EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
KTTI HOLDING COMPANY, INC.
KTTI ACQUISITION COMPANY, INC.
and
THOUSAND TRAILS, INC.
Dated as of April 29, 2003
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER..............................................................................................1
SECTION 1.01 The Merger......................................................................................1
SECTION 1.02 Closing; Effective Time.........................................................................2
SECTION 1.03 Effect of the Merger............................................................................2
SECTION 1.04 Subsequent Actions..............................................................................2
SECTION 1.05 Certificate of Incorporation and By-Laws........................................................2
SECTION 1.06 Directors and Officers..........................................................................3
ARTICLE II EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; PAYMENT FOR SHARES...............................................................................3
SECTION 2.01 Effect on Capital Stock.........................................................................3
SECTION 2.02 Payment for Company Common Stock and Company Stock Options
in the Merger...........................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8
SECTION 3.01 Organization and Qualification; Subsidiaries....................................................8
SECTION 3.02 Certificate of Incorporation and By-Laws........................................................8
SECTION 3.03 Capitalization..................................................................................9
SECTION 3.04 Authority Relative to this Agreement...........................................................10
SECTION 3.05 No Conflict; Required Filings and Consents.....................................................10
SECTION 3.06 Permits; Compliance............................................................................11
SECTION 3.07 SEC Filings; Financial Statements..............................................................12
SECTION 3.08 Undisclosed Liabilities........................................................................13
SECTION 3.09 Information Supplied...........................................................................13
SECTION 3.10 Absence of Certain Changes or Events...........................................................13
SECTION 3.11 Absence of Litigation..........................................................................15
SECTION 3.12 Employee Benefit Matters.......................................................................15
SECTION 3.13 Material Contracts.............................................................................17
SECTION 3.14 Environmental Matters..........................................................................18
SECTION 3.15 Title to Properties; Absence of Liens and Encumbrances.........................................19
SECTION 3.16 Intellectual Property..........................................................................20
SECTION 3.17 Taxes..........................................................................................22
SECTION 3.18 Insurance......................................................................................23
SECTION 3.19 Compliance with Applicable Laws................................................................24
SECTION 3.20 Membership Contracts...........................................................................24
SECTION 3.21 Stockholder Rights Agreement...................................................................24
SECTION 3.22 Opinion of Financial Advisor...................................................................25
SECTION 3.23 Brokers........................................................................................25
SECTION 3.24 Employees......................................................................................25
SECTION 3.25 Transactions with Affiliates...................................................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER....................................................26
SECTION 4.01 Organization and Qualification; Subsidiaries...................................................26
SECTION 4.02 Ownership of Parent and Buyer; No Prior Activities.............................................26
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SECTION 4.03 Authority Relative to this Agreement...........................................................26
SECTION 4.04 No Conflict; Required Filings and Consents.....................................................26
SECTION 4.05 Information Supplied...........................................................................27
SECTION 4.06 Brokers........................................................................................27
SECTION 4.07 Financing......................................................................................27
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER.................................................................28
SECTION 5.01 Conduct of Business by the Company Pending the Merger..........................................28
SECTION 5.02 Notification of Certain Matters................................................................31
SECTION 5.03 Employee Stock Purchase Plan...................................................................31
ARTICLE VI ADDITIONAL AGREEMENTS.................................................................................32
SECTION 6.01 Preparation of Proxy Statement; Company Stockholders Meeting...................................32
SECTION 6.02 Access to Information; Confidentiality.........................................................32
SECTION 6.03 No Solicitation of Transactions................................................................33
SECTION 6.04 Directors' and Officers' Indemnification and Insurance.........................................35
SECTION 6.05 Further Action; Consents.......................................................................36
SECTION 6.06 Public Announcements...........................................................................36
SECTION 6.07 Financing......................................................................................36
ARTICLE VII CONDITIONS TO THE MERGER.............................................................................37
SECTION 7.01 Conditions to the Obligations of Each Party....................................................37
SECTION 7.02 Conditions to the Obligations of Parent and Buyer..............................................37
SECTION 7.03 Conditions to the Obligations of the Company...................................................39
ARTICLE VIII TERMINATION, AMENDMENT, WAIVER AND EXPENSES.........................................................39
SECTION 8.01 Termination....................................................................................39
SECTION 8.02 Effect of Termination..........................................................................41
SECTION 8.03 Fees and Expenses..............................................................................41
ARTICLE IX GENERAL PROVISIONS....................................................................................43
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements.....................................43
SECTION 9.02 Notices........................................................................................43
SECTION 9.03 Certain Definitions............................................................................44
SECTION 9.04 Amendment......................................................................................48
SECTION 9.05 Waiver.........................................................................................48
SECTION 9.06 Severability...................................................................................48
SECTION 9.07 Assignment; Binding Effect; Benefit............................................................49
SECTION 9.08 Specific Performance...........................................................................49
SECTION 9.09 Governing Law; Forum...........................................................................49
SECTION 9.10 Headings.......................................................................................49
SECTION 9.11 Counterparts...................................................................................49
SECTION 9.12 Entire Agreement...............................................................................49
SECTION 9.13 Waiver of Jury Trial...........................................................................49
EXHIBIT A Form of Voting Agreement
ii
GLOSSARY OF DEFINED TERMS
Location of
Defined Term Definition
------------ ----------
Acquisition Agreement................................................................... Section 6.03(c)
Acquisition Proposal.................................................................... Section 6.03(b)
Acquisition Transaction................................................................. Section 6.03(a)
Action.................................................................................. Section 3.11
Affiliate or affiliate.................................................................. Section 9.03(a)
Affiliated Group........................................................................ Section 3.17(e)
Agreement............................................................................... Preamble
Appraisal Shares........................................................................ Section 2.01(d)
Asset Sale Proceeds..................................................................... Section 9.03(b)
Business Combination.................................................................... Section 8.03(e)
business day............................................................................ Section 9.03(c)
Buyer................................................................................... Preamble
Buyer Common Stock...................................................................... Section 2.01(c)
Buyer Material Adverse Effect........................................................... Section 4.01
Certificate of Merger................................................................... Section 1.02(b)
Certificate............................................................................. Section 2.01(b)
Closing................................................................................. Section 1.02(a)
Closing Date............................................................................ Section 1.02(a)
Code.................................................................................... Section 2.02(h)
Commitment Letters...................................................................... Section 4.07
Company................................................................................. Preamble
Company Balance Sheet................................................................... Section 3.07(b)
Company Board........................................................................... Recitals
Company By-Laws......................................................................... Section 3.02
Company Capital Stock................................................................... Section 3.03(a)
Company Charter......................................................................... Section 3.02
Company Common Stock.................................................................... Recitals
Company Disclosure Schedule............................................................. Section 9.12
Company Intellectual Property........................................................... Section 3.16(b)
Company Material Contracts.............................................................. Section 3.13(a)
Company Option Plans.................................................................... Section 2.01(e)
Company Permits......................................................................... Section 3.06(a)
Company Preferred Stock................................................................. Section 3.03(a)
Company SEC Reports..................................................................... Section 3.07(a)
Company Stock Options................................................................... Section 2.01(e)
Company Stockholders.................................................................... Recitals
Company Stockholder Approval............................................................ Section 3.04(a)
Company Stockholders Meeting............................................................ Section 6.01(b)
Company Subsidiary...................................................................... Section 9.03(d)
Company Transaction Expenses............................................................ Section 3.23(b)
Confidentiality Agreement............................................................... Section 6.02
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Consent................................................................................. Section 3.05(b)
Contract................................................................................ Section 3.06(b)
control................................................................................. Section 9.03(e)
Debt Commitment Letters................................................................. Section 4.07
DGCL.................................................................................... Section 1.01
Effective Time.......................................................................... Section 1.02(b)
Employee Benefit Plan................................................................... Section 9.03(f)
Employee Pension Benefit Plan........................................................... Section 9.03(g)
Employee Welfare Benefit Plan........................................................... Section 9.03(h)
Environmental Laws...................................................................... Section 9.03(i)
Environmental Permits................................................................... Section 3.14
ERISA................................................................................... Section 3.12(a)
Equity Commitment Letter................................................................ Section 4.07
Exchange Act............................................................................ Section 3.07
Expenses................................................................................ Section 8.03(a)
Fiduciary............................................................................... Section 9.03(j)
Filed Company SEC Documents............................................................. Section 3.10
Financing............................................................................... Section 4.07
Foothill................................................................................ Section 3.15(b)
Foothill Policies....................................................................... Section 3.15(b)
Governmental Entity..................................................................... Section 2.02(g)
Hazardous Substances.................................................................... Section 9.03(k)
HSR Act................................................................................. Section 3.05(b)
Insurance Policies...................................................................... Section 3.18
Intellectual Property................................................................... Section 9.03(l)
Judgment................................................................................ Section 3.05(a)
Key Employees........................................................................... Section 3.10(f)
knowledge............................................................................... Section 9.03(m)
Law..................................................................................... Section 1.02(b)
Liability............................................................................... Section 9.03(n)
Licensed Intellectual Property.......................................................... Section 3.16(c)
Liens................................................................................... Section 3.01(b)
Material Adverse Effect................................................................. Section 9.03(o)
Maximum Premium......................................................................... Section 6.04(b)
Membership Contracts.................................................................... Section 9.03(p)
Merger.................................................................................. Recitals
Merger Consideration.................................................................... Section 2.01(b)
Multiemployer Plan...................................................................... Section 9.03(q)
Option Agreement........................................................................ Section 2.02(c)
Option Consideration.................................................................... Section 2.01(e)
Order................................................................................... Section 7.01(b)
Parent.................................................................................. Preamble
Paying Agent............................................................................ Section 2.02(a)
Payment Fund............................................................................ Section 2.02(a)
PBGC.................................................................................... Section 9.03(r)
Person or person........................................................................ Section 9.03(s)
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Principal Stockholders.................................................................. Recitals
Prohibited Transaction.................................................................. Section 9.03(t)
Proxy Statement......................................................................... Section 3.05(b)
Real Property........................................................................... Section 3.15(b)
SEC..................................................................................... Section 3.05(b)
Securities Act.......................................................................... Section 3.07(a)
Stock Purchase Plan..................................................................... Section 5.03
Subsequent Adverse Determination........................................................ Section 6.03(c)
subsidiary or subsidiaries.............................................................. Section 9.03(u)
Superior Proposal....................................................................... Section 6.03(b)
Surviving Corporation................................................................... Section 1.01
Tax or Taxes............................................................................ Section 9.03(v)
Tax Return.............................................................................. Section 9.03(w)
Transactions............................................................................ Recitals
Trademarks.............................................................................. Section 9.03(x)
Union Bank Loan Agreement............................................................... Section 5.01(b)
U.S. GAAP............................................................................... Section 3.07(b)
Voting Agreements....................................................................... Recitals
Voting Company Debt..................................................................... Section 3.03(c)
Working Capital Adjustment Amount....................................................... Section 9.03(y)
Working Capital Amount.................................................................. Section 9.03(z)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of April 29, 2003 (this
"Agreement") is by and among KTTI HOLDING COMPANY, INC., a Delaware corporation
("Parent"), KTTI ACQUISITION COMPANY, INC., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Buyer"), and THOUSAND TRAILS, INC., a
Delaware corporation (the "Company"). All terms not otherwise defined herein
have the meanings ascribed to them in Section 9.03 hereof.
WHEREAS, the board of directors of the Company (the "Company Board"),
subject to the terms and conditions set forth herein, has unanimously (i)
determined that the merger (the "Merger") of Buyer with and into the Company is
advisable and in the best interests of the Company and its stockholders (the
"Company Stockholders"), (ii) approved and adopted this Agreement, the Merger
and the other transactions contemplated hereby to which the Company is a party,
and (iii) recommended approval and adoption by the Company Stockholders of this
Agreement and the other transactions contemplated hereby to which the Company is
a party;
WHEREAS, the boards of directors of Parent and Buyer have unanimously
approved this Agreement and the other transactions contemplated hereby to which
Parent or Buyer, as the case may be, is a party;
WHEREAS, Parent, Buyer and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to Parent and Buyer entering into
this Agreement, each of Xxxx Xxxxx Strategic Investments, L.P., Xxxxxxx X. Xxxx
and the Xxxxxxx X. Xxxx Family Partnership, L.P. (collectively, the "Principal
Stockholders") has entered into a voting agreement, dated as of the date hereof
and substantially in the form attached hereto as Exhibit A (collectively, the
"Voting Agreements"), pursuant to which, among other things, each of the
Principal Stockholders has agreed to vote any shares of common stock, par value
$0.01 per share, of the Company (the "Company Common Stock") owned by such
Principal Stockholders in favor of the approval and adoption of this Agreement
and the other transactions contemplated hereby (collectively, the
"Transactions").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement 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 of this Agreement and subject
to the conditions set forth in Article VII, and in accordance with the Delaware
General Corporation Law (the "DGCL"), at the Effective Time (as defined below),
Buyer will be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Buyer will
cease and the Company will continue as the surviving corporation of the Merger
(the "Surviving Corporation") and will continue to be governed by the laws of
the State of Delaware.
SECTION 1.02 Closing; Effective Time.
(a) The closing of the Merger (the "Closing") will take place
(i) at 10:00 a.m. (local time) at Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx as soon as practicable, but in any event within three (3) business
days after the day on which the last to be fulfilled or waived of the conditions
set forth in Article VII (other than those conditions that by their nature are
to be fulfilled at the Closing, but subject to the fulfillment or waiver of such
conditions) are fulfilled or waived in accordance with this Agreement or (ii) at
such other place and time or on such other date as Buyer and the Company may
agree in writing (the "Closing Date").
(b) At the Closing, the Company and Buyer will cause a
certificate of merger (the "Certificate of Merger") to be executed and filed
with the Secretary of State of the State of Delaware as provided in Section 251
of the DGCL and make all other filings or recordings required by applicable
statute, law (including common law), legislation, interpretation, ordinance,
rule or regulation, domestic or foreign (collectively, the "Law") in connection
with the Merger. The Merger will become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger (the
"Effective Time").
SECTION 1.03 Effect of the Merger. At the Effective Time, the effect of
the Merger will be as provided in this Agreement, the Certificate of Merger and
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Buyer will vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and Buyer will become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04 Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation considers or is advised that any deeds, bills of
sale, assignments, assurances or other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either the Company or Buyer or which are to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger,
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation are authorized to execute and deliver, in the name and on
behalf of each of the Company and Buyer, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of the Company and Buyer or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
SECTION 1.05 Certificate of Incorporation and By-Laws.
(a) At the Effective Time, the Company Charter will, by virtue
of the Merger, be amended and restated to be identical to the certificate of
incorporation of Buyer, as in effect
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immediately prior to the Effective Time, except that Article I will state that
the name of the Company is Thousand Trails, Inc.
(b) At the Effective Time, the Company By-Laws will, by virtue
of the Merger, be amended and restated to be identical to the by-laws of Buyer,
as in effect immediately prior to the Effective Time, except that such by-laws,
as so amended and restated, will state that the name of the Company is Thousand
Trails, Inc.
SECTION 1.06 Directors and Officers. The directors of Buyer immediately
prior to the Effective Time will be the directors of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time will be the officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; PAYMENT FOR SHARES
SECTION 2.01 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Buyer:
(a) Cancellation of Treasury Stock and Buyer-Owned Stock. Each
share of Company Common Stock that is owned by the Company as treasury stock or
is owned by Parent or Buyer will no longer be outstanding and will automatically
be canceled and retired and will cease to exist, and no other consideration will
be delivered or deliverable in exchange therefor.
