AGREEMENT AND PLAN OF MERGER
Dated as of January 9, 2006
Among
CFCI HOLDINGS, INC.,
HOLO ACQUISITION CORP.
And
CFC INTERNATIONAL, INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I THE
MERGER...................................................1
SECTION 1.01.
THE
MERGER.................................................1
SECTION 1.02.
CLOSING....................................................2
SECTION 1.03.
EFFECTIVE
TIME.............................................2
SECTION 1.04.
EFFECTS OF THE
MERGER......................................2
SECTION 1.05.
CERTIFICATE OF
INCORPORATION AND BY-LAWS...................2
SECTION 1.06.
DIRECTORS..................................................3
SECTION 1.07.
OFFICERS...................................................3
ARTICLE II EFFECT OF
THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; COMPANY
STOCK
OPTIONS AND
WARRANTS........................................................3
SECTION 2.01.
EFFECT ON CAPITAL
STOCK...................................3
SECTION 2.02.
EXCHANGE OF
CERTIFICATES..................................4
SECTION 2.03.
COMPANY STOCK OPTIONS;
COMPANY PREFERRED STOCK OPTION;
ESPP......................................................6
ARTICLE III REPRESENTATIONS
AND WARRANTIES OF THE COMPANY...............6
SECTION 3.01.
ORGANIZATION, STANDING
AND CORPORATE POWER................7
SECTION 3.02.
SUBSIDIARIES..............................................7
SECTION 3.03.
CAPITAL
STRUCTURE.........................................8
SECTION 3.04.
AUTHORITY;
NONCONTRAVENTION...............................9
SECTION 3.05.
GOVERNMENTAL
APPROVALS....................................11
SECTION 3.06.
COMPANY SEC DOCUMENTS;
NO UNDISCLOSED LIABILITIES.........11
SECTION 3.07.
INFORMATION
SUPPLIED......................................13
SECTION 3.08.
ABSENCE OF CERTAIN
CHANGES OR EVENTS......................13
SECTION 3.09.
LITIGATION................................................15
SECTION 3.10.
CONTRACTS.................................................15
SECTION 3.11.
COMPLIANCE WITH
LAWS......................................17
SECTION 3.12.
ENVIRONMENTAL
MATTERS.....................................18
SECTION 3.13.
EMPLOYEES AND
LABOR.......................................19
SECTION 3.14.
EMPLOYEE BENEFIT
PLANS....................................20
SECTION 3.15.
TAXES.....................................................23
SECTION 3.16.
TITLE TO ASSETS;
LEASES...................................25
SECTION 3.17.
INTELLECTUAL
PROPERTY.....................................27
SECTION 3.18.
CUSTOMER ACCOUNTS
RECEIVABLE..............................28
SECTION 3.19.
APPROVAL AND ADOPTION
REQUIREMENTS........................28
SECTION 3.20.
STATE TAKEOVER
STATUTES...................................28
SECTION 3.21.
TRANSACTIONS WITH
AFFILIATES..............................29
SECTION 3.22.
SUPPLIERS AND
CUSTOMERS...................................29
SECTION 3.23.
INSURANCE.................................................29
SECTION 3.24.
INVENTORY.................................................30
SECTION 3.25. SUFFICIENCY OF
ASSETS.....................................30
SECTION 3.26.
BROKERS AND OTHER
ADVISORS................................30
SECTION 3.27.
OPINION OF FINANCIAL
ADVISOR..............................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.....30
SECTION 4.01.
ORGANIZATION, STANDING
AND CORPORATE POWER................31
SECTION 4.02.
AUTHORITY;
NONCONTRAVENTION...............................31
SECTION 4.03.
GOVERNMENTAL
APPROVALS....................................32
SECTION 4.04.
INFORMATION
SUPPLIED......................................32
SECTION 4.05.
LITIGATION................................................32
SECTION 4.06.
OWNERSHIP AND
OPERATIONS OF MERGER SUB....................32
SECTION 4.07.
FINANCING.................................................32
SECTION 4.08.
INTERESTED
STOCKHOLDER....................................33
SECTION 4.09.
NO CAPITAL
OWNERSHIP......................................33
SECTION 4.10.
BROKERS AND OTHER
ADVISORS................................33
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS...................33
SECTION 5.01.
CONDUCT OF
BUSINESS.......................................33
SECTION 5.02.
NO SOLICITATION BY THE
COMPANY............................37
ARTICLE VI ADDITIONAL
AGREEMENTS........................................40
SECTION 6.01.
PREPARATION OF THE
INFORMATION STATEMENT..................40
SECTION 6.02.
ACCESS TO INFORMATION;
CONFIDENTIALITY....................41
SECTION 6.03.
COMMERCIALLY
REASONABLE EFFORTS...........................42
SECTION 6.04.
INDEMNIFICATION,
EXCULPATION AND INSURANCE................43
SECTION 6.05.
FEES AND
EXPENSES.........................................44
SECTION 6.06.
PUBLIC
ANNOUNCEMENTS......................................45
SECTION 6.07.
EMPLOYEE
MATTERS..........................................45
SECTION 6.08.
PRINCIPAL
STOCKHOLDERS' AGREEMENT.........................47
SECTION 6.09.
SECTION 16
MATTERS........................................47
SECTION 6.10.
STOCK PLANS; COMPANY
PREFERRED STOCK OPTION...............47
SECTION 6.11.
INDEMNIFICATION
OBLIGATIONS OF ROGER F. HRUBY.............47
ARTICLE VII CONDITIONS
PRECEDENT........................................48
SECTION 7.01.
CONDITIONS TO EACH
PARTY'S OBLIGATION TO EFFECT
THE MERGER................................................48
SECTION 7.02.
CONDITIONS TO
OBLIGATIONS OF PARENT AND MERGER SUB........48
SECTION 7.03.
CONDITIONS TO
OBLIGATION OF THE COMPANY...................50
SECTION 7.04.
FRUSTRATION OF CLOSING
CONDITIONS.........................50
ARTICLE VIII TERMINATION,
AMENDMENT AND WAIVER..........................51
SECTION 8.01.
TERMINATION...............................................51
SECTION 8.02.
EFFECT OF
TERMINATION.....................................52
SECTION 8.03.
AMENDMENT.................................................52
SECTION 8.04.
EXTENSION;
WAIVER.........................................52
SECTION 8.05.
PROCEDURE FOR
TERMINATION, AMENDMENT OR WAIVER............52
ARTICLE IX GENERAL
PROVISIONS...........................................53
SECTION 9.01.
NONSURVIVAL OF
REPRESENTATIONS AND WARRANTIES.............53
SECTION 9.02.
NOTICES...................................................53
SECTION 9.03.
DEFINITIONS...............................................54
SECTION 9.04.
INTERPRETATION............................................55
SECTION 9.05.
COUNTERPARTS..............................................55
SECTION 9.06.
ENTIRE AGREEMENT; NO
THIRD-PARTY BENEFICIARIES............55
SECTION 9.07.
GOVERNING
LAW.............................................55
SECTION 9.08.
ASSIGNMENT................................................55
SECTION 9.09.
JURISDICTION; WAIVER
OF JURY TRIAL........................56
SECTION 9.10.
SPECIFIC
ENFORCEMENT......................................56
SECTION 9.11.
