EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
among
MDI HOLDINGS, LLC,
MATRIX ACQUISITION CORP.
AND
MACDERMID, INCORPORATED
Dated as
of December 15, 2006
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TABLE OF CONTENTS
PAGES
ARTICLE I THE
MERGER........................................................2
Section 1.1
The
Merger...................................................2
Section 1.2
Closing......................................................2
Section 1.3
Effective
Time...............................................2
Section 1.4
Effects of the
Merger........................................2
Section 1.5
Certificate of
Incorporation and By-laws of the
Surviving Corporation.......................................3
Section 1.6
Directors....................................................3
Section 1.7
Officers.....................................................3
ARTICLE II CONVERSION
OF SHARES; EXCHANGE OF CERTIFICATES...................3
Section 2.1
Effect on Capital
Stock......................................3
Section 2.2
Exchange of
Certificates.....................................5
Section 2.3
Effect of the Merger
on Company Stock Options and
Company Restricted Shares....................................
Section 2.4
Timing of Equity
Rollover....................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY...................8
Section 3.1
Qualification,
Organization, Subsidiaries, etc...............8
Section 3.2
Capital
Stock................................................9
Section 3.3
Subsidiaries................................................10
Section 3.4
Corporate Authority
Relative to This Agreement; No
Violation..................................................10
Section 3.5
Reports and Financial
Statements............................11
Section 3.6
Internal Controls and
Procedures............................12
Section 3.7
No Undisclosed
Liabilities..................................13
Section 3.8
Compliance with Law;
Permits................................13
Section 3.9
Environmental Laws and
Regulations..........................14
Section 3.10
Employee Benefit Plans......................................14
Section 3.11
Interested Party Transactions...............................17
Section 3.12
Absence of Certain Changes or Events........................17
Section 3.13
Investigations; Litigation..................................18
Section 3.14
Proxy Statement; Other Information..........................18
Section 3.15 Tax
Matters.................................................18
Section 3.16
Labor Matters...............................................19
Section 3.17
Intellectual Property.......................................20
Section 3.18
Property....................................................20
Section 3.19
Opinion of Financial Advisor................................21
Section 3.20
Required Vote of the Company Stockholders...................21
Section 3.21
Material Contracts..........................................21
Section 3.22
Finders or Brokers..........................................22
Section 3.23
State Takeover Statutes; Charter Provisions.................22
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB.........23
Section 4.1
Qualification;
Organization.................................23
Section 4.2
Corporate Authority
Relative to This Agreement; No
Violation..................................................23
Section 4.3
Proxy Statement; Other
Information..........................24
Section 4.4
Financing...................................................24
Section 4.5
Ownership and
Operations of Merger Sub......................25
Section 4.6
Finders or
Brokers..........................................25
Section 4.7
Ownership of
Shares.........................................25
Section 4.8
Certain
Arrangements........................................25
Section 4.9
Investigations;
Litigation..................................26
Section 4.10
Limited Guarantees..........................................26
Section 4.11
Solvency....................................................26
Section 4.12 No
Other Information........................................26
Section 4.13
Access to Information; Disclaimer...........................27
ARTICLE V COVENANTS
AND AGREEMENTS.........................................27
Section 5.1
Conduct of
Business.........................................27
Section 5.2
Investigation...............................................30
Section 5.3
No
Solicitation.............................................31
Section 5.4
Filings; Other
Actions......................................34
Section 5.5
Employee
Matters............................................35
Section 5.6
Efforts.......................................................
Section 5.7
Takeover
Statute............................................39
Section 5.8
Public
Announcements........................................39
Section 5.9
Indemnification and
Insurance...............................39
Section 5.10
Financing.....................................................
