws or otherwise
loses the dissenters' rights, such shares of Seller Common Stock shall be
treated as if they had been converted as of the Effective Time into a right
to receive the Merger Consideration as provided in Section 2.02.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser and Sub that the statements
contained in this Article III are true and correct, except as set forth in the
disclosure schedule delivered by Seller to Purchaser on or before the date of
this Agreement (the "Seller Disclosure Schedule"). The Seller Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III and the disclosures in any
paragraph shall qualify only the corresponding paragraph in this Article III,
except where the information in any such section is disclosed in such a manner
to make its relevance to any other representation or warranty readily apparent,
in which case such section shall be deemed to also qualify such other
representation and warranty.
Section 3.01 ORGANIZATION OF SELLER. Each of Seller and its Subsidiaries
(as defined in Section 10.01) is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation,
has all requisite corporate power to own, lease, and operate its property and to
carry on its business as now being conducted, and is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the failure to be so qualified would have a Material Adverse Effect on
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Seller. For the purposes of any provision of this Agreement, a "Material Adverse
Effect" with respect to any party shall be deemed to occur if any event, change,
effect, condition, occurrence or development, individually or in the aggregate
with such other events, changes, effects, conditions, occurrences or
developments, has occurred which would have or would reasonably be expected to
have a material adverse effect on (a) the business, assets (including intangible
assets), liabilities (contingent or otherwise), results of operations or
condition (financial or otherwise) of such party and its subsidiaries taken as a
whole or (b) the ability of such party to consummate the transactions
contemplated by this Agreement; provided, however, that a Material Adverse
Effect shall not include any event, change, effect, condition, occurrence or
development directly or indirectly arising out of or attributable to (i)
conditions, events, or circumstances generally affecting the economy as a whole
or Seller's industry as a whole, but only to the extent that any such condition,
event or circumstance does not have a disproportionate effect on Seller as
compared to its competitors, (ii) any event, change, effect, condition,
occurrence or development resulting from or arising out of the public
announcement of the execution of this Agreement or the transactions contemplated
hereby or (iii) any event, change, effect, condition, occurrence or development
caused by the taking of any action required by this Agreement or the taking of
any action by Seller that has been approved in writing by Purchaser. Except as
set forth in the Seller SEC Reports (as defined in Section 3.04), neither Seller
nor any of its Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture, or other business association
or entity excluding securities in any publicly traded company held for
investment by Seller and comprising less than one percent of the outstanding
stock of such company.
Section 3.02 SELLER CAPITAL STRUCTURE.
(a) The authorized capital stock of Seller consists of 15,000,000
shares of Common Stock ("Seller Common Stock") and 150,000 shares of
Preferred Stock ("Seller Preferred Stock"). On September 30, 2005, (i)
6,563,636 shares of Seller Common Stock were outstanding, all of which were
validly issued, fully paid, and nonassessable, and no other shares of
Seller Common Stock had been issued as of such date, (ii) 700,505 shares of
Seller Common Stock were subject to outstanding stock options under the
Seller Option Plans and 59,115 shares of Seller Common Stock were reserved
for future grants under the Seller Option Plans, (iii) 1,346 shares of
Seller Common Stock were reserved for issuance pursuant to options
presently accrued under the Seller ESPP and 58,485 shares of Seller Common
Stock were reserved for future issuance under the Seller ESPP, and (iv) an
aggregate of 75,000 shares of Seller's Series A Junior Participating
Preferred Stock ("Seller Junior Preferred Stock") were reserved for future
issuance pursuant to the Rights Agreement, as amended, dated as of February
25, 1997, between Seller and Norwest Bank Minnesota, N.A., as Rights Agent
(the "Seller Rights Agreement"). Since September 30, 2005, no shares of
Seller Common Stock have been issued except pursuant to the exercise of
options granted under the Seller Option Plans or pursuant to the Seller
ESPP. None of the shares of Seller Preferred Stock are issued and
outstanding. There are no obligations, contingent or otherwise, of Seller
or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any
shares of Seller Common Stock or the capital stock of any Subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution, or otherwise) in any such Subsidiary or any other entity. All
of the outstanding shares of capital stock of each of Seller's Subsidiaries
are duly authorized, validly issued, fully paid, and nonassessable and all
such shares are owned by Seller free and clear of all security interests,
liens, claims, pledges, agreements, limitations in Seller's voting rights,
charges, or other encumbrances of any nature.
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(b) Except for outstanding warrants, options granted under the
Seller Option Plans or as reserved for future grants of options or rights
under the Seller Option Plans, shares reserved for issuance under the
Seller ESPP, or for the shares of Seller Junior Preferred Stock reserved
for issuance under the Seller Rights Agreement, there are no equity
securities of any class of Seller or any of its Subsidiaries, or any
security exchangeable into or exercisable for such equity securities,
issued, reserved for issuance, or outstanding. Except as set forth in this
Section 3.02, there are no options, warrants, equity securities, calls,
rights, commitments, or agreements of any character to which Seller or any
of its Subsidiaries is a party or by which it is bound obligating Seller or
any of its Subsidiaries to issue, deliver, or sell, or cause to be issued,
delivered, or sold, additional shares of capital stock of Seller or any of
its Subsidiaries or obligating Seller or any of its Subsidiaries to grant,
extend, accelerate the vesting of, or enter into any such option, warrant,
equity security, call, right, commitment, or agreement. Seller is not a
party to, nor is Seller aware of, any voting agreement, voting trust,
proxy, or other agreements or understandings with respect to the shares of
capital stock of Seller or any agreement, arrangement, or understanding
providing for registration rights with respect to any shares of capital
stock of Seller.
Section 3.03 AUTHORITY, NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) Seller has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement and the
Voting Agreements have been duly authorized by all necessary corporate
action on the part of Seller, subject only to the approval of this
Agreement and the Merger by Seller's shareholders under the MBCA. This
Agreement has been duly executed and delivered by Seller and constitutes
the valid and binding obligation of Seller, enforceable in accordance with
its terms.
(b) Subject to approval of this Agreement and the Merger by
Seller's shareholders, the execution and delivery of this Agreement by
Seller does not, and the consummation of the transactions contemplated by
this Agreement will not, (i) conflict with, or result in any violation or
breach of any provision of the Articles of Incorporation or Bylaws of
Seller, (ii) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to right
of termination, cancellation, or acceleration of any obligation or loss of
any benefit) under any of the terms, conditions, or provisions of any note,
bond, mortgage, indenture, lease, contract, or other agreement, instrument,
or obligation to which Seller or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, and
where such violation, breach or default would have a Material Adverse
Effect on Seller, any of its Subsidiaries or on the transactions
contemplated by this Agreement, or (iii) conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule, or regulation applicable to Seller or any of its
Subsidiaries or any of its or their properties or assets where such
conflict or violation would have a Material Adverse Effect on Seller, any
of its Subsidiaries or the transactions contemplated by this Agreement.
8
(c) No material consent, approval, order, or authorization of, or
registration, declaration, or filing with, any court, administrative
agency, or commission or other governmental authority or instrumentality
("Governmental Entity") is required by or with respect to Seller or any of
its Subsidiaries in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby,
except for (i) the filing of the pre-merger notification report under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR
Act"), (ii) the filing of the Articles of Merger, (iii) the filing of the
Proxy Statement (as defined in Section 3.17 below) with the Securities and
Exchange Commission ("SEC") in accordance with the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and (iv) such consents,
approvals, orders, authorizations, registrations, declarations, and filings
as may be required under the applicable federal and state securities laws
or under any applicable requirement of any Department of Transportation.
Section 3.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Seller has filed all forms, reports, and documents required
to be filed by Seller with the SEC since January 1, 2002 (including all
exhibits, notes, and schedules thereto and documents incorporated by
reference therein) (collectively, the "Seller SEC Reports"). The Seller SEC
Reports (i) at the time filed, with respect to all of the Seller SEC
Reports other than registration statements filed under the Securities Act
of 1933, as amended (the "Securities Act"), or at the time of their
respective effective dates, with respect to registration statements filed
under the Securities Act, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and (ii) did not at the time filed or at the time of their
respective effective dates, as the case may be (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing), contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Seller SEC Reports or necessary
in order to make the statements in such Seller SEC Reports, in the light of
the circumstances under which they were made, not misleading. None of
Seller's Subsidiaries is required to file any forms, reports, or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Seller SEC Reports at the
time filed or at the time of their respective effective dates, as the case
may be, complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was
prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
presented the consolidated financial position of Seller and its
Subsidiaries at the respective dates and the consolidated results of their
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments. The audited balanced sheet of Seller as of
December 31, 2004 is referred to herein as the "Seller Balance Sheet."
9
(c) Seller has complied in all material respects with the
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the related
rules and regulations promulgated under such act or the Exchange Act.
Seller has previously made available to Purchaser copies of all
certificates delivered by officers and employees of Seller, including
Seller's chief executive officer and chief financial officer, to the Seller
Board or any committee thereof pursuant to the certification requirements
relating to Seller's 2004 Form 10-K for the year ended December 31, 2004.
The management of Seller has (i) implemented disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure
that material information relating to Seller and its Subsidiaries is made
known to the management of Seller by others within those entities and (ii)
disclosed, based on its most recent evaluation, to the Seller's outside
auditors and the audit committee of the Seller Board (A) all significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) that are reasonably likely to materially affect the Seller's
ability to record, process, summarize and report financial data and (B) any
fraud, whether or not material, that involves management or other employees
who, in each case, have a significant role in Seller's internal control
over financial reporting.
(d) As used in this Section 3.04, the term "file" shall be
broadly construed to include any manner in which a document or information
is furnished, supplied or otherwise made available to the SEC.
Section 3.05 NO UNDISCLOSED LIABILITIES. Except as disclosed in the Seller
SEC Reports, Seller and its Subsidiaries do not have any liabilities, either
accrued or contingent (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), and
whether due or to become due, the effect of which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
Seller and its Subsidiaries, taken as a whole, other than (i) liabilities
reflected in the Seller Balance Sheet and (ii) normal or recurring liabilities
incurred since December 31, 2004, in the ordinary course of business consistent
with past practices.
Section 3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Seller Balance Sheet, Seller and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not occurred (i) any Material Adverse
Effect on Seller and any of its Subsidiaries, taken as a whole, (ii) any damage,
destruction, or loss (whether or not covered by insurance) with respect to any
property of Seller or any of its Subsidiaries having a Material Adverse Effect
on Seller and its Subsidiaries, taken as a whole, (iii) any material change by
Seller in its accounting methods, principles, or practices, or (iv) any material
revaluation by Seller of any of its material assets.