SEVERABILITY..............................................57
Exhibit A.........Form of Principal Stockholders' Agreement
Exhibit B.........Certificate of Incorporation of Surviving
Corporation
Exhibit C.........Terms of Non-competition Agreement
<PAGE>
Table of Defined Terms
----------------------
Section
-------
2005 Stockholder
Litigation..............................................6.11(c)
Affected
Employees.......................................................6.07(a)
Affiliate................................................................9.03(a)
Affiliated
group.........................................................3.15(a)
Agreement...............................................................Preamble
Alternative Acquisition
Agreement........................................5.02(a)
Appraisal
Shares.........................................................2.01(d)
Appraisal Shares
Amounts.................................................6.11(c)
Business
Day.............................................................9.03(b)
Certificate..............................................................2.01(c)
Certificate of
Merger....................................................1.03
Change of
Recommendation.................................................5.02(d)
Change of Recommendation
Notice..........................................5.02(d)
Closing..................................................................1.02
Closing
Date.............................................................1.02
Code.....................................................................2.02(g)
Common Stock Merger
Consideration........................................2.01(c)
Company.................................................................Preamble
Company Benefit
Agreements...............................................3.08(d)
Company
By-laws..........................................................3.01
Company
Certificate......................................................3.01
Company Class B
Stock....................................................2.01
Company Common
Stock.....................................................2.01
Company Disclosure
Letter........................................... Article III
Company
Notice...........................................................5.02(c)
Company
Plans............................................................3.14(a)
Company Preferred
Stock..................................................2.01
Company Preferred Stock
Option...........................................3.03(b)
Company SEC
Documents....................................................3.06(a)
Company Stock
Options....................................................3.03(b)
Company Stock
Plans......................................................2.03(a)
Company Transaction
Costs................................................6.11(c)
Confidentiality
Agreement................................................6.02
Contract.................................................................3.04(b)
Credit
Agreement.........................................................3.02
Debt
obligations.....................................................3.10(a)(ii)
DGCL.....................................................................1.01
Effect...................................................................3.01
Effective
Time...........................................................1.03
Employees................................................................3.13
Employment
Agreements...................................................Recitals
Environmental
Laws.......................................................3.12
ERISA....................................................................3.14(a)
Escrow
Agreement.........................................................6.09
Escrow
Amount............................................................6.09
Exchange
Act.............................................................3.06(a)
Exchange
Fund............................................................2.02(a)
Expense
Reimbursement....................................................6.05(b)
Executives..............................................................Recitals
Filed Company SEC
Document...............................................3.06(a)
Final Change
Deadline....................................................5.02(c)
GAAP.....................................................................3.06(a)
Governmental
Authority...................................................3.05
HSR
Act..................................................................3.05
Indemnitee...............................................................6.04(a)
Information
Statement....................................................3.05
Initial Proposal
Deadline................................................5.02(c)
Intellectual Property
Rights.............................................3.17(d)
IRS......................................................................3.14(b)
Knowledge................................................................9.03(c)
Laws.....................................................................3.11
Leased Real
Property.....................................................3.16(b)
Lender...................................................................3.02
Liens....................................................................3.02
Major Business
Partners.............................................3.10(a)(iii)
material.................................................................3.01
Material Adverse
Effect..................................................3.01
Merger..................................................................Recitals
Merger
Sub..............................................................Preamble
Multiemployer
Plans......................................................3.14(a)
Outside
Date.............................................................8.01(b)
Owned Real
Property......................................................3.16(a)
Parent..................................................................Preamble
Parent Disclosure
Letter..............................................Article IV
Paying
Agent.............................................................2.02(a)
person...................................................................9.02(e)
Permits..................................................................3.11
Permitted
Liens..........................................................9.03(d)
Preferred Stock Merger
Consideration.....................................2.01(c)
Principal Company
Stockholders..........................................Recitals
Principal Stockholder
Consent...........................................Recitals
Principal Stockholders'
Agreement.......................................Recitals
Representatives..........................................................5.02(a)
Restraints...............................................................7.01(c)
Run-Off
Insurance........................................................6.04(c)
SEC......................................................................2.04(a)
Secretary...............................................................Recitals
Section
203..............................................................3.20
Section
262..............................................................2.01(d)
Section 3.10
Contracts...................................................3.10(a)
Securities
Act...........................................................3.06(a)
Shareholder Litigation
Costs.............................................6.11(c)
SOX......................................................................3.06(a)
Stockholder
Approval.....................................................3.19
Subsidiary...............................................................9.03(f)
Superior
Proposal........................................................5.02(f)
Surviving
Corporation....................................................1.01
Takeover
Proposal........................................................5.02(f)
Taxes....................................................................3.15(g)
Tax
Returns..............................................................3.15(g)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF
MERGER (this
"Agreement"),
dated as of January
9,
2006, among CFCI
HOLDINGS, INC., a Virginia corporation ("Parent"), HOLO
ACQUISITION CORP.,
a Delaware
corporation
and a wholly owned
Subsidiary
of
Parent ("Merger Sub"), and CFC INTERNATIONAL, INC., a Delaware corporation
(the
"Company").
WHEREAS, the Board of Directors of each of Merger Sub
and the Company has
approved and
declared advisable, and the Board of Directors of Parent has
approved, this
Agreement and the merger of Merger Sub with and into the
Company
(the "Merger"),
upon the terms and
subject to the conditions set forth in this
Agreement;
WHEREAS,
simultaneously with
the execution and delivery of this Agreement
and as a condition and inducement to the willingness of Parent and
Merger Sub to
enter into this Agreement, Roger Hruby, RFH Investments, LP, Roger
F. Hruby IRA,
and the Roger Hruby Trust u/a/d 9/17/85 (collectively, the "Principal Company
Stockholders"), the
Company and Parent are
entering into an agreement (the
"Principal
Stockholders'
Agreement") pursuant
to which each of the
Principal
Company Stockholders
agrees, among other things, to take certain actions in
furtherance of the
Merger, including
causing the
execution and delivery of
written consents
in accordance with Section 228 of the DGCL (a "Principal
Stockholders'
Consent") pursuant to
which the record
holders of the shares of
Company Common
Stock beneficially owned by each of the Principal Company
Stockholders will
consent to the adoption of this Agreement and the approval of
the Merger without a meeting, without prior notice and without a
vote;
WHEREAS,
immediately
following the
execution and delivery of this
Agreement, each of the
record holders of the
shares of Company
Common Stock
beneficially owned
by the Principal Company Stockholders will execute a
Principal
Stockholders' Consent
and deliver it to the secretary of the Company
(the "Secretary"),
and the Secretary
shall certify and
acknowledge
that the
Stockholder Approval has been duly obtained; and
WHEREAS, Parent,
Merger Sub 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;
NOW,
THEREFORE, in
consideration of the foregoing and the representations,
warranties, covenants
and agreements
contained in this Agreement, the parties
hereto agree as follows:
ARTICLE I
The Merger
Section 1.01. The Merger. Upon the terms and subject to the
conditions set
forth in this Agreement and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), Merger Sub shall be merged with
and into the
Company as of the Effective Time pursuant to Section 251 of
the DGCL. As of the
Effective Time, the separate corporate existence of Merger Sub shall
thereupon
cease, and the Company
shall be the surviving
corporation
in the Merger (the
"Surviving Corporation").
Section 1.02. Closing.
Upon the terms and
subject to the
conditions set
forth in this
Agreement, the closing
of the Merger (the " Closing") will take
place at 10:00 a.m.
(Chicago Illinois
local time) on a date to be specified by
the parties,
which shall be no later than the second business day after
satisfaction or (to
the extent
permitted by applicable Law) waiver of the
conditions set forth in Article VII (other than those conditions that by their
terms cannot be satisfied until the Closing, but subject to the satisfaction
or
waiver of such conditions at such time), at the offices of Holland
& Knight LLP,
131 South Dearborn,
30th Floor, Chicago,
Illinois 60603, unless
another time,
date or place is agreed to in writing by the parties hereto;
provided, however,
that if all the
conditions set
forth in Article VII shall not have been
satisfied or (to the extent permitted by applicable
Law) waived on such
second
business day, the Closing will take place on the first business day
on which all
such conditions
shall have been satisfied or (to the extent permitted by
applicable Law)
waived. The date on
which the Closing occurs is referred to in
this Agreement as the "Closing Date".
Section 1.03.
Effective Time. Upon the terms and subject to the conditions
set forth in this Agreement, as promptly as practicable after the
Closing and on
the Closing Date,
the parties
shall file with the
Secretary of State of the
State of Delaware a
certificate of merger
(the "Certificate
of Merger") duly
prepared, executed
and acknowledged by the parties in accordance with the
relevant provisions of the DGCL, and, as promptly as practicable on
or after the
Closing Date, the
parties shall make all
other filings or recordings required
under the DGCL. The Merger shall become effective as of such time as the
Certificate of Merger
is duly filed with the Secretary of State of the State of
Delaware, or as of
such subsequent time or date as Parent and the Company shall
agree and shall specify in the Certificate of Merger (the time and
date at which
the Merger becomes effective being the "Effective Time").
Section 1.04. Effects of the Merger. From and after the Effective
Time, the
Merger shall have the
effects set forth in the DGCL,
including Section 259
thereof. Without
limiting the generality of the foregoing, and subject thereto,
as of the Effective Time, all the properties, rights, privileges, powers and
franchises of
the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company
and Merger Sub
shall become the debts, liabilities and duties of the Surviving
Corporation.
Section
1.05. Certificate
of
Incorporation and By-laws.
(a) The certificate of
incorporation of the
Company shall be amended
at
the Effective Time to
read as set forth on Exhibit B hereto, and as so
amended, shall
be the certificate of incorporation of the Surviving
Corporation until
thereafter amended as
provided therein or by applicable
Law.
(b) The By-laws of Merger Sub, as in effect immediately prior to the
Effective Time,
shall be the By-laws
of the Surviving
Corporation until
thereafter amended as provided therein or by applicable Law.
Section 1.06.
Directors. The
directors of Merger Sub immediately prior to
the Effective Time shall be the directors of the Surviving
Corporation until the
earlier of their
death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.07.