(b) Conversion of Company Common Stock. Except as otherwise
set forth in Sections 2.01(a) and 2.01(d), each issued share of Company Common
Stock (including shares held in employee stock accounts under the Stock Purchase
Plan at the Effective Time) will be converted into the right to receive $14.50
minus the Working Capital Adjustment Amount, if any, in cash, subject to
adjustment for any stock split, stock dividend or combination of stock that may
occur from the date hereof and prior to the Effective Time. The cash payable
upon the conversion of each share of Company Common Stock pursuant to this
Section 2.01(b) is referred to as the "Merger Consideration." As of the
Effective Time, all such shares of Company Common Stock will automatically be
canceled and will cease to exist, and each holder of a certificate
("Certificate") representing any such shares of Company Common Stock will cease
to have any rights with respect thereto, except the right to receive Merger
Consideration upon surrender of such certificate in accordance with Section
2.02(b), without interest.
(c) Capital Stock of Buyer. Each issued and outstanding share
of common stock, par value $.01 per share, of Buyer ("Buyer Common Stock") will
be converted into and become one fully paid and non-assessable share of common
stock, par value $.01 per share, of the Surviving Corporation and all such
shares together will constitute the only outstanding shares of capital stock of
the Surviving Corporation.
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(d) Appraisal Rights. Notwithstanding any provisions of this
Agreement to the contrary, shares of Company Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by any
Person who has not voted such shares of Company Common Stock in favor of the
Merger, who has delivered a written demand for appraisal of such shares of
Company Common Stock in the manner provided by the DGCL and who, as of the
Effective Time, has not effectively withdrawn or lost such right to appraisal
(the "Appraisal Shares") will not be converted into a right to receive the
Merger Consideration. The holders thereof will be entitled only to such rights
as are granted by Section 262 of the DGCL. Each holder of Appraisal Shares who
becomes entitled to payment for such shares of Company Common Stock pursuant to
Section 262 of the DGCL will receive payment therefor from the Surviving
Corporation in accordance with the DGCL; provided, however, that (i) if any such
holder of Appraisal Shares fails to establish its entitlement to appraisal
rights as provided in Section 262 of the DGCL, (ii) if any such holder of
Appraisal Shares effectively withdraws its demand for appraisal of such shares
of Company Common Stock or loses its right to appraisal and payment for its
shares of Company Common Stock under Section 262 of the DGCL, or (iii) if
neither any holder of Appraisal Shares nor the Surviving Corporation files a
petition demanding a determination of the value of all Appraisal Shares within
the time provided in Section 262 of the DGCL, such holder will forfeit the right
to appraisal of such shares of Company Common Stock and each such share of
Company Common Stock will be treated as if such share of Company Common Stock
had been converted, as of the Effective Time, into a right to receive the Merger
Consideration, without interest thereon, from the Surviving Corporation as
provided in Section 2.01(b). The Company will give Parent prompt notice of any
demands received by the Company for appraisal of Company Common Stock, and,
until the Effective Time, Buyer will have the right to participate in all
negotiations and proceedings with respect to such demands. The Company will not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
(e) Company Stock Options. As part of the Transactions, the
Company and the Surviving Corporation will cause any outstanding options to
purchase Company Common Stock (the "Company Stock Options") granted pursuant to
the Company's 1991 Employee Stock Incentive Plan, 1993 Stock Option and
Restricted Stock Purchase Plan, 1993 Director Stock Option Plan, 1999 Stock
Option and Restricted Stock Purchase Plan, 2001 Stock Option and Restricted
Stock Purchase Plan and the Stock Option Agreement dated as of August 1, 1996
between the Company and Xxxxxxx X. Xxxx (collectively the "Company Option
Plans") to be treated as follows:
(i) At the Effective Time, all then outstanding Company Stock
Options will be canceled and in lieu thereof, each holder of a Company
Stock Option will be entitled to receive from the Surviving
Corporation, an amount in cash (if any) equal to the product of (i) the
excess, if any, of the per share Merger Consideration over the per
share exercise price of such Company Stock Option, and (ii) the number
of shares of Company Common Stock subject to such Company Stock Option
as of the Effective Time, without interest, whether or not such Company
Stock Option is then vested (the "Option Consideration").
(ii) The Company will use its commercially reasonable efforts
to obtain all necessary consents, waivers or releases from holders of
Company Stock Options and will
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take such action as may be reasonably necessary to give effect to, and
accomplish, the transactions contemplated by this Section 2.01(e),
including without limitation obtaining an executed agreement from each
holder of Company Stock Options confirming such holder's agreement to
the foregoing treatment of such holder's Company Stock Options.
(iii) In accordance with Section 2.02(h), the Surviving
Corporation will be entitled to deduct and withhold from the Option
Consideration otherwise payable to any holder of Company Stock Options
such amount that the Company is required to deduct and withhold with
respect to the making of such payment under the Code, the rules and
regulations promulgated thereunder, or any provision of state, local or
foreign tax Law. The Company will promptly pay or cause to be paid any
amounts withheld pursuant to this Section 2.01(e) for applicable
foreign, federal, state and local taxes to the appropriate Governmental
Entity on behalf of such holders of Company Stock Options.
(iv) Except as otherwise provided herein or agreed to by the
parties, the Company Option Plans will terminate effective as of the
Effective Time and the Company will use its best efforts to cause the
provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock
of the Company or any Company Subsidiary to be canceled as of the
Effective Time.
SECTION 2.02 Payment for Company Common Stock and Company Stock Options
in the Merger.
(a) Paying Agent. Prior to the Effective Time, Parent will
select a bank or trust company in the United States, reasonably acceptable to
the Company, to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration upon surrender of certificates formerly representing
Company Common Stock and, at the option of the Surviving Corporation, of the
Option Consideration. Parent shall provide to the Paying Agent at the Effective
Time cash necessary to pay for the shares of Company Common Stock, and, if the
Surviving Corporation elects to use the Paying Agent for such payments, for the
Company Stock Options converted into the right to receive cash, pursuant to
Section 2.01 (such cash being herein referred to as the "Payment Fund"). The
Payment Fund will not be used for any purpose except as expressly provided in
this Agreement. The Paying Agent will invest the Payment Fund, as directed by
the Surviving Corporation on a daily basis, provided such investments shall be
limited to direct obligations of the United States of America, obligations for
which the full faith and credit of the United States of America is pledged to
provide for the payment of principal and interest, commercial paper rated A-1 or
P-1 by Xxxxx'x Investors Service, Inc. or Standard & Poor's Rating Group,
respectively, or certificates of deposit issued by a commercial bank having at
least $25,000,000,000 in assets. Any net profit resulting from, or interest or
income produced by, such investments will be paid to the Surviving Corporation.
(b) Payment Procedures for Company Common Stock. Promptly
after the Effective Time and in any event within five (5) business days thereof,
the Surviving Corporation or Parent will cause the Paying Agent to mail to each
holder of record of a Certificate that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock, whose shares were
converted into the right to receive Merger Consideration pursuant to
5
Section 2.01, (i) a letter of transmittal (which will specify that delivery will
be effected, and risk of loss and title to the Certificates will pass, only upon
delivery of the Certificates to the Paying Agent, will contain provisions
consistent with this Section 2.02(b) and will be in such form and have such
other provisions as Buyer may reasonably specify), and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by Buyer and the Paying Agent, the
holder of such Certificate will be entitled to receive in exchange therefor the
amount of cash into which the shares of Company Common Stock previously
represented by such Certificate were converted pursuant to Section 2.01, and the
Certificate so surrendered will immediately thereafter be canceled. In the event
of a transfer of ownership of Company Common Stock that is not registered in the
transfer records of the Company, payment may be made to a Person other than the
Person in whose name the Certificate so surrendered is registered, if such
Certificate is properly endorsed or otherwise is in proper form for transfer and
the Person requesting such payment pays any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of such
Certificate or establishes to the satisfaction of Buyer that such tax has been
paid or is not applicable. If any holder of shares of Company Common Stock is
unable to surrender such holder's Certificates because such Certificates have
been lost, mutilated or destroyed, such holder may deliver in lieu thereof an
affidavit and indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation or Parent.
(c) Procedures for Company Stock Options. Promptly after the
Effective Time and in any event within five (5) business days thereof, the
Surviving Corporation or Parent will or will cause the Paying Agent to mail to
each holder of an option agreement ("Option Agreement") that immediately prior
to the Effective Time represented Company Stock Options, whose Company Stock
Options were converted into the right to receive Option Consideration pursuant
to Sections 2.01(e), appropriate materials and instructions for use in effecting
the surrender of such Option Agreement in exchange for Option Consideration.
Upon surrender of an Option Agreement to the Paying Agent or the Surviving
Corporation, as the case may be, together with such other documents as may
reasonably be required by the Paying Agent or the Surviving Corporation, the
holder of such Option Agreement will be entitled to receive in exchange therefor
the amount of cash into which the Company Stock Options previously represented
by such Option Agreement have been converted pursuant to Section 2.01(e). If any
holder of Company Stock Options is unable to surrender such holder's Option
Agreement because such Option Agreement has been lost, mutilated or destroyed,
such holder may deliver in lieu thereof an affidavit and indemnity bond in form
and substance and with surety reasonably satisfactory to the Surviving
Corporation.
(d) No Further Transfers of Company Common Stock or Exercises
of Company Stock Options. After the Effective Time there will be no further
registration on the stock transfer books of the Surviving Corporation (i) of
transfers of shares of Company Common Stock or (ii) of the exercise of Company
Stock Options that were outstanding immediately prior to the Effective Time.
(e) Payment Fund for Appraisal Shares. Any portion of the
Payment Fund made available to the Paying Agent pursuant to Section 2.02(a) to
pay for shares of Company
6
Common Stock that are Appraisal Shares will be returned to the Surviving
Corporation upon demand.
(f) Termination of Payment Fund. Any portion of the Payment
Fund that remains undistributed to the holders of Company Common Stock or
Company Stock Options six months after the Effective Time will be delivered to
the Surviving Corporation, upon demand, and any holder of Company Common Stock
or Company Stock Options who has not previously complied with this Article II
will thereafter look only to the Surviving Corporation for payment of its claim
for Merger Consideration or Option Consideration as the case may be, without
interest.
(g) No Liability. None of Buyer, the Company, the Surviving
Corporation or the Paying Agent, nor any of their respective officers,
directors, employees, agents or counsel, will be liable to any Person in respect
of any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any Certificate or
Option Agreement has not been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which Merger
Consideration or Option Consideration in respect of such Certificate or Option
Agreement, as the case may be, would otherwise escheat to or become the property
of any federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (each, a "Governmental
Entity")), any such Merger Consideration or Option Consideration in respect of
such Certificate or Company Stock Option will, to the extent permitted by
applicable Law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any Person previously entitled thereto.
(h) Withholdings. The Company, the Surviving Corporation or
the Paying Agent, as applicable, will deduct and withhold from the consideration
otherwise payable to any holder of Company Common Stock or Company Stock Options
such amounts as are required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any other Law. To the extent that amounts are so withheld by the
Company, the Surviving Corporation or the Paying Agent, as the case may be, such
withheld amounts will be treated for all purposes of this Agreement as having
been paid to the applicable holder of the shares of Company Common Stock or
Company Stock Options.
(i) Adjustments to Prevent Dilution. In the event that prior
to the Effective Time, as a result of a reclassification, stock split (including
a reverse split), or stock dividend or stock distribution, made on a pro rata
basis to all holders of any class of stock of the Company, there is a change in
the number of shares of Company Common Stock outstanding or issuable upon the
conversion, exchange or exercise of securities or rights convertible or
exchangeable into or exercisable for shares of Company Common Stock then the
Merger Consideration and Option Consideration will each be equitably adjusted to
eliminate the effects of such event.
(j) Payments at Closing. Buyer will cause the Paying Agent to
pay, immediately following the Effective Time (or as soon thereafter as is
practicable), to each Company Stockholder by wire transfer of immediately
available funds the Merger Consideration and Option Consideration (subject to
any applicable withholding taxes) payable pursuant to Section 2.01 to such
Company Stockholder if such Company Stockholder (i) together with its
7
Affiliates owns greater than 5% of the aggregate issued and outstanding Company
Common Stock (calculated on a fully-diluted basis assuming the exercise or
conversion of all outstanding Company Stock Options) or is a director or
executive officer of the Company, and (ii) has delivered to the Paying Agent
properly executed letters of transmittal (in the form required by this Section
2.02), wire transfer instructions and the Certificates or other certificates
representing such Company Stockholder's Company Common Stock and Company Stock
Options together with such other documents as may reasonably be required by the
Buyer or the Paying Agent. No later than two (2) business days prior to the
Closing Date, Buyer will deliver to the Company a sufficient number of copies of
the letter of transmittal (in the form required by Section 2.02) and such other
documents (or requests for documents) required by Buyer or the Paying Agent so
as to permit each applicable Company Stockholder to exercise its right to
payment at Closing as provided in this Section 2.02(j).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Buyer that:
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) The Company and each Company Subsidiary is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation and has all
requisite corporate or other entity power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except for such governmental
approvals the failure of which to obtain would not have, individually or in the
aggregate, a Material Adverse Effect. Each of the Company and the Company
Subsidiaries is duly qualified or licensed as a foreign corporation or
organization to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except as would
not have, individually or in the aggregate, a Material Adverse Effect.
(b) Section 3.01(b) of the Company Disclosure Schedule lists
each Company Subsidiary and its jurisdiction of organization. All of the
outstanding shares of capital stock of each Company Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable and, except
as set forth in Section 3.01(b) of the Company Disclosure Schedule, are owned by
the Company, free and clear of all pledges, liens, charges, mortgages,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for its interests in the Company Subsidiaries
and except for the ownership of interests set forth in Section 3.01(b) of the
Company Disclosure Schedule, the Company does not own, directly or indirectly,
or have any outstanding contractual obligation to acquire, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02 Certificate of Incorporation and By-Laws. The Company has
heretofore provided to Buyer a complete and correct copy of the Company's
certificate of incorporation, as amended to date (the "Company Charter") and the
Company's by-laws, as amended to date (the
8
"Company By-Laws"). The Company Charter and Company By-Laws are in full force
and effect. The Company is not in violation of any of the provisions of the
Company Charter or the Company By-Laws. The Company has provided to Buyer
complete copies of the certificate of incorporation, by-laws or other
organizational documents of each Company Subsidiary and no Company Subsidiary is
in material violation of such documents.
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of
(i) 15,000,000 shares of Company Common Stock and (ii) 1,500,000 shares of
preferred stock, par value $.01 per share (the "Company Preferred Stock" and
collectively with the Company Common Stock, the "Company Capital Stock"). At the
close of business on April 9, 2003 (i) 6,973,943 shares of Company Common Stock
were issued and outstanding (including shares held in the employee stock
accounts under the Stock Purchase Plan), (ii) no shares of the Company Preferred
Stock were issued and outstanding, (iii) 1,500,452 shares of Company Common
Stock were held in the Company's treasury, (iv) no shares of Company Preferred
Stock were held in the Company's treasury, and (v) 1,200,368 shares of Company
Common Stock were subject to Company Stock Options granted pursuant to the
Company Option Plans. Except as set forth above, at the close of business on
April 9, 2003 no shares of Company Capital Stock or other securities of the
Company were issued, reserved for issuance or outstanding.