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Section 3.07 TAXES.
(a) All Tax Returns (as defined herein) required to be filed by
Seller or any of its Subsidiaries have been duly filed on a timely basis.
All such Tax Returns were complete and accurate in all material respects.
All Taxes shown to be due on such Tax Returns, and all material Taxes
otherwise required to be paid by Seller or any of its Subsidiaries have
been timely paid. All Taxes due and payable by Seller and its Subsidiaries
have been adequately provided for in the financial statements of Seller and
its Subsidiaries for all periods ending through the date hereof.
(b) There are no audits or administrative proceedings, court
proceedings or claims pending against Seller or any of its Subsidiaries
with respect to any Taxes, no assessment, deficiency or adjustment has been
asserted or proposed or threatened with respect to any Taxes or Tax Return
of or with respect to Seller or any of its Subsidiaries that has not been
paid in full or fully resolved in favor of the taxpayer, and there are no
liens for Taxes upon the assets or properties of Seller or any of its
Subsidiaries, except liens for Taxes not yet due. No issue has been raised
by any taxing authority in any presently pending Tax audit that could
reasonably be expected to have a Material Adverse Effect on Seller or any
of its Subsidiaries after the Effective Time.
(c) There are not in force any waivers of agreements,
arrangements, or understandings by or with respect to Seller or any of its
Subsidiaries of or for an extension of time for the assessment or payment
of any Taxes. Neither Seller nor any of its Subsidiaries has received a
written ruling of a taxing authority relating to Taxes or entered into a
written and legally binding agreement with a taxing authority relating to
Taxes that would have a continuing effect after the Closing Date.
(d) Neither Seller nor any of its Subsidiaries requested any
extension of time within which to file any Tax Return, which Tax Return has
not yet been filed, or executed or filed any power of attorney with any
taxing authority.
(e) Each of Seller and its Subsidiaries has withheld and paid in
all material respects all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor,
independent contractor or other third party.
(f) Neither Seller nor any of its Subsidiaries has any obligation
under any agreement (either with any person or any taxing authority) with
respect to Taxes.
(g) Neither Seller nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code since the
effective date of Section 355(e) of the Code.
(h) Neither Seller nor any of its Subsidiaries has (i) been a
member of an affiliated group of corporations within the meaning of Section
1504 of the Code, other than the affiliated group of which Seller is the
common parent or (ii) any material liability for the Taxes of any other
person (other than Seller or any of its Subsidiaries) under any state,
local or foreign law, as a transferee or successor, by contract, or
otherwise.
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(i) No written claim that could give rise to Taxes has been made
by a taxing authority in a jurisdiction where Seller or any of its
Subsidiaries does not file Tax Returns that Seller or any of its
Subsidiaries is or may be subject to taxation in that jurisdiction.
(j) The Seller has provided or made available to Purchaser
correct and complete copies of (i) all income and franchise Tax Returns of
Seller and its Subsidiaries for the preceding three taxable years and (ii)
any audit report issued within the last three years (or otherwise with
respect to any audit or proceeding in progress) relating to income or
franchise Taxes of Seller or any of its Subsidiaries.
(k) Neither Seller nor any of its Subsidiaries has entered into a
transaction that has been identified by published guidance as a listed
transaction under Treas. Reg. Section 1.6011-4(b)(2).
(l) Neither Seller nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(l)(A)(ii) of the Code.
(m) For purposes of this Agreement, (i) "Taxes" shall mean taxes
of any kind (including those measured by or referred to as income,
franchise, gross receipts, sales, use, ad valorem, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property, windfall profits, customs, duties or
similar fees, assessments or charges of any kind whatsoever) together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority with respect thereto, domestic or foreign
and shall include any transferee or successor liability in respect of taxes
(whether by contract or otherwise) and any several liability in respect of
any tax as a result of being a member of any affiliated, consolidated,
combined, unitary or similar group and (ii) "Tax Returns" shall mean any
return, report, claim for refund, estimate, information return or statement
or other similar document relating to or required to be filed with any
taxing authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Section 3.08 PROPERTIES.
(a) Seller has provided to Purchaser a true and complete list of
all real property owned by Seller or its Subsidiaries and real property
leased by Seller or its Subsidiaries pursuant to leases (collectively, the
"Leases" and, together with the owned real property, the "Real Property"),
and the name of the lessor, the date of the Lease and each amendment to the
Lease, and the aggregate annual rental or other fees payable under any such
Lease. The Real Property has access, sufficient for the conduct of the
business of Seller and its Subsidiaries as now conducted or as presently
proposed by Seller to be conducted, to public roads and to all utilities
used in the operation of the business at that location.
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(b) Seller holds a valid and existing leasehold interest under
each of the Leases. Seller has delivered to Purchaser complete and accurate
copies of each of the Leases (including all notices exercising renewal,
expansion, termination or other material rights under the Leases), and none
of the Leases has been modified in any material respect, except to the
extent that the copies delivered to Purchaser disclose such modifications.
Neither Seller nor any Subsidiary has leased or sublet, as lessor,
sublessor, licensor or the like, any of the Real Property. No Lease is
subject to any prime, ground or master lease, mortgage, deed of trust or
other encumbrance or interest which would entitle the interest holder to
interfere with or disturb Seller's or any Subsidiary's rights under the
Lease while Seller or such Subsidiary is not in default under the Lease.
Neither Seller nor any Subsidiary is in material default, and no
circumstances exist which, if unremedied, would, either with or without
notice or the passage of time or both, result in such material default by
Seller or any of its Subsidiaries under any of the Leases; nor, to the
Knowledge of Seller, is any other party to any of the Leases in material
default.
(c) Seller and its Subsidiaries own, or lease under valid leases,
all of the buildings, fixtures, leasehold improvements, computers,
equipment and other tangible and intangible assets, including, without
limitation, all trucks, cabs and other rolling stock, necessary for the
conduct of the business of Seller or its Subsidiaries as now conducted and
presently proposed to be conducted, all of which, collectively, are in good
condition and repair, ordinary wear and tear excepted, and are usable in
the ordinary course of business.
(d) Except for leased or licensed property, Seller and its
Subsidiaries own good and marketable title to each of the properties and
assets used by Seller or its Subsidiaries, located on the premises of
Seller or its Subsidiaries, or reflected on the Seller Balance Sheet or
acquired since the date thereof.
Section 3.09 INTELLECTUAL PROPERTY.
(a) Seller and its Subsidiaries own or license all patents,
trademarks, trade names, service marks, copyrights, any applications for
the foregoing, and any tangible or intangible proprietary information (the
"Intellectual Property") that is material or necessary to its business.
Schedule 3.09 of the Seller Disclosure Schedule lists and describes all
registered Intellectual Property, copyrights and proprietary software owned
or licensed by Seller or any Subsidiary, including identifying each
jurisdiction in which applications have been filed or rights issued. All of
the Intellectual Property rights are valid and enforceable in all material
respects, and Seller has no Knowledge of facts showing, and has received no
written notice of any party asserting, that any of the Intellectual
Property rights are invalid or not enforceable. The business of Seller and
its Subsidiaries as currently conducted does not infringe, misuse,
misappropriate, or conflict with the Intellectual Property rights of others
in a way that is likely to have a Material Adverse Effect on Seller and its
Subsidiaries, taken as a whole. Either Seller or its Subsidiaries owns and
possesses all right, title and interest, or holds a valid license, in and
to all of the Intellectual Property in all material respects, free and
clear of any material encumbrance, without any material conflict with the
rights of others, and has taken all action necessary to protect the
Intellectual Property in all material respects. No claim by any third party
contesting the validity of any of the Intellectual Property has been made,
received, is currently outstanding or, to the Knowledge of Seller, is
threatened or reasonably expected to arise.
13
(b) Seller or any of its Subsidiaries owns or has a valid and
enforceable right to use all computer software and systems used by Seller
or any of its Subsidiaries in the operation of their business as presently
conducted or proposed to be conducted, without taking into account the
transactions contemplated hereby ("Internal Use Software"), without any
conflict with the rights of others. Seller and any of its Subsidiaries do
not use, rely on or contract with any Person to provide services bureau,
outsourcing or other computer processing services which are material to
Seller or its Subsidiaries, in lieu of or in addition to their use of the
Internal Use Software. Seller or any of its Subsidiaries has the right to
use all databases Seller and its Subsidiaries use internally (the
"Databases"), and neither Seller nor any of its Subsidiaries has received
any written notice alleging that Seller's or any Subsidiary's use,
reproduction or distribution of the Databases infringes any third party's
rights. Neither Seller nor the Subsidiaries sell or license the Databases
to third parties. Neither Seller nor any of its Subsidiaries has done
anything to compromise the secrecy, confidentiality, ownership, rights in
or to, or value of any of the Intellectual Property. Seller and its
Subsidiaries have taken all reasonable security measures to protect the
secrecy, confidentiality and value of the Intellectual Property.
Section 3.10 AGREEMENTS, CONTRACTS, AND COMMITMENTS.
(a) Seller has not breached, or received in writing any claim or
threat that it has breached, any of the terms and conditions of any
agreement, contract, or commitment required to be filed as an exhibit to
the Seller SEC Reports ("Seller Material Contracts") in such a manner as
would permit any other party to cancel or terminate the same or would
permit any other party to seek material damages from Seller under any
Seller Material Contract. Each Seller Material Contract that has not
expired or been terminated is in full force and effect and is not subject
to any material default thereunder of which Seller is aware by any party
obligated to Seller pursuant to Seller Material Contracts.
(b) Except as set forth in Seller SEC Reports filed prior to the
date of this Agreement or as provided for in this Agreement, neither Seller
nor any of its Subsidiaries is a party to any oral or written (i)
consulting agreement providing for annual payments by Seller or any of its
Subsidiaries in excess of $100,000, (ii) agreement with any executive
officer or other key employee of Seller or any of its Subsidiaries the
benefits of which are contingent or vest, or the terms of which are
materially altered, upon the occurrence of a transaction involving Seller
or any of its Subsidiaries of the nature contemplated by this Agreement,
(iii) agreement with respect to any executive officer or other key employee
of Seller or any of its Subsidiaries providing any term of employment or
compensation guarantee, (iv) agreement or plan, including any stock option,
stock appreciation right, restricted stock or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement, (v) agreement that would restrict Seller's or any
Subsidiary's ability to compete in any business in any location, (vi)
agreements concerning a partnership or joint venture, (vii) loan
agreements, promissory notes, security agreements, deeds of trust and other
agreements relating to indebtedness for borrowed money or deferred purchase
price of property (other than trade payables arising in the ordinary course
of business), (viii) any agreement relating to business acquisitions or
dispositions not yet consummated, including any separate Tax or
indemnification agreements, and (ix) any other agreement that would be
required to be filed as an exhibit to an Annual Report on Form 10-K of
Seller if Seller were to file such a report on the date of this Agreement
(assuming for this purpose that the fiscal year covered thereby ended on
the date of this Agreement).