Officers. The officers
of the Company
immediately prior to
the Effective Time shall be the officers of the Surviving
Corporation until
the
earlier of their
death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent
Corporations; Exchange
of Certificates; Company Stock Options and Other Rights
Section 2.01. Effect
on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the Company,
Parent, Merger
Sub or any holder of any shares of common stock, par value $0.01 per share,
of
the Company ("Company
Common Stock"),
any shares of Class B
common stock, par
value $0.01 per share, of the Company ("Company Class B Stock"),
any shares of
voting preferred
stock, par value $0.01 per share,
of the Company
("Company
Preferred Stock") or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of
capital stock of Merger Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par
value $0.01
per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock, and Parent-Owned Stock. Each
share
of
Company Common Stock,
Company Class B Stock or Company Preferred Stock
that
is owned by the Company, Parent or Merger Sub immediately prior to
the
Effective Time shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and no consideration shall
be
delivered in exchange therefor.
(c) Conversion of Company Common Stock and Company Class B Stock.
Each
issued and outstanding
share of Company
Common Stock and
Company Class B
Stock (other than shares to be canceled in accordance with Section 2.01(b)
and
Appraisal Shares)
shall be converted
into the right to receive $16.75
in
cash, without interest
(the "Common Stock Merger Consideration"). All
such
shares of Company
Common Stock and Company Class B Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist,
and each holder of a certificate which immediately
prior to the Effective Time represented any such shares of Company
Common
Stock or Company Class B Stock (each, a "Certificate") shall cease to have
any
rights with
respect thereto, except the right to receive the
Common
Stock Merger Consideration.
(d) Appraisal Rights.
Notwithstanding
anything in this
Agreement to
the
contrary, shares ("Appraisal Shares") of Company Common Stock or
Company Class B Stock
issued and outstanding immediately prior to the
Effective Time that
are held by any holder who is entitled to demand and
properly demands
appraisal of such shares pursuant to, and who complies in
all
respects with,
the provisions of Section 262 of the DGCL
("Section
262") shall not be
converted into the
right to receive the
consideration
payable as provided in Section 2.01(c), but instead such holder shall be
entitled to payment of the fair value of such shares in accordance
with the
provisions of Section 262. As of the Effective Time, all Appraisal Shares
shall no longer be
outstanding and shall
automatically
be canceled
and
shall cease to exist,
and each holder of
Appraisal Shares shall
cease to
have
any rights with respect thereto, except the right to receive the
fair
value of such Appraisal Shares in accordance with the provisions of
Section
262.
Notwithstanding
the foregoing, if any such holder shall fail to
perfect or otherwise
shall waive, withdraw
or lose the right to appraisal
under Section 262 or a court of competent jurisdiction shall
determine that
such
holder is not entitled to the relief provided by Section 262, then
the
right of such holder to be paid the fair value of such holder's Appraisal
Shares under
Section 262 shall
cease to exist and such Appraisal Shares
shall be deemed to have been converted as of the Effective
Time into, and
shall have
become,
the right to receive the Common Stock Merger
Consideration as
provided in Section
2.01(c). The Company shall serve
prompt notice to
Parent of any demands
for appraisal of any shares of
Company Common
Stock or Company
Class B Stock and
Parent shall have
the
right to participate in and, subject to applicable Law, direct all
negotiations and
proceedings
with respect to such
demands. None of the
Company and its Subsidiaries shall, without the written consent of
Parent,
make
any payment with
respect to, or settle
or offer to settle,
any such
demands, or agree to do any of the foregoing.
Section 2.02. Exchange of Certificates.
(a) Paying Agent.
Prior to the Effective Time, Parent shall designate
a
bank or trust company (the "Paying Agent") reasonably acceptable to the
Company to
act as agent for payment of the Common Stock Merger
Consideration pursuant
to Section 2.01(c)
upon surrender of
certificates
representing the
Company Common Stock and Company Class B Stock
("Certificates"). As
of or prior
to the Effective Time, Parent shall
deposit, or cause to be deposited, with the Paying Agent cash
sufficient to
pay
the aggregate amounts
payable pursuant to
Section 2.01(c) in exchange
for
the outstanding
shares of Company
Common Stock and Company Class B
Stock (such cash being hereinafter referred to as the "Exchange
Fund").
(b) Exchange
Procedures.
As promptly as practicable after the
Effective Time, Parent
shall cause the Paying Agent to mail to each holder
of
record of a Certificate (i) a form of letter of transmittal (which
shall
specify that
delivery shall be effected, and risk of loss and title to
Certificates shall
pass, only upon proper
delivery of Certificates to the
Paying Agent and which
shall be in such form as Parent and the Company may
reasonably agree
to use) and (ii)
instructions
for use in
surrendering
Certificates in exchange for the cash amounts specified in Section
2.01(c).
Upon
surrender of a
Certificate
for cancellation to the Paying Agent,
together with such
letter of transmittal, duly completed and validly
executed, and such
other documents as may
be reasonably
required by the
Paying Agent, the holder of record of such Certificate shall be
entitled to
receive in exchange
therefor the amount of cash into which the
shares of
Company Common Stock or Company Class B Stock formerly represented by such
Certificate shall have been converted pursuant to Section 2.01(c),
and the
Certificate so surrendered shall forthwith be canceled.
In the event of a
transfer of ownership of shares of Company Common Stock or Company Class
B
Stock that is not
registered in the transfer records of the Company,
the
proper amount of cash
may be paid in exchange therefor to a person other
than
the person in whose name a Certificate so surrendered is registered
if
such
Certificate shall be
properly endorsed or otherwise be in proper form
for
transfer and the person requesting such issuance shall pay any
transfer
or other taxes
required by reason of the payment to a person other than the
registered holder
of such Certificate or establish to the reasonable
satisfaction of the
Paying Agent that such tax has been paid or is
not
applicable. Until surrendered as contemplated by this Section
2.02(b), each
Certificate shall
be deemed at any time after the Effective Time to
represent only the
right to receive upon such surrender the amount of cash
such
holder shall be entitled to receive pursuant to Section 2.01(c). No
interest will be paid or will accrue on the cash payable upon
surrender of
any
Certificate.
(c) No Further
Ownership Rights in
Company Common
Stock or Company
Class B Stock. All
cash paid upon the surrender of Certificates in
accordance with the
terms of this Article
II shall be deemed to have been
paid
in full satisfaction of all rights pertaining to the shares of
Company
Common Stock
or Company Class B Stock previously represented by such
Certificates. As of the close of business on the day on which the
Effective
Time
occurs, the stock
transfer books of the Company shall be
closed and
there shall be no further registration of transfers on the stock
transfer
books of the Surviving Corporation of the shares of Company Common
Stock or
Company Class B Stock, in each case that were outstanding
immediately prior
to
the Effective Time. If, at any time after the Effective Time,
Certificates are presented to the Surviving Corporation or the
Paying Agent
for
any reason, such
Certificates
shall be canceled and exchanged as
provided in this Article II.
(d) No Liability.
None of Parent,
Merger Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash
delivered
to a
public official pursuant to any applicable abandoned property,
escheat
or
similar Law. Any portion of the cash included in the Exchange Fund
that
remains undistributed to the holders of Certificates for one year
after the
Effective Time shall be returned to Parent, upon demand, and any
holders of
Certificates who have
not theretofore
complied with this Article II shall
thereafter look only
to Parent for, and Parent shall remain liable for,
payment of such funds to which such holder may be due pursuant to Section
2.01(c).
(e) Investment of Exchange Fund. Parent may cause the Paying Agent
to
invest, as directed by Parent in its sole discretion, any cash included in
the
Exchange Fund, and any capital gain, interest or other income
resulting
from
such investments
shall inure to the benefit of Parent and shall be
paid
to Parent from time to time by the Paying Agent.
(f) Lost Certificates. If any Certificate shall have been lost,
stolen
or
destroyed,
upon the making of an
affidavit of that fact
by the person
claiming such Certificate to be lost, stolen or destroyed and, if
required
by
Parent or the Paying Agent, the posting by such person of a bond in
such
reasonable amount as
Parent or the Paying
Agent may direct as
indemnity
against any successful
claim that may be made
against it with
respect to
such
Certificate,
the Paying
Agent will issue in
exchange for such lost,
stolen or destroyed
Certificate the amount of cash which such holder would
be
entitled pursuant to Section 2.01(c).
(g)
Withholding
Rights. The Paying Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from the
consideration
otherwise payable to
any holder of shares of Company Common Stock, shares
of
Company Class B Stock, or Company Stock Options pursuant to this
Agreement such amounts
as may be required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder (the
"Code"), or under any
provision of state, local or foreign tax Law. To the
extent that such amounts are so withheld and paid over to the appropriate
taxing authority,
such amounts shall be treated for purposes of this
Agreement as having
been paid to the person in respect of which such
deduction and withholding was made.