Section 5.11
Stockholder Litigation......................................42
Section 5.12
Notification of Certain Matters.............................42
Section 5.13
Rule 16b-3..................................................43
Section 5.14
Control of Operations.......................................43
Section 5.15
Certain Transfer Taxes......................................43
Section 5.16
Obligations of Merger Sub...................................43
ARTICLE VI CONDITIONS
TO THE MERGER........................................44
Section 6.1
Conditions to Each
Party's Obligation to Effect the
Merger.....................................................44
Section 6.2
Conditions to
Obligation of the Company to Effect
the Merger.................................................44
Section 6.3
Conditions to
Obligation of Parent and Merger Sub to
Effect the Merger..........................................45
ARTICLE VII
TERMINATION....................................................45
Section 7.1
Termination or
Abandonment..................................45
Section 7.2
Termination
Fees............................................47
ARTICLE VIII
MISCELLANEOUS.................................................50
Section 8.1
No Survival of
Representations and Warranties...............50
Section 8.2
Expenses....................................................50
Section 8.3
Counterparts;
Effectiveness.................................50
Section 8.4
Governing
Law...............................................50
Section 8.5
Jurisdiction;
Enforcement...................................50
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Section 8.6
WAIVER OF JURY
TRIAL........................................51
Section 8.7
Notices.....................................................51
Section 8.8
Assignment; Binding
Effect..................................52
Section 8.9
Severability................................................53
Section 8.10
Entire Agreement; No Third-Party Beneficiaries..............53
Section 8.11
Amendments; Waivers.........................................53
Section 8.12
Headings....................................................53
Section 8.13
Interpretation..............................................53
Section 8.14 No
Recourse.................................................54
Section 8.15
Determinations by the Company...............................54
Section 8.16
Certain Definitions.........................................54
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AGREEMENT AND PLAN OF MERGER, dated as of December 15, 2006
(this
"AGREEMENT"), among MDI HOLDINGS, LLC, a Delaware limited liability
company
("PARENT"), MATRIX ACQUISITION CORP., a Connecticut corporation and
a wholly
owned subsidiary of Parent ("MERGER SUB"), and MACDERMID,
INCORPORATED, a
Connecticut corporation (the "COMPANY").
W I T N E S S E T H :
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WHEREAS, the parties intend that Merger Sub be merged with and
into
the Company, with the Company surviving that merger on the terms
and subject to
the conditions set forth in this Agreement (the "MERGER");
WHEREAS, the Board of Directors of the Company, acting upon
the unanimous recommendation of the Special Committee, has
unanimously (with two
directors abstaining) (i) determined that it is in the best
interests of the
Company and its stockholders, and declared it advisable, to enter
into this
Agreement, (ii) approved the execution, delivery and performance by
the Company
of this Agreement and the consummation of the transactions
contemplated hereby,
including the Merger and (iii) resolved to recommend adoption of
this Agreement
by the stockholders of the Company;
WHEREAS, the Board of Directors of Merger Sub and the Members
of
Parent have each unanimously approved this Agreement and declared
it advisable
for Merger Sub and Parent, respectively, to enter into this
Agreement;
WHEREAS, certain existing stockholders of the Company desire to
contribute Shares (as hereinafter defined) to Parent or one or more
of its
Subsidiaries immediately prior to the Effective Time in exchange
for shares of
Parent capital stock immediately prior to the merger;
WHEREAS, concurrently with the execution of this Agreement, as
a
condition and inducement to Parent and Merger Sub's willingness to
enter into
this Agreement, Parent, Merger Sub and a stockholder of the Company
are entering
into a voting agreement, of even date herewith (the "VOTING
AGREEMENT") pursuant
to which such stockholder has agreed, subject to the terms thereof,
to vote its
Shares (as defined below) in favor of adoption of this
Agreement;
WHEREAS, concurrently with the execution of this Agreement, and as
a
condition and inducement to the Company's willingness to enter into
this
Agreement, each of Court Square Capital Partners, L.P. and Weston
Presidio V,
L.P. (together, the "GUARANTORS") have provided a limited guarantee
(together,
the "LIMITED GUARANTEES") in favor of the Company, in the form set
forth on
Section 4.10 of the Parent Disclosure Letter, with respect to the
performance by
Parent and Merger Sub, respectively, of their obligations under
this Agreement;
and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain
representations, warranties, covenants and agreements in connection
with the
Merger and the transactions contemplated by this Agreement and also
to prescribe
certain conditions to the Merger as specified herein.
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NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained
herein, and
intending to be legally bound hereby, Parent, Merger Sub and the
Company hereby
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. At the Effective Time (as hereinafter
defined), upon the terms and subject to the conditions set forth in
this
Agreement and in accordance with the applicable provisions of the
Connecticut
Business Corporation Act (the "CBCA"), Merger Sub shall be merged
with and into
the Company, whereupon the separate corporate existence of Merger
Sub shall
cease, and the Company shall continue as the surviving company in
the Merger
(the "SURVIVING CORPORATION") and a wholly owned subsidiary of
Parent.