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(c) All Seller Material Contracts and such other agreements
required to be disclosed in Section 3.10 of the Seller Disclosure Schedule
are valid and binding and are in full force and effect and enforceable
against Seller or its Subsidiaries in accordance with their respective
terms, except as to the effect, if any, of (i) applicable bankruptcy or
other similar laws affecting the rights of creditors generally, (ii) rules
of law governing specific performance, injunctive relief and other
equitable remedies and (iii) to the extent applicable, the enforceability
of provisions regarding indemnification in connection with the sale or
issuance of securities. Neither Seller nor any of its Subsidiaries is in
material violation or breach of or default under, or has received notice of
any material violation or breach of or default under, any such Seller
Material Contracts or other agreements required to be disclosed in Section
3.10 of the Seller Disclosure Schedule. To the Knowledge of Seller, no
other party to a Seller Material Contract or any other agreement required
to be disclosed in Section 3.10 of the Seller Disclosure Schedule is in
material violation or breach of or default under any such Seller Material
Contract or other such agreement, as the case may be.
Section 3.11 LITIGATION. Except as described in the Seller SEC Reports,
there are no claims, actions, suits, investigation or proceedings pending or, to
the Knowledge of Seller, threatened against or affecting Seller or any of its
Subsidiaries or any of their respective assets or properties, at law or in
equity, before or by any Federal, state, municipal or other governmental agency
or authority, foreign or domestic, or before any arbitration board or panel,
wherever located, which would, or could reasonably be expected to, require
payments by Seller or any of its Subsidiaries in excess of $100,000 individually
or $1,000,000 in the aggregate, not fully recoverable from insurance.
Section 3.12 ENVIRONMENTAL MATTERS.
(a) Within the last three years, Seller has conducted its
business operations in compliance, in all material respects, with all
applicable Environmental Laws and has obtained and maintained in full force
and effect all material permits, licenses, approvals and other governmental
authorizations required under any Environmental Law for the operation of
Seller's business.
(b) No above ground or underground tanks are located under, in or
on any facility or real estate currently owned or leased by Seller, or, to
the Knowledge of Seller, have been located under, in or on any such
facility or real estate and have subsequently been removed or filled. To
the extent storage tanks exist on or under any facility or real estate
currently owned or leased by Seller, such storage tanks have been duly
registered with all appropriate regulatory and governmental bodies and
otherwise are in compliance in all material respects with applicable
Federal, state and local statutes, regulations, ordinances and other
regulatory requirements.
15
(c) Seller has provided and disclosed to Purchaser all material
reports, information, notices and communications, written or oral, in
Seller's possession or control pertaining to the environmental condition of
any facility or real estate currently owned or leased by Seller, or the
remediation of any contamination thereof. Seller does not have Knowledge of
any material expenditures or other actions required to bring any facility
or real estate currently owned or leased by Seller, in compliance with any
Environmental Law.
(d) No facility or real estate currently or previously owned or
leased by Seller has been used by Seller or, to the Knowledge of Seller,
any other person or entity to generate, manufacture, refine, transport,
treat, store, handle or dispose of any Hazardous Substance in violation of
any Environmental Law, and, to the Knowledge of Seller, there has not been
any Release of any Hazardous Substance on, under, about, or from any
facility or real estate currently or previously owned or leased by Seller
within the last three years in violation of any Environmental Law or that
may require material remedial action under any Environmental Law. To the
Knowledge of Seller the facilities or real estate currently or previously
owned or leased by Seller within the last three years do not contain any
condition which could reasonably be expected to result in a material claim,
right of action or recovery against Seller by any person or entity under
any Environmental Law.
(e) "Hazardous Substance" means any pollutant, contaminant,
hazardous substance or waste, solid waste, petroleum or any fraction
thereof, or any other chemical, substance or material listed or identified
in or regulated by any Environmental Law; "Environmental Law" means the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss. 9601 et seq., the Resource Conservation and Recovery Act. 42
U.S.C. ss. 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
ss. 1201 et seq., the Clean Act, 33 U.S.C. ss. 1321 et seq., the Clean Air
Act, 42 U.S.C. ss.7401 et seq., and any other federal, state, local or
other governmental statute, regulation, law or ordinance dealing with the
protection of human health, natural resources and/or the environment;
"Release" means any release, spill, effluent, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the environment, or into or out of any property owned, operated or
leased by the applicable party.
Section 3.13 EMPLOYEE BENEFIT PLANS.
(a) Seller has set forth on Schedule 3.13 of the Seller
Disclosure Schedule all "employee benefit plans" as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and all bonus, stock option, stock purchase, incentive, deferred
compenSation, supplemental retirement, severance, and other similar
employee benefit plans, and all unexpired severance agreements, written or
otherwise, for the benefit of or relating to, any current or former
employee of Seller or any trade or business (whether or not incorporated)
(an "ERISA Affiliate") which is aggregated with Seller or any Subsidiary of
Seller pursuant to Section 414 of the Code (together, the "Seller Employee
Plans").
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(b) With respect to each Seller Employee Plan, Seller has made
available to Purchaser a true and correct copy, to the extent applicable,
of (i) the most recent annual report (Form 5500) filed with the Internal
Revenue Service ("IRS"), (ii) the plan document and summary plan
description, (iii) each trust agreement and group annuity contract, if any,
and (iv) the most recent actuarial report or valuation, if any, and most
recent IRS determination letter.
(c) With respect to the Seller Employee Plans, individually and
in the aggregate, no event has occurred, and to the Knowledge of Seller,
there exists no condition or set of circumstances in connection with which
Seller could be subject to any liability that is reasonably likely to have
a Material Adverse Effect on Seller and its Subsidiaries, taken as a whole,
under ERISA, the Code, or any other applicable law and each Seller Employee
Plan has been administered in material compliance with applicable law,
including ERISA and the Code and have been administered substantially in
accordance with its respective terms.
(d) With respect to the Seller Employee Plans, individually and
in the aggregate, there are no material benefit obligations required to be
funded for which contributions have not been made or properly accrued and
there are no unfunded benefit obligations which have not been accounted for
by reserves, or otherwise properly footnoted in accordance with generally
accepted accounting principles on the financial statements of Seller.
(e) Except as disclosed in Seller SEC Reports filed prior to the
date of this Agreement and except as provided for or referenced in this
Agreement, neither Seller nor any of its Subsidiaries is party to any (i)
agreement with any officer or other key employee of Seller or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which
are materially altered upon the occurrence of a transaction involving
Seller of the nature contemplated by this Agreement, (ii) agreement with
any officer of Seller providing any term of employment or compensation
guarantee extending for a period longer than one year from the date hereof
or for the payment of compensation in excess of $150,000 per annum, or
(iii) agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan, or stock purchase plan, any
of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement.
(f) Seller does not maintain any pension plans subject to Title
IV of ERISA.
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Section 3.14 COMPLIANCE WITH LAWS. Seller has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state, or local statute, law, or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which would not have a Material Adverse Effect
on Seller and its Subsidiaries, taken as a whole. Neither Seller nor any of its
Subsidiaries has offered, authorized, promised, made or agreed to make gifts of
money, other property or similar benefits (other than incidental gifts of
articles of nominal value) to any actual or potential customer, supplier,
governmental employee, political party, political party official or candidate,
official of a public international organization or any other person in a
position to assist or hinder Seller or any of its Subsidiaries other than
payments required or permitted by the laws of the applicable jurisdiction and in
compliance with the U.S. Foreign Corrupt Practices Act.
Section 3.15 OPINION OF FINANCIAL ADVISOR. The financial advisor of
Seller, Xxxxxxxx Inc., has delivered to Seller an opinion to the effect that the
Merger is fair from a financial point of view to the Shareholders.
Section 3.16 RIGHTS AGREEMENT. Seller has adopted an amendment to the
Seller Rights Agreement with the effect that neither Purchaser nor Sub shall be
deemed to be an Acquiring Person (as defined in the Seller Rights Agreement),
the Distribution Date (as defined in the Seller Rights Agreement) shall not be
deemed to occur and the Rights (as defined in the Seller Rights Agreement) will
not separate from the Seller Common Stock, in each case as a result of Seller
entering into this Agreement or consummating the Merger in accordance with the
terms of this Agreement. The Seller Board has resolved to, and Seller will
promptly after the execution of this Agreement, take all action necessary to
render the Rights pursuant to the terms of the Seller Rights Agreement
inapplicable to the Merger and this Agreement and for the Rights to expire or be
redeemed immediately prior to the Effective Time.
Section 3.17 INFORMATION SUPPLIED. None of the proxy statement relating to
Seller Shareholders' Meeting, as amended or supplemented from time to time (as
so amended and supplemented, the "Proxy Statement"), and any other documents to
be filed by Seller with the SEC or any other Governmental Entity in connection
with the Merger and the other transactions contemplated hereby, will, on the
date of its filing or, in the case of the Proxy Statement, at the date it is
mailed to the Shareholders and at the time of the Seller Shareholders' Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
or necessary to correct any statement in any earlier communication with respect
to any solicitation of proxies for the Seller Shareholders' Meeting which shall
have become false or misleading, except that no representation is made by Seller
with respect to information supplied in writing by or on behalf of Purchaser or
Sub expressly for inclusion therein and information incorporated by reference
therein from documents filed by Purchaser or any of its Subsidiaries with the
SEC. The Proxy Statement filed by Seller with the SEC under the Exchange Act
relating to the Seller Shareholders' Meeting will comply as to form in all
material respects with the Exchange Act.
