Exhibit 10.1
AGREEMENT AND PLAN OF
MERGER
among
TravelCenters of America,
Inc.
Hospitality Properties
Trust
HPT TA Merger Sub Inc.
and
Oak Hill Capital Partners,
L.P.
September 15, 2006
TABLE OF
CONTENTS
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Page
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ARTICLE I DEFINITIONS
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1
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Section 1.01. Certain
Definitions
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1
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ARTICLE II THE MERGER
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6
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Section 2.01. The Merger
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6
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Section 2.02. Effect of
Merger
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6
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Section 2.03. Additional
Actions
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6
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Section 2.04. Certificate of
Incorporation By-laws, Directors and Officers of the Surviving
Corporation
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7
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Section 2.05. Effect of Merger on
Capital Stock of Constituent Corporations
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7
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Section 2.06. Effect of Merger on
Company Stock Options and Company Warrants
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9
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Section 2.07. Withholding
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10
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ARTICLE III PAYMENT OF MERGER
CONSIDERATION
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10
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Section 3.01. Merger
Consideration
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10
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Section 3.02. Post-Closing
Adjustment of Merger Consideration
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11
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Section 3.03. Escrow Agreement and
Escrow Fund
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14
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Section 3.04. Exchange of
Certificates Representing Company Securities
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14
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
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16
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Section 4.01.
Organization
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16
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Section 4.02.
Subsidiaries
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17
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Section 4.03.
Capitalization
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17
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Section 4.04.
Authorization
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18
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Section 4.05. No
Violation
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18
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Section 4.06. Approvals
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19
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Section 4.07. Financial
Statements
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19
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Section 4.08. Absence of Certain
Transactions
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20
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Section 4.09. Taxes
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21
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Section 4.10. Litigation
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23
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Section 4.11. Environmental
Matters
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23
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Section 4.12. Title to
Property
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25
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Section 4.13. Condition of
Property
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26
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Section 4.14. Contracts
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26
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Section 4.15. Employee and Labor
Matters and Plans
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27
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Section 4.16. Insurance
Policies
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30
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Section 4.17. Intellectual
Property
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30
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Section 4.18. Permits
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30
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Section 4.19. Compliance with
Laws
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31
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Section 4.20. Brokerage
Fees
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31
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Section 4.21. Affiliate
Agreements
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31
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Section 4.22. No Other
Representations or Warranties
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31
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i
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
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32
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Section 5.01.
Organization
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32
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Section 5.02.
Authorization
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32
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Section 5.03. No
Violation
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32
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Section 5.04. Approvals
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33
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Section 5.05. Litigation
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33
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Section 5.06. Available
Funds
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33
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Section 5.07. Brokerage
Fees
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34
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Section 5.08. No Other
Representations or Warranties
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34
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ARTICLE VI COVENANTS
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34
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Section 6.01. Interim Operations of
the Company
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34
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Section 6.02. Access to
Information
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36
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Section 6.03. Consents and
Approvals
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37
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Section 6.04. Employment
Matters
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38
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Section 6.05. Publicity
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39
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Section 6.06. Notification of
Certain Matters
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40
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Section 6.07. Directors’ and
Officers’ Indemnification
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40
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Section 6.08. Additional
Agreements
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41
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Section 6.09. Cooperation with
Financing
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41
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Section 6.10. Conduct of Business of
Parent and Merger Sub Pending the Merger
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42
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Section 6.11. No Adverse Change in
Financial Commitments
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42
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Section 6.12. Termination of
Affiliate Contracts
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42
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Section 6.13. Stockholder Approval;
Stockholder Notice
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43
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Section 6.14. No Solicitation or
Negotiation
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43
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Section 6.15. Repayment of
Outstanding Indebtedness
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43
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Section 6.16.
Consultation
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44
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Section 6.17. Real Property
Matters
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44
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Section 6.18. Additional Financial
Statements
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44
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Section 6.19. No Control of Other
Party’s Business
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45
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ARTICLE VII CONDITIONS
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45
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Section 7.01. Conditions to the
Obligations of All Parties
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45
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Section 7.02. Conditions to the
Obligations of Parent and Merger Sub
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45
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Section 7.03. Conditions to the
Obligations of the Company
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46
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ARTICLE VIII CLOSING; TERMINATION
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47
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Section 8.01. Closing
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47
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Section 8.02. Termination
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48
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Section 8.03. Effect of
Termination
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48
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ARTICLE IX GENERAL PROVISIONS
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49
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Section 9.01. Non-Survival of
Representations and Warranties
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49
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Section 9.02. Costs and
Expenses
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49
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Section 9.03. Notices
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49
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ii
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Section 9.04. Stockholders
Representative
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51
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Section 9.05.
Counterparts
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51
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Section 9.06. Entire
Agreement
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51
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Section 9.07. Governing Law;
Exclusive Jurisdiction
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51
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Section 9.08. Third Party Rights;
Assignment
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52
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Section 9.09. Waivers and
Amendments
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52
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Section 9.10. Schedules
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52
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Section 9.11. Enforcement
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52
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Section 9.12. [Reserved.]
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53
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Section 9.13. Headings;
Interpretation
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53
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Section 9.14. Nonliability of
Trustees
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53
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iii
The Disclosure Schedules to the
Agreement and Plan of Merger have been omitted and will be
supplementally furnished to the Securities and Exchange Commission
upon request.
iv
INDEX OF DEFINED
TERMS
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Accounting Firm
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12
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Actual Balance Sheet
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11
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Actual Net Working
Capital
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11
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Additional Financial
Statements
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44
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Additional Transaction
Bonuses
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1
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Affiliate
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2
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Agreement
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1
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Antitrust Division
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37
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Balance Sheet Date
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19
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Certificate of Merger
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6
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Certificates
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14
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Closing
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47
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Closing Date
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2
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Closing Transaction Bonus Payout
Amount
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10
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Code
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2
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Company
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1
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Company Balance Sheet
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19
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Company Closing Costs
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2
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Company Common Stock
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2
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Company Material Adverse
Effect
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2
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Company Preferred Stock
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17
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Company Securities
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13
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Company Stock
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2
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Company Stock Option
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9
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Company Stock Option Exercise
Price
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9
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Company Subsidiary
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2
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Company Warrant
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2
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Company Warrant Exercise
Price
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9
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Confidentiality Agreement
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36
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Constituent Corporations
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6
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Covered Parties
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40
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Covered Party
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40
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D&T
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12
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Dataroom
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3
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Declaration
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53
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DGCL
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1
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Dissenting Shares
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8
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Effective Time
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3
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Employee Plan
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27
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Environmental Law
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3
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Environmental Permit
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3
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ERISA
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3
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ERISA Affiliate
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3
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Escrow Agent
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14
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Escrow Agreement
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14
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Escrow Amount
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14
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Escrow Fund
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14
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Estimated Merger
Consideration
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11
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Estimated Net Working
Capital
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11
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Estimated Per Share Merger
Consideration
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11
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Excess Payment
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13
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Exchange Act
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3
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Exchange Agent
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14
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Exchange Fund
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14
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Final Statement
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13
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Financial Statements
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19
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Financing
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33
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Financing Commitment
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33
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FIRPTA Certificate
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15
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FTC
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37
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Fully Diluted Basis
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3
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GAAP
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3
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Good Faith Deposit
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47
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Governmental Antitrust
Authority
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37
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Governmental Entity
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3
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Hazardous Materials
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3
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HSR Act
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3
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Indebtedness
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4
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Intellectual Property
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30
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Intercompany Indebtedness
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4
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Interest Factor
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4
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IRS
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4
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Judgment
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4
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knowledge
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4
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Law
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4
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Leased Premises
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25
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Letter of Transmittal
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14
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Liabilities
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4
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Lien
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4
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Material Contracts
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27
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Merger
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1
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Merger Consideration
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10
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Merger Sub
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1
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Net Working Capital
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11
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Notice of Disagreement
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12
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Oak Hill
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1
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|
v
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Owned Property
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25
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Parent
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1
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Parent Closing Costs
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4
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Payment Shortfall
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13
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Per Share Merger
Consideration
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11
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Permits
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5
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Person
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5
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Proceeding
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5
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PWC
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44
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Recipients
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13
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Requisite Regulatory
Approvals
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5
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SEC
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5
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Secretary of State
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6
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Securities
|
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41
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Securities Act
|
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5
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Special Costs
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5
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|
Stock Option Plan
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9
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|
Stockholder Approval
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5
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Stockholder Notice
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43
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|
Stockholders
|
|
1
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|
|
Stockholders Agreement
|
|
5
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Stockholders
Representative
|
|
1
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|
Subsidiary
|
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5
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Surveys
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26
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|
Surviving Corporation
|
|
6
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|
Target Net Working
Capital
|
|
5
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|
Tax Return
|
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23
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|
Taxes
|
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23
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Transaction Bonus
Agreements
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6
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|
Warrant Agreement
|
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6
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|
Working Capital Adjustment
Amount
|
|
11
|
|
|
Working Capital Statement
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|
11
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|
Written Consent
|
|
1
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AGREEMENT AND PLAN OF
MERGER
This AGREEMENT AND PLAN OF
MERGER (the “ Agreement ”), dated September
15, 2006, among TravelCenters of America, Inc., a Delaware
corporation (the “ Company ”), Hospitality
Properties Trust, a Maryland real estate investment trust (“
Parent ”), HPT TA Merger Sub Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent (“
Merger Sub ”), and Oak Hill Capital Partners, L.P., a
Delaware limited partnership (“ Oak Hill ”),
solely in its capacity as the representative for the stockholders
of the Company as further provided herein (in such capacity, the
“ Stockholders Representative ”).