Section 1.2 CLOSING. The closing of the Merger (the "CLOSING")
shall
take place at the offices of Wachtell, Lipton, Rosen & Katz, 51
West 52nd
Street, New York, New York at 10:00 a.m., local time, on a date to
be specified
by the parties (the "CLOSING DATE") which shall be no later than
the later of
(i) the second Business Day after the satisfaction or waiver (to
the extent
permitted by applicable Law (as hereinafter defined)) of the
conditions set
forth in Article VI (other than those conditions that by their
nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver
of such
conditions) or (ii) the date of completion of the Marketing Period
(or, if
Parent so notifies the Company, a date during the Marketing Period
not less than
three Business Days following such notice to the Company), or at
such other
place, date and time as the Company and Parent may agree in
writing. For
purposes of this Agreement, "MARKETING PERIOD" shall mean the first
period of 20
consecutive Business Days after the date hereof throughout which
(A) Parent
shall have the Required Financial Information (as defined in
Section 5.10) that
the Company is required to provide to Parent pursuant to Section
5.10, (B) the
conditions set forth in Section 6.1 and Section 6.3 (other than
6.3(c)) shall be
satisfied, and (C) the applicable auditors shall not have withdrawn
their audit
opinions for any applicable Required Financial Information;
PROVIDED that such
20 Business Day period shall commence no earlier than three
Business Days after
the condition set forth in Section 6.1(a) has been satisfied.
Section 1.3 EFFECTIVE TIME. On the Closing Date, the Company
shall
cause the Merger to be consummated by executing, delivering and
filing a
certificate of merger (the "CERTIFICATE OF MERGER") with the
Secretary of State
of the State of Connecticut in accordance with Sections 33-603 and
33-819(b) of
the CBCA. The Merger shall become effective at such time as the
Certificate of
Merger is duly filed with the Secretary of State of the State of
Connecticut, or
at such later date or time as may be agreed by Parent and the
Company in writing
and specified in the Certificate of Merger in accordance with the
CBCA (such
time as the Merger becomes effective is referred to herein as the
"EFFECTIVE
TIME").
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the
effects
set forth in this Agreement and the applicable provisions of the
CBCA.
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Section 1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE
SURVIVING
CORPORATION.
(a) The certificate of incorporation of the Company (the
"COMPANY
CERTIFICATE") shall be amended in its entirety to be the same as
set forth in
Exhibit 1.5(a) and, as so amended, shall be the certificate of
incorporation of
the Surviving Corporation following the Merger until thereafter
amended in
accordance with its terms, in each case consistent with the
obligations set
forth in Section 5.9, and the CBCA.
(b) The by-laws of Merger Sub, as in effect at the Effective
Time,
shall be the by-laws of the Surviving Corporation until thereafter
amended in
accordance with the provisions thereof, hereof and applicable Law,
in each case
consistent with the obligations set forth in Section 5.9.
Section 1.6 DIRECTORS. The directors of Merger Sub immediately
prior
to the Effective Time shall be the initial directors of the
Surviving
Corporation and shall hold office until their respective successors
are duly
elected and qualified, or their earlier death, resignation or
removal.
Section 1.7 OFFICERS. The officers of the Company immediately prior
to
the Closing Date shall be the initial officers of the Surviving
Corporation and
shall hold office until their respective successors are duly
elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue
of the Merger and without any action on the part of the Company,
Merger Sub or
the holders of any securities of the Company or Merger Sub:
(a) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
2.1(b),
2.1(d) and 2.1(e), each issued and outstanding share of common
stock, without
par value, of the Company outstanding immediately prior to the
Effective Time
(such shares, collectively, "COMPANY COMMON STOCK", and each, a
"SHARE"), other
than (i) any Shares held by any direct or indirect wholly owned
subsidiary of
the Company, which Shares shall remain outstanding except that the
number of
such Shares shall be appropriately adjusted in the Merger (the
"REMAINING
SHARES"), (ii) any Cancelled Shares (as defined, and to the extent
provided in
Section 2.1(b)) and (iii) any Dissenting Shares (as defined, and to
the extent
provided in Section 2.1(e)) shall thereupon be converted
automatically into and
shall thereafter represent the right to receive $35.00 in cash,
without interest
(the "MERGER CONSIDERATION"). All Shares that have been converted
into the right
to receive the Merger Consideration as provided in this Section 2.1
shall be
automatically cancelled and shall cease to exist, and the holders
of
certificates which immediately prior to the Effective Time
represented such
Shares shall cease to have any rights with respect to such Shares
other than the
right to receive the Merger Consideration.