Section 3.18 LABOR MATTERS. Neither Seller nor any of its Subsidiaries is
a party to any collective bargaining agreement with any labor union,
confederation or association and there are no discussions, negotiations, demands
or proposals that are pending or, to the Knowledge of Seller, threatened, or
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have been conducted or made with or by any labor union, confederation or
association regarding organizational activities. Except as disclosed in Seller
SEC Reports filed prior to the date of this Agreement, there are no material
controversies pending or, to the Knowledge of Seller, threatened between Seller
or any of its Subsidiaries and any representatives of its employees and, to the
Knowledge of Seller, there are no material organizational efforts presently
being made involving any of the now unorganized employees of Seller or any of
its Subsidiaries. Since January 1, 2000, there has been no work stoppage,
strike, material dispute or other concerted action by employees of Seller or any
of its Subsidiaries. During that period, Seller and its Subsidiaries have
complied in all material respects with all applicable Laws relating to the
employment of labor, including, without limitation those relating to wages,
hours and collective bargaining. There is no pending, or to the Knowledge of
Seller, threatened action, complaint, arbitration, proceeding or investigation
against Seller or any of its Subsidiaries by or before (or, in the case of any
threatened matter, that could be brought before ) any court, Governmental
Entity, administrative agency, board, commission or arbitrator brought by or on
behalf of any prospective, current or former employees of Seller or any of its
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect on Seller and its Subsidiaries, taken as a whole. Within the past three
(3) years, neither Seller nor any of its Subsidiaries has closed any facility,
or effectuated any layoffs of employees or implemented any early retirement,
separation or similar program, nor has Seller or any of its Subsidiaries planned
or announced any such action or program for the future.
Section 3.19 INSURANCE. Schedule 3.19 of the Seller Disclosure Schedule
contains a list of all material insurance policies which are owned by Seller and
any of its Subsidiaries and which name Seller or any of its Subsidiaries as an
insured, including without limitation, self-insurance programs and those which
pertain to Seller's assets, employees or operations. All such insurance policies
are in full force and effect and Seller has not received notice of cancellation
of any such insurance policies.
Section 3.20 CUSTOMERS. Schedule 3.20 of the Seller Disclosure Schedule
lists the 25 largest customers of Seller for the 12-month period ended December
31, 2004 and for the eight-month period ended August 31, 2005, and sets forth
opposite the name of each such customer the approximate percentage and dollar
amount of net sales by Seller and its Subsidiaries attributable to such customer
for each such period. Since December 31, 2004, no customer required to be listed
in Schedule 3.20 of the Seller Disclosure Schedule has indicated to any officer,
director or manager of sales of Seller or any of its Subsidiaries that such
customer will stop or materially decrease the rate of business done with Seller
or any of its Subsidiaries.
Section 3.21 AFFILIATE TRANSACTIONS. Except as set forth in Seller SEC
Reports, there are no contracts, commitments, agreements, arrangements or other
transactions between Seller or any of its Subsidiaries, on the one hand, and any
(i) present officer or director of Seller or any of its Subsidiaries or any of
their immediate family members (including their spouses) or (ii) affiliate of
any such officer, director, family member or beneficial owner, on the other
hand, required to be disclosed pursuant to Item 404 of Regulation S-K of the
SEC.
Section 3.22 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the voting power of the Seller Common Stock with respect to the
adoption of this Agreement is the only vote of the holders of any class or
series of the capital shares of Seller required to adopt this Agreement and
approve the Merger and the other transactions contemplated hereby.
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Section 3.23 STATE TAKEOVER STATUTES. Seller has taken all action
necessary in order to exempt this Agreement, the Voting Agreements and the
Merger and the other transactions contemplated hereby and thereby from, and this
Agreement, the Voting Agreements and the Merger and the other transactions
contemplated hereby and thereby are exempt from, the requirements of any "fair
price," "moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation existing under, or adopted in connection with, the laws of
the State of Minnesota or any other state.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB
Purchaser and Sub, jointly and severally, represent and warrant to Seller
that the statements contained in this Article IV are true and correct, except as
set forth in the disclosure schedule delivered by Purchaser to Seller on or
before the date of this Agreement (the "Purchaser Disclosure Schedule"). The
Purchaser Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article IV and the
disclosure in any paragraph shall qualify only the corresponding paragraph in
this Article IV, except where the information in any such section is disclosed
in such a manner to make its relevance to any other representation or warranty
readily apparent, in which case such section shall be deemed to also qualify
such other representation and warranty.
Section 4.01 ORGANIZATION OF PURCHASER AND SUB. Each of Purchaser and Sub
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, has all requisite corporate
power to own, lease, and operate its property and to carry on its business as
now being conducted, and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a Material Adverse Effect on Purchaser and its
Subsidiaries, taken as a whole.
Section 4.02 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONTRACTS.
(a) Each of Purchaser and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated by
this Agreement have been duly authorized by all necessary corporate action
on the part of each of Purchaser and Sub. This Agreement has been duly
executed and delivered by Purchaser and Sub and constitutes the valid and
binding obligation of each of Purchaser and Sub, enforceable in accordance
with its terms.
(b) The execution and delivery of this Agreement by each of
Purchaser and Sub does not, and the consummation of the transactions
contemplated by this Agreement will not, (i) conflict with, or result in
any violation or breach of any provision of the Articles of Incorporation
or Bylaws of either Purchaser or Sub, (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both)
a default (or give rise to a right of termination, cancellation, or
acceleration of any obligation or loss of any material benefit) under any
of the terms, conditions, or provisions of any note, bond, mortgage,
indenture, lease, contract, or other agreement, instrument, or obligation
to which Purchaser or any of its Subsidiaries is a party or by which any of
them or any of their properties or assets may be bound, and where such
violation, breach or default would have a Material Adverse Effect on either
Purchaser or Sub or on the transactions contemplated by this Agreement, or
(iii) conflict or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule, or regulation
applicable to Purchaser or any of its Subsidiaries or their properties or
assets where such conflict or violation would have a Material Adverse
Effect on Purchaser or on the transactions contemplated by this Agreement.
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(c) No material consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental Entity is
required by or with respect to Purchaser or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) the
filing of the pre-merger notification report under the HSR Act, (ii) the
filing of the Articles of Merger, and (iii) such consents, approvals,
orders, authorizations, registrations, declarations, and filings as may be
required to be obtained by Purchaser under applicable federal and state
securities laws or under any applicable requirement of any Department of
Transportation.
Section 4.03 LITIGATION. There are no claims, actions, suits,
investigations or proceedings pending or, to the Knowledge of Purchaser,
threatened against or affecting Purchaser or any of its Subsidiaries or any of
their respective assets or properties, at law or in equity, before or by any
Federal, state, municipal or other governmental agency or authority, foreign or
domestic, or before any arbitration board or panel, wherever located, which are
likely to have a Material Adverse Effect on Purchaser or its Subsidiaries, taken
as a whole.
Section 4.04 COMPLIANCE WITH LAWS. Each of Purchaser and Sub has complied
with, is not in violation of, and has not received any notices of violation with
respect to, any federal, state, or local statute, law, or regulation with
respect to the conduct of its business, or the ownership or operation of its
business, except for failures to comply or violations which would not have a
Material Adverse Effect on Purchaser and its Subsidiaries, taken as a whole.
Section 4.05 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities, and has conducted its operations only
as contemplated by this Agreement.
Section 4.06 FINANCING. Purchaser has, or has received binding (subject to
the terms and conditions thereof) written commitments from financially
responsible financial institutions to obtain, the funds necessary to consummate
the Merger and pay the Merger Consideration as provided in Section 2.01, and to
pay related fees and expenses (collectively, the "Commitment Letters").
Purchaser has provided Seller with true and complete copies of the Commitment
Letters.
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Section 4.07 INFORMATION SUPPLIED. Neither the information supplied or to
be supplied in writing by or on behalf of Purchaser or Sub for inclusion in the
Proxy Statement or any other documents to be filed by Purchaser, Sub or Seller
with the SEC or any other Governmental Entity in connection with the Merger and
the other transactions contemplated hereby will, on the date of its filing or,
in the case of the Proxy Statement, at the date it is mailed to the Shareholders
and at the time of the Seller Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to any
solicitation of proxies for the Seller Shareholders' Meeting which shall have
become false or misleading.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.01 COVENANTS OF SELLER. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Seller agrees as to itself and its Subsidiaries (except
to the extent that Purchaser shall otherwise consent in writing), to carry on
its business in the usual, regular, and ordinary course in substantially the
same manner as previously conducted, to pay its debts and taxes when due subject
to good faith disputes over such debts or taxes (it being understood payment of
fees and expenses in connection with the transactions contemplated by this
Agreement shall be permitted; provided, that such fees and expenses, and any
other amounts payable in connection with the transactions contemplated by this
Agreement, other than any fees and expenses payable to Xxxxxxxx Inc. pursuant to
the terms of its engagement letter with Seller dated June 9, 2005 (as amended on
August 10, 2005 and October 14, 2005, collectively, the "Xxxxxxxx Letter"),
shall not exceed $1,000,000 in the aggregate), to pay or perform other
obligations when due, and, to the extent consistent with such business, to use
all reasonable effort consistent with past practices and policies to preserve
intact its present business organization, to keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, franchisees, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Seller shall
promptly notify Purchaser of any event or occurrence not in the ordinary course
of business of Seller. Without limitation of the foregoing, during such period
of time, except as expressly contemplated by this Agreement, Seller shall not
(and shall not permit any of its Subsidiaries to), without the prior written
consent of Purchaser:
(a) declare or pay any dividends on or make any other
distributions (whether in cash, stock, or property) in respect of any of
its capital stock or split, combine, or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of,
in lieu of, or in substitution for shares of its capital stock, or purchase
or otherwise acquire, directly or indirectly, any shares of its capital
stock;
(b) issue, deliver, or sell or authorize or propose the issuance,
delivery, or sale of, or purchase or propose the purchase of, any shares of
its capital stock or securities convertible into shares of its capital
stock, or subscriptions, rights, warrants, or options to acquire, or other
agreements or commitments of any character obligating it to issue, any such
shares or other convertible securities, other than the issuance of shares
upon the exercise of Seller Stock Options outstanding as of the date hereof
under the Seller Option Plans, the issuance of shares upon the exercise of
options accrued as of the date of this Agreement under the Seller ESPP, and
issuances of securities under the Seller Rights Agreement, as amended to
date;
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(c) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association, or other business organization or division, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of Seller and its
Subsidiaries, taken as a whole;
(d) sell, lease, license, or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate,
to the business of Seller and its Subsidiaries, taken as a whole, except in
the ordinary course of business consistent with past practices;
(e) (i) increase or agree to increase the compensation payable or
to become payable to its directors, officers or employees, except for
increases in salary or wages of employees other than directors or officers
of Seller in accordance with past practices and except for the acceleration
of unvested Seller Stock Options outstanding as of the date hereof, (ii)
increase or agree to increase the compensation payable or to become payable
to directors or officers of Seller or grant any additional severance or
termination pay to, or enter into any employment or severance agreements
with such directors or officers, (iii) grant any severance or termination
pay to, or enter into any employment or severance agreement with, any
employee, except in accordance with past practices, (iv) enter into any
collective bargaining agreement, (v) establish, adopt, enter into, or amend
any bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination,
severance, or other plan, trust, fund, policy, or arrangement for the
benefit of any directors, officers, or employees, or (vi) hire any new
executive employee;
(f) revalue any of its material assets, including writing down
the value of inventory or writing off notes or accounts receivable, other
than in the ordinary course of business;
(g) incur, outside the ordinary course of its business, any
indebtedness for borrowed money or guarantee any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire any debt
securities of Seller or any of its Subsidiaries or guarantee any debt
securities of others;
(h) amend or propose to amend its charter documents or Bylaws;
(i) make any capital expenditure or commitment for which it is
not contractually bound at the date hereof, except expenditures and
commitments undertaken in accordance with Seller's 2005 Capital Budget,
dated January 21, 2005 and modified on September 21, 2005, which 2005
Capital Budget as modified has been delivered to Purchaser prior to the
date of this Agreement;
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(j) enter into any Seller Material Contracts or amend or modify
any existing Seller Material Contracts, or engage in any new transaction
outside the ordinary course of business consistent with past practice or
not on an arm's length basis, with any affiliate of Seller or any of its
Subsidiaries;
(k) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement), other than settlements involving
payments that (i) have been fully reserved on the balance sheet at August
31, 2005 (specific claim amount plus applied growth) or (ii) exceed such
amount or are not so reserved and are not in excess of $100,000
individually or $500,000 in the aggregate not fully recoverable from
insurance;
(l) change its fiscal year, revalue any of its material assets,
or make any changes in financial, actuarial, reserving, statutory or Tax
accounting methods, principles or practices, except in each case as
required by GAAP or applicable Law;
(m) except to the extent required by applicable law, make any
material Tax election or settle or compromise any material Tax liability
with any Governmental Entity, or agree to an extension of a statute of
limitations with respect to material Taxes; or
(n) take, or agree in writing or otherwise to take, any of the
actions described in Sections (a) through (j) above, or any action which is
reasonably likely to make any of Seller's representations or warranties
contained in this Agreement untrue or incorrect in any material respect on
the date made (to the extent so limited) or as of the Effective Time.