WHEREAS , the Board of Directors of the Company has
(i) determined that it is in the best interests of the Company
and the stockholders of the Company, and declared it advisable, to
enter into this Agreement with Parent and Merger Sub providing for
the merger (the “ Merger ”) of Merger Sub with
and into the Company in accordance with the General Corporation Law
of the State of Delaware (the “ DGCL ”), upon
the terms and subject to the conditions set forth herein,
(ii) approved this Agreement in accordance with the DGCL, upon
the terms and subject to the conditions set forth herein, and
(iii) resolved to recommend adoption of this Agreement by the
stockholders of the Company;
WHEREAS , the Boards of Directors of Parent and Merger
Sub have each approved, and the Board of Directors of Merger Sub
has declared it advisable for Merger Sub to enter into, this
Agreement providing for the Merger in accordance with the DGCL,
upon the terms and subject to the conditions set forth herein;
and
WHEREAS , simultaneously herewith, each of the
stockholders of the Company listed on Schedule 4.04(b)
hereto (the “ Stockholders ”), who collectively
own in excess of 90% of the voting power of the Company, will
execute and deliver a written consent (the “ Written
Consent ”) (i) approving this Agreement, the Merger and
the other transactions contemplated hereby, and (ii) designating
Oak Hill as the Stockholders Representative.
NOW, THEREFORE
, in consideration of the premises
and the mutual covenants and agreements of the parties hereto
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, and
subject to the satisfaction or waiver of the conditions hereof, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain
Definitions .
Certain terms used in this Agreement
and the Schedules hereto are defined as follows:
“ Additional Transaction
Bonuses ” means the transaction bonuses granted by the
Company to senior executives of the Company between the date hereof
and the Closing Date.
1
“ Affiliate ” of
a Person shall mean another Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person.
“ Closing Date ”
shall mean the date on which the Closing occurs.
“ Code ” shall
mean the Internal Revenue Code of 1986, as amended.
“ Company Closing Costs
” shall mean (i) any and all costs and expenses of the
Company or its Affiliates incurred prior to the Effective Time in
connection with, or as a result of or related to, the sale process
with respect to the Company and the negotiation, preparation,
execution and closing of the transactions contemplated hereby,
including, but not limited to, the fees and expenses of all
professional advisors, investment bankers, brokers, accountants,
attorneys, consultants, engineers and representatives of the
Company or its Affiliates and (ii) the amount of any Additional
Transaction Bonuses; provided , however , any Special
Costs shall not be deemed to be, or included in the calculation of,
Company Closing Costs.
“ Company Common Stock
” shall mean the Common Stock, $0.0001 par value per share,
of the Company.
“ Company Material Adverse
Effect ” shall mean any change or effect that is
materially adverse to the business, properties, assets, financial
condition or results of operations of the Company and the Company
Subsidiaries taken as a whole, other than any change or effect
resulting from (i) changes in general economic conditions,
(ii) general changes or developments in the industries in
which the Company and the Company Subsidiaries operate, including
changes in refined product margin, (iii) the announcement of
this Agreement and the transactions contemplated hereby, including
any termination of, reduction in or similar negative impact on
relationships, contractual or otherwise, with any customers,
suppliers, distributors, partners or employees of the Company and
the Company Subsidiaries, or the performance of this Agreement and
the transactions contemplated hereby, including compliance with the
covenants set forth herein, (iv) changes in any Tax Laws or
applicable accounting regulations or principles or (v) any
attack on, or by, outbreak or escalation of hostilities or acts of
terrorism involving, the United States, any declaration of war by
the United States or any other national or international calamity,
unless, in the case of the foregoing clauses (i) and (ii), such
changes referred to therein have a materially disproportionate
effect on the Company and the Company Subsidiaries taken as a whole
relative to other participants in the industries in which the
Company and the Company Subsidiaries operate.
“ Company Stock ”
shall mean all shares of the Company’s capital stock
authorized, issued or outstanding prior to the Effective Time, of
whatever class or series, including all of the Company Common
Stock.
“ Company Subsidiary
” shall mean any Subsidiary of the Company.
“ Company Warrant
” shall mean each Initial Warrant or Contingent Warrant (as
defined in the Warrant Agreement) issued by the Company to purchase
shares of Company Common Stock.
2
“ Dataroom ”
shall mean the online data rooms (Intralinks and ENFOS) established
by Lehman Brothers for purposes of the transactions contemplated by
this Agreement.
“ Effective Time
” shall mean such date and time as mutually agreed by the
parties hereto and set forth in the Certificate of
Merger.
“ Environmental Law
” shall mean any and all applicable Laws of any Governmental
Entity relating to protection of natural resources, the environment
or human health (as relating to exposure to hazardous or toxic
substances, materials or chemicals including petroleum, gasoline,
diesel fuel, asbestos and polychlorinated biphenyls).
“ Environmental Permit
” shall mean any license, permit, authorization or
registration required by any Environmental Law for the operation of
business of the Company or any Company Subsidiary.
“ ERISA ” shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“ ERISA Affiliate
” shall mean each trade or business (whether or not
incorporated) which together with the Company would be deemed to be
a ‘single employer’ within the meaning of Section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of
Section 414 of the Code.
“ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“ Fully Diluted Basis
” means, when used with respect to the outstanding number of
shares of Company Stock as of any date, the sum of (i) all shares
of Company Stock outstanding on that date plus (ii) the
number of shares of Company Common Stock issuable upon the
exercise, exchange or conversion of (A) all Company Stock Options
vested prior to the date hereof and vesting and exercisable at the
Effective Time pursuant to their terms and (B) the Company
Warrants.