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(b) PARENT AND MERGER SUB-OWNED SHARES. Each Share that is
owned,
directly or indirectly, by Parent or Merger Sub immediately prior
to the
Effective Time, if any, or held by the Company immediately prior to
the
Effective Time (in each case, other than any such Shares held on
behalf of third
parties) (the "CANCELLED SHARES") shall, by virtue of the Merger
and without any
action on the part of the holder thereof, be cancelled and retired
and shall
cease to exist, and no consideration shall be delivered in exchange
for such
cancellation and retirement.
(c) CONVERSION OF MERGER SUB COMMON STOCK. At the Effective Time,
by
virtue of the Merger and without any action on the part of the
holder thereof,
each share of common stock, without par value, of Merger Sub issued
and
outstanding immediately prior to the Effective Time shall be
converted into and
become one validly issued, fully paid and nonassessable share of
common stock,
without par value, of the Surviving Corporation and shall with the
Remaining
Shares constitute the only outstanding shares of capital stock of
the Surviving
Corporation. From and after the Effective Time, all certificates
representing
the common stock of Merger Sub shall be deemed for all purposes to
represent the
number of shares of common stock of the Surviving Corporation into
which they
were converted in accordance with the immediately preceding
sentence.
(d) ADJUSTMENTS. If at any time during the period between the date
of
this Agreement and the Effective Time, any change in the
outstanding shares of
capital stock of the Company, or securities convertible or
exchangeable into or
exercisable for shares of capital stock, shall occur as a result of
any
reclassification, recapitalization, stock split (including a
reverse stock
split) or subdivision or combination, exchange or readjustment of
shares, or any
stock dividend or stock distribution with a record date during such
period
(excluding, in each case, normal quarterly cash dividends), merger
or other
similar transaction, the Merger Consideration shall be equitably
adjusted to
reflect such change; PROVIDED that nothing in this Section 2.1(d)
shall be
construed to permit the Company to take any action with respect to
its
securities that is prohibited by the terms of this Agreement.
(e) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement
to
the contrary, shares of Company Common Stock that are issued and
outstanding
immediately prior to the Effective Time and which are held by a
stockholder who
did not vote in favor of the Merger (or consent thereto in writing)
and who is
entitled to demand and properly demands appraisal of such shares
pursuant to,
and who complies in all respects with, the applicable provisions of
Section
33-861 of the CBCA (the "DISSENTING STOCKHOLDERS"), shall not be
converted into
or be exchangeable for the right to receive the Merger
Consideration (the
"DISSENTING SHARES," and together with the Cancelled Shares, the
"EXCLUDED
SHARES"), but instead such holder shall be entitled to payment of
the appraised
value of such shares in accordance with the applicable provisions
of the CBCA
(and at the Effective Time, such Dissenting Shares shall no longer
be
outstanding and shall automatically be canceled and shall cease to
exist, and
such holder shall cease to have any rights with respect thereto,
except the
right to receive the appraised value of such Dissenting Shares in
accordance
with the applicable provisions of the CBCA), unless and until such
holder shall
have failed to perfect or shall have effectively withdrawn or lost
rights to
appraisal under the CBCA. If any Dissenting Stockholder shall have
failed to
perfect or shall have effectively withdrawn or lost such right,
such holder's
shares of Company Common Stock shall thereupon be treated as if
they had been
converted into and become exchangeable for the right to receive, as
of the
Effective Time, the Merger Consideration
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for each such share of Company Common Stock, in accordance with
Section 2.1(a),
without any interest thereon. The Company shall give Parent (i)
prompt notice of
any written demands for appraisal of any shares of Company Common
Stock,
attempted withdrawals of such demands and any other instruments
served pursuant
to the CBCA and received by the Company relating to stockholders'
rights of
appraisal and (ii) the opportunity to participate in negotiations
and
proceedings with respect to demands for appraisal under the CBCA.