(b) All outstanding shares of Company Capital Stock are, and
all such shares that may be issued prior to the Effective Time will be when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right under
any provision of the DGCL, the Company Charter, the Company By-Laws or any
Contract to which the Company is a party or otherwise bound.
(c) There are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Company capital stock may vote ("Voting Company Debt").
(d) Except as set forth in Section 3.03(a) above or pursuant
to the Stock Purchase Plan, as of the date of this Agreement, there are not any
options, warrants, rights, convertible or exchangeable securities, "phantom"
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which the
Company or any Company Subsidiary is a party or by which any of them is bound
(i) obligating the Company or any Company Subsidiary to issue or sell, or cause
to be issued or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exchangeable into, or exercisable
for, any capital stock of or other equity interest in, the Company or of any
Company Subsidiary or any Voting Company Debt, or (ii) obligating the Company or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, right, security, stock appreciation right, stock-based performance
unit, commitment, Contract, arrangement or undertaking. Section 3.03(d) of the
Company Disclosure Schedule sets forth the total number of outstanding Company
Stock Options as of April 9, 2003 and the exercise prices thereof. The Company
has provided Buyer with a schedule of all of such
9
Company Stock Options, as of such date, including the relevant vesting times,
exercise prices and exercise periods, and copies of all Company Option Plans and
forms of option agreements granted thereunder.
(e) Except as set forth in Section 3.03(e) of the Company
Disclosure Schedule or in the Filed Company SEC Documents, there are not any
outstanding contractual obligations of the Company or of any Company Subsidiary,
contingent or otherwise, to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any Company Subsidiary. Except as set forth
in Section 3.03(e) of the Company Disclosure Schedule, there are no issued and
outstanding shares of Company Capital Stock that are subject to a repurchase or
redemption right in favor of the Company.
(f) Each holder of a Company Stock Option that, by its terms,
is not cancelable in the Merger in exchange for the Option Consideration has
executed an agreement in accordance with Section 2.01(e) of this Agreement to
exchange immediately prior to the Effective Time such holder's Company Stock
Options with the Company for an amount in cash, without interest, equal to the
Option Consideration therefor.
SECTION 3.04 Authority Relative to this Agreement.
(a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
this Agreement by the holders of not less than a majority of the outstanding
shares of Company Common Stock (the "Company Stockholder Approval"), with
respect to the Merger, to consummate the Transactions. The execution and
delivery by the Company of this Agreement and the consummation by the Company of
the Transactions have been duly authorized by all necessary corporate action on
the part of the Company, subject, in the case of the Merger, to receipt of the
Company Stockholder Approval. The Company has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and binding
obligation (subject to the Company Stockholder Approval with respect to the
Merger), enforceable against it in accordance with its terms, except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other Laws affecting the enforcement
of creditors' rights generally or by general equitable or fiduciary principles.
(b) At a meeting duly called and held on April 29, 2003, the
Company Board unanimously adopted resolutions in accordance with the DGCL (i)
approving, authorizing and adopting this Agreement, the Merger (including to the
extent required by Section 203 of the DGCL in order that the consummation of the
Transactions is not limited or restricted by such Law) and the other
Transactions to which the Company is a party, (ii) determining that the Merger
is advisable and in the best interests of the Company and the Company
Stockholders, and (iii) recommending that the Company Stockholders approve this
Agreement and directing that this Agreement and the Merger be submitted for
consideration by the Company Stockholders at the Company Stockholders Meeting.
10
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.05(a) of the Company
Disclosure Schedule, the execution and delivery by the Company of this Agreement
does not, and the consummation of the Transactions and compliance with the terms
hereof will not, result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any Person under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Charter, the Company By-Laws or the comparable
charter, by-law or other organizational documents of any Company Subsidiary,
(ii) any Company Material Contract or Employee Benefit Plan, or (iii) subject to
the filings and other matters referred to in Section 3.05(b), any judgment,
order, injunction or decree, domestic or foreign ("Judgment"), or Law,
applicable to the Company or any Company Subsidiary or their respective
properties or assets, except in the case of clauses (ii) and (iii) above, as
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in Section 3.05(b) of the Company
Disclosure Schedule, no consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, any
Governmental Entity or third party is required to be obtained or made by or with
respect to the Company or any Company Subsidiary in connection with the
execution, delivery and performance of this Agreement or the consummation of the
Transactions, other than (i) if required, compliance with and filing of a
pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing with the
Securities and Exchange Commission (the "SEC") of a proxy statement relating to
the approval of this Agreement by the Company Stockholders (the "Proxy
Statement") and such other related filings, statements, reports or documents as
may be required, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of the other jurisdictions in which the Company is
qualified to do business, (iv) compliance with and filings under the Laws
governing liquor licenses and collection agency licenses, (v) compliance with
and filings under the Laws of any foreign jurisdictions, if and to the extent
required, (vi) such approvals and other consents as may be required in
connection with the Financing, (vii) such other items that, individually and in
the aggregate, would not and would not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.06 Permits; Compliance.
(a) The Company and each Company Subsidiary has all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for the Company or any Company Subsidiary to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Company Permits"), except for those the failure of which to have would
not, individually or in the aggregate, result in a Material Adverse Effect.
Except as disclosed in Section 3.06(a) of the Company Disclosure Schedule or in
the Filed Company SEC Documents, no suspension or cancellation of any of the
Company Permits is pending or, to the best of the Company's knowledge,
threatened and neither the Company nor any Company Subsidiary has received any
written notices of violations with respect to any Company Permit that remains
uncured.
11
(b) Except as disclosed in Section 3.06(b) of the Company
Disclosure Schedule or in the Filed Company SEC Documents or except as would
not, individually or in the aggregate, have a Material Adverse Effect, (i) the
Company and each Company Subsidiary is in compliance with each Law applicable to
the Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, and (ii) neither the
Company nor any Company Subsidiary is in breach of, or in default or violation
under (A) any contract, lease, license, indenture, note, bond, mortgage,
agreement or other instrument or obligation ("Contract") to which the Company or
any Company Subsidiary is a party or by which the Company or any Company
Subsidiary or any property or asset of the Company or any Company Subsidiary is
bound or affected, or (B) any Company Permits.
SECTION 3.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the SEC since June 30, 1998, including (i) all
Annual Reports on Form 10-K, (ii) all Quarterly Reports on Form 10-Q, (iii) all
proxy statements relating to meetings of stockholders (whether annual or
special), (iv) all Reports on Form 8-K, (v) all other reports or registration
statements, and (vi) all amendments, exhibits and supplements to all such
reports and registration statements (collectively, the "Company SEC Reports").
The Company SEC Reports, including all forms, reports and documents to be filed
by the Company with the SEC after the date hereof and prior to the Effective
Time, (i) were and, in the case of Company SEC Reports filed after the date
hereof, will be prepared in all material respects in accordance with the
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the published rules and regulations of the SEC thereunder,
and (ii) did not as of the time they were filed, and in the case of such forms,
reports and documents filed by the Company with the SEC after the date of this
Agreement, will not as of the time they are filed, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were and will be made, not misleading. No
Company Subsidiary is subject to the periodic reporting requirements of the
Exchange Act. As of the date hereof, there is no unresolved violation of the
Exchange Act or the published rules and regulations of the SEC asserted by the
SEC with respect to the Company SEC Reports.
(b) Each of the consolidated financial statements (including
any notes thereto) contained in the Company SEC Reports was prepared in
accordance with the rules and regulations of the SEC and United States generally
accepted accounting principles ("U.S. GAAP") applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q under
the Exchange Act) and each presented fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and the consolidated Company Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which have not been and are not expected to be
material, individually or in the aggregate). The balance sheet of the Company
contained in the Company SEC Reports as of June 30, 2002 is hereinafter referred
to as the "Company Balance Sheet."
12
SECTION 3.08 Undisclosed Liabilities. Except (i) for Liabilities in the
amounts set forth on the face of the Company Balance Sheet (or in the notes
thereto) or in the Filed Company SEC Documents, or (ii) as set forth in Section
3.08 of the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary has outstanding any Liability, except for (i) Liabilities which have
been incurred in the ordinary course of business, consistent with past practice,
(ii) Liabilities incurred under any Contract identified on the Company
Disclosure Schedule or in the Filed Company SEC Documents resulting from the
performance by the Company or any Company Subsidiary of such Contract (but
excluding any Liability resulting from any breach, default or violation of such
Contract), and (iii) other Liabilities (including those resulting from a breach,
default or violation of a Contract), in each case which, individually and in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.09 Information Supplied. The Proxy Statement (i) will not, at
the date it is first mailed to the Company Stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, and (ii) will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied in writing by Parent or Buyer specifically for inclusion or
incorporation by reference therein.
SECTION 3.10 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports filed since June 30, 2001 and publicly available on
the SEC's XXXXX database prior to the date of this Agreement (the "Filed Company
SEC Documents") or in Section 3.10 of the Company Disclosure Schedule, from the
date of the Company Balance Sheet, the Company has conducted its business only
in the ordinary course consistent with past practice, and during such period
there has not been:
(a) any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock or any repurchase or redemption for value by the Company
of any Company Capital Stock;
(c) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of Company
Capital Stock;
(d) any issuance by the Company or any Company Subsidiary of
any capital stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity securities,
except for the issuance of any shares of Company Common Stock pursuant to the
exercise of any stock options outstanding on the date hereof pursuant to the
Company Option Plans or the Stock Purchase Plan;
13
(e) any increase in indebtedness for borrowed money or
issuance of any notes, bonds or other debt securities, other than indebtedness
incurred under the Union Bank Loan Agreement in the ordinary course of business
consistent with past practice;
(f) (i) any grant by the Company or any Company Subsidiary to
any current or former director, officer or employee of the Company or any
Company Subsidiary of any increase in their compensation, except to the extent
required under employment agreements in effect as of the date of the Company
Balance Sheet or disclosed in the Filed Company SEC Documents, or except with
respect to employees (other than directors, officers or key employees identified
as such in Section 3.10 of the Company Disclosure Schedule (the "Key
Employees")) in the ordinary course of business consistent with past practice
and except for Company Stock Options that are reflected as outstanding in clause
(v) of Section 3.03(a), (ii) any grant by the Company or any Company Subsidiary
to any current or former director, officer or employee of any increase in
severance or termination pay, except as was required under any employment,
severance or termination policy, practice or agreements in effect as of the date
of the Company Balance Sheet or disclosed in the Filed Company SEC Documents or
(iii) any entry by the Company or any Company Subsidiary into, or any amendment
of, any employment, severance or termination agreement with any such director,
officer or employee, except for such agreements or amendments with employees
(other than directors, officers or Key Employees) that were entered into in the
ordinary course of business consistent with past practice;
(g) any termination of employment or departure of any officer
or other Key Employee of the Company or any Company Subsidiary, other than such
terminations or departures as do not, individually or in the aggregate,
materially disrupt the operation of the business of the Company and the Company
Subsidiaries.
(h) any entry by the Company or any Company Subsidiary into
any commitment or transaction material to the Company and the Company
Subsidiaries taken as a whole, except for commitments or transactions entered
into prior to the date hereof in the ordinary course of business consistent with
past practice or after the date hereof in accordance with Section 5.01;
(i) any material revaluation by the Company of any material
asset (including any writing off of notes or accounts receivable) in excess of
the amounts reserved therefor on the Company Balance Sheet;
(j) any change in accounting methods, principles or practices
by the Company or any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar as
may have been required by a change in U.S. GAAP;
(k) any material elections with respect to Taxes by the
Company or any Company Subsidiary or settlement or compromise by the Company or
any Company Subsidiary of any material Tax Liability or refund; or
(l) any agreement by the Company or any Company Subsidiary to
take any action described in this Section 3.10 except as expressly contemplated
by this Agreement;
14
SECTION 3.11 Absence of Litigation. Except as specifically disclosed in
the Filed Company SEC Documents or in Section 3.11 of the Company Disclosure
Schedule or as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (i) there is no litigation, suit, claim,
action, proceeding or investigation (an "Action") pending or, to the knowledge
of the Company, threatened against the Company or any Company Subsidiary, or any
property or asset of the Company or any Company Subsidiary, before any court,
arbitrator or Governmental Entity, domestic or foreign, and (ii) there is no
Judgment, consent decree or other Order outstanding against the Company or any
Company Subsidiary.
SECTION 3.12 Employee Benefit Matters.
(a) Section 3.12(a) of the Company Disclosure Schedule lists
each Employee Benefit Plan, other than those set forth in Section 3.13(a)(ii) of
the Company Disclosure Schedule. The Company has delivered or made available to
the Buyer correct and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from the Internal
Revenue Service for each Employee Pension Benefit Plan or Welfare Benefit Plan
trust, the Form 5500 Annual Reports and Form 990 Annual Reports that were filed
for the last year, all related trust agreements, insurance contracts (including
the stop loss policy and the fiduciary policy that covers activities related to
the VEBA), and other funding agreements which implement each such Employee
Benefit Plan, and, to the best of the Company's knowledge, other than as
required by Law, no promise or commitment to amend or improve any Employee
Benefit Plan for the benefit of any current or former director, officer, or
employee of the Company or any Company Subsidiary which is not reflected in the
documentation provided to Buyer has been made.
(i) Each Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation with the
applicable requirements of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), the Code, and other applicable Laws,
except where failure to do so would not have a Material Adverse Effect.
(ii) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-l's, and Summary Plan
Descriptions) have been timely and appropriately filed or distributed
with respect to each Employee Benefit Plan, except where the failure to
do so has not had and would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
(iii) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with the past
custom and practice of the Company. All premiums or other payments for
all periods ending on or before the Closing Date have been paid or
accrued with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
15
(iv) Each Employee Benefit Plan which is an Employee Pension
Benefit Plan intended to be qualified under Code Section 401(a) has
received a favorable determination letter from the IRS as to its
qualification and, to the best of the Company's knowledge, has been
operated in all material respects in accordance with the terms of such
plan and the Code.
(v) All premiums or other payments for all periods ending on
or before the Closing Date have been paid or accrued with respect to
each Employee Benefit Plan which is an Employee Welfare Benefit Plan.
Each trust holding assets used to fund an Employee Welfare Benefit Plan
that is intended to be tax-exempt under Code Section 501(c)(9) has
received an IRS opinion letter confirming its tax exemption and, to the
best of the Company's knowledge, has been administered in all material
respects in accordance with the terms of such trust and plan and the
Code. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code Section 4980B have been met with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan subject to such
Part, except where failure to do so would not have a Material Adverse
Effect.
(b) No Employee Pension Benefit Plan is or ever has been
subject to Title IV of ERISA and none of the Company or any Company Subsidiary
has incurred or has any reason to expect that any of the Company or the Company
Subsidiaries will incur, any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(c) There have been no non-exempt Prohibited Transactions with
respect to any Employee Benefit Plan which would have a Material Adverse Effect.
No Fiduciary has any Liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or investment of the
assets of any such Employee Benefit Plan which would have a Material Adverse
Effect. No action, suit, proceeding, hearing, examination, or investigation with
respect to the administration or the investment of the assets of any such
Employee Benefit Plan (other than routine claims for benefits) is pending or, to
the knowledge of the Company, threatened which would reasonably be expected to
have a Material Adverse Effect. Except as set forth in Section 3.12(c) of the
Company Disclosure Schedule, no Employee Benefit Plan is, or in the last three
years has been, the subject of a government sponsored voluntary correction,
amnesty, or similar program.