“ GAAP ” shall
mean United States generally accepted accounting principles
consistently applied.
“ Governmental Entity
” shall mean any federal, state, local or foreign government
or political subdivision thereof, or any court, administrative
agency or commission, or other governmental authority or
instrumentality or any subdivision thereof.
“ Hazardous Materials
” shall mean any substance, material, waste, pollutant, or
contaminant that is regulated as toxic or hazardous or other term
of similar regulatory import or that is subject to remedial,
investigatory or reporting obligations under any Environmental Law
including petroleum and petroleum products (including oil, gasoline
and diesel fuel), friable asbestos and polychlorinated
biphenyls.
“ HSR Act ” shall
mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
3
“ Indebtedness ”
means, with respect to the Company and the Company Subsidiaries,
without duplication and exclusive of Intercompany Indebtedness, all
indebtedness for borrowed money, including the aggregate principal
amount of, and any accrued interest and applicable prepayment
charges or premiums (including any “make-whole” or
similar premium or penalty payable in connection with redemption or
otherwise extinguishing such indebtedness whether or not then due)
with respect to all borrowed money, purchase money financing and
capitalized lease obligations.
“ Intercompany
Indebtedness ” means, with respect to the Company and the
Company Subsidiaries, all outstanding Indebtedness owed by the
Company or any Company Subsidiary to the Company or any other
Company Subsidiary.
“ Interest Factor
” means an amount equal to the Merger Consideration
(calculated excluding the Interest Factor) times the interest rate
set forth in Schedule 1.01 hereto (accruing on a per diem
basis), compounded monthly, for the period, if any, from and
including February 1, 2007 to and including the Closing
Date.
“ IRS ” shall
mean the United States Internal Revenue Service, or any successor
agency thereto.
“ Judgment ”
shall mean any and all judgments, orders, writs, directives,
rulings, decisions, injunctions (temporary, preliminary or
permanent), decrees or awards of any Governmental
Entity.
“ knowledge ” in
the phrase “ to its knowledge ” or a similar
phrase, when used to qualify a representation of a party, shall be
deemed to be the actual knowledge, after reasonable investigation,
of (i) the individuals listed on Schedule 1.01(a)
hereto, if the Company is making such representation, and (ii) the
individuals listed on Schedule 1.01(b) hereto, if Parent or
Merger Sub is making such representation, in each case, at the time
such representation is made.
“ Law ” shall
mean all laws (whether statutory or otherwise), ordinances, codes,
rules, regulations and Judgments of all Governmental
Entities.
“ Liabilities ”
shall mean any liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, whether due or to
become due.
“ Lien ” shall
mean, with respect to any property or asset, any mortgage, pledge,
security interest, lien (statutory or other), charge, encumbrance
or other similar restrictions or limitations of any kind or nature
whatsoever on or with respect to such property or asset.
“ Parent Closing Costs
” shall mean any and all costs and expenses of Parent, Merger
Sub or their Affiliates incurred in connection with, or as a result
of, the negotiation, preparation, execution and closing of the
transactions contemplated hereby, including, but not limited to,
the fees and expenses of all professional advisors, investment
bankers, brokers, accountants, attorneys, consultants, engineers
and representatives of Parent, Merger Sub or their
Affiliates.
4
“ Permits ” shall
mean all franchises, licenses, authorizations, approvals, permits
(excluding Environmental Permits), consents or other rights granted
by any Governmental Entity and all certificates of convenience or
necessity, immunities, privileges, licenses, concessions, consents,
grants, ordinances and other rights, of every character whatsoever
required for the conduct of business and the use of properties by
the Company and the Company Subsidiaries as currently conducted or
used.
“ Person ” shall
mean any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or other
entity or government or any agency or political subdivision
thereof.
“ Proceeding ”
shall mean any action, claim, suit, or legal, administrative,
arbitration or other alternative dispute resolution proceeding or
investigation.
“ Requisite Regulatory
Approvals ” shall mean all permits, approvals, consents
and filings required to be obtained or made with or by any
Governmental Entity under any Law or Judgment, and all waiting
periods required to expire prior to the Merger under applicable
Laws, including notifications, approvals and filings pursuant to
the HSR Act.
“ SEC ” shall
mean the Securities and Exchange Commission.
“ Securities Act
” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
“ Special Costs ”
shall mean (i) any costs incurred by the Company related to the
Evaluation of Environmental Liabilities Associated with
TravelCenters of America, dated August 2006, prepared by Environ
International Corporation, (ii) any and all costs and expenses
incurred by the Company in connection with any title searches,
title insurance commitments or title insurance policies, including
endorsements, obtained in connection with the Merger or the
Financing, and (iii) any and all out of pocket costs and expenses,
as specifically requested or approved by Parent or Merger Sub in
writing, (x) paid by the Company or any Company Subsidiary prior to
the Effective Time or (y) accrued by the Company or any Company
Subsidiary on the Actual Balance Sheet, in order for the Company or
any Company Subsidiary to comply with its obligations pursuant to
Section 6.09 or otherwise.
“ Stockholder Approval
” shall mean the adoption and approval of this Agreement and
the Merger by the affirmative vote of or the written consent by the
holders of a majority of outstanding shares of all classes of the
Company Stock voting together as a single class.
“ Stockholders
Agreement ” shall mean the Stockholders’ Agreement,
dated as of November 14, 2000, as amended, among the Company, the
Stockholders Representative, the other Stockholders and the other
parties thereto.
“ Subsidiary ”
shall mean, in respect of any specified Person, any company or
other entity of which 50% or more of the outstanding share capital
or other equity interest is owned, directly or indirectly, by such
specified Person.
“ Target Net Working
Capital ” shall mean $100,000,000.
5
“ Transaction Bonus
Agreements ” shall mean those agreements between the
Company and certain employees of the Company or a Company
Subsidiary set forth on Schedule 3.01(ix) .
“ Warrant Agreement
” shall mean that Warrant Agreement, dated as of November 14,
2000, as amended, between the Company and State Street Bank and
Trust Company, as warrant agent.
ARTICLE II
THE MERGER
Section 2.01. The
Merger .
On the Closing Date, subject to the
terms and conditions of this Agreement, Merger Sub shall be merged
with and into the Company in accordance with the DGCL, with the
Company being the surviving corporation (following the Merger, the
“ Surviving Corporation ”). The Company
and Merger Sub are sometimes collectively referred to as the
“ Constituent Corporations .” The Merger
shall be effective at the Effective Time when a Certificate of
Merger, together with any other documents required by the Laws of
the State of Delaware to effectuate the Merger (collectively, the
“ Certificate of Merger ”), properly executed
shall be filed with the Secretary of State of the State of Delaware
(the “ Secretary of State ”), which filing shall
be made on the Closing Date, as provided for in
Section 8.01(a).
Section 2.02. Effect of
Merger .
By virtue of the Merger, as of the
Effective Time, all rights, privileges, immunities, powers and
purposes of the Company and Merger Sub, and all the property, real
and personal, including causes of action, and every other asset of
the Company and Merger Sub, shall vest in the Surviving
Corporation, without any further act or deed, and the separate
existence of Merger Sub shall cease and the corporate existence of
the Company as the Surviving Corporation and a corporation
organized under the DGCL shall continue unaffected and unimpaired
by the Merger. The Surviving Corporation shall assume and be
liable for all the Liabilities, obligations and penalties of the
Company and Merger Sub. No liability or obligation due or to
become due, and no claim or demand for any cause of action existing
against either the Company or Merger Sub, or any stockholder,
officer or director thereof, shall be released or impaired by the
Merger. No Proceeding, whether civil or criminal, then
pending by or against either the Company or Merger Sub or any
stockholder, officer or director thereof, shall abate or be
discontinued as a result of or by the Merger, but may be enforced,
prosecuted, settled or compromised as if the Merger had not
occurred, or the Surviving Corporation may be substituted in such
Proceeding in place of either the Company or Merger Sub.