The Company
shall not, except with the prior written consent of Parent,
voluntarily make any
payment with respect to, or settle, or offer or agree to settle,
any such demand
for payment. Any portion of the Merger Consideration made available
to the
Paying Agent pursuant to Section 2.2 to pay for shares of Company
Common Stock
for which appraisal rights have been perfected shall be returned to
Parent upon
demand.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. At or prior to the Effective Time, Parent
shall
deposit, or shall cause to be deposited, with a U.S. bank or trust
company that
shall be appointed by Parent and approved by the Company in writing
(such
approval not to be unreasonably withheld) to act as a paying agent
hereunder
(the "PAYING AGENT"), in trust for the benefit of holders of the
Shares, cash in
U.S. dollars sufficient to pay the aggregate Merger Consideration
in exchange
for all of the Shares outstanding immediately prior to the
Effective Time (other
than the Excluded Shares and the Remaining Shares) pursuant to the
provisions of
this Article II (such cash being hereinafter referred to as the
"EXCHANGE
FUND").
(b) PAYMENT PROCEDURES.
(i) As soon as reasonably practicable after the Effective Time
and in any event not later than the second Business Day following
the Effective
Time, the Paying Agent shall mail to each holder of record of
Shares whose
Shares were converted into the Merger Consideration pursuant to
Section 2.1, (A)
a letter of transmittal which shall specify that delivery shall be
effected, and
risk of loss and title to the certificates that immediately prior
to the
Effective Time represented Shares ("CERTIFICATES") shall pass, only
upon
delivery of Certificates to the Paying Agent (and shall be in such
form and have
such other provisions as Parent and the Company may reasonably
determine prior
to the Effective Time) and (B) instructions for use in effecting
the surrender
of Certificates (or effective affidavits of loss in lieu thereof)
or
non-certificated Shares represented by book-entry ("BOOK-ENTRY
SHARES") in
exchange for the Merger Consideration.
(ii) Upon surrender of Certificates (or effective affidavits of
loss in lieu thereof) or Book-Entry Shares to the Paying Agent
together with
such letter of transmittal, duly completed and validly executed in
accordance
with the instructions thereto, and such other documents as may
customarily be
required by the Paying Agent, the holder of such Certificates or
Book-Entry
Shares shall be entitled to receive in exchange therefor a check in
an amount
(after giving effect to any required tax withholdings) equal to the
product of
(x) the number of Shares represented by such holder's properly
surrendered
Certificates (or effective affidavits of loss in lieu thereof) and
Book-Entry
Shares multiplied by (y) the Merger Consideration. No interest will
be paid or
accrued on any amount payable upon due surrender of Certificates or
Book-Entry
Shares. In the event of a transfer of ownership of Shares that is
not registered
in the
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transfer or stock records of the Company, a check for any cash to
be paid
upon due surrender of the Certificate formerly representing such
Shares may be
paid to such a transferee if such Certificate is presented to the
Paying Agent,
accompanied by all documents required to evidence and effect such
transfer and
to evidence that any applicable stock transfer or other Taxes (as
hereinafter
defined) have been paid or are not applicable.
(iii) The Surviving Corporation, Parent and the Paying Agent
shall be entitled to deduct and withhold from the consideration
otherwise
payable under this Agreement to any holder of Shares such amounts
as are
required to be withheld or deducted under the Internal Revenue Code
of 1986, as
amended (the "CODE"), or any provision of U.S. state, local or
foreign Tax Law
with respect to the making of such payment. To the extent that
amounts are so
withheld or deducted and paid over to the applicable Governmental
Entity (as
hereinafter defined), such withheld or deducted amounts shall be
treated for all
purposes of this Agreement as having been paid to the holder of the
Shares in
respect of which such deduction and withholding were made.