Section 2.03.
Company Stock Options; Company Preferred Stock Option.
(a) Before the Closing, the Board of Directors of the
Company (or, if
appropriate, any
committee of the Board of Directors of the Company
administering the
Company Stock Plans)
shall adopt such
resolutions and
take
all such other
actions as may be necessary to provide that each
Company Stock Option granted under the Company's 1995 Employee
Stock Option
Plan, 2000
Employee Stock Option Plan, 1995 Stock Option Plan For
Non-Employee Directors
or the 2000
Stock Option Plan for Non-Employee
Directors (together,
the "Company Stock Plans"), as the case may be,
outstanding
immediately prior to
the Effective Time,
whether or not then
vested or exercisable, shall be canceled as of the Effective Time in
exchange for a lump sum payment in cash payable at the time of
cancellation
equal to the excess, if any, of (i) the product of (A) the number
of shares
of
Company Common Stock
subject to such
Company Stock Option
and (B) the
Common Stock Merger
Consideration over
(ii) the product of (x) the number
of
shares of Company
Common Stock subject to such Company Stock Option and
(y)
the per share exercise price of such Company Stock Option.
(b) Before the Closing, the Board of Directors of the Company
shall
adopt such resolutions
and the Company and Roger F. Hruby shall
take all
such
other actions as may be necessary to provide that the option to
purchase 534 shares of the Company Preferred Stock at an exercise
price of
$500
per share held by Roger F. Hruby (the "Company Preferred Stock
Option"), if unexercised and outstanding immediately prior to the
Effective
Time, shall be
canceled as of the
Effective Time.
If for any reason
the
Company Preferred
Stock Option is exercised by Roger F. Hruby prior to
Closing, at the
Closing, all issued and outstanding shares of Company
Preferred Stock shall be cancelled without additional
consideration.
ARTICLE III
Representations and Warranties of the Company
Except as set forth in the disclosure letter delivered by the Company to
Parent dated as of the date hereof certified by a duly authorized
officer of the
Company (the "Company
Disclosure Letter")
(each section of which qualifies the
correspondingly
numbered
representation,
warranty or
covenant to the
extent
specified therein and such other representations, warranties or
covenants to the
extent a matter in such section is disclosed in such a way as to make its
relevance to such other representation, warranty or covenant readily
apparent),
the Company represents and warrants to Parent and Merger Sub as
follows:
Section 3.01.
Organization,
Standing and
Corporate Power. Each of the
Company and its Subsidiaries (i) is a corporation or limited
liability company,
as the case may be, duly organized, validly existing and in good
standing under
the Laws of the jurisdiction in which it is incorporated or formed,
as the case
may be, and (ii) has all requisite corporate or limited liability
company, as
the case may be, power
and authority to carry on its business as now being
conducted. Each of the
Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in the jurisdictions set forth
in Section 3.02 of the Company Disclosure Letter, which
jurisdictions are all of
the jurisdictions in which the nature of its business or the
ownership, leasing
or operation of its
properties or other
assets makes such qualification or
licensing necessary, other than in such jurisdictions where the
failure to be so
qualified or licensed
individually or in the
aggregate has not had
and is not
reasonably likely to
have a Material
Adverse Effect. For purposes of this
Agreement, "Material
Adverse Effect" shall mean any state of facts,
change,
development, effect,
condition or
occurrence (any such item, an "Effect") that
is or is reasonably
likely to adversely affect in a material respect the
business, assets, liabilities, properties, condition (financial or
otherwise),
results of operations or prospects of the Company and its
Subsidiaries taken
as
a whole or that
impairs in any
material respect the
ability of the Company to
perform its obligations under this Agreement or prevents or
materially
impedes,
interferes with,
hinders or delays the consummation of the Merger or any of the
other transactions contemplated hereby; provided that, in any such
case referred
to in clause (i) or (ii) the following shall not be deemed
"material" or to have
a "Material Adverse Effect": any change or event caused by or
resulting from (A)
actions or
omissions of the Company or Parent taken with the prior written
consent of the other
or required
in this Agreement, (B) the execution and
delivery of this Agreement or the consummation of the transactions
contemplated
hereby or the announcement thereof, or (C) any outbreak of
major hostilities in
which the United
States is involved or any act of terrorism within the United
States or directed
against its facilities
or citizens wherever
located; and
provided, further,
that in no event shall
a change in the trading price of the
Company's capital
stock, by itself, be considered material or constitute a
Material Adverse
Effect. Section 3.01 of the Company
Disclosure
Letter sets
forth the officers and
directors of the
Company and each of its Subsidiaries.
The Company has provided to Parent true and complete copies of the certificate
of incorporation
of the Company as in effect on the date hereof ("Company
Certificate") and the
By-laws of the
Company as in effect
on the date hereof
("Company By-laws") and, provided the Parent access to the minutes
of all of the
meetings of the
stockholders, the
Board of Directors and each committee of the
Board of Directors of the Company held since January 1, 2000.
Section 3.02.
Subsidiaries. Section
3.02 of the Company Disclosure Letter
sets forth a true and complete list of all the Subsidiaries of the Company
and,
for each such Subsidiary, the jurisdiction of incorporation or
formation. All
the outstanding shares
of capital stock of, or other equity or voting interests
in, each such Subsidiary are duly authorized, validly issued, fully paid and
nonassessable and are
owned, directly or
indirectly,
by the Company free
and
clear of all pledges,
claims, liens, charges, options, rights of first
refusal
or similar rights,
encumbrances
and security
interests of any kind
or nature
whatsoever (collectively, "Liens"), and free of any
restriction on the right to
vote, sell or otherwise dispose of such capital stock or
other equity or voting
interests, other than
as set forth in Section 3.02 of the Company Disclosure
Letter and other than liens or restrictions in favor of LaSalle Bank
National
Association ("Lender")
pursuant to the
Amended and Restated
Loan and Security
Agreement, dated May
17, 2001, as amended,
between the Company and Lender, as
included in the filed SEC Documents (the "Credit Agreement"). Except for the
capital stock of, or other equity or voting interests in, its
Subsidiaries, the
Company does not beneficially own, directly or indirectly, any
capital stock of,
or other equity or voting interests or investment
(whether equity or
debt) in,
any person,
nor is the
Company or any of its Subsidiaries subject to any
obligation or
requirement to provide for or to make any investment (in the
form
of a loan, capital contribution or otherwise) to or in, any
person.
Section 3.03. Capital Structure.
(a) The authorized capital stock of the Company consists of
10,000,000
shares of Company Common Stock, 750,000 shares of Company Class B
Stock and
750
shares of Company
Preferred Stock. As of the close of business on
December 30, 2005, (i) 3,999,049 shares of Company Common Stock
(excluding
treasury shares) were
issued and
outstanding, none of
which were held by
any
Subsidiary
of the Company, (ii) 512,989 shares of Company Class B
Stock, none of which
were held by any Subsidiary of the Company, (iii) no
shares of Company
Preferred Stock (excluding treasury shares) were issued
and
outstanding, (iv)
582,727 shares of Company Common Stock, no shares of
Company Class B Stock and no shares of Company Preferred Stock were
held by
the
Company in its
treasury, (v) 512,989
shares of Company
Common Stock
were
reserved for issuance
pursuant to
conversion of the
Company Class B
Stock, (vi)
294,000 shares of Company Common Stock were reserved for
issuance pursuant to
the Company Stock Plans (of which 246,116 shares of
Company Common Stock were subject to outstanding options to
purchase shares
of
Company Common Stock
granted under the Company Stock Plans), (vii) 534
shares of Company
Preferred Stock were
reserved for issuance
pursuant to
the
Company Preferred Stock Option, and (viii) no shares of Company
Common
Stock will be (x)
subject to a right of
repurchase by the
Company, (y)
subject to forfeiture
back to the
Company or (z)
subject to transfer
or
lock-up restrictions,
in each of cases (x),
(y) and (z),
following the
consummation of the Merger.