Section 2.03. Additional
Actions .
If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to (i) 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 the
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Company or Merger Sub acquired or to
be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or (ii) otherwise carry out the
purposes of this Agreement, the Company and its officers and
directors and Merger Sub and its officers and directors shall be
deemed to have granted the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such deeds, bills of
sale, assignments and assurances and to take and do all such other
actions and things as may be necessary or desirable to vest,
perfect or confirm any and all rights, title, properties or assets
in the Surviving Corporation or to otherwise carry out the purposes
of this Agreement; and the officers and directors of the Surviving
Corporation are fully authorized in the name of the Company and of
Merger Sub or otherwise to take any and all such
actions.
Section 2.04.
Certificate of
Incorporation By-laws, Directors and Officers of the Surviving
Corporation .
(a)
At the Effective Time, the
certificate of incorporation of the Surviving Corporation shall,
subject to the requirements of Section 6.07(b) hereof, be amended
to read in its entirety as the certificate of incorporation of
Merger Sub read immediately prior to the Effective Time, except
that the name of the Surviving Corporation shall be TravelCenters
of America, Inc. and the provision in the certificate of
incorporation of Merger Sub naming its incorporator shall be
omitted.
(b)
At the Effective Time, the by-laws
of the Surviving Corporation shall, subject to the requirements of
Section 6.07(b) hereof, be amended so as to read in their entirety
as the by-laws of Merger Sub as in effect immediately prior to the
Effective Time, until thereafter amended in accordance with
applicable Law, except the references to Merger Sub’s name
shall be replaced by references to TravelCenters of America,
Inc.
(c)
The directors of the Company
immediately prior to the Effective Time shall submit their
resignations to be effective as of the Effective Time.
Immediately after the Effective Time, Parent shall take the
necessary action to cause the directors of Merger Sub immediately
prior to the Effective Time to 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
applicable Law. The officers of the Company immediately prior
to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office until the earlier of
their resignation or removal.
Section 2.05. Effect of
Merger on Capital Stock of Constituent Corporations
.
At the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any
class of capital stock of the Constituent Corporations, the
following shall occur:
(a)
Conversion of Company
Stock . Each share
of Company Stock issued and outstanding immediately prior to the
Effective Time (other than (x) shares to be canceled pursuant to
Section 2.05(c) and (y) Dissenting Shares) shall, at the Effective
Time, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive cash
from Parent in an amount equal to the Per Share Merger
Consideration payable to
7
the holder thereof, without interest
thereon, upon the surrender of the certificate previously
representing such share of Company Common Stock.
(b)
Shares of Merger Sub
. Each share of the common
stock, $0.01 par value per share, of Merger Sub, issued and
outstanding immediately prior to the Effective Time, shall, at the
Effective Time, by virtue of the Merger and without any action on
the part of Merger Sub or any other Person, be converted into one
fully paid and nonassessable share of common stock, $0.01 par value
per share, of the Surviving Corporation.
(c)
Treasury Shares of Company;
Parent Owned Shares . All shares of Company Stock held in the
treasury of the Company and each share of Company Stock owned or
otherwise held by Parent, Merger Sub or any direct or indirect
wholly-owned subsidiary of Parent or the Company immediately prior
to the Effective Time shall be canceled and retired without any
conversion thereof and no payment or distribution shall be made
with respect thereto.
(d)
Shares of Dissenting
Stockholders .
(i)
Notwithstanding anything in this
Agreement to the contrary, any shares of Company Stock that are
issued and outstanding as of the Effective Time and that are held
by a holder who has properly exercised such holder’s
appraisal rights (the “ Dissenting Shares ”)
under the DGCL shall not be converted into the right to receive the
consideration provided for in this Section 2.05, unless and until
such holder shall have failed to perfect, or shall have effectively
withdrawn or lost, his or her right to dissent from the Merger
under the DGCL and to receive such consideration as may be
determined to be due with respect to such Dissenting Shares
pursuant to and subject to the requirements of the DGCL. If
any such holder shall have so failed to perfect or have effectively
withdrawn or lost such right, each share of such holder’s
Company Stock shall thereupon be deemed to have been converted into
and to have become, as of the Effective Time, the right to receive,
without any interest thereon, the consideration provided for in
this Section 2.05.
(ii)
The Company shall give Parent prompt
notice of any notice or demands for appraisal or payment for shares
of Company Stock received by the Company. The Company shall
not, without the prior written consent of Parent (not to be
unreasonably withheld), make any payment with respect to, or
settle, offer to settle or otherwise negotiate, with respect to any
such demands.
(iii)
Dissenting Shares, if any, after
payments of fair value in respect thereto have been made to the
holders thereof pursuant to the DGCL, shall be canceled.
(e)
Stock Transfer Books
. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall
be no further registration of transfers of shares of Company Stock
on the records of the Company. If, after the Effective Time,
certificates previously representing shares of Company Stock are
presented to the Surviving Corporation, they shall be canceled and
exchanged for cash pursuant to the provisions of this Section
2.05.
8
(f)
Cancellation and Retirement of
Shares of Company Stock . At and after the Effective Time, holders
of certificates which immediately prior to the Effective Time
represented outstanding shares of Company Stock shall cease to have
any rights as stockholders of the Company, except the right to
receive the cash into which their shares of Company Stock have been
converted by the Merger as provided in Section 2.05(a).
Section 2.06. Effect of
Merger on Company Stock Options and Company Warrants
.
(a)
At the Effective Time, each stock
option granted under the 2001 Stock Incentive Plan of TravelCenters
of America, Inc. (the “ 2001 Stock Option Plan
”) that is outstanding and unexercised at the Effective Time
(a “ Company Stock Option ”) shall be cancelled
at the Effective Time. In exchange for such cancellation, the
holder of such Company Stock Option shall receive the right to
payment from Parent immediately following the Effective Time
(subject to any applicable withholding taxes), in respect of the
portion of the Company Stock Option that is exercisable at the
Effective Time by its terms (prior to giving effect to such
cancellation), of an amount in cash equal to (1) the total
number of shares of Company Common Stock subject to such
exercisable portion of such Company Stock Option held by such
holder, multiplied by (2) the excess, if any, of the
Per Share Merger Consideration (calculated based on the Estimated
Merger Consideration, subject to subsequent adjustment pursuant to
Section 3.02) over the exercise price per share of the Company
Stock set forth in such Company Stock Option subject to such
exercisable portion of such Company Stock Option held by such
holder (such exercise price, the “ Company Stock Option
Exercise Price ”).