(c) CLOSING OF 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 on the stock transfer books of the
Surviving
Corporation of the Shares that were outstanding immediately prior
to the
Effective Time. If, after the Effective Time, Certificates are
presented to the
Surviving Corporation or Parent for transfer, they shall be
cancelled and
exchanged for a check in the proper amount pursuant to and subject
to the
requirements of this Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund
(including the proceeds of any investments thereof) that remains
undistributed
to the former holders of Shares for six months after the Effective
Time shall be
delivered to the Surviving Corporation upon demand, and any former
holders of
Shares who have not surrendered their Shares in accordance with
this Section 2.2
shall thereafter look only to the Surviving Corporation for payment
of their
claim for the Merger Consideration, without any interest thereon,
upon due
surrender of their Shares.
(e) NO LIABILITY. Notwithstanding anything herein to the
contrary,
none of the Company, Parent, Merger Sub, the Surviving Corporation,
the Paying
Agent or any other person shall be liable to any former holder of
Shares for any
amount properly delivered to a public official pursuant to any
applicable
abandoned property, escheat or similar Law. If any Certificate
shall not have
been surrendered prior to the date on which the related Merger
Consideration
would escheat to or become the property of any Governmental Entity,
any such
Merger Consideration shall, to the extent permitted by applicable
Law,
immediately prior to such time become the property of the Surviving
Corporation,
free and clear of all claims or interest of any person previously
entitled
thereto.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest
all
cash included in the Exchange Fund as reasonably directed by
Parent; PROVIDED,
HOWEVER, that any investment of such cash shall in all events be
limited to
direct short-term obligations of, or short-term obligations fully
guaranteed as
to principal and interest by, the U.S. government and that no such
investment or
loss thereon shall affect the amounts payable to holders of
Certificates or
Book-Entry Shares pursuant to this Article II. Any interest and
other income
resulting from such
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investments shall be paid to the Surviving Corporation on the
earlier of six
months after the Effective Time or full payment of the Exchange
Fund.
(g) LOST CERTIFICATES. In the case of any Certificate that has
been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the
person claiming such Certificate to be lost, stolen or destroyed
and, if
required by Parent or the Paying Agent, the posting by such person
of an
indemnity agreement or, at the election of Parent or the Paying
Agent, a bond in
customary amount as indemnity against any claim that may be made
against it with
respect to such Certificate, the Paying Agent will issue in
exchange for such
lost, stolen or destroyed Certificate a check in the amount of the
number of
Shares represented by such lost, stolen or destroyed Certificate
multiplied by
the Merger Consideration.
Section 2.3 EFFECT OF THE MERGER ON COMPANY STOCK OPTIONS AND
COMPANY
RESTRICTED SHARES.
(a) Except as otherwise agreed in writing by Parent and the
applicable
holder thereof, each outstanding option to acquire shares of
Company Common
Stock (each, a "COMPANY STOCK OPTION"), whether or not then vested
or
exercisable, that is outstanding immediately prior to the Effective
Time shall,
as of the Effective Time (i) become fully vested, (ii) unvested
Company Stock
Options as of immediately prior to the Effective Time that are
subject to a
performance multiplier shall be deemed to have achieved the
performance
multiplier at the maximum level and have the exercise price
previously
established in 2006 by the Company's Board of Directors (other than
for unvested
Company Stock Options granted in 2003, 2004 or 2005, which shall
have an
exercise price reflected on the list of Company Stock Options
included in
Section 3.2(b) of the Company Disclosure Letter, which exercise
price is based
on the specialty chemical index on October 30, 2006)) and (iii) be
converted
into the right to receive a payment in cash, payable in U.S.
dollars and without
interest, equal to the product of (x) the excess, if any, of (I)
the Merger
Consideration over (II) the exercise price per share of Company
Common Stock
subject to such Company Stock Option, multiplied by (y) the number
of shares of
Company Common Stock for which such Company Stock Option shall not
theretofore
have been exercised, whether or not then vested or exercisable. The
Surviving
Corporation shall pay the holders of Company Stock Options the cash
payments
described in this Section 2.3(a) on or as soon as reasonably
practicable after
the Closing Date, but in any event within three (3) Business Days
following the
Closing Date.
(b) Except as otherwise agreed in writing by Parent and the
applicable
holder thereof, immediately prior to the Effective Time, each award
of
restricted Company Common Stock (the "COMPANY RESTRICTED SHARES")
shall vest in
full and be converted into the right to receive the Merger
Consideration as
provided in Section 2.1(a).