(d) None of the Company or any Company Subsidiary contributes
to, has since December 31, 1991 contributed to, or since December 31, 1991 has
been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(e) Except as set forth in Section 3.12(e) of the Company
Disclosure Schedule, none of the Company or any Company Subsidiary maintains or
since December 31, 1991 has maintained or contributes, or since December 31,
1991 has contributed or has been required to contribute to, any Employee Welfare
Benefit Plan providing medical, health, or life
16
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
(f) Except as set forth in Section 3.12(f) of the Company
Disclosure Schedule, the Transactions will not result in any payment or
acceleration of, or vesting or increase in benefits under, any Employee Benefit
Plan.
SECTION 3.13 Material Contracts.
(a) Section 3.13(a) of the Company Disclosure Schedule
contains a list (organized by subsections corresponding to the subsections
identified below) of the following contracts, agreements and arrangements
(including all amendments thereto) to which the Company or a Company Subsidiary
is a party as of the date hereof, other than those contracts, agreements and
arrangements listed as exhibits in the Company's Form 10-K for the fiscal year
ended June 30, 2002 (such contracts, agreements and arrangements required to be
set forth in Section 3.13(a) of the Company Disclosure Schedule or listed as
exhibits in the Company's Form 10-K for the fiscal year ended June 30, 2002, the
"Company Material Contracts"):
(i) each contract and agreement or group of related agreements
which (A) is likely to involve consideration of more than $250,000 in
the aggregate, during the fiscal years ending June 30, 2003 or June 30,
2004, (B) is likely to involve consideration of more than $250,000 in
the aggregate over the remaining term of such contract, or (C) is
likely to involve consideration of more than $75,000 and cannot be
canceled by the Company or any Company Subsidiary without penalty or
further payment and on less than 60 days' notice;
(ii) (A) all employment, consulting, severance or termination
agreements between the Company or any Company Subsidiary and any
director, officer or employee of the Company or any Company Subsidiary
providing for annual compensation in excess of $25,000 (other than any
such employment agreement with a member of the Company's salesforce
that is one of the Company's standard form agreements for its
salesforce), and (B) all indemnification agreements between the Company
or any Company Subsidiary and any director, officer or employee of the
Company or any Company Subsidiary;
(iii) all (A) management contracts (excluding contracts for
employment) and (B) contracts with consultants which involve
consideration of more than $100,000;
(iv) all contracts, credit agreements, indentures and other
agreements evidencing indebtedness for borrowed money (including
capitalized leases);
(v) all agreements under which the Company or any Company
Subsidiary has advanced or loaned any funds, other than travel advances
and advances to sales personnel in the ordinary course of business
consistent with past practices or transfers of cash among the Company
and the Company Subsidiaries pursuant to the Company's existing cash
management policies;
(vi) all guarantees of any obligations in excess of $100,000;
17
(vii) all joint venture or other similar agreements, other
than joint marketing programs not involving payments by the Company and
the Company Subsidiaries in excess of $25,000 per program;
(viii) all lease agreements with annual lease payments in
excess of $50,000;
(ix) agreements under which the Company has granted any Person
registration rights (including demand and piggy-back registration
rights) or any other similar agreements with respect to the capital
stock of the Company or any Company Subsidiary;
(x) all contracts and agreements that limit the ability of the
Company or any Company Subsidiary to compete in any line of business or
with any Person or entity or in any geographic area or during any
period of time with respect to any business currently conducted by the
Company or any Company Subsidiary;
(xi) all contracts and other agreements with Affiliates; and
(xii) any other contracts or agreements that are material to
the business, assets, condition (financial or otherwise) or results of
operations of the Company and the Company Subsidiaries taken as a
whole.
(b) Except as would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, each Company Material
Contract is a legal, valid and binding agreement in full force and effect in
accordance with its terms and neither the Company nor any Company Subsidiary is
in violation or default, or has received notice that it is in violation or
default, under any Company Material Contract and to the best of the Company's
knowledge no other party is in default under any Company Material Contract. The
Company has provided the Buyer with copies of all Company Material Contracts.
SECTION 3.14 Environmental Matters. Except as described in Section 3.14
of the Company Disclosure Schedule or in the Filed Company SEC Documents or as
has not had and would not reasonably be expected to have a Material Adverse
Effect: (a) the Company and the Company Subsidiaries have not been and are not
in violation of any Environmental Law applicable to any of them; (b) none of the
properties currently or formerly owned, leased or operated by the Company or the
Company Subsidiaries are contaminated with any Hazardous Substance; (c) neither
the Company nor any of the Company Subsidiaries are liable for any off-site
contamination by Hazardous Substances; (d) the Company and the Company
Subsidiaries have all permits, licenses and other authorizations required under
any Environmental Law ("Environmental Permits"); (e) the Company and the Company
Subsidiaries are in compliance in all material respects with their Environmental
Permits; and (f) neither the execution of this Agreement nor the consummation of
the Transactions will require any investigation, remediation or other action
with respect to Hazardous Substances, or any notice to or consent of
Governmental Entities or third parties, pursuant to any applicable Environmental
Law or Environmental Permit. Except as described in Section 3.14 of the Company
Disclosure Schedule, none of the Company or the Company Subsidiaries has
received notice of a violation of, or any Liability under, any Environmental Law
(whether with respect to properties presently or previously owned or used) that
would reasonably be expected to have, individually or in the
18
aggregate, a Material Adverse Effect. The Company and the Company Subsidiaries
have made available to Buyer all environmental audits, reports and other
material environmental documents relating to their properties, facilities or
operations which have been prepared since June 30, 1995 and are in their
possession or control. To the best of the Company's knowledge, neither the
Company nor any Company Subsidiary has arranged for the disposal or treatment of
any substance at any off-site location that has been included in any published
U.S. federal, state or local "superfund" site list or any similar list of
hazardous or toxic waste sites published by any Governmental Entity.
SECTION 3.15 Title to Properties; Absence of Liens and Encumbrances.
(a) Except as described in Section 3.15(a) of the Company
Disclosure Schedule and except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, each of the Company
and the Company Subsidiaries has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
personal properties owned, used or held for use in its business. No such
tangible personal property is subject to any Lien that can be discharged through
the payment of a liquidated sum of money other than (i) Liens imposed by Law for
Taxes that are not yet delinquent, (ii) as set forth in Section 3.15(a) of the
Company Disclosure Schedule, or (iii) such Liens as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Section 3.15(b) of the Company Disclosure Schedule sets
forth a true, correct and complete list of all real property and improvements
(collectively, the "Real Property") owned or leased (as tenant or subtenant) by
the Company or any Company Subsidiary. Except for the Membership Contracts, the
Company's extended vacation or stay programs, the Company's storage programs,
and other ordinary course arrangements with members and other campground users,
in each case entered into in the ordinary course of business, or as set forth in
Section 3.15(b) of the Company Disclosure Schedule, there are no leases,
subleases or other occupancy agreements, either written or oral, granting any
Person the right of use or occupancy of any Real Property (or portion thereof).
Except for such usual and customary easements, licenses, rights-of-way, and
other customary encumbrances that do not materially interfere with the use and
operation of the Real Property in the conduct of the Company's business, the
Company (or such Company Subsidiary as the case may be) has good and insurable
title to the Real Property and has furnished to Buyer true and complete copies
of title insurance reports and title insurance policies with respect to the Real
Property from and after 1996 as are in the Company's possession or control. No
Real Property is subject to any Lien that can be discharged through the payment
of a liquidated sum of money other than (i) Liens imposed by Law for Taxes that
are not yet delinquent, (ii) Liens in favor of materialmen, workmen, carriers,
warehousepersons or laborers not in excess of $100,000 in the aggregate, (iii)
as reflected in the Filed Company SEC Documents, and (iv) as set forth in
Section 3.15(b) of the Company Disclosure Schedule. All title to the Real
Property located in the United States is insurable by Chicago Title Insurance
Company or another nationally recognized title insurance company selected by
Buyer and reasonably acceptable to the Company, pursuant to title insurance
policies that are substantially in the same form (including endorsements) as the
title insurance policies issued by Chicago Title Insurance Company to Foothill
Capital Corporation ("Foothill") in connection with the loan facility, as
amended, that Foothill provided to the
19
Company and previously furnished to Parent (the "Foothill Policies"), except for
(i) non-monetary Liens set forth in the Foothill Policies, (ii) Liens specified
in clauses (i), (ii) and (iv) of the preceding sentence, and (iii) non-monetary
Liens incurred in the ordinary course of business since the date of the
applicable Foothill Policy that do not, individually or in the aggregate,
materially affect the value of one or more campgrounds included in the Real
Property or the operation of the business of the Company and the Company
Subsidiaries. Except as set forth on Section 3.15(b) of the Company Disclosure
Schedule or as set forth in the Filed Company SEC Documents, neither the Company
nor any Company Subsidiary leases (as tenant or subtenant) any real property.
The real property listed in Section 3.15(b) of the Company Disclosure Schedule
constitutes all of the real property used, leased or occupied by the Company or
any Company Subsidiary as of the date hereof other than approximately 1,390
miscellaneous undeveloped lots that are reflected as having zero value on the
Company Balance Sheet.
(c) The Real Property and all present uses and operations of
the Real Property comply with all Laws, covenants, conditions, restrictions,
easements, disposition agreements and similar matters affecting the Real
Property, except for such failures to comply as have not and would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company and the Company Subsidiaries have obtained all
approvals of Governmental Entities (including certificates of use and occupancy,
licenses and permits) required in connection with the construction, ownership,
use, occupation and operation of the Real Property, except for such approvals as
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. Except as set forth in Section 3.15(c) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary has received
any notice of, nor does the Company or any Company Subsidiary have any knowledge
of, any pending or proposed condemnation proceeding, taking, lawsuit or
administrative matter that would reasonably be expected to materially affect any
campground included in the Real Property or the Company's operation thereof.
(d) All structures, facilities and improvements owned by the
Company or any Company Subsidiary and all structural, mechanical and other
physical systems that constitute a part thereof are in sufficient condition to
permit the business of the Company and the Company Subsidiaries to continue to
operate in substantially the same manner as such business and operations have
been historically conducted, assuming the continuance of capital expenditures as
contemplated by the Company's current capital expenditure budget previously
furnished to Buyer. No maintenance or repair to the Real Property or such
structures, facilities and improvements (including any structural, mechanical or
other physical system thereof) has been unreasonably deferred such that the
Company or any Company Subsidiary is unable to conduct its business and continue
its operations in substantially the same manner as such business and operations
have been historically conducted, assuming the continuance of such capital
expenditures.
SECTION 3.16 Intellectual Property.
(a) Except with respect to the items set forth in Section
3.16(a) of the Company Disclosure Schedule or as described in the Filed Company
SEC Documents, the Company and the Company Subsidiaries own or possess adequate
licenses or other valid enforceable rights to use all Intellectual Property used
in the conduct of the business of the
20
Company and the Company Subsidiaries, and the consummation of the Transactions
will not conflict with, alter or impair the Company or any Company Subsidiary's
rights to any such Intellectual Property, in each case except as would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
(b) Section 3.16(b) of the Company Disclosure Schedule sets
forth the following Intellectual Property owned by the Company or any Company
Subsidiary and the following Intellectual Property licensed by the Company for
which the failure to license such Intellectual Property would, individually or
in the aggregate, have a Material Adverse Effect: patents and patent
applications, inventions that have been identified as active patent matters but
for which applications have not yet been filed, Trademark registrations and
applications for Trademark registrations, trade names and registered copyrights.
To the best of the Company's knowledge, all patents, Trademark registrations and
copyright registrations set forth in Section 3.16(b) of the Company Disclosure
Schedule are valid and in full force and effect. Neither the Company nor any
Company Subsidiary has interfered with or infringed upon any Intellectual
Property rights of third parties in connection with the business of the Company
or any Company Subsidiary, except for such interferences or infringements as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and, except as set forth in Section 3.16(b) of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary has
received any charge, complaint, claim, demand, office action or notice (i)
alleging any such interference or infringement, or (ii) challenging the
legality, validity, enforceability, use or ownership of any Intellectual
Property set forth in Section 3.16(b) of the Company Disclosure Schedule
("Company Intellectual Property"), except for any such charge, complaint, claim,
demand, office action or notice that would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect. Except as set
forth in Section 3.16(b) of the Company Disclosure Schedule, no Person is
infringing or otherwise violating the rights of the Company or any of the
Company Subsidiaries with respect to any Company Intellectual Property, except
for such infringements or violations as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(c) Except as set forth in Section 3.16(c) of the Company
Disclosure Schedule, the Company has timely paid, or caused to be timely paid,
all required maintenance, renewal and other similar fees, and has timely met any
applicable legal requirements, with respect to all Intellectual Property that is
listed in Section 3.16(b) of the Company Disclosure Schedule as owned by the
Company or any Company Subsidiary, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect . With
respect to Intellectual Property licensed by the Company or any Company
Subsidiary ("Licensed Intellectual Property") that is listed in Section 3.16(b)
of the Company Disclosure Schedule, the Company and each applicable Company
Subsidiary is in compliance with any applicable license or similar agreement and
each such license or agreement is legal, valid, binding and in full force and
effect in accordance with its terms, except as would not have or would not
reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth in Section 3.16(d) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary has agreed
to indemnify any Person for or against any interference, infringement,
misappropriation, or any other conflict with respect to any Intellectual
Property.
21
(e) All of the Company's information technology systems are
adequate for the conduct of the Company's and the Company Subsidiaries' business
as presently conducted. The Company owns or possesses adequate licenses for all
computer software used in the conduct of the Company's and the Company
Subsidiaries' business as presently conducted, except for such the failure of
which to obtain would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.17 Taxes.
(a) Except as set forth in Section 3.17(a) of the Company
Disclosure Schedule, each of the Company and the Company Subsidiaries has filed
on a timely basis all Tax Returns required to be filed by it and all such Tax
Returns were correct and complete except to the extent any failure to file or
any inaccuracy in any filed Tax Return would not, individually or in the
aggregate, have a Material Adverse Effect. All Taxes due and owing by the
Company or any Company Subsidiary (whether or not shown on any Tax Return) other
than Taxes not yet delinquent have been timely paid in full except to the extent
any failure to pay would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and the Company Subsidiaries currently are not the
beneficiary of any extension of time within which to file any Tax Return. No
claim has been made by an authority in a jurisdiction where any of the Company
and the Company Subsidiaries does not file Tax Returns that they may be subject
to taxation by that jurisdiction, except for such claims relating to Taxes other
than income or sales Taxes that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(b) Each of the Company and the Company Subsidiaries has
complied with all reporting requirements and has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party, except to the extent any failure to comply or withhold and pay would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) There is no pending or unresolved dispute, audit,
investigation, proceeding or claim concerning any Liability with respect to
Taxes of the Company or the Company Subsidiaries either (i) claimed or raised by
any authority in writing or (ii) as to which the Company has knowledge based
upon contact with any such authority, except for such as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Except as set forth in Section 3.17(c) of the Company Disclosure Schedule, none
of the federal, state, local, and foreign income Tax Returns filed with respect
to the Company and the Company Subsidiaries is currently the subject of audit.
The Company delivered or made available to Buyer correct and complete copies of
all federal, state, local and foreign income Tax Returns, examination reports
and statements of deficiencies assessed against or agreed to by any of the
Company and the Company Subsidiaries for the last three taxable years.