(b)
As soon as practicable following the
date of this Agreement, the Company shall use commercially
reasonable efforts to take such actions and obtain such consents as
are necessary under the Warrant Agreement to amend the Warrant
Agreement in order to provide that each Company Warrant that is
outstanding and unexercised at the Effective Time shall be
cancelled at the Effective Time. In exchange for such
cancellation, the holders of the Company Warrants shall receive the
right to payment from Parent immediately following the Effective
Time (subject to any applicable withholding taxes), of an amount in
cash equal to (1) the total number of shares of Company Common
Stock for which such Company Warrant was exercisable for
immediately prior to cancellation, multiplied by (2) the
excess of the Per Share Merger Consideration (calculated based on
the Estimated Merger Consideration, subject to subsequent
adjustment pursuant to Section 3.02) over the exercise price per
share of the Company Common Stock set forth in such Company Warrant
(such exercise price, the “ Company Warrant Exercise
Price ”). If the Warrant Agreement is not so
amended, immediately following the Effective Time, Parent shall
deposit with the Warrant Agent (as defined in the Warrant
Agreement) an amount equal to the excess of the Per Share Merger
Consideration (calculated based on the Estimated Merger
Consideration, subject to subsequent adjustment pursuant to Section
3.02) multiplied by the total number of shares of Company Common
Stock for which all Company Warrants were exercisable for
immediately prior to the Effective Time over the aggregate sum of
the Company Warrant Exercise Price for all Company Warrants
outstanding and unexercised immediately prior to the Effective
Time.
9
Section 2.07.
Withholding .
Each of Parent and the Surviving
Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person under this Article
II, such amounts as are required to be deducted and withheld under
any provision of applicable Law.
ARTICLE III
PAYMENT OF MERGER
CONSIDERATION
Section 3.01. Merger
Consideration .
The “ Merger
Consideration ” shall be an amount equal to:
(i)
One billion, nine hundred
twenty-five million Dollars ($1,925,000,000.00),
(ii)
plus the aggregate sum of the Company Stock Option
Exercise Price for all Company Stock Options (or portions thereof)
that are exercisable at the Effective Time by their
terms,
(iii)
plus the aggregate sum of the Company Warrant
Exercise Price for all Company Warrants,
(iv)
plus an amount equal to any Special Costs to the
extent paid prior to the Effective Time or accrued as a Liability
on the Actual Balance Sheet,
(v)
minus the aggregate amount of Indebtedness of the
Company and the Company Subsidiaries as of the close of business on
the day immediately preceding the Closing Date,
(vi)
minus the amount, if any, by which the Estimated Net
Working Capital (as defined below) is less than the Target Net
Working Capital;
(vii)
plus the amount, if any, by which the Estimated Net
Working Capital is greater than the Target Net Working
Capital;
(viii)
plus or minus
, as the case may be, the amount of
any upward or downward adjustment (if any) of the Merger
Consideration, respectively, pursuant to Section 3.02 in an
amount equal to the Working Capital Adjustment Amount (as defined
below),
(ix)
minus 50% of the aggregate amount of all amounts
payable to employees of the Company or a Company Subsidiary
pursuant to the Transaction Bonus Agreements (the “
Closing Transaction Bonus Payout Amount ”);
10
(x)
minus the amount of any Company Closing Costs to the
extent payable by the Company or a Company Subsidiary after the
close of business on the day immediately preceding the Closing
Date; and
(xi)
plus an amount equal to the Interest
Factor.
The “ Per Share Merger
Consideration ” shall be (A) the Merger
Consideration divided by (B) the aggregate number of
shares of Company Stock outstanding immediately prior to the
Effective Time (calculated on a Fully Diluted Basis). The
“ Estimated Merger Consideration ” and the
“ Estimated Per Share Merger Consideration ”
shall mean the Merger Consideration and the Per Share Merger
Consideration (in each case, calculated without giving effect to
Section 3.01(viii)) as estimated in good faith by the Company no
more than three (3) days prior to the Closing. Copies of
such estimates (and the Company’s calculation thereof) shall
be provided to Parent and Merger Sub prior to the Closing
Date.
Section
3.02.
Post-Closing Adjustment of
Merger Consideration .
(a)
Estimated Net Working
Capital . The
Company shall, concurrently with the delivery to Parent and Merger
Sub of its calculations of the Estimated Merger Consideration and
Estimated Per Share Merger Consideration, cause to be prepared and
delivered to Parent and Merger Sub a statement setting forth the
estimated calculation of the Net Working Capital (as defined below)
(the “ Estimated Net Working Capital ”) as of
the close of business on the day immediately preceding the Closing
Date. “ Net Working Capital ” shall mean
the current assets less the current liabilities of the Company and
the Company Subsidiaries, all as determined in accordance with GAAP
applied in a manner consistent with the Company Balance Sheet;
provided that, in determining Net Working Capital, the
following shall be excluded: (i) the current portion of any
Indebtedness; (ii) Company Closing Costs to the extent a deduct in
calculating the Merger Consideration pursuant to Section 3.01(x)
and (iii) the Closing Transaction Bonus Payout
Amount.
(b)
Actual Balance Sheet and Working
Capital Statement .
Within forty-five (45) days following the Closing Date, Parent
shall deliver to the Stockholders Representative and the Escrow
Agent a consolidated balance sheet of the Company and the Company
Subsidiaries as of the close of business on the day immediately
preceding the Closing Date prepared in accordance with GAAP applied
on a basis consistent with the Company Balance Sheet and shall
reflect a pro rata portion of all known adjustments which would be
required in a year-end closing of the books of the Company and the
Company Subsidiaries but shall not give effect to any changes in
accruals (including tax accruals with respect to the exercise or
cancellation of Company Stock Options between January 1, 2006 and
the Effective Time) for any items resulting from the
transactions contemplated hereby (the “ Actual Balance
Sheet ”). The Actual Balance Sheet shall be
accompanied by a statement, certified by the Chief Financial
Officer of the Surviving Corporation (the “ Working
Capital Statement ”), that sets forth in reasonable
detail the Actual Net Working Capital, the Working Capital
Adjustment Amount, and the final calculation of the Merger
Consideration. The “ Actual Net Working Capital
” shall mean the Net Working Capital of the Company and the
Company Subsidiaries as of the close of business on the day
immediately preceding the Closing Date. The “
Working Capital Adjustment Amount ” shall mean the
difference between the Estimated Net Working Capital and the Actual
Net
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Working Capital. The Surviving
Corporation shall give the Stockholders Representative reasonable
access to its books, records, work papers (including, to the extent
applicable, accountants’ work papers, subject to such
confidentiality restrictions as the Surviving Corporation’s
accountants shall reasonably request) and employees in connection
with the review by the Stockholders Representative of the Actual
Balance Sheet and the Working Capital Statement. In the
course of preparing the Actual Balance Sheet and the Working
Capital Statement, Parent may consult with the Stockholders
Representative in order to resolve any issues that otherwise might
become the subject of a dispute under
Section 3.02(c).