Section 5.02 COOPERATION. Subject to compliance with applicable law, from
the date hereof until the Effective Time, each of Purchaser and Seller shall
confer on a regular and frequent basis with one or more representatives of the
other party to report material operational matters and the general status of
ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger, and the transactions contemplated
hereby and thereby. In addition, Seller agrees to provide, and will cause its
Subsidiaries and its and their respective directors, officers, employees and
advisors to provide, all cooperation reasonably necessary in connection with the
arrangement of any financing to be consummated in respect of the transactions
contemplated by this Agreement, including participation in meetings, due
diligence sessions, the execution and delivery of the Commitment Letters,
underwriting or placement agreements, pledge and security documents, other
definitive financing documents or other requested certificates or documents as
may be reasonably required by Purchaser and taking such other actions as are
reasonably required to be taken by Seller; provided, however, that Purchaser
shall not interfere materially with the duties of such officers, employees and
advisors. In addition, in conjunction with the obtaining of any such financing,
Seller agrees, at the reasonable request of Purchaser, to call for prepayment or
redemption, or to prepay, redeem and/or renegotiate, as the case may be, any
then existing indebtedness of Seller and its Subsidiaries; provided, however,
that no call for redemption or prepayment shall be irrevocably made until
contemporaneously with or after the Effective Time and Seller shall not be
required to pay any redemption or prepayment fee prior to the Effective Time.
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ARTICLE VI
ADDITIONAL AGREEMENTS AND COVENANTS
Section 6.01 NO SOLICITATION.
(a) Seller shall not (i) solicit, initiate, or knowingly
encourage any inquiries or proposals that constitute, or are reasonably
likely to lead to, an Acquisition Proposal, other than the transactions
contemplated by this Agreement, (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal, or (iii) agree to, approve, or
recommend any Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent Seller, the Seller Board, or the
Special Committee from furnishing non-public information to, or entering
into discussions or negotiations with, any person, entity or group of
persons or entities (a "Third Party"), or taking any other action deemed
necessary, in connection with an unsolicited bona fide Acquisition Proposal
by such Third Party or recommending an unsolicited bona fide written
Acquisition Proposal to the Shareholders, if and only to the extent that
the Special Committee determines in good faith after consultation with
outside legal counsel that such action is necessary for it to comply with
its fiduciary duties to the Shareholders under applicable law.
Notwithstanding the previous sentence, if at any time prior to obtaining
Shareholder Approval, (a) Seller has received a bona fide unsolicited
written Acquisition Proposal that did not result from a breach of this
Section 6.01, and the Special Committee has reasonably determined in good
faith that such Acquisition Proposal constitutes a Superior Proposal, then
Seller may take any of the actions described in clause (ii) of this Section
6.01(a); provided, however, that Seller (A) will provide notice to
Purchaser of the receipt of such Acquisition Proposal within twenty-four
(24) hours after any member of the Special Committee or Xxxxxxxx Inc. has
knowledge of the receipt thereof, (B) will not disclose any information to
such Third Party without entering into an acceptable confidentiality
agreement containing terms no more favorable to such Third Party than the
terms set forth in the Confidentiality Agreement and (C) will promptly
provide to Purchaser any non-public information concerning Seller provided
to such Third Party which was not previously provided to Purchaser. Upon
execution of this Agreement, Seller shall (whether directly or indirectly
through its representatives), and Seller shall direct and use reasonable
best efforts to cause its and its Subsidiaries' respective representatives
to, cease immediately and cause to be terminated any and all existing
discussions, conversations, negotiations and other communications with any
Third Parties conducted heretofore with respect to, or that could
reasonably be expected to lead to, an Acquisition Proposal and promptly
request that all confidential information with respect thereto furnished by
or on behalf of Seller be returned or destroyed. Without limiting the
foregoing, Seller agrees that any violation of the restrictions set forth
in this Section 6.01(a) by any of Seller's representatives or its
Subsidiaries' representatives, whether or not purporting to act on behalf
of Seller, shall constitute a breach of this Section 6.01(a) by Seller.
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(b) Seller shall notify Purchaser promptly (and no later than 24
hours) after receipt by any member of the Special Committee or Xxxxxxxx
Inc. of any Acquisition Proposal or any request for non-public information
in connection with an Acquisition Proposal or for access to the properties,
books, or records of Seller by any person or entity that informs Seller
that it is considering making, or has made, an Acquisition Proposal. Seller
shall inform Purchaser on a current basis of the status and terms of any
discussions regarding, or relating to, any such Acquisition Proposal with a
Third Party (including amendments and proposed amendments) and, as promptly
as practicable, of any change in the price, structure or form of the
consideration or material terms of and conditions regarding the Acquisition
Proposal. In fulfilling its obligations under this Section 6.01(b), Seller
shall provide promptly to Purchaser copies of all written proposals. All
information provided by Seller to Purchaser pursuant to this Section
6.01(b) shall be kept confidential by Purchaser in accordance with the
terms of the Confidentiality Agreement. Immediately upon determination by
the Seller Board that an Acquisition Proposal constitutes a Superior
Proposal, Seller shall deliver to Purchaser a written notice advising
Purchaser that the Seller Board has so determined, specifying the terms and
conditions of such Superior Proposal (including the amount that the
Shareholders will receive per share of Seller Common Stock (valuing any
non-cash consideration at what the Seller Board determines in good faith,
after consultation with a financial advisor of nationally recognized
reputation, to be the fair value of the non-cash consideration)) and the
identity of the Third Party making such Superior Proposal, and providing
Purchaser at such time with a copy of the Superior Proposal and all
documents relating thereto.
(c) The Seller Board has adopted a resolution resolving to
recommend that the Shareholders vote for the approval of this Agreement
(the "Seller Recommendation"). The Seller Board shall not (i) withdraw,
qualify or modify, or propose publicly to withdraw, qualify or modify, in
each case, in a manner adverse to Purchaser, the Seller Recommendation or
make any statement, filing or release, in connection with the Seller
Shareholders' Meeting or otherwise, inconsistent with the Seller
Recommendation (it being understood that taking a neutral position or no
position with respect to an Acquisition Proposal shall be considered an
adverse modification of the Seller Recommendation), subject to Section
6.01(d) (any such action, a "Change in Recommendation"), (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal and/or (iii) enter into (or cause Seller or any of its
Subsidiaries to enter into) any letter of intent, agreement in principle,
acquisition agreement or other agreement (A) related to any Acquisition
Proposal (other than an acceptable confidentiality agreement entered into
in accordance with the provisions of Section 6.01(a)) or (B) requiring
Seller to abandon, terminate or fail to consummate the Merger.
Notwithstanding the foregoing, prior to obtaining the Shareholder Approval,
(x) the Seller Board may effect a Change in Recommendation if the Seller
Board has determined in good faith, after consultation with its outside
legal counsel and a financial advisor of nationally recognized reputation,
that it would be necessary for it to comply with its fiduciary duties to
the Shareholders under applicable law to effect a Change in Recommendation
and (y) (I) the Seller Board may approve or recommend to the Shareholders
an Acquisition Proposal that the Seller Board has determined constitutes a
Superior Proposal (a "Seller Subsequent Determination"), (II) terminate
this Agreement pursuant to Section 8.01(h) and (III) enter into any letter
of intent, agreement in principle, acquisition agreement or other agreement
related to such Superior Proposal; provided, however, that, in each case
with respect to clause (y), Seller has fully complied with its obligations
under this Section 6.01(c) and with the terms of Section 8.01(h), and has
paid to Purchaser the Expenses and the Termination Fee, in each case, in
accordance with Section 8.03.
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(d) Nothing contained in this Agreement shall prohibit Seller
from taking and disclosing to the Shareholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any
required disclosure to the Shareholders if, in the good faith judgment of
the Seller Board failure to so disclose would be inconsistent with its
obligations under applicable law.