(d) Except as set forth in Section 3.17(d) of the Company
Disclosure Schedule, none of the Company or any of the Company Subsidiaries has
waived any statue of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
22
(e) Except as set forth in Section 3.17(e) of the Company
Disclosure Schedule, none of the Company or any of the Company Subsidiaries is
or since June 30, 1993 has been a party to any Tax allocation or sharing
agreement or a member of an affiliated group within the meaning of Code Section
1504(a) or any similar group defined under a similar provision of state, local,
or foreign Law (an "Affiliated Group") filing a consolidated federal income Tax
Return (other than the Affiliated Group the common parent of which is the
Company). Neither the Company nor any Company Subsidiary has any Liability for
the Taxes of any Person other than the Company and the Company Subsidiaries
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or
foreign Law), as a transferee or successor, by contract, or otherwise.
(f) None of the Company or any of the Company Subsidiaries has
filed a consent under Code Section 341(f) concerning collapsible corporations.
Except as set forth in Section 3.17(f) of the Company Disclosure Schedule, none
of the Company and the Company Subsidiaries has made any payments, is obligated
to make any payments, or is a party to any Contract (including this Agreement)
that under certain circumstances could obligate it to make any payments that
will not be deductible as a result of Code Sections 162 or 280G or that will be
subject to an excise tax under Code Section 4999.
(g) The unpaid Taxes of the Company and the Company
Subsidiaries (1) did not, except as set forth in Section 3.17(g) of the Company
Disclosure Schedule, as of June 30, 2002, exceed the reserve for Tax Liability
(excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the Company
Balance Sheet (rather than in any notes thereto) and (2) will not exceed that
reserve as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Company and the Company
Subsidiaries in filing their Tax Returns, except to the extent an excess would
not, individually or in the aggregate, have a Material Adverse Effect.
(h) Since July 1, 1993, the Company has not had an "ownership
change" within the meaning of Section 382(g) of the Code.
SECTION 3.18 Insurance. Section 3.18 of the Company Disclosure Schedule
sets forth a complete and accurate list of all insurance policies in force on
the date hereof (the "Insurance Policies") naming the Company, any Company
Subsidiary or directors or employees thereof as a loss payee or for which the
Company or any Company Subsidiary has paid or is obligated to pay all or part of
the premiums. To the best of the Company's knowledge, each of the Insurance
Policies that expires on or before the Closing Date is renewable by the Company
or Company Subsidiary, as applicable, on substantially similar terms but with
increases in premiums, deductibles or retentions or reductions in scope of
coverage that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any Company
Subsidiary has received notice of any pending or threatened cancellation or
premium increase (retroactive or otherwise) with respect to the Insurance
Policies that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and each of the Company and the Company
Subsidiaries is in compliance with all material conditions contained in the
Insurance Policies.
23
SECTION 3.19 Compliance with Applicable Laws. Except as disclosed in
the Filed Company SEC Documents or in Section 3.19 of the Company Disclosure
Schedule, the Company and the Company Subsidiaries are, and since June 30, 1995
have been, in compliance with all applicable Laws, including those relating to
membership campgrounds, time-shares, labor and employment, occupational health
and safety and the environment, except for such failures to be in compliance as
have not, individually or in the aggregate, had a Material Adverse Effect.
Except as set forth in the Filed Company SEC Documents or in Section 3.19 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary has
received any communication during the past two years from a Governmental Entity
that alleges that the Company or a Company Subsidiary is not in compliance with
any applicable Law, except for such allegations as have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.20 Membership Contracts.
(a) Except as set forth in Section 3.20(a) of the Company
Disclosure Schedule, no Membership Contract provides any Person with any
ownership interest in or to any campground or other Real Property or facility
(or portion thereof) owned or used by the Company or any Company Subsidiary.
Each Membership Contract contains all of the terms and provisions required to be
included therein by applicable Law, except for such as have not had and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company and each Company Subsidiary is in compliance with
all of the provisions of each Membership Contract applicable to it and has
satisfied all of its material obligations thereunder required to be satisfied,
except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(b) The reports attached to Section 3.20(b) of the Company
Disclosure Schedule accurately present, in all material respects when considered
as a whole, the information purported to be covered thereby.
SECTION 3.21 Stockholder Rights Agreement. Except as specifically
provided in the Company Charter, neither the Company nor any Company Subsidiary
has adopted a stockholder rights agreement or any similar plan or agreement
which limits or impairs the ability to purchase, or become the direct or
indirect beneficial owner of, shares of Company Common Stock or any other equity
or debt securities of the Company or any Company Subsidiary, other than any
stockholder rights plan or stockholder rights agreement that (a) is adopted
after the date of this Agreement, (b) does not impair the ability of the parties
to consummate the Merger in accordance with the terms of this Agreement, and (c)
otherwise does not have an adverse effect on Parent or Buyer or on the rights of
Parent or Buyer under this Agreement or any of the Voting Agreements. The
Company has taken such action as is necessary under the Company Charter to
permit (i) the Company to execute and deliver this Agreement and consummate the
Transactions, and (ii) the Principal Stockholders to execute and deliver the
Voting Agreements and perform their obligations thereunder. The Stockholder
Agreement dated as of April 5, 1999 between the Company and Xxxx Xxxxx
Management Company, L.P., Xxxx Xxxxx Strategic Investments, L.P., Xxxx Xxxxx
Strategic Investments II, L.P., Xxxxxx X. Xxxx and Xxxxxx X. Xxxxxx has expired
by its terms prior to the date hereof and is of no further force or effect.
24
SECTION 3.22 Opinion of Financial Advisor. The Company Board has
received the written opinion of Xxxxxxxx Inc. dated the date of this Agreement
to the effect that, as of the date of this Agreement, the consideration to be
received in the Merger by the Company Stockholders (other than Xxxx Xxxxx
Strategic Investments, L.P. and its Affiliates) is fair to such Company
Stockholders from a financial point of view, and a copy of the signed opinion
has been provided to Buyer.
SECTION 3.23 Brokers.
(a) No broker, investment banker, financial advisor or other
Person, other than Xxxxxxxx Inc., financial advisor to the Company, the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company. The Company has delivered to Buyer a complete and accurate copy of all
agreements pursuant to which Xxxxxxxx Inc. is entitled to any fees and expenses
payable directly or indirectly by the Company or any Company Subsidiary in
connection with any of the Transactions.
(b) Section 3.23 of the Company Disclosure Schedule sets forth
a list of the fees and expenses, estimated in good faith as of the date of this
Agreement, incurred and to be incurred by the Company or any Company Subsidiary
in connection with the Transactions (including without limitation the fees and
expenses of Xxxxxxxx Inc. and of the Company's legal counsel and accountants)
and noting which fees and expenses, if any, have been paid as of the date hereof
or accrued as of the date hereof (the actual fees and expenses incurred and to
be incurred by the Company or any Company Subsidiary in such connection being
referred to as the "Company Transaction Expenses").
SECTION 3.24 Employees. Except as set forth in Section 3.24 of the
Company Disclosure Schedule or except as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect, to the best of
the Company's knowledge, no executive, Key Employee, or group of employees has
any plans to terminate employment with the Company or the Company Subsidiaries.
The Company and the Company Subsidiaries have not experienced any material labor
disputes or work stoppages due to labor disagreements. The Company and the
Company Subsidiaries are in compliance with all applicable Laws respecting
employment and employment practices and terms and conditions of employment,
except for such the failure to be in compliance would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. The
Company and the Company Subsidiaries are not, nor have any of them ever been, a
party to any collective bargaining agreements and, to the knowledge of the
Company, none of the Company or any of the Company Subsidiaries has been the
subject of any organizational activity.
SECTION 3.25 Transactions with Affiliates. Except as set forth in
Section 3.25 of the Company Disclosure Schedule or in the Filed Company SEC
Documents, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred that would be required to be reported by the Company
pursuant to Item 404 of Regulation S-K promulgated by the SEC. Section 3.25 of
the Company Disclosure Schedule identifies each Person who is, to the best of
the Company's knowledge, an Affiliate of the Company or any Company Subsidiary.
25
Without limiting the generality of the foregoing, there are no amounts due or
payable by the Company or any Company Subsidiary to any of the Principal
Stockholders or any of their Affiliates in connection with the Transactions or
the Voting Agreements or otherwise, except for such amounts as may be payable
under the Company's Employee Benefit Plans as in effect on the date hereof and
which are listed on the Company Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Each of Parent and Buyer, jointly and severally, hereby represents and
warrants to the Company that:
SECTION 4.01 Organization and Qualification; Subsidiaries. Such Person
is a corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be organized, existing, in good standing
or to have such power, authority or governmental approvals would not reasonably
be expected to prevent or materially delay the ability of Parent or Buyer to
consummate the Transactions (a "Buyer Material Adverse Effect"). Such Person is
duly qualified or licensed as a foreign corporation or organization to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not reasonably be
likely to have a Buyer Material Adverse Effect.
SECTION 4.02 Ownership of Parent and Buyer; No Prior Activities. Such
Person was formed solely for the purpose of engaging in the Transactions. Such
Person (i) has not conducted, and will not prior to the Effective Time conduct,
any business and (ii) has no, and prior to the Effective Time will have no,
assets or liabilities, except, in either case, in connection with the
Transactions. As of the date hereof, no shares of Company Common Stock are held
by Parent or Buyer. As of the date hereof, the authorized capital stock of
Buyer, consists of 1,000 shares of common stock, par value $0.01 per share, all
of which have been validly issued, are fully paid and nonassessable and are
owned by Parent free and clear of any Liens.
SECTION 4.03 Authority Relative to this Agreement. Such Person has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the Transactions. The execution and delivery of this Agreement
by such Person and the consummation by each such Person of the Transactions have
been duly authorized by all necessary corporate action on the part of such
Person. Such Person has duly executed and delivered this Agreement, and this
Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other Laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
26
SECTION 4.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery by such Person of this
Agreement does not, and the consummation of the Transactions and compliance with
the terms hereof will not, result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any Person under, or result in the creation of any
Lien upon any of the properties or assets of such Person under, any provision of
(i) its charter, by-laws or other organizational documents, (ii) any Contract to
which such Person is a party or by which any of its respective properties or
assets is bound or (iii) subject to the filings and other matters referred to in
Section 4.04(b), any Judgment or Law applicable to such Person or any of its
subsidiaries or respective properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually and in the
aggregate, would not reasonably be expected to have a Buyer Material Adverse
Effect.
(b) No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to such Person in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, other
than (i) if required, compliance with and filing of a pre-merger notification
report under the HSR Act, (ii) the filing with the SEC of such reports under
Section 13 of the Exchange Act as may be required in connection with this
Agreement and the Transactions, (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of the other jurisdictions in which Buyer is
qualified to do business, (iv) compliance with and filings under the Laws of any
foreign jurisdictions, if and to the extent required, and (v) such other items
that, individually and in the aggregate, would not reasonably be expected to
have a Buyer Material Adverse Effect.
SECTION 4.05 Information Supplied. None of the information supplied or
to be supplied in writing by Parent or Buyer specifically for inclusion or
incorporation by reference in the Proxy Statement (including any amendment or
supplement thereto) will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
SECTION 4.06 Brokers. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or Buyer. Parent has previously
provided to the Company a written list of the fees and expenses, estimated in
good faith as of the date of this Agreement, incurred and to be incurred by
Parent and Buyer in connection with the Transactions (including without
limitation the fees and expenses of Parent's and Buyer's legal counsel and
accountants) and noting which fees and expenses, if any, have been paid as of
the date hereof or accrued as of the date hereof.
SECTION 4.07 Financing. Buyer has provided the Company with commitment
letters from iStar Financial Inc., dated April 22, 2003 and Union Bank of
California, N.A., dated April 11, 2003 (collectively, the "Debt Commitment
Letters"). Buyer has provided the Company with a commitment letter from Kohlberg
Management IV, L.L.C., dated April 25, 2003, (the "Equity Commitment Letter" and
together with the Debt Commitment Letters, the "Commitment
27
Letters"). To the knowledge of Parent or Buyer, the Commitment Letters have been
duly executed by all parties thereto and are in full force and effect as of the
date hereof and have not been amended or modified in any material respect.
Neither iStar Financial Inc. nor Union Bank of California, N.A. has notified
Parent or Buyer of its intention to terminate such lender's Debt Commitment
Lender or not to provide the financing contemplated thereby. As of the date
hereof, there are no facts or circumstances known to Parent or Buyer that in
Parent's or Buyer's good faith estimation would reasonably be expected to cause
the Financing not to be consummated. All commitment and other fees required to
be paid under the Commitment Letters on or prior to the date hereof have been
paid. Assuming the satisfaction of the condition set forth in Section 7.02(i) of
this Agreement, the aggregate proceeds of the financings contemplated by the
Commitment Letters (the "Financing"), when taken together with the available
cash of the Company and the Company Subsidiaries is sufficient to pay the
aggregate Merger Consideration and Option Consideration and to pay the
anticipated fees and expenses of Parent and Buyer related to the Merger and the
Transactions and, to the knowledge of Parent or Buyer, to provide adequate
liquidity for the continuation of the business of the Company and the Company
Subsidiaries in a manner consistent with historical practice.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger. The
Company agrees that, between the date of this Agreement and the Effective Time,
except as set forth in Section 5.01 of the Company Disclosure Schedule or as
specifically contemplated by any other provision of this Agreement, unless
Parent otherwise consents in writing (which consent will not be unreasonably
withheld or delayed):
(a) the businesses of the Company and the Company Subsidiaries
will be conducted only in, and the Company and the Company Subsidiaries will not
take any action except in, the ordinary course of business and in a manner
consistent with past practice (including without limitation with respect to (i)
the timing and payment terms of accounts payable and other expenses, (ii) the
billing and receipt of accounts receivable and membership dues, (iii) capital
expenditures provided for in the Company's budget, and (iv) the management of
the Company's working capital); and
(b) the Company will use its commercially reasonable efforts
to preserve substantially intact its business organization, to keep available
the services of the current officers, employees and consultants of the Company
and the Company Subsidiaries and to preserve the current relationships of the
Company and the Company Subsidiaries with members or other customers, employees,
suppliers, licensors, licensees and other Persons with which the Company or any
Company Subsidiary has significant business relations.