(c)
Dispute Resolution
. The Stockholders
Representative may dispute the calculation of the Actual Net
Working Capital, the Working Capital Adjustment Amount or the
calculation of the Merger Consideration set forth in the Working
Capital Statement by delivering a written notice (a “
Notice of Disagreement ”) to Parent, the
Surviving Corporation and the Escrow Agent within thirty
(30) days following the delivery of the Working Capital
Statement to the Stockholders Representative. Any Notice of
Disagreement delivered pursuant to this
Section 3.02(c) shall specify in reasonable detail the
nature and dollar amount of any disagreement so asserted. If
the Stockholders Representative fails to deliver a timely Notice of
Disagreement, Parent’s calculation of the Actual Net Working
Capital, the Working Capital Adjustment Amount or the calculation
of the Merger Consideration (as set forth in the Working Capital
Statement) shall be deemed the final Actual Net Working Capital,
the Working Capital Adjustment Amount and/or Merger Consideration,
as applicable. During the thirty (30) days following the
delivery of a Notice of Disagreement, Parent and the Stockholders
Representative shall seek in good faith to resolve in writing any
differences which they may have with respect to the matters
specified in the Notice of Disagreement and such final resolution
shall be the final Merger Consideration. If at the end of
such 30-day period, the parties are unable to resolve such dispute,
the parties shall submit the dispute to Deloitte & Touche LLP
(“ D&T ”) or, if D&T is unavailable,
another mutually satisfactory (to Parent and the Stockholders
Representative) independent “big-four” accounting firm
(the “ Accounting Firm ”) for its review
and resolution of all matters (but only such matters) which
remain in dispute and which were properly included in the Notice of
Disagreement, and the Accounting Firm shall make final
determinations of the Actual Net Working Capital, the Working
Capital Adjustment Amount and/or the Merger Consideration in
accordance with the guidelines and procedures set forth in this
Agreement. If the parties are unable to mutually agree on the
selection of the Accounting Firm, the “big-four”
accounting firm that is not D&T or the independent public
accountants of the Company and Parent shall serve as the Accounting
Firm. The parties will cooperate with the Accounting Firm
during the term of its engagement. In resolving any matters
in dispute with respect to any assets or liabilities as to which
both the Stockholders Representative and Parent have assigned
values, the Accounting Firm may not assign a value to any item in
dispute greater than the greatest value for such item assigned by
the Stockholders Representative, on the one hand, or by Parent, on
the other hand, or less than the smallest value for such item
assigned by the Stockholders Representative, on the one hand, or by
Parent, on the other hand. The Accounting Firm’s
determination will be based solely on presentations (including work
papers) by the Stockholders Representative and Parent or by their
respective representatives which are in accordance with the
guidelines and procedures set forth in this Agreement ( i.e.
, not on the basis of an independent review). The
determination of the Actual Net Working Capital, Working Capital
Adjustment Amount and the Merger Consideration shall become final
and binding on the parties and such determination of the Merger
Consideration shall be deemed the final Merger Consideration
on
12
the date the Accounting Firm
delivers to the Stockholders Representative, Parent and the
Surviving Corporation its final resolution in writing (such
resolution, the “ Final Statement ”) (and the
parties will direct the Accounting Firm to complete its
determination and deliver the Final Statement within thirty
(30) days following the submission of the disputed matters to
it). The fees and expenses of the Accounting Firm shall be
paid by (i) Parent if the final calculation of the Merger
Consideration, as set forth in the Final Statement, is greater than
the amount of the Merger Consideration as set forth in the Working
Capital Statement and (ii) the holders of shares of Company Stock,
Company Stock Options and the Company Warrants (collectively, the
“ Company Securities ”) (but only such holders
of Company Stock Options all or a portion of which are exercisable
at the Effective Time by their terms) on a pro rata basis based
upon their respective percentages of the Merger Consideration, if
the final calculation of the Merger Consideration, as set forth in
the Final Statement, is less than or equal to the amount of the
Merger Consideration as set forth in the Working Capital
Statement. To the extent such fees and expenses of the
Accounting Firm are payable by the holders of the Company
Securities, such fees and expenses shall be paid using the funds
deposited into the Escrow Fund to the extent such holders are
entitled to such funds.
(d)
Payment of Adjustment to Merger
Consideration .
(i) Excess Payment . If
the Estimated Merger Consideration is greater than the
Merger Consideration as finally determined pursuant to this Section
3.02 (such difference, an “ Excess Payment ”),
then an aggregate amount equal to such Excess Payment shall be
distributed to Parent from the Escrow Fund (after deducting any
applicable fees and expenses of the Accounting Firm payable by
Parent (if any) in accordance with Section 3.02(c)). Any
remaining funds in the Escrow Fund (after deducting any applicable
fees and expenses of the Accounting Firm payable by the holders of
the Company Securities (if any) in accordance with Section 3.02(c))
shall be distributed to the holders of the Company Securities
eligible to receive such distributions from the Escrow Fund as
determined based on the final Per Share Merger Consideration (such
holders collectively, the “ Recipients ”)
pursuant to the Escrow Agreement. If the Excess Payment
exceeds the aggregate amount of the Escrow Fund, then each
Recipient entitled to receive distributions from the Escrow Fund
shall, on demand, pay to Parent a pro rata amount of such excess
based upon their respective rights to receive the Merger
Consideration.
(ii) Payment Shortfall
. If the Estimated Merger Consideration is less than
the final Merger Consideration (such difference, a “
Payment Shortfall ”), then (A) Parent shall pay to the
holders of Company Securities an aggregate amount (after deducting
any applicable fees and expenses of the Accounting Firm payable by
the holders of the Company Securities (if any) in accordance with
Section 3.02(c)) equal to the Payment Shortfall, to be distributed
based on their respective rights to receive the Merger
Consideration and (B) each Recipient, as appropriate and depending
upon such Recipient’s interest in and to the Escrow Fund,
shall receive from such fund such Recipient’s relative
interest in the Escrow Fund pursuant to the Escrow
Agreement.
(iii) Distributions .
The parties hereto agree that any and all distributions which are
required to be made from the Escrow Fund under this Section 3.02
shall be made in accordance with the Escrow Agreement.
13
Section
3.03.
Escrow Agreement and Escrow
Fund .
At or prior to the Closing, Parent,
the Company, the Stockholders Representative and The Bank of New
York (the “ Escrow Agent ”) shall enter into an
Escrow Agreement on mutually agreeable terms consistent with the
terms of this Agreement or as may be acceptable to the parties
thereto (the “ Escrow Agreement ”). The
Escrow Agreement shall provide for the creation of an escrow fund
(the “ Escrow Fund ”) consisting of Ten Million
Dollars ($10,000,000) of the Merger Consideration (the “
Escrow Amount ”) to be applied to any downward
adjustment of the Merger Consideration pursuant to Section
3.02. The Escrow Agreement shall contain provisions with
respect to the timing and procedure of distributions of funds from
the Escrow Fund consistent with the terms hereof.
Section
3.04.
Exchange of Certificates
Representing Company Securities .