(b) Section 3.03(b) of the Company Disclosure Letter sets forth, as
of
the
date hereof, a true and complete list of (i) all outstanding
options to
purchase Company Common Stock (collectively, "Company Stock Options"), the
number of shares of Company Common Stock subject to each such
Company Stock
Option or other such right, the grant dates and exercise prices and
vesting
schedule of each such Company Stock Option, or other right and the
names of
the
holder of each such
Company Stock
Option or other right
and (ii) all
outstanding options to
purchase Company Preferred Stock (the "Company
Preferred Stock Option"), the number of shares of Company
Preferred Stock
subject to the Company Preferred Stock Option, the grant date and exercise
price and vesting
schedule of the Company Preferred Stock Option and the
name
of the holder of the Company Preferred Stock Option. Except as set
forth in Section
3.03(a) of this Agreement, (i) there are not issued,
reserved for issuance or outstanding any (A) shares of capital
stock of, or
other equity or voting
interests in, the
Company, (B)
securities of the
Company or any of its
Subsidiaries
convertible into or
exchangeable
or
exercisable for
shares of capital stock of, or other equity or voting
interests in,
the Company or any of its Subsidiaries or (C) options,
warrants or
other rights to acquire from the Company or any of its
Subsidiaries any
capital stock of, or other equity or voting interests in,
or
securities convertible
into or exchangeable
or exercisable for capital
stock of, or other equity or voting interests in, the Company or
any of its
Subsidiaries and (ii)
as of the date of this
Agreement, there
exists no
obligation of the Company or any of its Subsidiaries to issue any capital
stock of, or other equity or voting interests in, or securities
convertible
into
or exchangeable
or exercisable for
capital stock of, or other equity
or
voting interests in, the Company or any of its Subsidiaries. Except as
set
forth in Section
3.03(a) of this
Agreement, there are
no outstanding
stock appreciation rights, phantom stock awards, rights to receive shares
of
Company Common Stock
on a deferred basis or
otherwise or other similar
rights that are linked in any way to the value of Company
Common Stock or
any
part thereof.
Except as set forth in
Section 3.03(b) of the
Company
Disclosure Letter, during the period from the close of business on
December
31,
2004, to the date
hereof, there have
been no issuances by the Company
or
any of its
Subsidiaries of (i)
shares of capital stock of, or other
equity or voting
interests in,
the Company or any of its Subsidiaries
(other than issuances
pursuant to the
exercise of Company Stock Options,
the
Company Preferred
Stock Option or conversion of the Convertible Note,
in
each case as
outstanding on such
date as required by their terms as in
effect on the date of this Agreement), (ii) securities of the Company or
any
of its Subsidiaries convertible into or exchangeable or exercisable
for
shares of capital
stock of, or other
equity or voting
interests in, the
Company or any of its
Subsidiaries or (iii)
options, warrants or other
rights to acquire from the Company or any of its Subsidiaries any capital
stock of, or other equity or voting interests in, or securities
convertible
into
or exchangeable
or exercisable for
capital stock of, or other equity
or
voting interests in, the Company or any of its Subsidiaries.
(c) All outstanding
shares of capital
stock of the Company
are, and
all
shares which may be issued upon exercise of the Company
Stock Options
will
be, when issued in accordance with the terms thereof, duly
authorized,
validly issued, fully
paid and nonassessable and not subject to preemptive
rights. Except as set
forth in Section
3.03(a) and Section 303(b) of this
Agreement, there are
no (i) Contracts of
any kind to which the Company or
any
of its Subsidiaries is a party or is bound that obligate the
Company or
any
of its Subsidiaries to repurchase, redeem or otherwise acquire shares
of
capital stock of, or other equity or voting interests in, the
Company or
any
of its Subsidiaries
or (ii) options, warrants or other rights to
acquire shares of capital stock of, or other equity or voting
interests in,
or
securities convertible
into or exchangeable for capital stock of, or
other equity
or voting interests in, the Company or any of its
Subsidiaries. Other
than the Principal
Stockholders'
Agreement or as set
forth in Section
3.03(c) of the Company
Disclosure
Letter, neither the
Company nor any of its
Subsidiaries is a party to any voting Contract with
respect to the voting
of any such
securities. Other
than the Principal
Stockholders'
Agreement or as set forth in Section 3.03(c) of the Company
Disclosure Letter,
to the knowledge of the Company, there are no
irrevocable proxies
and no voting
Contracts (or
Contracts to execute a
written consent or a
proxy) with respect to
any shares of Company
Common
Stock, Company
Class B Stock,
or Company Preferred Stock or any other
voting securities of the Company.
(d) Section 3.03(d) of the Company Disclosure Letter sets forth a
true
and
complete list of all outstanding indebtedness for borrowed money of
the
Company or any of its Subsidiaries and all guarantees by the
Company or any
of
its Subsidiaries
of indebtedness in respect of borrowed money of
any
person.
Section 3.04. Authority; Noncontravention.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the Merger and the
other transactions contemplated hereby and thereby, subject, in the
case of
the
consummation
of the Merger, only to receipt of the Stockholder
Approval. The
execution and delivery of this Agreement by the Company and
the
consummation
of the Merger and the other transactions contemplated
hereby and thereby and the compliance by the Company with the
provisions of
this
Agreement have been duly authorized by all necessary corporate action
on
the part of the Company and no other corporate proceedings on the part
of
the Company are
necessary to authorize or approve this Agreement or to
consummate the
Merger or the other
transactions
contemplated
hereby or
thereby, subject,
in the case of the
consummation of the Merger, only to
receipt of the Stockholder Approval. This Agreement has been duly
executed
and
delivered by the Company and, assuming the due authorization,
execution
and
delivery by each of the other parties hereto, constitutes the legal,
valid and binding
obligation
of the Company, enforceable against the
Company in accordance
with its terms
(subject to applicable
bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other Laws
affecting creditors'
rights generally from time to time in
effect). The
Board of Directors of the Company, at a meeting duly called and held,
at
which all directors
of the Company
were present, duly and unanimously
adopted resolutions
(i) approving,
adopting and declaring
advisable this
Agreement, the Merger
and the other transactions contemplated hereby and
thereby, (ii)
declaring that the Merger and the other transactions
contemplated hereby
are in the best interests of the stockholders of the
Company, (iii)
fixing the record date to determine the stockholders
entitled to consent to
the adoption
of this Agreement and approve the
Merger and the other transactions contemplated hereby, which date is the
date
hereof, (iv) directing that this Agreement be submitted to the
stockholders
promptly following
the execution and delivery of this
Agreement by each of the parties hereto for such stockholders to consider
whether to
adopt this Agreement and approve the Merger and other
transactions contemplated hereby and (v) recommending that the
stockholders
of
the Company adopt this
Agreement and approve the Merger and the
other
transactions
contemplated
hereby, which
resolutions
have not been
subsequently rescinded, modified or withdrawn in any way.
(b) The execution
and delivery of this
Agreement does not, and the
consummation of the Merger and the other transactions contemplated hereby
and
thereby and compliance
with the provisions
hereof and thereof do
not
and
will not, conflict
with, or result in any violation or
breach of, or
constitute a
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 the loss of a
benefit under, or result in the
creation of any Lien in or upon any of the properties or other assets of
the
Company or any of its Subsidiaries under (i) the Company
Certificate or
the
Company By-laws or the comparable organizational documents of any
Subsidiary of the Company, (ii) except for the Credit
Agreement, any
loan
or
credit agreement, bond, debenture, note, mortgage, indenture, lease or
other contract,
commitment, agreement,
instrument,
obligation,
option,
undertaking,
concession, franchise
or license,
binding arrangement or
binding
understanding
(each, including
all amendments thereto, a
"Contract") to which the Company or any of its Subsidiaries is a party or
is
bound or any of their respective properties or other assets is
bound by
or
subject to or otherwise under which the Company or any of its
Subsidiaries has
any rights or benefits or (iii) subject to the
governmental filings and other matters referred to in Section 3.05,
any Law
applicable to the Company or any of its Subsidiaries or their respective
properties or other
assets, other than, in the case of clauses (ii)
and
(iii), any such conflicts, violations, breaches, defaults, rights,
results,
losses or Liens that
individually or in the
aggregate have not had and is
not
reasonably likely to have a Material Adverse Effect.
Section 3.05. Governmental Approvals. Except as set forth in Section
3.05
of the Company Disclosure Letter, no consent, approval, order or authorization
of, action by or in respect of, or registration, declaration or
filing with, any
domestic or
foreign (whether supernational, national, Federal, state,
provincial, local
or otherwise) government or any court, administrative,
regulatory or
other governmental agency, commission or authority or any
nongovernmental
self-regulatory
agency, commission
or authority (each, a
"Governmental
Authority") is
required by or with respect to the Company or any
of its Subsidiaries
in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
Merger or the
other transactions
contemplated hereby or thereby, except for (a) the filing of
a pre-merger
notification
and report form by the Company under the
Hart-Scott-Rodino
Antitrust Improvements
Act of 1976,
as amended (the "HSR
Act"), (b) the filing with the Securities and Exchange Commission
("SEC") of (i)
an information
statement pursuant to Regulation 14C of the Exchange Act (as
amended or
supplemented
from time to time, the "Information Statement")
following the Stockholder Approval and (ii) such reports
under the Exchange Act
as may be required after the date hereof in connection with this
Agreement, the
Principal
Stockholders'
Agreement, the
Merger and the other transactions
contemplated hereby
and thereby, (c) 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 other states in which the Company is qualified
to do business and (d) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required after
the date hereof
under the corporation, takeover or blue sky laws of various states
or the NASDAQ
National Market.