By way of amplification and not limitation, except (x) as contemplated by this
Agreement, (y) for transfers of cash among the Company and the Company
Subsidiaries pursuant to the Company's existing cash management policies or (z)
as set forth in Section 5.01 of the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary will, between the date of this Agreement (or
in the case of clause (ii) below, April 9, 2003) and the Effective Time,
28
directly or indirectly, do any of the following without the prior written
consent of Parent (which consent will not be unreasonably withheld or delayed):
(i) amend or change its certificate of incorporation or
by-laws or equivalent organizational documents (including without
limitation the Company Charter and Company By-Laws);
(ii) issue or sell, or authorize for issuance or sale, any
shares of its stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or any Company Subsidiary (except
for the issuance of shares of Company Common Stock pursuant to the
Company Stock Options outstanding on the date of this Agreement) or
pursuant to the Stock Purchase Plan;
(iii) authorize, declare or set aside any dividend payment or
other distribution, payable in cash, stock, property or otherwise, with
respect to any of its stock;
(iv) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its stock or issue
or authorize the issuance of any other securities in respect of, or in
lieu of or in substitution for shares of its capital stock;
(v) acquire or agree to acquire or sell or agree to sell
(including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any interest in any corporation,
partnership, other business organization or any division thereof or any
assets constituting a business or a portion of a business (including a
campground), provided that the Company will give Parent prompt notice
of the sale (or agreement to sell) any campground or other asset
specified on Section 5.01 of the Company Disclosure Schedule;
(vi) except for (a) Membership Contracts entered into in the
ordinary course of business consistent with past practice, (b) the
disposition of obsolete or worthless assets, sell, lease, license,
encumber or subject to any Lien or otherwise dispose of any Real
Property;
(vii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse the obligations of any
Person, or make any loans or advances, except for revolving
indebtedness under the Company's existing Loan Agreement dated as of
July 1, 2001 between the Company and Union Bank of California N.A., as
amended and in effect (the "Union Bank Loan Agreement"), incurred in
the ordinary course of business and consistent with past practice and
for other indebtedness with a maturity of not more than one year and in
a principal amount not, in the aggregate, in excess of $50,000;
(viii) enter into any contract or agreement that would be
required to be listed on the Company Disclosure Schedule pursuant to
Section 3.13(a)(i)(A), Section 3.13(a)(i)(B), Section 3.13(a)(ii) (but
only with respect to officers, directors and Key Employees), Section
3.13(a)(iii), Section 3.13(a)(iv) (other than for renewal or
29
substitution of the Company's outstanding letter of credit issued under
the Union Bank Loan Agreement and required by certain of the Insurance
Policies or renewals thereof contemplated by Section 3.18), Section
3.13(a)(v), Section 3.13(a)(vi), Section 3.13(a)(vii) (other than joint
marketing programs not involving payments by the Company and the
Company Subsidiaries in excess of $50,000 per program), Section
3.13(a)(viii), Section 3.13(a)(ix), Section 3.13(a)(x) or Section
3.13(a)(xi), in each case if entered into prior to the date hereof, or
modify, amend, renew, or waive any material provision of, breach in any
material respect, or terminate any Company Material Contract;
(ix) make or authorize any capital expenditures, other than as
set forth in Section 5.01(b)(ix) of the Company Disclosure Schedule, in
excess of $100,000 in the aggregate;
(x) except for the acceleration of vesting of unvested Company
Stock Options outstanding on the date hereof, waive any stock
repurchase or acceleration rights, amend or change the terms of any
options, warrants, or restricted stock, or reprice options granted
under any Company Option Plan or warrants or authorize cash payments in
exchange for any options, or warrants granted under any such plans;
(xi) except as required by Law or as specifically provided for
in this Agreement and except for fiscal 2003 year-end bonuses not in
excess of $700,000 in the aggregate and consistent with past practices,
(a) increase the compensation payable or to become payable to the
Company's or any Company Subsidiary's officers or employees (including
without limitation any rights to severance or termination pay), except
for increases in salaries or wages of employees (other than directors,
officers or Key Employees) in accordance with past practices and
consistent with current budgets as of the date hereof, (b) grant or
amend any rights to severance or termination pay to, or enter into or
amend any employment or severance agreement with, any director, officer
or Key Employee of the Company or any Company Subsidiary, or (c)
forgive any indebtedness of any employee of the Company or any Company
Subsidiary other than forgiveness of advances to sales personnel
consistent with past practice that is not, individually or in the
aggregate, material in amount;
(xii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $75,000 per claim, liability or obligation or
$500,000 in the aggregate, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice, of liabilities reflected or reserved against in (or arising
after the date of), the Company Balance Sheet, or cancel any
indebtedness in excess of $75,000 in any one instance or $500,000 in
the aggregate or waive any claims or rights with a value in excess of
$75,000, or waive the benefits of, or agree to modify in any manner,
any confidentiality, standstill or similar agreement to which the
Company or any Company Subsidiary is a party (other than the
confidentiality provisions contained in any employment agreement);
(xiii) settle any Action other than any settlement which
involves only the payment of damages in an amount that does not exceed
$75,000 and does not involve
30
injunctive or other equitable relief, or commence any litigation or
arbitration (other than in connection with a breach of this Agreement)
involving a claim in excess of $75,000;
(xiv) make or revoke any material Tax elections, adopt or
change any method of Tax accounting, request any ruling or similar
determination, enter into any closing agreement or settle any Tax
liabilities or take any similar action (including communications with a
Governmental Entity) with respect to the computation of Taxes or the
preparation of a Tax Return that is either inconsistent with past
practice or is in excess of $75,000;
(xv) take any action, other than as required by U.S. GAAP or
by the SEC, with respect to accounting principles or procedures,
including, without limitation, with respect to any revaluation of
assets;
(xvi) except as provided in Sections 5.01(b)(x) and 5.03, (i)
establish, adopt, enter into, amend, or terminate any collective
bargaining agreement or Employee Benefit Plan, other than to the extent
required to comply with applicable Law, (ii) take any action to
accelerate any rights or benefits under any Employee Benefit Plan, or
(iii) unless consistent with past practice, make any material
determinations not in the ordinary course of business, under any
collective bargaining agreement or Employee Benefit Plan;
(xvii) enter into or implement any "stockholder rights" plan
or any similar anti-takeover plan or device in a manner that could
prevent or delay the consummation of the Merger;
(xviii) enter into a binding agreement to take any of the
actions described in clauses (i) through (xvii) above; or
(xix) except as specifically permitted by this Section 5.01,
take any action (a) that would reasonably be expected to cause any of
the Company's representations and warranties set forth in Article III
not to satisfy the conditions to closing set forth in Section 7.02(a),
or (b) that would be reasonably expected to result in the inability of
Company to satisfy the other conditions to closing set forth in Section
7.02.
SECTION 5.02 Notification of Certain Matters. Buyer will give prompt
notice to the Company, and the Company will give prompt notice to Buyer, of (i)
the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause (A) any representation or warranty contained in
this Agreement made by such Person not to satisfy the conditions to closing set
forth in Section 7.02(a) or 7.03(a), as applicable, or (B) any covenant,
condition or agreement contained in this Agreement applicable to such Person not
to be complied with or satisfied in any material respect and (ii) any failure of
Buyer or the Company, as the case may be, to comply with or satisfy in all
material respects any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.02 will not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 5.03 Employee Stock Purchase Plan. The Company will take all
necessary and appropriate actions with respect to the Thousand Trails, Inc.
Employee Stock Purchase Plan
31
(the "Stock Purchase Plan") so that (a) the offering period ending June 30, 2003
is the final offering period for which shares of Company Common Stock are issued
under such plan, (b) all contractual restrictions on transfer applicable to any
shares of Company Common Stock held in stock accounts of the Stock Purchase Plan
are terminated immediately prior to the Effective Time, (c) such plan is
terminated, in accordance with section 8.1 of such plan, immediately prior to
the Effective Time, and (d) all balances deferred after June 30, 2003 under the
Stock Purchase Plan are refunded to the plan participants promptly following the
Effective Time.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Preparation of Proxy Statement; Company Stockholders
Meeting.
(a) The Company will, as soon as practicable following the
date of execution of this Agreement, prepare and file with the SEC the Proxy
Statement in preliminary form (provided that Buyer and its counsel will be given
reasonable opportunity to review and comment on the Proxy Statement and any
amendments thereto prior to its filing with the SEC), and each of the Company
and Buyer will use its best efforts to respond as promptly as practicable to any
comments of the SEC with respect thereto. The Company will notify Buyer promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Buyer with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement. If at any
time prior to receipt of the Company Stockholder Approval there occurs any event
that should be set forth in an amendment or supplement to the Proxy Statement,
the Company will promptly prepare and mail to its stockholders such an amendment
or supplement. The Company will use reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after filing with the SEC. Subject to Section 6.03(c), (i) the Proxy Statement
will contain the recommendation of the Company Board that the Company
Stockholders vote to adopt and approve this Agreement and the Merger and (ii) if
requested to do so by Buyer at any time prior to the Company Stockholders
Meeting and subject to compliance with applicable Laws, if there has been
publicly announced an alternative Acquisition Proposal, the Company Board will
within fifteen business days following such public announcement (but in any
event prior to the Company Stockholders Meeting) publicly reaffirm such
recommendation and/or will publicly announce that it is not recommending that
the Company Stockholders accept an alternative Acquisition Proposal.
(b) Unless this Agreement has been terminated in accordance
with its terms, the Company will, as soon as practicable following the date of
execution of this Agreement (and without regard to the commencement, public
proposal, public disclosure or communication to the Company of any Acquisition
Proposal), duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders Meeting") for the purpose of seeking the
Company Stockholder Approval.
SECTION 6.02 Access to Information; Confidentiality. The Company will,
and will cause each Company Subsidiary to afford to Parent, Buyer, and to
Parent's and Buyer's officers, employees, accountants, counsel, financial
advisors, financing sources and other representatives,
32
upon reasonable notice, reasonable access during normal business hours during
the period prior to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during such period,
the Company will, and will cause each Company Subsidiary to, furnish promptly to
Parent and Buyer such information concerning its business, properties, assets,
customers, consultants and personnel as Parent or Buyer may reasonably request.
The Company hereby consents, and will cause each Company Subsidiary to consent,
to Parent and Buyer and Parent's and Buyer's officers, employees, accountants,
counsel, financial advisors, financing sources and other representatives
contacting, in a reasonable fashion, members, employees, lenders and landlords
of the Company and such Company Subsidiary and will, upon reasonable notice from
Parent or Buyer, request such members, employees, lenders and landlords to
cooperate during normal business hours during the period prior to the Effective
Time with any reasonable requests made by or on behalf of Parent or Buyer.
Parent will, prior to the Effective Time, respond promptly to reasonable
requests by the Company for information concerning the status of the Financing.
Any confidential information provided to Parent, Buyer or the Company hereunder
will be subject to the terms of the Confidentiality Agreement between the
Company and Kohlberg Management IV, L.L.C. dated November 12, 2002
("Confidentiality Agreement").
SECTION 6.03 No Solicitation of Transactions.
(a) After the date hereof and prior to the Effective Time or
earlier termination of this Agreement, except as provided in clause (b) below,
the Company will not, and will not permit any of the Company Subsidiaries to
directly or indirectly, initiate, solicit, negotiate, encourage or provide
nonpublic or confidential information to facilitate, and the Company will not,
and will use its reasonable best efforts to cause any officer, director or
employee of the Company, or any attorney, accountant, investment banker,
financial advisor or other agent retained by it or any of the Company
Subsidiaries not to, directly or indirectly initiate, solicit, negotiate,
encourage or provide nonpublic or confidential information to facilitate, any
proposal or offer to acquire any part of the business or properties of the
Company or any Company Subsidiary constituting 25% or more of the net revenues,
net income or the assets of the Company and the Company Subsidiaries, taken as a
whole, or a significant equity interest in any class of capital stock of the
Company or any Company Subsidiary, whether by merger, consolidation,
recapitalization, purchase of assets, tender offer or otherwise and whether for
cash, securities or any other consideration or combination thereof (any such
transaction being referred to herein as an "Acquisition Transaction"). The
Company immediately will cease and cause to be terminated all activities,
discussions or negotiations with any parties with respect to any Acquisition
Transaction, other than the Merger.
(b) Notwithstanding the provisions of clause (a) above, the
Company Board may respond to, furnish information to or engage in discussions or
negotiations with any Person in response to an unsolicited written offer or
proposal with respect to an Acquisition Transaction (an "Acquisition Proposal")
if and only to the extent that (I) the Company Board determines, in good faith
after consultation with its independent financial advisor and legal counsel,
that such Acquisition Proposal would (or reasonably could) constitute a Superior
Proposal, (II) the Company Board determines, in good faith after consultation
with legal counsel, that such action is required in order to comply with its
fiduciary duties to the Company Stockholders under applicable Law, and (III) the
Company Board receives, prior to furnishing any such information or entering
into any discussions or negotiations with such Person, an executed
confidentiality
33
agreement on terms no less favorable to the Company than the Confidentiality
Agreement (including without limitation with respect to the standstill
provisions thereof). For purposes of this Agreement, "Superior Proposal" means a
bona fide Acquisition Proposal (A) made by a third party that the Company Board
determines in its good faith judgment (after consultation with its financial
advisor) to be more favorable to the Company Stockholders than the Merger, (B)
that involves at least 51% of the outstanding shares of Company Common Stock or
assets of the Company and the Company Subsidiaries, (C) that the Company Board
determines in its good faith judgment is reasonably likely to be consummated,
taking into account all legal and regulatory aspects of the proposal, and (D)
for which financing, to the extent required, is then committed on terms as
likely to be satisfied as the Commitment Letters. The Company Board may take and
disclose to the Company Stockholders a position required by Rules 14d-9 and
14e-2 under the Exchange Act without violating this clause (b).
(c) Neither the Company Board nor any committee thereof will,
except as expressly permitted by this Section 6.03(c), (i) withdraw, amend,
qualify or modify in any manner adverse to Parent or Buyer, the approval or
recommendation of the Company Board or such committee of the Merger or this
Agreement, (ii) endorse, approve, recommend or submit to the Company
Stockholders any Acquisition Transaction (other than the Merger), or (iii) cause
the Company to enter into any agreement related to or with respect to any
Acquisition Transaction (each an "Acquisition Agreement"); provided, that the
Company may enter into a confidentiality agreement to the extent required, and
containing only the terms contemplated, by Section 6.03(b)(III). Notwithstanding
the foregoing, if the Company Board determines in good faith, after it has
received a Superior Proposal in compliance with this Section 6.03 and after
taking into account advice from independent outside legal counsel with respect
to its fiduciary duties to Company Stockholders under applicable Law, that such
action is required for the Company Board to comply with its fiduciary
obligations to the Company Stockholders under applicable Law, the Company Board
may (subject to this and the following sentences), take any of the actions
described in clauses (i) through (iii) of this Section 6.03(c) (each a
"Subsequent Adverse Determination"), but only at a time that is after the fifth
business day following Parent's receipt of written notice advising Parent that
the Company Board intends to make a Subsequent Adverse Determination. Such
written notice will specify the material terms and conditions of such Superior
Proposal (and include a copy thereof with all accompanying documentation),
identify the Person making such Superior Proposal and state that the Company
Board intends to make a Subsequent Adverse Determination. During such five
business day period, Parent and Buyer may offer the Company adjustments to the
terms and conditions of this Agreement that will permit the Company Board to
determine that, with such adjustments, the Merger is at least as favorable to
the Company Stockholders as such Superior Proposal.
(d) The Company will notify Parent orally within 24 hours and
in writing within 48 hours after receipt of any Acquisition Proposal, indication
of interest or request for nonpublic information relating to the Company or a
Company Subsidiary in connection with an Acquisition Proposal or for access to
the properties, books or records of the Company or any Company Subsidiary by any
Person or group that informs the Company Board or the board of directors of any
Company Subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice to Parent will indicate in reasonable detail the identity
of the offeror and the terms and conditions of such proposal, inquiry or contact
as well as the Company's intention to furnish information to, or enter into
discussions or negotiations with, such Person or group.
34
The Company will use its reasonable efforts to keep Parent informed of the
status and details (including any change to the material terms thereof) of any
such Acquisition Proposal.
SECTION 6.04 Directors' and Officers' Indemnification and Insurance.
(a) Buyer will, to the fullest extent permitted by Law, cause
the Surviving Corporation (from and after the Effective Time) to honor all of
the Company's obligations to indemnify, defend and hold harmless (including any
obligations to advance funds for expenses) the current and former directors and
officers of the Company and the Company Subsidiaries against all losses, claims,
damages or liabilities arising out of acts or omissions by any such directors
and officers in their capacities as such for their service to the Company and
the Company Subsidiaries at and prior to the Effective Time to the maximum
extent that such obligations of the Company exist on the date of this Agreement.