Section 6.02 PROXY STATEMENT.
(a) As promptly as practical after the execution of this
Agreement, Seller shall prepare and file with the SEC the Proxy Statement
to be sent to the Shareholders in connection with the meeting of the
Shareholders to vote upon this Agreement and the Merger (the "Seller
Shareholders' Meeting"). Except as permitted by Section 6.01, Seller shall,
through the Seller Board, include in the Proxy Statement the recommendation
of the Seller Board that the Shareholders adopt this Agreement and shall
use its reasonable best efforts to obtain such adoption. Purchaser and
Seller shall make all other necessary filings with respect to the Merger
under the Exchange Act and the rules and regulations thereunder.
(b) Seller shall take such action as may be necessary to insure
that the information supplied by Seller for inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to the
Shareholders, at the time of the Seller Shareholders' Meeting, and at the
Effective Time, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or omit to state any material fact necessary
in order to make the statements made in the Proxy Statement not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Seller Shareholders' Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating
to Seller or any of its affiliates, officers, or directors should be
discovered by Seller which should be set forth in a supplement to the Proxy
Statement, Seller shall promptly so inform Purchaser.
(c) Purchaser shall take such action as may be necessary to
insure that the information supplied by Purchaser for inclusion in the
Proxy Statement shall not on the date the Proxy Statement is first mailed
to the Shareholders, at the time of the Seller Shareholders' Meeting, and
at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements made in the Proxy Statement
not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Seller Shareholders' Meeting which has
become false or misleading. If at any time prior to the Effective Time any
event relating to Purchaser or any of its affiliates, officers, or
directors should be discovered by Purchaser which should be set forth in a
supplement to the Proxy Statement, Purchaser shall promptly so inform
Seller.
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Section 6.03 ACCESS TO INFORMATION. Upon reasonable notice, Seller shall
(and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, and other representatives of Purchaser, access, during
normal business hours during the period prior to the Effective Time, to all
officers, employees, agents, customers and accountants of Seller and its
Subsidiaries and their respective properties, books, contracts, commitments, and
records and, during such period, each of Seller and Purchaser shall (and shall
cause each of their respective Subsidiaries to) furnish promptly to the other
(a) a copy of each report, schedule, registration statement, and other document
filed or received by it during such period pursuant to the requirements of
federal securities laws and (b) all other information concerning its business,
properties, and personnel as such other party may reasonably request. Unless
otherwise required by law, the parties will hold any such information which is
nonpublic in confidence in accordance with the confidentiality agreement between
Purchaser and Seller, dated July 19, 2005 (the "Confidentiality Agreement"). No
information or Knowledge obtained in any investigation pursuant to this Section
6.03 shall affect or be deemed to modify a representation or warranty contained
in this Agreement or the conditions to the obligations of the parties to
consummate the Merger.
Section 6.04 SELLER SHAREHOLDERS' MEETING. Seller shall, through the
Seller Board, duly call, give notice of, convene and hold the Seller
Shareholders' Meeting for the purpose of voting on the adoption of this
Agreement and obtaining approval of adoption of this Agreement by the
affirmative vote of the holders of a majority of the voting power of the Seller
Common Stock entitled to vote thereon ("Shareholder Approval") as soon as
reasonably practicable after the date hereof. Without limiting the generality of
the foregoing, Seller's obligations pursuant to the first sentence of this
Section 6.04 shall not be affected by (i) a Change in Recommendation permitted
by Section 6.01(c) or (ii) the commencement, public announcement, disclosure or
other communication to the Seller Board of any Acquisition Proposal or any
intention (whether or not conditional) with respect to any potential or future
Acquisition Proposal, unless, in the case of clause (i), this Agreement is
terminated pursuant to Section 8.01(e), or, in the case of clause (ii), this
Agreement is terminated pursuant to Section 8.01(h).
Section 6.05 LEGAL CONDITIONS TO MERGER. Subject to Section 6.01, each of
Purchaser and Seller will use their reasonable best efforts to comply promptly
with all legal requirements which may be imposed on it with respect to the
Merger (which actions shall include, without limitation, furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any other Governmental Entity) and will promptly cooperate with and
furnish information to each other in connection with any such requirements
imposed upon either of them or any of their Subsidiaries in connection with the
Merger. Each of Purchaser and Seller will, and will cause its Subsidiaries to,
use its reasonable best efforts to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order, or approval of, or any exemption
by, any Governmental Entity or other public third party, required to be obtained
or made by Purchaser, Seller, or any of their Subsidiaries in connection with
the Merger or the taking of any action contemplated thereby or by this
Agreement.
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Section 6.06 PAYMENT OF TAXES. Seller shall pay, prior to the Effective
Time (a) all Taxes required to be paid prior to the Effective Time, and (b)
shall withhold with respect to its employees all federal and state income taxes,
FICA, FUTA, and other Taxes required to be withheld.
Section 6.07 PUBLIC DISCLOSURE. Purchaser and Seller shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement, or with respect to
anything involving or referring to the other, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law.
Section 6.08 CONSENTS. Each of Purchaser and Seller shall use all
reasonable efforts to obtain all necessary consents, waivers, and approvals
under any of Purchaser's or Seller's material agreements, contracts, licenses,
or leases in connection with the Merger.
Section 6.09 BROKERS OR FINDERS. Each of Purchaser and Seller represents,
as to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor, or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
Xxxxxxxx Inc., whose fees and expenses will be paid by Seller in accordance with
the terms of the Xxxxxxxx Letter (a copy of which has been delivered by Seller
to Purchaser prior to the date of this Agreement).
Section 6.10 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) For a period of not less than one (1) year following the
Effective Time, the Continuing Corporation shall provide all individuals
who are employees of the Seller and its Subsidiaries (including employees
who are not actively at work on account of illness, disability or leave of
absence) on the Effective Time (the "Affected Employees"), while employed
by the Continuing Corporation, with compensation and benefits (not
including equity compensation) which are substantially comparable in the
aggregate to the compensation and benefits provided to such Affected
Employee as of the date of this Agreement. The Continuing Corporation shall
continue to provide and recognize all accrued but unused vacation of
Affected Employees as of the Effective Time. Affected Employees shall be
credited with service with the Seller or its Subsidiaries for all purposes
under any of the welfare plans (including medical, dental and disability
coverage) established or maintained by the Continuing Corporation after the
Effective Time. Purchaser shall, and shall cause the Continuing Corporation
to, assume and honor all Seller Material Contracts relating to employment
to the extent of the respective terms of such agreements. Subject to the
preceding sentence, nothing in this Agreement shall be interpreted as
limiting the power of the Continuing Corporation or Purchaser to amend or
terminate any particular employee benefit plan, program, agreement or
policy or as requiring the Continuing Corporation or Purchaser to offer to
continue the employment of any Affected Employee for any period of time or
to offer to continue (other than as required by its written terms) any
employee benefit plan, program, agreement or policy. Notwithstanding
anything in this Section 6.10 to the contrary, nothing in this Section 6.10
is intended to, and shall not, confer upon any person other than the
parties hereto any rights or remedies hereunder.
29
(b) The Continuing Corporation shall be responsible for all
liabilities or obligations under the WARN Act and similar state and local
rules, statues and ordinances resulting from the Merger or from the actions
of the Continuing Corporation or any of its Subsidiaries following the
Effective Time. The Continuing Corporation shall be liable for any workers'
compensation or similar workers' protection claims of any Affected Employee
incurred prior to the Effective Time.
Section 6.11 NOTIFICATION OF CERTAIN MATTERS. Seller will give prompt
notice to Purchaser, and Purchaser will give prompt notice to Seller, of (a) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date hereof
to the Effective Time, and (b) any material failure of Seller or Purchaser, or
any director, officer, employee, agent or representative thereof, to comply with
or satisfy any covenant, condition, or agreement to be complied with or
satisfied by it hereunder.
Section 6.12 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of shareholders of Seller
described in Section 6.04, including cooperating fully with the other party. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest the Continuing
Corporation with full title to all properties, assets, rights, approvals,
immunities, and franchises of either of the Constituent Corporations, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
Section 6.13 DIRECTOR AND OFFICER LIABILITY.
(a) From and after the Effective Time, the Purchaser shall
indemnify, defend and hold harmless any person who is on the date hereof,
or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer, director, employee or agent (the
"Indemnified Party") of Seller or any of its Subsidiaries against all
losses, claims, damages, liabilities, costs and expenses (including
attorneys' fees and expenses), judgments, fines, and amounts paid in
settlement in connection with any actual or threatened action, suit, claim,
proceeding or investigation (each, a "Claim") to the extent that any such
Claim is based on or arises out of, (i) the fact that any person is or was
a director, officer, employee or agent of Seller or any of its Subsidiaries
at any time prior to the Effective Time or is or was serving at the request
of Seller or any of its Subsidiaries as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise at any time prior to the Effective Time, or (ii) this Agreement
or any of the transactions contemplated hereby or thereby in each case to
the extent that any such Claim pertains to any matter or fact arising,
existing, or occurring prior to or at the Effective Time, regardless of
whether such Claim is asserted or claimed prior to, at or after the
Effective Time (the matters described in clauses (i) and (ii), the
"Pre-Merger Matters"), to the fullest extent indemnified under Seller's
Articles of Incorporation, Bylaws or any indemnification agreements in
effect as of the date hereof, or under the MBCA, including in each case
provisions relating to the advancement of expenses incurred in the defense
of any action or suit.
30
(b) Purchaser agrees that all right to indemnification and all
limitations or exculpation of liabilities existing in favor of any
Indemnified Party as provided in Seller's Articles of Incorporation, Bylaws
or the MBCA as in effect as of the Effective Time shall continue in full
force and effect with respect to Pre-Merger Matters, without any amendment
thereto, for a period of six years from the Effective Time to the extent
such rights are consistent with the MBCA, provided, that in the event any
Claim or Claims with respect to any such Pre-Merger Matters are asserted or
made within such six-year period, all rights to indemnification in respect
of any such Claim or Claims shall continue until disposition of any such
Claim or Claims; provided, however, that any determination required to be
made with respect to whether an Indemnified Party's conduct complies with
the standards set forth under the MBCA, Sellers' Articles of Incorporation
or Bylaws, as the case may be, shall be made by independent legal counsel
selected by the Indemnified Party and reasonably acceptable to the
Purchaser, retained at the Purchaser's expense; and provided further, that
nothing in this Section shall impair any rights or obligations of any
present or former directors or officers of Seller.