(a)
Exchange Agent
. Immediately following the
Effective Time (but in any event on the Closing Date), Parent shall
deposit with an exchange agent selected by the Parent and
reasonably acceptable to the Company (the “ Exchange
Agent ”), for the benefit of the holders of Company
Securities (other than the Company Warrants if they have not been
amended), for exchange in accordance with this Agreement, an amount
equal to (i) the Estimated Merger Consideration minus
(ii) the Escrow Amount, minus (iii) the product of (A)
the Per Share Merger Consideration (calculated based on the
Estimated Merger Consideration) and (B) the total number of
Dissenting Shares, and, if the Company Warrants have not been
amended, minus (iv) an amount equal to the excess, if any,
of the Per Share Merger Consideration (calculated based on the
Estimated Merger Consideration) multiplied by the total
number of shares of Company Common Stock for which all Company
Warrants were exercisable for immediately prior to the Effective
Time over the aggregate sum of the Company Warrant Exercise Price
for all Company Warrants outstanding and unexercised immediately
prior to the Effective Time (the “ Exchange Fund
”) (it being understood that any adjustment to the Estimated
Merger Consideration pursuant to Section 3.02 shall be paid in
accordance with such section). Immediately following the
Effective Time (but in any event on the Closing Date), Parent shall
deposit the Escrow Amount with the Escrow Agent, which shall be
held and disbursed by the Escrow Agent in accordance with the
Escrow Agreement. Promptly after the Effective Time, the
Exchange Agent shall mail to each record holder of an outstanding
certificate, certificates or instruments as of the Effective Time
(other than instruments representing Company Warrants, if they have
not been amended) which immediately prior to the Effective Time
represented Company Securities (the “ Certificates
”), a letter of transmittal and instructions for use in
effecting the surrender of the Certificates for payment therefor
(collectively, the “ Letter of Transmittal ”),
which Letter of Transmittal shall include (i) representations
of the holder for the benefit of the Surviving Corporation
regarding title to the Company Securities, due authorization to
sell or transfer the Company Securities pursuant to the terms of
this Agreement, and the absence of any conflicts or breaches by
such holder in connection therewith, (ii) an agreement for the
benefit of Parent that such holder shall pay to Parent, to the
extent applicable, such stockholders’ pro rata portion of the
amounts required to be paid pursuant to Section 3.02(d)(i) plus any
cost of collection thereof, (iii) such information as the
Stockholders Representative may reasonably request be included
therein, including an agreement for the benefit of the Stockholders
Representative that such holder agrees to Oak Hill’s
designation as the Stockholders Representative and that Oak Hill
shall have the full and exclusive authority to, in its capacity as
the Stockholders Representative,
14
execute any and all instruments or
other documents on behalf of such holder, and do any and all other
acts or things on behalf of such holder, which the Stockholders
Representative may deem necessary or advisable, or which may be
required pursuant to this Agreement or otherwise, in connection
with the consummation of the Merger and the other transactions
contemplated hereby, including (w) agreeing with Parent or
Merger Sub with respect to any matter or thing required or deemed
necessary by the Stockholders Representative in connection with the
provisions of this Agreement calling for the agreement of the
holder and giving and receiving notices on behalf of the holder,
all in the absolute discretion of the Stockholders Representative,
(x) in general, doing all things and performing all acts,
including executing and delivering all agreements, certificates,
receipts, consents, elections, instructions, and other instruments
or documents contemplated by, or deemed by the Stockholders
Representative to be necessary or advisable in connection with,
this Agreement, (y) executing and delivering the Escrow Agreement,
and (z) negotiating, settling, compromising and otherwise handling
the post-closing adjustment of the Merger Consideration pursuant to
Section 3.02, and (iv) such other documents as may reasonably
be required in connection with such surrender, in customary
form to be agreed upon by the Company and Parent prior thereto,
including a certificate of each holder of Company Stock conforming
to the requirements of Treasury Regulation Section 1.1445-2(b)(2)
certifying that such holder is not a “foreign person”
for purposes of Section 1445 of the Code (a “ FIRPTA
Certificate ”) or, for those holders of Company Stock who
are “foreign persons” for purposes of Section 1445 of
the Code, a statement to that effect.
(b)
Exchange Procedures
.
(i)
After the Effective Time, each
holder of Certificate(s) shall, upon surrender to the Exchange
Agent of such Certificate(s) and a fully and properly
completed Letter of Transmittal and acceptance thereof by the
Exchange Agent, be entitled to receive the amount of the Merger
Consideration into which such surrendered Certificate(s) have
been converted or exchanged pursuant to this Agreement.
(ii)
After the Effective Time, there
shall be no further transfer on the records of the Company or its
transfer agent of Certificates, and if Certificates are presented
to the Company for transfer, they shall be canceled against
delivery of the Merger Consideration into which such Certificates
have been converted or exchanged pursuant to this Agreement.
If any Merger Consideration is to be paid to a Person other than
the Person in whose name the surrendered Certificate is registered,
it shall be a condition of such exchange that the Certificate so
surrendered shall properly be endorsed, with signature guaranteed,
or otherwise in proper form for transfer and that the Person
requesting such exchange shall pay to the Surviving Corporation or
its transfer agent any transfer or other taxes required, or
establish to the satisfaction of the Surviving Corporation or its
transfer agent that such taxes have been paid or are not
applicable.
(iii)
Until surrendered as contemplated by
this Section 3.04(b), each Certificate (for the purposes of
clarification, excluding certificates relating to Company Warrants,
if the Company Warrants have not been amended prior to the
Effective Time) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the
Merger Consideration into which such Certificate has been converted
or exchanged pursuant to this Agreement and after the Effective
Time the
15
holders thereof shall cease to have
any other rights as holders of Company Securities. No
interest will be paid or will accrue on any amount payable to
holders of Company Securities as Merger Consideration.
(c)
No Further Rights in Company
Securities .
All Merger Consideration paid upon the surrender for
exchange of Certificates in accordance with the terms of this
Agreement shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to the Company Securities
represented thereby.
(d)
Termination of Exchange
Fund . Any portion
of the Exchange Fund which remains undistributed to the holders of
Certificates upon the expiration of two years following the
Effective Time shall be delivered to the Surviving Corporation upon
demand, and any holders of Company Securities who have not
theretofore complied with this Article III shall thereafter look
only to the Surviving Corporation, and only as general creditors
thereof, for payment of any claim for Merger
Consideration.
(e)
No Liability
. None of the Surviving
Corporation, Parent, Merger Sub or the Exchange Agent shall be
liable to any Person in respect of any cash or other assets from
the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any
Certificate has not been surrendered prior to the later of
(i) two years after the Effective Time and
(ii) immediately prior to the date on which any cash or other
assets, if any, in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity, any
such cash or other assets in respect of such Certificate shall, to
the extent permitted by applicable Law, become the property of the
Surviving Corporation, free and clear of all claims or interests of
any Person previously entitled thereto.
(f)
Investment of Exchange
Fund . The
Exchange Agent shall invest the cash included in the Exchange Fund
in a money market deposit account selected by Parent prior to the
Closing. Any interest and other income resulting from such
investments shall be paid to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and
warrants to Parent and Merger Sub as follows:
Section 4.01.
Organization .
Each of the Company and each Company
Subsidiary is a corporation or other entity duly organized, validly
existing and (to the extent the concept of good standing is
applicable to such entity) in good standing under the laws of the
jurisdiction of its incorporation or organization and has full
corporate power and authority to conduct its business as it is now
being conducted and to own, operate or lease the properties and
assets it currently owns, operates or holds under lease. Each
of the Company and each Company Subsidiary is duly qualified or
licensed to do business and is in good standing as a foreign entity
in each jurisdiction where such qualification or licensing is
necessary, except where the failure to so qualify or be so licensed
would not, individually or in the aggregate, have a Company
Material Adverse Effect.
16
Section 4.02.
Subsidiaries .
Schedule 4.02
sets forth a list, as of the date
hereof of (a) all Company Subsidiaries and (b) all other
entities in which the Company or any Company Subsidiary has an
aggregate equity investment in excess of $100,000 (other than
through a mutual fund or similar investment account). Except
as set forth in Schedule 4.02 , all outstanding shares
of stock of any Company Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable, and are
owned, directly or indirectly, by the Company free and clear of any
Liens, and there are no outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights or
agreements or instruments or understandings of any character,
obligating the Company or any Company Subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold, contingently or
otherwise, additional shares of such Company Subsidiary or any
securities or obligations convertible or exchangeable for such
shares or to grant, extend or enter into any such option, warrants,
convertible security, call, right, commitment, preemptive right or
agreement. Except for transactions among Company Subsidiaries
or among the Company and Company Subsidiaries, with respect to any
Company Subsidiary or other entity in which the Company or any
Company Subsidiary has an equity investment (other than through a
mutual fund or similar investment account), neither the Company nor
any Company Subsidiary has (i) an obligation to make a loan or
other capital contribution, (ii) any liability for the obligations
of such entity or (iii) any other obligations to such
entity.
Section 4.03.
Capitalization .
(a)
The authorized capital stock of the
Company consists of 20,000,000 shares of Company Common Stock and
5,000,000 shares of Preferred Stock, par value $0.0001 per share
(the “ Company Preferred Stock ”). As of
the date of this Agreement:
(i)
6,937,003 shares of Company Common
Stock were issued and outstanding ,
(ii)
no shares of Company Preferred Stock
were issued and outstanding,
(iii)
Company Warrants to purchase an
aggregate 277,165 shares of Company Common Stock were issued and
outstanding, and
(iv)
939,375 shares of Company Common
Stock were reserved and available for issuance upon or otherwise
deliverable in connection with the grant of equity-based awards or
the exercise of Company Stock Options issued pursuant to the 2001
Stock Option Plan.