Without limiting the foregoing, the by-laws of the Surviving Corporation will
contain the provisions that are set forth, as of the date of this Agreement, in
Article XI of the Company By-Laws, which provisions will not be amended,
repealed or otherwise modified in any manner that would affect adversely the
rights thereunder of individuals who at or at any time prior to the Effective
Time were directors, officers, employees or other agents of the Company with
respect to actions taken or omissions to act in their capacities as such for
their service to the Company and the Company Subsidiaries occurring at or prior
to the Effective Time.
(b) The Company will maintain, through the Effective Time, the
Company's existing directors' and officers' insurance in full force and effect
without reduction of coverage. Not later than the Effective Time, Buyer (i)
shall cause to be purchased (with all premiums prepaid) "tail-end" coverage
under such insurance for a period of five years after the Effective Time, or
substitute "tail-end" coverage with reputable and financially sound carriers
having at least substantially the same coverage and amounts and containing terms
and conditions which are in the aggregate substantially no less advantageous
(provided the premium for such "tail-end" coverage does not exceed the Maximum
Premium (as defined below)) with respect to claims arising from or related to
acts or omissions by the current and former directors and officers of the
Company and the Company Subsidiaries in their capacities as such for their
service to the Company and the Company Subsidiaries at or before the Effective
Time, and (ii) shall either cause the deductibles or retentions thereunder
directly or indirectly payable by individual directors and officers to be
reduced to zero or, if practicable, cause to be established and funded an
irrevocable trust so as to eliminate such deductible or retention on terms
reasonably satisfactory to the Company; provided, however, that Buyer will not
be obligated to make a premium payment for such insurance coverage to the extent
such premium exceeds 200% of the annual premiums paid as of the date hereof by
the Company for such insurance multiplied by the five years of coverage (such
200% amount, the "Maximum Premium"). If such insurance coverage cannot be
obtained at all, or can only be obtained at a premium in excess of the Maximum
Premium, not later than the Effective Time Buyer will cause to be purchased
(with all premiums prepaid) the most advantageous five-year policy of directors'
and officers' insurance obtainable for a premium equal to the Maximum Premium.
The Company represents to Buyer that the last annual premium paid prior to the
date of this Agreement for the Company's existing directors' and officers'
insurance policy was $70,000.
35
(c) If the Surviving Corporation (or any of its successors or
assigns) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision will be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.04.
SECTION 6.05 Further Action; Consents. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties will use all
commercially reasonable efforts to take, or cause to be taken, all reasonable
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things reasonably necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Transactions, including without limitation (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any, and including without limitation
such filings as are referred to in Section 3.05(b)(iv)) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
Transactions, including, when reasonable, seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed and (iv) the execution and delivery of any additional instruments
necessary to consummate the Transactions and to fully carry out the purposes of
this Agreement. Without limiting the foregoing, the Company will give Buyer the
opportunity to participate in (but not control) the defense of any stockholder
litigation against the Company and/or its directors relating to this Agreement
or the Transactions and no settlement will be agreed to without Buyer's consent,
which consent will not be unreasonably withheld.
SECTION 6.06 Public Announcements. Parent and Buyer, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements (including any filings with any federal or
state governmental or regulatory agency or with the American Stock Exchange)
with respect to the Transactions and will not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable Law (including foreign regulations relating to
competition), court process or by obligations pursuant to any listing agreement
with any national securities exchange. Notwithstanding anything to the contrary
herein or in the Confidentiality Agreement, any party to this Agreement (and
each employee, representative, or other agent of such party) may disclose to any
and all Persons, without limitation of any kind, the tax treatment and tax
structure of the Transactions and all materials of any kind (including opinions
or other tax analyses) that are provided to it relating to such tax treatment
and tax structure; provided, however, that this sentence shall not permit any
disclosure that otherwise is prohibited by this Agreement if such disclosure
would result in a violation of applicable federal or state securities laws.
SECTION 6.07 Financing. Parent and Buyer will use their commercially
reasonable efforts to complete the Financing contemplated by the Debt Commitment
Letters and will use best efforts to cause their Affiliates to satisfy their
obligations under the Equity Commitment Letter. In the event that the Financing
contemplated by the Commitment Letters is not made available to Parent and Buyer
so as to enable Parent and Buyer to proceed with the Merger in a
36
timely manner, Parent and Buyer will use commercially reasonable efforts to
obtain alternate financing on terms no less favorable to Parent and Buyer than
the Financing contemplated by the Debt Commitment Letters. Following the date
hereof, Parent shall notify the Company (i) of any amendment, modification,
termination or cancellation of any of the Commitment Letters promptly following
such amendment, modification, termination or cancellation, and (ii) if Parent
determines, based on Parent's good faith estimation, that all or any portion of
the Financing is not reasonably likely to be consummated.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Buyer to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) Company Stockholder Approval. The Company Stockholder
Approval has been obtained;
(b) No Order. No Governmental Entity has enacted, issued,
promulgated, enforced or entered any Law, rule, regulation, judgment, decree,
injunction, executive order or award (an "Order") that is then in effect and
has, or would have, the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger; provided that the party relying on a
failure of this condition has complied in all material respects with its
obligations under Section 6.05; and
(c) Antitrust Waiting Periods. Any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act has expired or been terminated.
SECTION 7.02 Conditions to the Obligations of Parent and Buyer. The
obligations of Parent and Buyer to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement (read
without giving effect to any of the materiality, Material Adverse Effect or
equivalent qualifications contained therein) are true and correct as of the
Closing Date, as though made at and as of the Closing Date (except that those
representations and warranties that address matters only as of a particular date
remain true and correct as of such date), except for any untruths or
inaccuracies as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and Parent and Buyer have received a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company to that effect;
(b) Agreements and Covenants. The Company has performed or
complied with, in all material respects, all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date and Parent and Buyer have received a certificate of the Chief
Executive Officer or Chief Financial Officer of the Company to that effect;
37
(c) Material Adverse Effect. Since the date of this Agreement,
there have been no circumstances, events, occurrences, changes or effects that,
individually or in the aggregate, have had or would reasonably be expected to
have a Material Adverse Effect;
(d) Actions. No Action has been brought, is pending or has
been threatened by any Governmental Entity (or is pending by any other Person
relating to the Merger) that (i) seeks to prevent or delay the consummation of
the Transactions, (ii) seeks to restrain or prohibit Parent's or Buyer's full
rights of ownership or operation of any portion of the business or assets of the
Company, or to compel Parent or Buyer to dispose of or hold separate all or any
portion of the business or assets of the Company, (iii) seeks to impose
limitations on the ability of Parent or Buyer to exercise full rights of
ownership of the shares of Company Common Stock acquired pursuant to the Merger,
including, without limitation, the right to vote any shares of Company Common
Stock acquired or owned by Parent or Buyer on all matters properly presented to
the Company Stockholders, (iv) seeks to require divestiture by Parent or Buyer
of any shares of Company Common Stock, or (v) that otherwise would reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect;
(e) Financing. The Financing contemplated by the Debt
Commitment Letters (or alternative financing contemplated by Section 6.07 of
this Agreement) has been consummated; provided that Parent and Buyer may not
rely on this clause (e) as a basis for termination of this Agreement unless
Parent and Buyer have complied in all material respects with their obligations
under Section 6.07;
(f) Certified Copies. At the Closing, the Company will deliver
certified copies of (i) the resolutions duly adopted by the Company Board
authorizing the execution, delivery and performance of this Agreement and the
other agreements contemplated hereby applicable to it and the Transactions
(including without limitation the resolutions required by Section 9.2(d) of the
Company Charter), (ii) Company Charter and Company By-Laws and (iii) the
tabulation of the stockholder vote taken at the Company Stockholders Meeting;
(g) Director Resignations. At the Closing, the Company will
deliver signed letters of resignation from each director of the Company and of
each Company Subsidiary pursuant to which each such director resigns from his
position as a director of the Company and of each Company Subsidiary and makes
such resignation effective at or prior to the Effective Time;
(h) Union Bank Loan Agreement. All indebtedness and other
obligations of the Company or any Company Subsidiary under the Union Bank Loan
Agreement (other than those represented by an outstanding letter of credit in
the aggregate amount of $1,100,000 or any replacement thereof permitted by
Section 5.01(b)(viii)) have been fully paid off and discharged and, if Buyer has
provided for a substitute letter of credit prior to the Effective Time, the
Company has terminated the Union Bank Loan Agreement;
(i) Working Capital. The Working Capital Amount is equal to or
greater than $24,000,000, as evidenced by an officers' certificate of the
Company delivered to Parent and Buyer; and
38
(j) Appraisal Shares. No more than 5% of the shares of Company
Common Stock are Appraisal Shares.
SECTION 7.03 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Parent and Buyer contained in this Agreement
(read without giving effect to any of the materiality, Buyer Material Adverse
Effect or equivalent qualifications contained therein) are true and correct as
of the Closing Date, as though made at and as of the Closing Date (except that
those representations and warranties that address matters only as of a
particular date remain true and correct as of such date), except for any
untruths or inaccuracies as would not, individually or in the aggregate,
reasonably be expected to have a Buyer Material Adverse Effect, and the Company
has received a certificate of the Chief Executive Officer or Chief Financial
Officer of Parent and Buyer to that effect;
(b) Agreements and Covenants. Each of Parent and Buyer has
performed or complied, in all material respects, with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date and the Company has received a certificate of the
Chief Executive Officer or Chief Financial Officer of Parent and Buyer to that
effect;
(c) Certified Copies. At the Closing, (A) Buyer will deliver
certified copies of (i) the resolutions duly adopted by Buyer's board of
directors authorizing the execution, delivery and performance of this Agreement
and the other agreements contemplated hereby applicable to it and the
Transactions, (ii) the resolutions duly adopted by Buyer's stockholders
approving this Agreement and the Transactions, and (iii) the certificate of
incorporation and the by-laws of Buyer, and (B) Parent will deliver certified
copies of (i) the resolutions duly adopted by Parent's board of directors
authorizing the execution, delivery and performance of this Agreement and the
other agreements contemplated hereby applicable to it and the Transactions, and
(ii) Parent's certificate of incorporation and by-laws; and
(d) Working Capital. The Working Capital Amount is equal to or
greater than $24,000,000.
ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND EXPENSES
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Buyer and the Company;
39
(b) by either Buyer or the Company, if there is any Law or
Order of a Governmental Authority which is final and nonappealable preventing
the consummation of the Merger; provided, however, that the provisions of this
Section 8.01(b) will not be available to any party whose failure to fulfill its
obligations hereunder is the cause of, or has resulted in, such Law or Order;
(c) by either Buyer or the Company, if the Effective Time has
not occurred on or before August 29, 2003; provided, however, that the right to
terminate this Agreement under this Section 8.01(c) will not be available to any
party whose failure to fulfill its obligations hereunder has caused the failure
of the Merger to occur on or before such date;
(d) by Buyer if (X) the Company Board (i) has made a
Subsequent Adverse Determination, (ii) fails to recommend to the Company
Stockholders in the Proxy Statement that they approve the Merger and give the
Company Stockholder Approval, or (iii) fails to reconfirm the recommendation
referred to in clause (ii) above if requested in accordance with the applicable
provisions of Section 6.01(a), or fails to publicly announce (in accordance with
the applicable provisions of Section 6.01(a)) that the Company Board is not
recommending any alternative Acquisition Proposal, or (Y) the Company has
breached in any material respect its obligations under Section 6.03;
(e) by either Buyer or the Company if this Agreement fails to
receive the Company Stockholder Approval at the Company Stockholders Meeting
duly called and held in accordance with Section 6.01(b);
(f) by Buyer upon (i) a breach of any representation or
warranty on the part of the Company set forth in this Agreement, other than the
representations and warranties contained in Section 3.20(b) of this Agreement,
(in each case read without giving effect to any of the materiality, Material
Adverse Effect or equivalent qualifications contained therein) that would
reasonably be expected to have a Material Adverse Effect, or (ii) a material
breach of any covenant or agreement on the part of the Company set forth in this
Agreement (but in each case where such breach or untruth is capable of being
cured, only following the fifteenth day after the giving of written notice
thereof to the Company if such breach or untruth has not been cured);
(g) by the Company upon (i) a breach of any representation or
warranty on the part of Buyer set forth in this Agreement (in each case read
without giving effect to any of the materiality, Buyer Material Adverse Effect
or equivalent qualifications contained therein) that would reasonably be
expected to have a Buyer Material Adverse Effect, or (ii) a material breach of
any covenant or agreement on the part of Buyer set forth in this Agreement (but
in each case where such breach or untruth is capable of being cured, only
following the fifteenth day after the giving of written notice thereof to Parent
and Buyer if such breach or untruth has not been cured);
(h) prior to the Company Stockholders Meeting, by the Company
(A) if the Company Board has authorized the Company, subject to complying with
the terms of this Agreement, to enter into a definitive agreement with respect
to a Superior Proposal and the Company has notified Buyer in writing that it
intends to enter into such an agreement (which notification will identify the
offeror and detail the proposed terms of such Superior Proposal),
40
and (B) Buyer has not made, within five business days of receipt of the
Company's written notification of its intention to enter into a definitive
agreement with respect to a Superior Proposal, an offer that the Company Board
determines, in good faith after consultation with its financial advisors, is at
least as favorable to the Company Stockholders as the Superior Proposal;
provided, however, that such termination pursuant to this clause (h) will not be
effective unless and until the Company has paid to Buyer the amounts described
in Section 8.03 hereof as applicable to this Section 8.01(h);
(i) prior to the Company Stockholders Meeting, by the Company
if the Company Board has determined in good faith (after consultation with legal
counsel) that not holding the Company Stockholders Meeting is required in order
for the Company Board to comply with its fiduciary duties to the Company
Stockholders under applicable Law; provided, however, that such termination
pursuant to this clause (i) will not be effective unless and until the Company
has paid to Buyer the amounts described in Section 8.03 hereof as applicable to
this Section 8.01(i);
(j) by Buyer if the condition to closing set forth in Section
7.02(i) has not been satisfied or by the Company if the condition to closing set
forth in Section 7.03(d) has not been satisfied; or
(k) by Buyer upon a breach of any representation or warranty
on the part of the Company set forth in Section 3.20(b) of this Agreement.
SECTION 8.02 Effect of Termination. Except as provided in Section 8.03,
in the event of termination of this Agreement pursuant to Section 8.01, this
Agreement will immediately become void, there will be no liability under this
Agreement on the part of Parent or Buyer or the Company or any of their
respective stockholders, officers, directors or representatives, and all rights
and obligations of each party hereto will cease; provided, however, that nothing
herein will relieve any party from liability for the willful breach of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 8.03 Fees and Expenses.
(a) Except as set forth below, all Expenses (as defined below)
incurred in connection with this Agreement and the Transactions will be paid by
the party incurring such expenses. "Expenses" as used in this Agreement include
all documented reasonable out of pocket expenses (including, without limitation,
all fees and expenses of counsel, accountants, financing sources, appraisers,
investment bankers, experts and consultants to a party hereto and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the due diligence review and analysis of the Company, the Merger and the
other Transactions, the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Proxy Statement, the solicitation of the Company Stockholder Approval, the
filing of any required notices under the HSR Act or other similar regulations
and all other matters related to the closing of the Merger and the other
Transactions.
(b) The Company will reimburse Buyer for all Expenses (up to
an aggregate amount of $3,000,000) incurred by or on behalf of Parent or Buyer
prior to termination of this
41
Agreement in connection with this Agreement and the Transactions, upon the
termination of this Agreement:
(i) by Buyer or the Company pursuant to Section 8.01(e) or
Section 8.01(j);
(ii) by Buyer pursuant to Section 8.01(d) or Section 8.01(f);
or
(iii) by the Company pursuant to Section 8.01(h) or Section
8.01(i).