(c) Purchaser shall maintain in effect Seller's directors' and
officers' liability insurance policy as of the Effective Time ("D&O
Insurance") with respect to Pre-Merger Matters for a period of not less
than six years after the Effective Time, provided, that Purchaser may
substitute therefor policies of substantially similar coverage and amounts
containing terms no less advantageous to such former directors or officers.
(d) This Section 6.13 shall survive consummation of the Merger
and is intended to benefit, and may be enforced by, an Indemnified Party or
person covered by D&O Insurance or otherwise eligible for the benefits of
this Section 6.13 and their heirs and personal representatives and will be
binding on the Purchaser and the Continuing Corporation.
Section 6.14 FINANCING. Purchaser and Sub shall use their reasonable best
efforts to obtain the financing contemplated by the Commitment Letters and shall
comply in all respects with their representations, warranties, covenants and
commitments contained therein; provided, however, that notwithstanding anything
in this Agreement to the contrary, Purchaser and Sub shall be entitled to
obtain, in their sole discretion, substitute debt financing in place of some or
all of the financing with one or more other nationally recognized financial
institutions if, and only if, the Commitment Letters or any substitute
commitment letters have not expired and such substitute debt financing would not
delay the consummation of the Merger beyond 180 days following the date of this
Agreement.
Section 6.15 SECTION 16 MATTERS. Seller agrees to take, and cause the
Seller Board, or appropriate committee of the Seller Board, to take, prior to
the Effective Time, any and all such actions as may be reasonably necessary to
afford an exemption from liability under Section 16(b) of the Exchange Act for
any acquisitions and dispositions of equity securities of Seller by its
directors and officers (as defined in Rule 16a-1 under the Exchange Act)
pursuant to the transactions contemplated by this Agreement.
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ARTICLE VII
CONDITIONS TO MERGER
Section 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Seller Common Stock present and
voting at the Seller Shareholders' Meeting called for the purpose of voting
upon the Agreement and the Merger and at which meeting a quorum is present.
(b) HSR ACT. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction, or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the Merger or
limiting or restricting Purchaser's conduct or operation of the business of
Purchaser or Seller after the Merger shall have been issued, nor shall any
proceeding brought by a domestic administrative agency or commission or
other domestic Governmental Entity seeking any of the foregoing be pending;
nor shall there be any action taken, or any statute, role, regulation, or
order enacted, entered, enforced, or deemed applicable to the Merger which
makes the consummation of the Merger illegal.
Section 7.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PURCHASER AND SUB.
The obligations of Purchaser and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived, in
writing, exclusively by Purchaser and Sub.
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller set forth in this Agreement (without regard to
materiality or Material Adverse Effect qualifiers contained therein) shall
be true and correct as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except to the extent
such representations and warranties speak as of an earlier date), except
where the failure to be true and correct would not reasonably be expected
to have a Material Adverse Effect on Seller and its Subsidiaries, taken as
a whole, or a material adverse effect upon the consummation of the
transactions contemplated hereby; and Purchaser shall have received a
certificate of Seller to such effect; provided, however, that claims,
actions, suits and proceedings contemplated by Section 3.11 that arise
after the date of this Agreement shall not be considered to have a Material
Adverse Effect on Seller if consistent with historical experiences.
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(b) PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Purchaser
shall have received a certificate of Seller to such effect.
(c) CONSENTS. Seller shall have obtained all consents, waivers,
and approvals required under any of Seller's material agreements,
contracts, and licenses where the failure to obtain such consents, waivers
or approvals would have a Material Adverse Effect on the transactions
contemplated by this Agreement.
(d) FINANCING. Purchaser and Sub shall have received the proceeds
of the financing contemplated by Section 6.14 hereof.
(e) SELLER RIGHTS AGREEMENT. On or prior to the Closing Date, the
Rights (as defined in the Seller Rights Agreement) shall not have become
exercisable or transferable apart from the associated Seller Common Stock.
(f) DISSENTERS' RIGHTS. Dissenters' rights shall not have been
asserted with respect to greater than 5% of the outstanding shares of
Seller Common Stock.
Section 7.03 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The
obligation of Seller to effect the Merger is subject to the satisfaction of each
of the following conditions, any of which may be waived, in writing, exclusively
by Seller.
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser and Sub set forth in this Agreement (without regard
to materiality or Material Adverse Effect qualifiers contained therein)
shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the
extent such representations speak as of an earlier date), except where the
failure to be true and correct would not reasonably be expected to have a
Material Adverse Effect on Purchaser and Sub, taken as a whole, or a
material adverse effect upon the consummation of the transactions
contemplated hereby; and Seller shall have received a certificate of
Purchaser to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PURCHASER AND SUB. Purchaser
and Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and Seller shall have received a certificate of Purchaser to
such effect.
(c) CONSENTS. Purchaser shall have obtained all necessary
consents, waivers, and appeals required under any of Purchaser's material
agreements, contracts, and licenses where the failure to obtain such
consents, waivers or approvals would have a Material Adverse Effect on the
transactions contemplated by this Agreement.
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ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.01 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, by written notice from the terminating party to the
other party, whether before or after approval of the matters presented in
connection with the Merger by the Shareholders:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller if the Merger shall not have
been consummated within 180 days of the date of this Agreement (provided
that the right to terminate this Agreement under this Section 8.01(b) shall
not be available to a party whose material failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date);
(c) by either Purchaser or Seller if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree, or ruling or taken any other action, in each case
having the effect of permanently restraining, enjoining, or otherwise
prohibiting the Merger;
(d) by Purchaser or Seller, if, at the Seller Shareholders'
Meeting (including any adjournment or postponement thereof), the
Shareholder Approval shall not have been obtained;
(e) by Purchaser, if (i) the Seller Board shall have effected a
Change in Recommendation or shall have resolved to effect a Change in
Recommendation; (ii) the Seller Board shall have recommended, or advised
Purchaser of its intention to make, a Seller Subsequent Recommendation; or
(iii) a tender offer or exchange offer for 20% or more of the outstanding
shares of Seller Common Stock is commenced (other than by Purchaser or an
affiliate of Purchaser) and the Seller Board shall not have sent to its
security holders pursuant to Rule 14e-2 within five (5) business days after
such tender or exchange offer is first published, sent, or given a
statement disclosing that Seller recommends rejection of such tender or
exchange offer;
(f) by Seller, if the Board of Directors of Purchaser shall have
withdrawn or modified its approval of the Merger in a manner adverse to
Seller or shall have resolved to do any of the foregoing;
(g) by Purchaser or Seller, if there has been a material breach
of any representation, warranty, covenant, or agreement on the part of the
other party set forth in this Agreement, which breach shall not have been
cured, in the case of a representation or warranty, prior to the Closing
or, in the case of a covenant or agreement, within 20 business days
following receipt by the breaching party of written notice of such breach
from the other party (provided that the right to terminate this Agreement
under this Section 8.01(g) shall not be available to a party who is then in
material breach of this Agreement);
34
(h) by Seller, if the Seller Board makes a Change in
Recommendation or a Seller Subsequent Determination in accordance with the
terms of Section 6.01(c) and Seller, prior to or concurrently with such
termination, pays to Purchaser in immediately available funds the
Termination Fee; or
(i) by Seller, if the Commitment Letters or such substitute
commitment letters contemplated by Section 6.14 expire within 180 days
following the date of this Agreement.
Section 8.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall immediately became
void and there shall be no liability or obligation on the part of Purchaser,
Seller, Sub or their respective officers, directors, shareholders, or
affiliates, except as set forth in Section 8.03; provided, however, that the
provisions of this Section 8.02, Section 8.03 and Article IX (except Section
9.01) of this Agreement shall remain in full force and effect and survive any
termination of this Agreement.
Section 8.03 FEES AND EXPENSES.
(a) Except as set forth in this Section 8.03, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated; provided, however, that Purchaser
and Seller shall share equally all fees and expenses, other than attorneys'
fees, incurred in relation to the printing and filing of the Proxy
Statement (including any related preliminary materials) and any filings
pursuant to the HSR Act.
(b) Seller agrees to reimburse Purchaser (or its designees) for
all documented out-of-pocket expenses of Purchaser and its affiliates,
including fees and expenses of financial advisors, outside legal counsel,
accountants, experts and consultants, incurred by Purchaser and its
affiliates or on their respective behalf in connection with or related to
the authorization, preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby (collectively,
"Expenses"), up to a maximum amount of $1,000,000, if this Agreement is
terminated:
(i) by Purchaser pursuant to Section 8.01(e);
(ii) by Purchaser pursuant to Section 8.01(g) after a
willful breach by Seller of this Agreement; provided that, Seller's
breach of Section 6.01 shall be deemed willful for purposes of this
Section 8.03(b)(ii);
(iii) by Seller pursuant to Section 8.01(h); or
(iv) by Seller or Purchaser pursuant to Section 8.01(b)
or Section 8.01(d), and on or before the date of any such termination
described in this clause (iv), there shall exist an Acquisition
Proposal that has been disclosed or otherwise communicated to the
Seller Board.
35
(c) Seller shall pay Purchaser (or its designees) an amount equal
to $2.0 million (the "Termination Fee") if this Agreement is terminated:
(i) by Purchaser pursuant to Section 8.01(e);
(ii) by Purchaser pursuant to Section 8.01(g) after a
willful breach by Seller of any of its covenants set forth in this
Agreement which breach gives rise to the failure of the condition set
forth in Section 7.02(b) to be satisfied; provided that, Seller's
breach of Section 6.01 shall be deemed willful for purposes of this
Section 8.03(c)(ii); provided further, that, the Termination Fee shall
be required to be paid pursuant to this Section 8.03(c)(ii) if
Purchaser has terminated this Agreement pursuant to Section 8.01(g)
after a willful breach by Seller of any of its covenants set forth in
this Agreement other than the covenants set forth in Sections 6.01 and
6.04 only if, (I) at the time of such termination, there shall have
been announced an Acquisition Proposal which shall not have been
absolutely and unconditionally withdrawn and abandoned and (II) Seller
shall have recommended a bona fide written offer by a Third Party
that, if consummated, would result in such Third Party (or its
shareholders) owning, directly or indirectly, more than 50% of the
outstanding shares of Seller Common Stock (or of the surviving entity
in a merger or the direct or indirect parent of the surviving entity
in a merger) or all or substantially all of the total consolidated
assets of Seller, or signed a letter of intent, agreement in
principle, acquisition agreement or other agreement for, or
consummated, such a transaction, within six (6) months after such
termination;
(iii) by Seller pursuant to Section 8.01(h); or
(iv) by Seller pursuant to Section 8.01(b) or Section
8.01(d) if, (I) at the time of such termination, there shall have been
announced an Acquisition Proposal which shall not have been absolutely
and unconditionally withdrawn and abandoned and (II) Seller shall have
recommended a bona fide written offer by a Third Party that, if
consummated, would result in such Third Party (or its shareholders)
owning, directly or indirectly, more than 50% of the outstanding
shares of Seller Common Stock (or of the surviving entity in a merger
or the direct or indirect parent of the surviving entity in a merger)
or all or substantially all of the total consolidated assets of
Seller, or signed a letter of intent, agreement in principle,
acquisition agreement or other agreement for, or consummated, such a
transaction, within six (6) months after such termination.