Section 3.06. Company
SEC Documents;
NASDAQ Compliance; No Undisclosed
Liabilities.
(a) The Company has filed all reports, schedules, forms, statements
and
other documents (including exhibits and other information
incorporated
therein) with the SEC
required to be filed by the Company since January 1,
2000
under the Securities Act of 1933, as amended, and the rules and
regulations
promulgated thereunder
(the "Securities Act")
and Securities
and
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act") (such documents,
together with
any
documents filed during such period by the Company
with the SEC on a
voluntary basis
on Current Reports on Form 8-K, the "Company SEC
Documents"). As of
their respective
dates, the Company SEC Documents
complied in all material respects with the requirements of the Securities
Act,
the Exchange Act and the Sarbanes-Oxley Act of 2002, and the rules
and
regulations promulgated thereunder ("SOX"), applicable to such Company SEC
Documents, and,
as of their
respective
dates, none of the Company SEC
Documents contained
any untrue statement
of a material fact or omitted to
state a material fact
required to be stated
therein or necessary in order
to
make the statements
therein, in light of
the circumstances under which
they
were made,
not misleading. Except to the extent that information
contained in any Company SEC Document filed and publicly available
prior to
the
date hereof ("Filed
Company SEC Document") has been revised, amended,
supplemented or
superceded by a later filed Company SEC Document, none of
the
Company SEC Documents
contains any untrue statement of a material fact
or
omits to state a material fact required to be stated therein or
necessary in
order to make the statements therein, in light of the
circumstances under
which they were made,
not misleading.
Except as set
forth in Section 3.06(a) of the Company Disclosure Letter, the financial
statements (including the related notes thereto) of the Company
included in
the
Company SEC Documents (i) complied as to form in all material
respects
with
applicable
accounting
requirements
and the published rules and
regulations of the SEC with respect thereto as of their
respective
dates,
(ii)
were prepared in
accordance with United
States generally accepted
accounting
principles
("GAAP") (except,
in the case of unaudited
statements, as
permitted by Form 10-Q
of the SEC) applied on a consistent
basis during the periods involved (except as may be
indicated in the notes
thereto) and (iii) presented fairly in all material respects the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash
flows for
the
periods then ended (subject, in the case of unaudited
statements,
to
normal year-end audit
adjustments). The
Company is in compliance with the
applicable listing
rules of the NASDAQ
National Market and, except as set
forth in Section 3.06(a) of the Company Disclosure Letter, has not since
January 1, 2000
received any notice from the NASDAQ National Market
asserting any non-compliance with such rules. The Company has
not made any
filings or any
amendments or
modifications
to any Company SEC
Documents
which have not yet
been filed
with the SEC but that
are required
to be
filed with the SEC in accordance with the Securities Act or the Exchange
Act,
as the case may be. As
used in this Section
3.06, the term "file"
shall be broadly
construed to include
any manner in which a
document or
information is
furnished, supplied or
otherwise made available in writing
to
the SEC.
None of the Subsidiaries of the Company are, or have at any time
been,
subject to the
reporting requirements
of Section 13(a) or 15(d) of the
Exchange Act.
(b) Neither
the Company nor any of its Subsidiaries has any
liabilities or
obligations
of any nature (whether accrued, absolute,
contingent or
otherwise and whether known or unknown), except for (i)
liabilities and obligations referenced (whether by value or otherwise)
or
reflected in the Company's annual report for the fiscal year ended
December
31,
2004 on Form 10-K filed with the SEC on March 30, 2005, (ii)
liabilities and
obligations
incurred in the
ordinary course of
business
consistent with past practice since December 31, 2004, that
individually or
in
the aggregate
have not had and are not reasonably likely to have a
Material Adverse Effect, (iii) liabilities under Section 3.10 Contracts,
Contracts filed
as exhibits to the Filed Company SEC Documents and
Contracts set forth on
Section 3.16(a) or
Section 3.16(b) of the
Company
Disclosure Letter,
in each case, that
relate to obligations that have not
yet
been performed,
and are not required
to be performed, as of
the date
hereof, and (iv) liabilities and obligations set forth in item B of
Section
3.06
of the Company Disclosure Letter.
(c) Each of the
principal executive
officer of the
Company and the
principal financial officer of the Company has made all certifications
required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302
and
906 of SOX
with respect to the Company SEC Documents, and the
statements contained
in such certifications were at the time they were
made, and are, true and accurate. For purposes of this Agreement,
"principal executive
officer" and "principal financial officer" shall have
the
meanings given to such
terms in SOX. Except
as set forth in item C of
Section 3.06 of the Company Disclosure Letter, neither the Company nor any
of
its Subsidiaries
has outstanding, or has arranged any outstanding,
"extensions of credit"
to directors or executive officers within the
meaning of Section 402 of SOX.
(d) Neither the Company nor any of its Subsidiaries is a party to, or
has
any commitment
to become a party to,
any joint venture,
off-balance
sheet partnership
or any similar Contract (including any Contract or
arrangement relating
to any transaction or
relationship between
or among
the
Company and any of its Subsidiaries, on the one hand, and any
unconsolidated Affiliate, including any structured finance, special
purpose
or
limited purpose entity or Person, on the other hand or any
"off-balance
sheet arrangements"
(as defined in Item
303(a) of Regulation
S-K of the
SEC)), where the
result, purpose or effect of such
Contract is to
avoid
disclosure of any material transaction involving, or material liabilities
of,
the Company or any of its Subsidiaries in the Company's or such
Subsidiary's published financial statements or other Company SEC
Documents.
(e) The Company
maintains a system of
internal accounting
controls
sufficient to
provide reasonable assurance that (i) transactions are
executed in
accordance
with
management's
general
or specific
authorizations, (ii)
access to assets is permitted only in accordance with
management's general
or specific authorization and (iii) the recorded
accountability
for assets
is compared with the existing assets at
reasonable intervals
and appropriate
action is taken with
respect to any
differences.
(f) The Company's
"disclosure controls and procedures" (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably
designed
to
ensure that (i) all
information
(both financial and non-financial)
required to be
disclosed by the
Company in the reports
that it files or
submits under the
Exchange Act is recorded, processed, summarized and
reported within the
time periods
specified in the rules
and forms of the
SEC
and (ii) all such
information is accumulated and communicated to the
Company's management
as appropriate to
allow timely decisions
regarding
required disclosure
and to make the certifications of the principal
executive officer and
principal financial
officer of the Company required
under the Exchange Act with respect to such reports.
(g) Except
as set forth in item D of Section 3.06 of the Company
Disclosure Letter,
since January 1, 2000, the Company has not received any
notification of
(i) a "significant deficiency" or (ii) a "material
weakness" in
the Company's internal controls. For purposes of this
Agreement, the terms "significant deficiency" and "material
weakness" shall
have
the meanings
assigned to them in Release 2004-001 of the Public
Company Accounting Oversight Board, as in effect on the date
hereof.
Section 3.07.
Information Supplied.
None of the
information included
or
incorporated by reference in the Information Statement will, on the date it
is
first mailed to the stockholders of the Company, contain any untrue
statement of
a material fact or omit to state any material fact required to be
stated therein
or necessary
in order to make the statements therein, in light of the
circumstances under
which they are made, not misleading, except that no
representation or
warranty is made by the Company with respect to statements
made or incorporated
by reference
therein based on information supplied in
writing by Parent to the Company specifically for inclusion or
incorporation by
reference in the Information Statement. The Information Statement
will comply as
to form in all material respects with the requirements of the
Exchange Act.
Section 3.08.
Absence of Certain
Changes or Events.