(b)
Schedule 4.03(b)
sets forth the number, class or
series and record owner of all Company Stock and Company Stock
Options as of the date of this Agreement. All outstanding
shares of Company Stock have been duly authorized, validly issued
and are fully paid and non-assessable. Except for the Company
Stock Options and the Company Warrants or as set forth in the
Stockholders Agreement and except as set forth in
Schedule 4.03(b) , there are no authorized or
outstanding options, warrants, convertible securities, calls,
rights, commitments, preemptive rights or agreements or instruments
or understandings of any character, to which the Company is a party
or by which the Company is bound, obligating the Company to issue,
deliver
17
or sell, or cause to be issued,
delivered or sold, contingently or otherwise, additional shares of
Company Stock or any securities or obligations convertible into or
exchangeable for such shares or to grant, extend or enter into any
such option, warrant, convertible security, call, right,
commitment, preemptive right or agreement. No bonds, notes or
other indebtedness having the right to vote on matters on which
stockholders may vote are issued or outstanding.
Section 4.04.
Authorization .
(a)
The Company
. The Company has all
requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have
been duly and validly authorized by all necessary action of the
Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize
the Merger, this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by the Company, and assuming due authorization, execution
and delivery by each other party hereto, constitutes a legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement
may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to
creditors’ rights generally, (ii) general principles of
equity (whether applied in a proceeding at law or in equity) and
(iii) any implied covenant of good faith and fair
dealing.
(b)
The Stockholders
. The class and total number
of shares of Company Stock owned by each Stockholder is as set
forth in Schedule 4.04(b) . Such shares, taken in the
aggregate, represent in excess of 90% of the voting power of the
Company.
Section 4.05. No
Violation .
Except as set forth on Schedule
4.05 , the execution and delivery of this Agreement by the
Company does not, and the consummation by the Company of the
transactions contemplated by this Agreement will not,
(i) conflict with, or result in any violation of or default or
loss of any benefit under, any provision of the Company’s or
any Company Subsidiary’s Certificate of Incorporation or
By-Laws; (ii) subject to the matters described in Section
4.06, conflict with or result in any violation of or default or
loss of any benefit under, any Law or Judgment of any Governmental
Entity to which the Company or any Company Subsidiary is a party or
to which any of its property is subject; or (iii) conflict
with, or result in a breach, termination (or right of termination)
or violation of or default or loss of any benefit under the terms
of any agreement, contract, indenture or other instrument to which
the Company or any Company Subsidiary is a party or to which any of
its property is subject, or constitute a default or loss of any
right thereunder or any event which, with the lapse of time or
notice or both, might result in a default or loss of any right
thereunder, except with respect to clauses (ii) and (iii)
hereof, where the conflict, breach, termination, violation,
default, loss of benefit, acceleration or loss of right would not,
individually or in the aggregate, have a Company Material Adverse
Effect.
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Section 4.06.
Approvals .
The execution and delivery of this
Agreement and the consummation of the transactions contemplated by
this Agreement by the Company will not require any consent,
approval, order, authorization or Permit of any counterparty to a
Material Contract or a lease pursuant to which the Company or a
Company Subsidiary leases the Leased Premises, or a party to any
agreement, declaration, covenant, restriction, option agreement or
right of first refusal affecting title to the Owned Property or
Leased Premises, or any other third party, or any Governmental
Entity under any Law or Judgment, other than consents, approvals,
orders, authorizations, Permits and Requisite Regulatory Approvals
disclosed in Schedule 4.06 and no declaration, filing or
registration with any Governmental Entity is required by the
Company or any Company Subsidiary in connection with the execution
and delivery of this Agreement and the consummation of transactions
contemplated by this Agreement, except for (i) the filing of the
Certificate of Merger as required by the DGCL and the filing of
appropriate documents with the relevant authorities of other states
in which the Company or any Company Subsidiary is qualified to do
business, (ii) filings pursuant to the HSR Act, and the expiration
or termination of the applicable waiting period under the HSR Act,
or (iii) such other consents, approvals, orders, authorizations,
actions, registrations, declarations and filings the failure of
which to be obtained or made individually or in the aggregate has
not had and would not reasonably be expected to (w) have a Company
Material Adverse Effect, (x) impair in any material respect the
ability of the Company to perform its obligations under this
Agreement, (y) prevent or materially impede, interfere with, hinder
or delay the consummation of the transactions contemplated by this
Agreement, or (z) filings and notices not required to be made or
given until after the Effective Time.
Section 4.07. Financial
Statements .
(a)
Schedule 4.07(a)
contains copies of the following
consolidated financial statements of the Company and the Company
Subsidiaries (collectively, the “ Financial Statements
”): (i) the audited consolidated balance sheet of the
Company and the Company Subsidiaries as of December 31, 2005 and
December 31, 2004 and the related statements of income and cash
flows for each of the three years in the period ending December 31,
2005 (together with the notes thereto); and (ii) the unaudited
consolidated balance sheet (the “ Company Balance
Sheet ”) of the Company and the Company Subsidiaries as
of June 30, 2006 (the “ Balance Sheet Date ”)
and the related unaudited statements of income and cash flows for
the six month period ending on the Balance Sheet Date. The
Financial Statements (i) present fairly in all material respects
the consolidated financial condition and results of operations of
the Company and the Company Subsidiaries as of the dates thereof or
for the periods covered thereby, except as otherwise noted therein
(subject, in the case of the unaudited Financial Statements, to
normal year-end adjustments) and (ii) have been prepared in
accordance with GAAP applied on a consistent basis for the periods
involved (except as may be indicated in the notes thereto or as
described on Schedule 4.07(a) ).
(b)
Except as set forth in Schedule
4.07(b) , neither the Company nor any Company Subsidiary has
any Liabilities, other than Liabilities (i) that have been
specifically disclosed or accrued or reserved for in the Company
Balance Sheet, (ii) that have been incurred in the ordinary
course of business since the date thereof, (iii) of the type
that are not required by
19
GAAP to be included in or, in the
notes to, a balance sheet prepared in accordance with GAAP, (iv)
relating to operating leases incurred in accordance with the terms
of such leases in the ordinary course of business and which with
respect to clauses (ii) and (iii) that have not had, and would not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 4.08. Absence of
Certain Transactions .
Except as set forth on Schedule
4.08 and except for the transactions expressly contemplated
hereby, since the Balance Sheet Date, the Company and the Company
Subsidiaries have conducted their respective businesses in the
ordinary and usual course consistent with past practices.
Since the Balance Sheet Date, there have not been any events,
changes, effects or developments which have had or would reasonably
be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Except as set forth on
Schedule 4.08 and except for actions following the date
of this Agreement undertaken in accordance with the other
provisions of this Agreement, since the Balance Sheet
Date:
(a)
Neither the Company nor any Company
Subsidiary has (i) declared or paid any dividend or made any
other distribution with respect to Company Stock or the capital
stock of any Company Subsidiary (other than dividends or
distributions made by any Company Subsidiary to the Company),
(ii) redeemed, purchased, canceled or otherwise acquired,
directly or indirectly, any outstanding shares of Company Stock or
any shares of capital stock of any Company Subsidiary (other than
repurchases or acquisitions of Company Stock from management
pursuant to subscription agreements entered into with such members
of management), (iii) issued addition