(d) The expenses and fees, if applicable, payable pursuant to
this Article VIII shall be paid within two (2) business days after the
event giving rise to the obligation to pay such amount and shall constitute
liquidated damages once paid in full.
(e) Seller acknowledges that the agreements contained in this
Section 8.03 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Purchaser would not enter
into this Agreement. Accordingly, if Seller fails promptly to pay any
amount due pursuant to this Section 8.03 and, in order to obtain such
payment, Purchaser commences a suit which results in a judgment against
Seller for the amount set forth in this Section 8.03, Seller shall pay to
Purchaser its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit.
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(f) As used in this Agreement:
(i) "Acquisition Proposal" means any inquiry, proposal
or offer, including a public pronouncement by any Third Party that it
is considering making an inquiry, proposal or offer, (A) for a
transaction pursuant to which any Third Party would acquire more than
20% of the outstanding shares of Seller Common Stock pursuant to a
tender offer or exchange offer or otherwise, (B) for a merger or other
business combination involving Seller pursuant to which any Third
Party would acquire more than 20% of the outstanding equity securities
of Seller or the entity surviving such merger or business combination,
(C) for any other transaction pursuant to which any Third Party would
acquire control of assets (including for this purpose the outstanding
equity securities of Subsidiaries of Seller, and the entity surviving
any merger or business combination including any of them) of Seller
having a fair market value (as determined by the Board of Directors of
Purchaser in good faith) equal to more than 20% of the fair market
value of all the assets of Seller, and its Subsidiaries, taken as a
whole, immediately prior to such transaction, or (D) any public
announcement of a proposal, plan, or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(ii) "Superior Proposal" means any bona fide written
offer made by a Third Party that, if consummated, would result in such
Third Party (or its shareholders) owning, directly or indirectly, more
than 50% of the outstanding shares of Seller Common Stock (or of the
surviving entity in a merger or the direct or indirect parent of the
surviving entity in a merger) or all or substantially all of the total
consolidated assets of Seller (A) on terms which the Special Committee
has reasonably determined in good faith, after consultation with its
outside legal counsel and a financial advisor of nationally recognized
reputation, to be more favorable to the Shareholders (in their
capacities as shareholders) from a financial point of view than the
Merger and the transactions contemplated by this Agreement, (B) if the
consideration offered is wholly or partially in cash, the financing
therefor is firmly committed, and (C) which is reasonably capable of
being completed on the terms proposed, taking into account all legal,
regulatory, fiduciary and other aspects of the proposal, including the
likelihood that such transaction will be consummated.
Section 8.04 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the Shareholders, but, after any such approval, no amendment shall
be made which by law requires further approval by the Shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
37
Section 8.05 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may to the extent legally allowed (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.01 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.
None of the representations, warranties, and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Section 2.02 (Conversion of Capital
Stock), 2.03 (Seller Stock Options), 2.05 (Exchange of Certificates), 6.07
(Public Disclosure), 6.10 (Employee Benefits), 6.12 (Additional Agreements;
Reasonable Efforts), 6.13 (Director and Officer Liability) and 8.03 (Fees and
Expenses), the last sentence of Section 8.04 and Article IX (Miscellaneous). The
Confidentiality Agreement shall survive the execution and delivery of this
Agreement, but shall terminate at Closing.
Section 9.02 NOTICES. All notices and other communications given hereunder
shall be in writing and shall be deemed given (i) when delivered if delivered
personally, (ii) when receipt is acknowledged by an affirmative act of the party
receiving notice, if telecopied, or (iii) three business days after being
mailed, if mailed by registered or certified mail (return receipt requested).
Notices and other communications to the parties will be sent to the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Purchaser or Sub, to:
Patriot Holding Corp.
3700 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Van Zandt Xxxx
Facsimile: (000) 000-0000
with a required copy to (which alone shall not
constitute notice):
Xxxxxx & Xxxxxxx LLP
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
38
(b) if to Seller, to:
Transport Corporation of America, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Attention: Special Committee of the Board of Directors
c/o Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a required copy to (which alone shall not
constitute notice):
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Section 9.03 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes," or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement," "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to the
date set forth in the first paragraph of this Agreement.
Section 9.04 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.05 ENTIRE AGREEMENT, NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as specifically provided herein, is not
intended to and shall not confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 9.06 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota without regard
to any applicable conflicts of law. Any litigation between the parties shall be
venued in a United States Federal court or a Minnesota State court, in either
case, located in Minneapolis, Minnesota, and each party hereto hereby consents
to the personal jurisdiction of any such court.
39
Section 9.07 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by the parties
and their respective successors and assigns.
ARTICLE X
DEFINITIONS
Section 10.01 SUBSIDIARY. As used in this Agreement, the term "Subsidiary"
shall mean, with respect to any party, corporation, or other organization,
whether incorporated or unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any Subsidiary of
such party do not have a majority of the voting interest in such partnership) or
(ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
Section 10.02 KNOWLEDGE. All references in this Agreement to "Knowledge"
of a corporation shall be deemed to mean the actual knowledge, after due
inquiry, of any one or more of the individuals identified in Schedule 10.02 of
the Seller Disclosure Schedule.
Section 10.03 DEFINED TERMS. When each of the following terms is used in
this Agreement, it shall have the meaning stated in the Section indicated:
Term Section Page
Acquisition Proposal...................Section 8.03(f)................40
Agreement..............................Preamble........................1
Articles of Merger.....................Section 1.02....................2
Certificates...........................Section 2.02(c).................4
Change in Recommendation...............Section 6.01(b)................28
Claim..................................Section 6.13(a)................33
Closing Date...........................Section 1.03....................2
Closing................................Section 1.03....................2
Code...................................Section 2.04....................5
Commitment Letters.....................Section 4.06...................23
Confidentiality Agreement..............Section 6.03...................30
Consitituent Counterparts..............Section 1.01....................2
Continuing Corporation.................Section 1.01....................2
Contributed Shares.....................Preamble........................1
Contribution...........................Preamble........................1
D&O Insurance..........................Section 6.13(a)................34
Databases..............................Section 3.09(b)................15
Effective Time.........................Section 1.02....................2
40
employee benefit plans.................Section 3.13(a)................18
Environmental Law......................Section 3.12(e)................17
ERISA Affiliate........................Section 3.13(a)................18
ERISA..................................Section 3.13(a)................18
Exchange Act...........................Section 3.03(c)................10
Exchange Fund..........................Section 2.05(a).................5
Expenses...............................Section 8.03(b)................38
file...................................Section 3.04(d)................11
Governmental Entity....................Section 3.03(c)................10
Hazardous Substance....................Section 3.12(e)................17
HSR Act................................Section 3.03(c)................10
Indemnified Party......................Section 6.13(a)................33
Internal Use Software..................Section 3.09(b)................15
IRS....................................Section 3.13(b)................18
Knowledge..............................Section 10.02..................43
Leases.................................Section 3.08(a)................13
Leases.................................Section 3.09(a)................14
made available.........................Section 9.03...................42
Material Adverse Effect................Section 3.01....................7
MBCA...................................Section 1.01....................2
Merger Consideration...................Section 2.02(b).................3
Merger.................................Preamble........................1
Paying Agent...........................Section 2.05(a).................5
Pre-Merger Matters.....................Section 6.13(a)................33
Proxy Statement........................Section 3.17...................20
Purchaser Disclosure Schedule..........Article IV.....................22
Purchaser..............................Preamble........................1
Real Property..........................Section 3.08(a)................13
SEC....................................Section 3.03(c)................10
Securities Act.........................Section 3.04(a)................10
Seller Balance Sheet...................Section 3.04(b)................11
Seller Board...........................Preamble........................1
Seller Common Stock....................Section 3.02....................8
Seller Disclosure Schedule.............Article III.....................7
Seller Employee Plans..................Section 3.13(a)................18
Seller ESPP............................Section 2.03(b).................4
Seller Junior Preferred Stock..........Section 3.02....................8
Seller Material Contracts..............Section 3.10(a)................15
Seller Option Plans....................Section 2.03(a).................4
Seller.................................Preamble........................1
Seller Preferred Stock.................Section 3.02....................8
Seller Recommendation..................Section 6.01(b)................28
Seller Rights Agreement................Section 3.02....................8
Seller SEC Reports.....................Section 3.04(a)................10
Seller Shareholders's Meeting..........Section 6.02(a)................29
Seller Stock Option....................Section 2.03(a).................4
41
Seller Subsequent Determination........Section 6.01(b)................29
Shareholder Approval...................Section 6.04...................30
Shareholder............................Preamble........................1
Shareholders...........................Preamble........................1
Sub....................................Preamble........................1
Subsidiary.............................Section 10.01..................43
Superior Proposal......................Section 8.03(f)................40
Surviving Bylaws.......................Section 1.05....................3
Surviving Charter......................Section 1.05....................2
Tax Returns............................Section 3.07(m)................13
Taxes..................................Section 3.07(m)................13
Termination Fee........................Section 8.03(c)................39
Third Party............................Section 6.01(a)................27
Voting Agreements .....................Preamble........................1
42
IN WITNESS WHEREOF, Purchaser, Sub, and Seller have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
PATRIOT HOLDING CORP.
By: /s/ Van Zandt Xxxx
------------------------------------
Its: President
-----------------------------
PATRIOT ACQUISITION CORP.
By: /s/ Van Zandt Xxxx
------------------------------------
Its: President
-----------------------------
TRANSPORT CORPORATION OF AMERICA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Its: Co-Chair, Special Committee of
the Board of Directors
-----------------------------
43