Since December 31,
2004, the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past
practice, and except
as disclosed in the Filed SEC Documents, or as set forth in Section 3.08 of
the
Company Disclosure Letter, there has not been:
(a) any Effect that
individually or in the
aggregate has had or is
reasonably likely to have a Material Adverse Effect;
(b) (i) any
declaration, setting
aside or payment of any dividend or
other distribution
(whether in cash,
stock, property or
other assets) in
respect of any of the Company's or any of its Subsidiaries'
capital stock,
or
other equity or voting interests, other than dividends or
distributions
by a
direct or indirect
wholly owned Subsidiary of the Company to its
parent, (ii) any
split, combination or reclassification of any of the
Company's or any of its Subsidiaries' capital stock, or other equity or
voting interests,
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 such capital stock, or other equity or voting interests,
or (iii)
any
purchase, redemption or other acquisition of any shares of capital
stock, or other equity or voting interests or any other
securities of the
Company or any of its Subsidiaries or any warrants, options or
other rights
to
acquire any such shares or other securities;
(c) any granting
by the Company or any of its Subsidiaries to any
current or former
director, officer,
employee or consultant
(other than
attorneys, accountants
or other similar professional service providers) of
the
Company or any of its
Subsidiaries of any
increase in
compensation,
bonus or other
benefits or any such granting of any type of compensation,
bonus or other
benefits to any current or former director, officer,
employee or consultant (other than attorneys, accountants or other similar
professional service
providers) of the
Company or any of its Subsidiaries
not
previously receiving
or entitled to receive such type of compensation,
bonus or other benefit, except for increases of cash
compensation
(i) in
the
ordinary course of
business consistent
with past practice or, (ii) as
was
required under any Company Plan or Company Benefit Agreement listed in
Section 3.14(a) of the Company Disclosure Letter as in effect on
December
31,
2004;
(d) any entering
into, or any amendment or termination of, any
employment, deferred
compensation,
supplemental
retirement,
severance,
retention, "change in
control" or other similar Contract ("Company Benefit
Agreements") or any
collective
bargaining
Contract or other
labor union
Contract or any Company Plan;
(e) any change in the manner in which contributions to any
Multiemployer Plan are
made or the basis on which such contributions are
determined;
(f) any change in financial or tax accounting methods, principles or
practices by the Company or any of its Subsidiaries, except insofar as may
have
been required by a change in GAAP;
(g) any material
election with respect to taxes by the Company or any
of
its Subsidiaries
(other than elections
that are consistent
with past
practice) or any
settlement or compromise of any material tax liability or
refund that is reasonably likely to have a material and
adverse effect on
the
tax liability
of the Company or any of its Subsidiaries after the
Effective Time;
(h) any revaluation by
the Company or any of its Subsidiaries of any
material assets of the Company or any of its Subsidiaries; or
(i) any sale, lease, license or other disposition of, or subjecting
to
any
Lien, any assets of the Company or any of its Subsidiaries (including
Intellectual Property
Rights), except in the ordinary course of
business
consistent with past practice.
Section 3.09.
Litigation.
Except as set forth in Section 3.09 of the
Company Disclosure
Letter, there is no
claim, suit, action,
investigation or
other proceeding pending or, to the Knowledge of the Company,
threatened against
the Company or any of its Subsidiaries or any of their respective
properties or
other assets, nor is there any judgment, decree, injunction, rule or order of
any Governmental
Authority or arbitrator outstanding against, or, to the
Knowledge of the Company, investigation, proceeding, notice of violation,
order
of forfeiture or complaint by any Governmental Authority involving,
the Company
or any of its
Subsidiaries.
"2005 Stockholder Litigation" shall mean the
litigation matters
identified as "2005 Stockholder Litigation" in Section 3.09
of the Company Disclosure Letter.
Section 3.10. Contracts.
(a) Neither the Company nor any of its Subsidiaries is a party or is
bound or otherwise has rights or benefits under, and none of their
respective properties
or other assets is bound by or subject to, any
Contract that is of a nature required to be filed as an exhibit to
a report
or
filing under the Securities Act or the Exchange Act, other than any
such
Contract that is filed
as an exhibit to the Filed Company SEC Documents.
Except for Contracts
filed as exhibits to
the Filed Company SEC Documents
and
purchase orders entered into in the ordinary course of business
consistent with past practice (but not the Contracts pursuant to
which such
purchase orders were issued), Section 3.10 of the Company
Disclosure Letter
sets
forth (with specific reference to the Subsection to which it
relates),
as
of the date hereof,
a true and
complete list of, and the Company has
provided the Parent
access to true and complete copies of (collectively,
the
Contracts required to be listed in the Company Disclosure Letter,
"Section 3.10 Contracts"):
(i) each Contract of the Company or any of its Subsidiaries
involving aggregate annual payments by or to the Company or any of
its
Subsidiaries, of more than $100,000, other than any Contract set
forth
on Section 3.13, 3.14(a) or 3.16(a) of the Company Disclosure
Letter;
(ii) (A) all Contracts
pursuant to which any indebtedness of the
Company or any of its
Subsidiaries is
outstanding or may be incurred
(collectively, "debt
obligations"),
(B) all Contracts of or by the
Company or any of its
Subsidiaries
guaranteeing any debt obligations
of any other person (other than the Company or any of its
Subsidiaries),
including the respective aggregate principal amounts
outstanding as of the date hereof, and (C) all Contracts involving
any
"keep well"
arrangements
or pursuant to which
the Company or any of
its
Subsidiaries
has agreed to maintain any financial statement
condition of another person;
(iii) all Contracts between the Company or any of its
Subsidiaries and any
vendor or supplier of
the Company or any of its
Subsidiaries to whom the Company or any of its Subsidiaries has paid
or has an annual
payment obligation
to, and each customer of the
Company or any of its Subsidiaries who has paid or is obligated to
pay
the Company and its Subsidiaries, in excess of $400,000 in either
2004
or to date in 2005 (each such vendor, supplier or customer, a "Major
Business Partner");
(iv) (A) all Contracts
pursuant to which the Company or any of
its Subsidiaries
has agreed not to, or which, following the
consummation of the
Merger, could
restrict the ability
of Parent or
any of its Subsidiaries, including the Company and its Subsidiaries
to
compete with any person in any business or in any geographic area or
to engage in any business or other activity, including any
restrictions relating
to "exclusivity" or any similar requirement in
favor of any person other than the Company or any of its
Subsidiaries
or pursuant to which
any benefit is required to be given or lost as a
result of so competing or engaging, and (B) all Contracts pursuant
to
which the Company
or any of its
Subsidiaries
has agreed not to,
or
which, following the
consummation of the
Merger, could restrict
the
ability of Parent or any of its Subsidiaries, including the Company
and its Subsidiaries to solicit or to hire any person for positions
in
which annual compensation would be expected to exceed $100,000 to
work
for the Company or any of its Subsidiaries (either as an employee or
as an independent
contractor or other agent) or pursuant to which any
benefit is required to
be given or lost as a result of so soliciting
or hiring;
(v) all Contracts of the Company or any of its Subsidiaries
granting the other
party to such
Contract or a third party "most
favored nation" or similar status;
(vi) all Contracts to which the Company or any of its
Subsidiaries is party granting any license to, or franchise in
respect
of, any material right, property or other asset;
(vii) all joint venture, limited liability company,
partnership
or other similar Contracts (including all amendments thereto) in
which
the Company or any of its Subsidiaries holds an interest;
(viii) all
confidentiality,
standstill or similar
Contracts to
which the Company or
any of its
Subsidiaries is a
party that impose
restrictions on
the activities of the Company or any of its
Subsidiaries or that,
following the Effective Time, would impose
restrictions on the
activities of Parent or any of its Subsidiaries,
including the Surviving Corporation;
(ix) all Contracts by the Company or any of its Subsidiaries
that
restrict the payment of dividends or the repurchase of securities;
and
(x) all Contracts by the Company or any of its Subsidiaries
that
relate to the making of any loan to or investment in any person;
and
(xi) all Contracts providing for indemnity (including an
obligation to advance funds for expenses) by the Company or any of
its
Subsidiaries.
Neither the
Company nor any of its Subsidiaries is in material
violation or breach of or in default under (nor, to the Knowledge of the
Company, does there
exist any condition
which upon the passage of time or
the
giving of notice or both would cause such a violation or breach of or
default under) any
Contract to which it is a party or is bound or by which
it
or any of its
properties or other
assets is bound by or
subject to or
otherwise under which the Company or any of its Subsidiaries has
any rights
or
benefits. Except as
set forth in Section 3.10 of the Company Disclosure
Letter, no
approval or consent of, or notice to, any
person is needed in
order that each
Section 3.10
Contract shall continue in full force and
effect in accordance with its terms without penalty, acceleration
or rights
of
early termination
by reason of the
consummation
of the transactions
contemplated by this Agreement.
(b) No person that was
a Major Business
Partner at any time after
January 1,
2004 has terminated (including delivering a notice to the
Company having
such effect) any Section 3.10 Contract or any of its
existing relationships
with the Company or any of its Subsidiaries or
failed to renew or requested any amendment to any Section 3.10 Contract
that
is material and adverse to the Company or any of its
Subsidiaries.
Section 3.11. Compliance with Laws.