(c) In addition to any amount payable in accordance with
Section 8.03(b), the Company agrees to pay to Buyer a non-refundable fee equal
to $4,000,000 if:
(i) (A) Buyer or the Company terminates this Agreement
pursuant to Section 8.01(e), and (B) the Company consummates, or enters
into a definitive agreement with respect to, a Business Combination
with any Person or group within 12 months of such termination;
(ii) Buyer terminates this Agreement pursuant to Section
8.01(d);
(iii) (A) Buyer terminates this Agreement pursuant to Section
8.01(f), and (B) the Company consummates, or enters into a definitive
agreement with respect to, a Business Combination with any Person or
group within 12 months of such termination with any Person with whom
the Company had negotiations in connection with an Acquisition
Proposal, to whom the Company furnished nonpublic or confidential
information in connection with an Acquisition Proposal, or who
submitted an Acquisition Proposal, in each case prior to such
termination; or
(iv) The Company terminates this Agreement pursuant to Section
8.01(h) or Section 8.01(i).
(d) Any payment required to be paid pursuant to this Section
8.03 will be made promptly by wire transfer of same day funds but in no event
later than:
(i) in the case of termination by Buyer, two business days
following such termination pursuant to Section 8.01; provided, however,
that any fee payable pursuant to Section 8.03(c)(i) or (iii) will be
payable no later than two business days prior to the closing of the
Business Combination referred to in clauses (i)(B) and (iii)(B) of
Section 8.03(c); and
(ii) in the case of termination by the Company, prior to the
date of such termination; provided, however, that any fee payable
pursuant to Section 8.03(c)(i) will be payable prior to the occurrence
of the first to occur of the events described in Section 8.03(c)(i)(B).
(e) For purposes of this Section 8.03, "Business Combination"
means (i) a merger, consolidation, share exchange, business combination or
similar transaction involving the Company or a recapitalization of the Company
for the purpose of distributing cash to the Company Stockholders (whether
through a dividend, issuer tender offer or similar transaction)
42
(A) that is financed, or for which financing is syndicated or arranged, by iStar
Financial Inc. or any of its Affiliates, or (B) as a result of which the
Company's stockholders prior to such transaction cease to own at least 65% of
the voting securities of the entity surviving or resulting from such transaction
(or the ultimate parent entity thereof) with Xxxx Xxxxx Strategic Investments,
L.P. and its Affiliates owning substantially the proportion of such voting
securities they owned prior to such transaction, (ii) a sale, lease, exchange,
transfer, or other disposition of more than 50% of the assets of the Company and
the Company Subsidiaries, taken as a whole, in either case, in a single
transaction or a series of related transactions, or (iii) the acquisition, by a
Person, group or entity (other than (I) Buyer or any Affiliate thereof, or (II)
Xxxx Xxxxx Strategic Investments, L.P., or any Affiliate thereof, so long as
such acquisition by Xxxx Xxxxx Strategic Investments, L.P., or any Affiliate
thereof, is not part of a "Rule 13e-3 transaction" as defined in Rule
13e-3(a)(3) under the Exchange Act) of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of more than 50% of the outstanding Company Common
Stock, whether by tender or exchange offer or otherwise; provided, however, that
a recapitalization of the Company for the purpose of distributing cash to the
Company Stockholders (whether through a dividend, issuer tender offer or similar
transaction), which (A) is not financed (and for which financing is not
syndicated or arranged) by iStar Financial Inc. or any of its Affiliates, and
(B) does not result in any Person that is not a Company Stockholder on the date
hereof owning any securities of the Company (or any successor entity thereto),
shall be deemed not to be a Business Combination.
(f) The Company acknowledges that the agreements contained in
this Section 8.03 are an integral part of the Transactions, and that, without
these agreements, Parent and Buyer would not enter into this Agreement;
accordingly, if the Company fails to pay the amounts due pursuant to this
Section 8.03, and, in order to obtain any such payment, Parent or Buyer
commences a legal proceeding which results in a judgment against the Company for
the amounts set forth in this Section 8.03, the Company will pay to Parent and
Buyer their respective costs and reasonable expenses (including reasonable
attorneys' fees) in connection with such proceeding, together with interest on
the amounts set forth in this Section 8.03 at the prime rate of Citibank N.A. in
effect on the date any such payment was required to be made.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations and warranties in this Agreement and in any
certificate delivered pursuant hereto will terminate at the Effective Time. The
covenants and agreements in this Agreement to be performed after the Effective
Time will survive the Effective Time in accordance with their terms.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be deemed given (i) when
delivered after mailing by certified mail (postage prepaid, return receipt
requested), (ii) when delivered by hand, (iii) upon confirmation of receipt by
facsimile or (iv) one business day after sending by overnight delivery service
to the respective parties at the following addresses (or at such other address
for a party as is specified in a notice given in accordance with this Section
9.02):
43
if to Parent or Buyer:
KTTI Holding Company, Inc.
KTTI Acquisition Company, Inc.
c/o Kohlberg & Company
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx Xx.
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
if to the Company:
Thousand Trails, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000 (for overnight delivery)
X.X. Xxx 0000 (for certified mail)
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx III, Esq.
SECTION 9.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "Affiliate" of a specified Person means a Person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such specified Person.
(b) "Asset Sale Proceeds" means the net cash proceeds after
payment of the direct expenses of sale, the payment or accrual of Taxes incurred
as a result of such sale and, if accrued, included in the Company's "accounts
payable" or "other accrued liabilities" referred to in Section 9.03(z)(c)(iv)
below, and the reservation for retained liabilities reserved in accordance with
U.S. GAAP and consistent with the Company's past practices and included in the
Company's "accounts payable" or "other accrued liabilities" referred to in
Section 9.03(z)(c)(iv)
44
below, in each case from (i) the sale or disposition (including by way of
merger) of any real property owned by the Company or any Company Subsidiary, and
(ii) any insurance payments or condemnation awards on account of the destruction
or loss of such property, in each case received by the Company or any Company
Subsidiary since January 1, 2003.
(c) "business day" means any day on which both the principal
offices of the SEC in Washington, D.C. are open to accept filings, and, in the
case of determining a date when any payment is due, any day (other than a
Saturday or a Sunday) on which banks are not required or authorized to close in
The City of New York.
(d) "Company Subsidiary" means any subsidiary of the Company.
(e) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
(f) "Employee Benefit Plan" means any current or terminated
(a) nonqualified deferred compensation or retirement plan or arrangement which
is an Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), (d) Employee Welfare
Benefit Plan, material fringe benefit plan or program, or (e) profit sharing,
stock option, stock purchase, equity, stock appreciation, bonus, incentive
deferred compensation, severance plan or other benefit plan, which covers any
current or former employees, officers, directors, independent contractors (or
their dependents or beneficiaries) of the Company or any Company Subsidiary or
for which the Company or any Company Subsidiary may have any Liability.
(g) "Employee Pension Benefit Plan" has the meaning set forth
in ERISA Section 3(2).
(h) "Employee Welfare Benefit Plan" has the meaning set forth
in ERISA Section 3(l).
(i) "Environmental Laws" means any federal, state, local or
foreign Laws relating to (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; or (C) otherwise relating to
pollution or protection of the environment.
(j) "Fiduciary" has the meaning set forth in ERISA Section
3(21).
(k) "Hazardous Substances" means (i) those substances defined
as such in or regulated under the following federal statutes and their state
counterparts and all regulations thereunder: the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
45
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products, including crude oil and any fractions thereof;
(iii) natural gas, synthetic gas, and any mixtures thereof; (iv) polychlorinated
biphenyls, asbestos and radon; (v) any other contaminant; and (vi) any
substance, material or waste regulated by any federal, state, local or foreign
Governmental Entity pursuant to any Environmental Law.
(l) "Intellectual Property" means the entire right, title and
interest in and to all proprietary rights of every kind and nature, including
without limitation all rights and interests pertaining to or deriving from:
(i) patents, copyrights, technology, know-how,
processes, trade secrets, inventions, domain names, works
(whether published or unpublished and whether registered or
not), proprietary data, customer data, databases, pricing and
cost information, business, sales and marketing methods and
plans, formulae, research and development data and computer
software programs;
(ii) all Trademarks;
(iii) all registrations, applications, recordings,
licenses, common-law rights and Contracts relating thereto;
and
(iv) all Actions and rights to xxx at law or in
equity for any past, present or future infringement or other
impairment of any of the foregoing.
(m) "knowledge" means, with respect to the Company, the actual
knowledge, after reasonable inquiry of employees of the Company or any Company
Subsidiary reasonably expected to have the relevant knowledge, of each executive
officer (determined in accordance with Rule 16a-1(f) under the Exchange Act) of
the Company, and with respect to Parent or Buyer, the actual knowledge, after
reasonable inquiry, of any executive officer (determined in accordance with Rule
16a-1(f) under the Exchange Act) of Parent or Buyer, as the case may be.
(n) "Liability" means any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
whether incurred or consequential and whether due or to become due).
(o) "Material Adverse Effect" means any one or more
circumstances, events, occurrences, changes or effects that, individually or in
the aggregate materially and adversely affects the business, operations,
condition (financial or otherwise), assets (tangible or intangible), results of
operations or prospects of the Company and the Company Subsidiaries taken as a
whole, other than circumstances, events, occurrences, changes or effects
affecting the campground industry generally (unless the Company is
disproportionately affected by such circumstances, events, occurrences, changes
or effects).
(p) "Membership Contract" means any membership or similar
agreement entered into between the Company or any Company Subsidiary and any
Person entitling such Person to use, or providing an ownership interest in, any
of the Company's or any Company Subsidiary's campgrounds or other facilities.
46
(q) "Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
(r) "PBGC" means the Pension Benefit Guaranty Corporation.
(s) "person" or "Person" means an individual, corporation,
partnership, limited partnership, syndicate, person (including, without
limitation, a "person" as defined in section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency or
instrumentality of a government.
(t) "Prohibited Transaction" has the meaning set forth in
ERISA Section 406 and Code Section 4975.
(u) "subsidiary" or "subsidiaries" of any Person means any
corporation, partnership, joint venture or other legal entity of which such
Person (either alone or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity interests,
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity.
(v) "Tax" or "Taxes" means all taxes, fees, levies, duties,
tariffs, imposts, and governmental impositions or charges of any kind in the
nature of (or similar to) taxes, payable to any federal, state, local, or
foreign authority, whether disputed or not, including without limitation (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security (or similar),
workers' compensation, unemployment compensation, disability, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
environmental (including taxes under Code section 59A), customs duties,
registration, alternative and add-on minimum, estimated, transfer and gains
taxes, or other tax of any kind whatsoever, and (ii) in all cases, including
interest, penalties, additional taxes and additions to tax imposed with respect
thereto.
(w) "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule, attachment or amendment thereto.
(x) "Trademarks" means all trademarks, service marks, trade
names, trade dress, and logos, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith.
(y) "Working Capital Adjustment Amount" equals (i) if the
Working Capital Amount is less than $26,000,000 (A) $26,000,000 minus the
Working Capital Amount, divided by (B) the aggregate number of shares of Company
Common Stock outstanding on the measurement date for the determination of the
Working Capital Amount plus the aggregate number of shares of Company Common
Stock subject to Company Stock Options as of such measurement date, or (ii)
zero, if the Working Capital Amount is equal to or greater than $26,000,000.
(z) "Working Capital Amount" means (a) the "cash and
equivalents," plus (b)(i) "gross contracts receivable," (ii) "other current
assets," and (iii) Company Transaction
47
Expenses paid prior to the date of determination of the Working Capital Amount,
minus (c)(i) the aggregate cash proceeds received by the Company since January
1, 2003 upon the exercise, conversion or exchange of any options or other
derivative securities convertible or exchangeable into, or exercisable for,
shares of Company Common Stock, (ii) Asset Sale Proceeds, (iii) the aggregate
outstanding indebtedness for money borrowed ((A) including capitalized leases
other than the one capitalized lease that is in place on the date hereof and
represents outstanding indebtedness of approximately $38,000, but (B) excluding
undrawn letters of credit and a promissory note with an unpaid balance of
approximately $130,000 associated with the purchase of shares of capital stock
of Leisure Time Resorts of America, Inc.), and (iv) "accounts payable" and
"other accrued liabilities" (other than any Company Transaction Expenses
included therein and not paid prior to the date of determination of the Working
Capital Amount), in each case as of the last day of the last completed month
prior to the Closing Date and all as determined for the Company on a
consolidated basis in accordance with the internal format and accounting
policies and practices used by the Company, consistent with past practice, as
reflected, in the case of clauses (a), (b)(i), (b)(ii), and (c)(iv) above, in
the Company's Forecast by Month for Fiscal 2003 prepared by the Company's
management for distribution to the Company Board and previously furnished to
Buyer.
SECTION 9.04 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that after this
Agreement is adopted by the Company Stockholders, no such amendment will be made
that reduces the amount or changes the type of consideration into which each
share of Company Common Stock will be converted upon consummation of the Merger
or that otherwise by applicable Law requires the approval of the Company
Stockholders without the further approval of the Company Stockholders. This
Agreement may not be amended, except by an instrument in writing signed by the
parties hereto.
SECTION 9.05 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto, or
(c) waive compliance with any agreement or condition contained herein. Any such
extension or waiver will be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby. The failure of any party to
this Agreement to assert any of its rights under this Agreement will not
constitute a waiver of such rights.
SECTION 9.06 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect as long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
48
SECTION 9.07 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder will be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties, provided, however, that
each of Parent and Buyer will be entitled to assign this Agreement and any
rights, interests or obligations hereunder to any of its Affiliates or, at or
after the Effective Time, iStar Financial Inc. without the consent of the
Company; provided further, however, that no such assignment shall relieve Parent
or Buyer of any of its obligations hereunder. Subject to the preceding sentence,
this Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective successors and assigns. Except as provided in
Section 6.04, notwithstanding anything else contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 9.08 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or in equity.
SECTION 9.09 Governing Law; Forum. This Agreement will be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts executed in and to be performed in that state and without regard to
any applicable conflicts of law principles that would apply any other Law. Each
of the parties submits to the jurisdiction of any state or federal court sitting
in the state of Delaware, in any action or proceeding arising out of or relating
to this Agreement and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each of the parties
waives any defense of inconvenient forum or any other objection to the laying of
venue or to the maintenance of any action or proceeding so brought and waives
any bond, surety, or other security that might be required of any other party.
Each party agrees that a final judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by law or at equity.
SECTION 9.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and will not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.11 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered will be deemed to be an original but all of which taken together
will constitute one and the same agreement.
SECTION 9.12 Entire Agreement. This Agreement (including the exhibits
hereto and the disclosure schedule called for hereunder and furnished by the
Company to Parent and Buyer prior to the execution of this Agreement (the
"Company Disclosure Schedule")) and the Confidentiality Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings among the parties
hereto with respect thereto. No addition to or modification of any provision of
this
49
Agreement will be binding upon any party hereto unless made in writing and
signed by all parties hereto.
SECTION 9.13 Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Remainder of Page Intentionally Left Blank]
50
IN WITNESS WHEREOF, Parent, Buyer and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
KTTI HOLDING COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------
Name: Xxxx X. Xxxxxxxx, Xx.
Title:
KTTI ACQUISITION COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------
Name: Xxxx X. Xxxxxxxx, Xx.
Title:
THOUSAND TRAILS, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: President