(a) Except with respect to Environmental Laws and taxes, which are
the
subject of Sections
3.12 and 3.15,
respectively, each of
the Company and
its
Subsidiaries is, and
since January 1, 2002, has been, in compliance in
all
material respects
with (a) all
statutes, laws, ordinances, rules,
regulations,
judgments, orders and
decrees of any Governmental Authority
(collectively, "Laws") applicable to it, its personnel, properties
or other
assets or its
business or operations, and (b) all material permits,
licenses, variances,
exemptions,
authorizations,
operating certificates,
franchises,
orders and
approvals
of all Governmental Authorities
(collectively, "Permits") issued to the Company or any of its
Subsidiaries.
None
of the Company and its
Subsidiaries have
received, since
January 1,
2002, a notice or
other written
communication
alleging or relating
to a
possible material
violation of any Law
applicable to it, its
personnel,
properties or other assets or its businesses or operations. The
Company and
its
Subsidiaries
have in effect all
Permits necessary for them to own,
lease or operate their
properties
and other assets and
to carry on their
businesses operations
as now conducted. All
Permits are listed on Section
3.11
of the Company Disclosure Letter. There is no event that has
occurred
that
has resulted in or, to the Knowledge of the Company, is reasonably
likely to result in the revocation, cancellation, nonrenewal or adverse
modification of any Permit.
(b) The Company and its Subsidiaries are in compliance in all
material
respects with all
statutory and
regulatory
requirements
under the Arms
Export Control Act (22
U.S.C. 2778),
the International Traffic in Arms
Regulations (22
C.F.R. ss. 120 et seq.), the Export Administration
Regulations (15 C.F.R.
ss. 730 et seq.) and associated executive orders,
and
the Laws implemented by the Office of Foreign Assets Controls, United
States Department of the Treasury (collectively the "Export Control
Laws").
Neither the
Company nor any of its Subsidiaries has received any
communication that
alleges that the Company or a Subsidiary is not, or may
not
be, in compliance
with, or has, or may
have, any material
liability
under, the Export Control Laws.
(c) The Company and its Subsidiaries are in compliance in all
material
respects with all
statutory and regulatory requirements under (i) the
anti-bribery
provisions of the
Foreign Corrupt
Practices Act (15
U.S.C.
ss.ss. 78dd-1 and
78dd-2), (ii) the
books and records
provisions of the
Foreign Corrupt Practices Act as they relate to any payment in
violation of
the
anti-bribery provisions of the Foreign Corrupt Practices Act, (iii)
the
Organization for Economic Cooperation and Development
Convention
Against
Bribery of Foreign Public Officials in International Business Transactions
and
(iv) local
anti-corruption and
bribery laws in jurisdictions in which
the
Company and the Company Subsidiaries are operating (collectively, the
"Anti-Bribery Laws").
Neither the Company
nor any of its Subsidiaries has
received any communication that alleges that the Company,
a Subsidiary or
any
agent thereof is, or may be, in violation of, or has, or may have,
any
material liability under, the Anti-Bribery Laws.
Section 3.12. Environmental Matters. Except as disclosed in the
Company SEC
Documents or as set forth in Section 3.12 of the Company
Disclosure Letter,
(i)
Hazardous Materials
(as hereinafter defined) have not at any time been
generated, used,
treated or stored on, or transported to or from or released or
disposed of on
any Company Property (as hereinafter defined) or, to the
knowledge of the
Company, any property adjoining or adjacent to any
Company
Property, except in
material compliance with Environmental Laws (as hereinafter
defined) and so as not to give rise to an Environmental Claim (as hereinafter
defined), (ii) the
Company and each of its Subsidiaries is in compliance in all
material respects
with all Environmental Laws and the requirements of any
Permits issued
under such Environmental Laws with respect to any Company
Property, (iii) there
are no past, pending or, to the Knowledge of the Company,
threatened
Environmental Claims
against the Company or any of its Subsidiaries
or any Company Property, (iv) there are no facts or circumstances,
conditions or
occurrences regarding
any Company Property or, to the Knowledge of the Company,
any property adjoining
or adjacent to any Company Property, that is reasonably
likely (A) to form the basis of an Environmental Claim against the Company or
any of its
Subsidiaries or any
Company Property or
(B) to cause such
Company
Property to be subject to any restrictions on its ownership,
occupancy,
use or
transferability under
any Environmental
Law, (v) there are not now and
never
have been any underground storage tanks located on any
Company Property or,
to
the Knowledge
of the Company, on any property adjoining or adjacent to any
Company Property
and (vi) no Company Property is listed on the National
Priorities List or the Comprehensive Environmental Response, Compensation and
Liability
Information System
promulgated
pursuant
to the Comprehensive
Environmental
Response, Compensation
and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq. or state equivalent lists and laws.
For
purposes of this Agreement, the following terms shall have the
following
meanings: (i)
"Company Property means any real property and
improvements at any
time owned,
leased, used, operated or occupied by the
Company or any of its
Subsidiaries; (ii)
"Hazardous Materials"
means (A) any
petroleum or petroleum
products, radioactive
materials,
asbestos in any
form
that is friable, urea formaldehyde foam insulation, dielectric fluid containing
levels of polychlorinated biphenyls, and radon gas; (B) any
chemicals, materials
or substances
defined
as or included in the definition of "hazardous
substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous
substances,"
"restricted
hazardous wastes,"
"toxic substances," "toxic
pollutants," or words of similar import, under any applicable
Environmental Law;
and (C) any other
chemical, material or substance, exposure to which is
prohibited,
limited or
regulated by any governmental authority; (iii)
"Environmental Law"
means any federal, state or local statute, law, rule,
regulation, ordinance,
code, policy or rule of common law in effect and in each
case as amended as of the date hereof and the Effective
Time, and any judicial
or administrative interpretation thereof as of the date hereof and
the Effective
Time, including
any judicial or administrative order, consent decree or
judgment, relating to
the environment,
health, safety or
Hazardous Materials,
including the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended, 42 U.S.C. ss.9601 et seq.; the Resource
Conservation
and Recovery
Act, as amended,
42 U.S.C. ss.6901 et seq.; the Federal Water
Pollution Control
Act, as amended, 33 U.S.C. ss.1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean Air
Act, 42 U.S.C.
ss. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 3808 et seq.; the
Occupational Safety
and Health Act, 29 U.S.C. ss.ss. 651 - 678 (1999); and
the
Oil Pollution Act, 33 U.S.C. ss.ss. 2701 - 2706 (1999); and
(iv) "Environmental
Claims means any and all administrative, regulatory or judicial actions,
suits,
demands, demand
letters, claims,
liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any
Environmental Law (for
purposes of this subclause (iv), "Claims") or any permit issued
under any such
Environmental Law,
including (A) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response,
remedial or
other actions or damages pursuant to any applicable
Environmental
Law and (B)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from
Hazardous Materials
or arising from alleged injury or threat of injury to
health, safety or the environment.
Section 3.13. Employees and Labor.
(a) Section
3.13 of the Company
Disclosure
Letter sets forth (i)
a
true
and complete list of all collective bargaining Contracts and similar
labor union Contracts to which the Company or any of its
Subsidiaries is a
party or is otherwise
bound, (ii) a true and
complete list of all current
or
pending arbitrations
to which any
collective
bargaining
Contract or
similar labor union
Contract is applicable
or relating to any labor union
or
similar organization or any member thereof. No other collective
bargaining Contracts or similar labor union Contracts with the
employees or
their representatives and/or the trade unions exist and/or are
applied with
the
Company other than those disclosed in Section 3.13 of the Company
Disclosure Letter.
Except to the extent covered by a collective bargaining
Contract or similar
labor union
Contract as set forth
on Section 3.13 of
the
Company Disclosure
Letter, (A) none of the employees of the Company or
any
of its Subsidiaries
(the "Employees") is represented in his or her
capacity as an Employee by any labor union or similar organization,
(B) the
Company and its Subsidiaries have not recognized any labor
organization as
the
collective bargaining agent of any Employees with respect to
employment
with
the Company or any of its Subsidiaries and (C) after January
1, 2002,
no
labor union or
similar organization has attempted to organize or
otherwise made a claim
to represent the
Employees and no such action is
pending or threatened.
After January 1, 2002,
neither the Company nor any
of
its Subsidiaries
has experienced any lockout or work slowdown or
stoppage, and
there is no labor
dispute or work slowdown or stoppage
pending, or, to the
Knowledge of the Company, threatened, against or
affecting the Company or any of its Subsidiaries.
(b) (i) Each of the Company and its Subsidiaries is, and at all
times
since January 1, 2002,
has been, in
compliance in all
material respects
with
all federal, state or
other applicable laws respecting employment and
employment practices,
terms and conditions of employment and wages and
hours, and has not and is not engaged in any unfair labor
pract