(c) The Surviving Corporation shall be entitled to deduct and
withhold
from the amounts otherwise payable pursuant to this Section 2.3 to
any holder of
Company Stock Options or Company Restricted Shares such amounts as
the Surviving
Corporation is required to deduct and withhold with respect to the
making of
such payment under the Code, or any provision of U.S. state, local
or foreign
tax Law, and the Surviving Corporation shall make any required
filings with and
payments to tax authorities relating to any such deduction or
withholding. To
the extent that amounts are so deducted and withheld by the
Surviving
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<PAGE>
Corporation, such withheld amounts shall be treated for all
purposes of this
Agreement as having been paid to the holder of the Company Stock
Options or
Company Restricted Shares in respect of which such deduction and
withholding was
made by the Surviving Corporation.
(d) The Compensation Committee of the Board of Directors of the
Company shall make such adjustments and determinations with respect
to Company
Stock Options and Company Restricted Shares to implement the
foregoing
provisions of this Section 2.3.
Section 2.4 TIMING OF EQUITY ROLLOVER. For the avoidance of doubt,
the
parties acknowledge and agree that the contribution of Shares to
Parent or one
of its Subsidiaries pursuant to the Rollover Commitments (and any
subsequent
contribution of such Shares prior to the Effective Time by Parent
to one or more
of its Subsidiaries) shall be deemed to occur immediately prior to
the Effective
Time and prior to any other above-described event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Company SEC Documents filed on or
after
December 31, 2005 and prior to the date of this Agreement or (ii)
as disclosed
in the disclosure letter delivered by the Company to Parent
immediately prior to
the execution of this Agreement by reference to the appropriate
Section of this
Agreement (the "COMPANY DISCLOSURE LETTER", it being agreed that
disclosure of
any item in any section of the Company Disclosure Letter shall also
be deemed
disclosure with respect to any other section of this Agreement to
which the
relevance of such item is reasonably apparent), the Company
represents and
warrants to Parent and Merger Sub as follows:
Section 3.1 QUALIFICATION, ORGANIZATION, SUBSIDIARIES, ETC.
(a) Each of the Company and its Subsidiaries is a legal entity
duly
organized, validly existing and in good standing under the Laws of
its
respective jurisdiction of organization. Each of the Company and
its
Subsidiaries has all requisite corporate, partnership or similar
power and
authority to own, lease and operate its properties and assets and
to carry on
its business as presently conducted in all material respects.
(b) Each of the Company and its Subsidiaries is qualified or
licensed
to do business and is in good standing as a foreign corporation in
each
jurisdiction where the ownership, leasing or operation of its
assets or
properties or conduct of its business requires such qualification,
except where
the failure to be so qualified, licensed or in good standing would
not,
individually or in the aggregate, have a Company Material Adverse
Effect. The
organizational or governing documents of the Company and each of
its
Subsidiaries are in full force and effect. Neither the Company nor
any
Subsidiary is in violation of its organizational or governing
documents.
(c) As used in this Agreement, any reference to any fact,
circumstance, event, change, effect or occurrence having a "COMPANY
MATERIAL
ADVERSE EFFECT" means any fact, circumstance, event, change, effect
or
occurrence that, individually or in the aggregate with all other
facts,
circumstances, events, changes, effects or occurrences, (1) has or
would be
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<PAGE>
reasonably likely to have a material adverse effect on the assets,
business,
results of operation or financial condition of the Company and its
Subsidiaries
taken as a whole, or (2) that would be reasonably likely to prevent
or
materially delay or materially impair the ability of the Company to
consummate
the Merger or the other transactions contemplated hereby, but, in
the case of
the foregoing clause (1), shall not include facts, circumstances,
events,
changes, effects or occurrences (i) generally affecting the
industries in which
the Company conducts its business, or the economy or the financial
or securities
markets, in the United States or elsewhere in the world, including
effects on
such industries, economy or markets resulting from any regulatory
and political
conditions or developments, or other force majeure events, except
to the extent
such changes or developments have a disproportionate impact on the
Company and
its Subsidiaries, taken as a whole, relative to other participants
in the
industries in which the Company conducts its businesses; (ii)
resulting from any
outbreak or escalation of hostilities, declared or undeclared acts
of war or
terrorism, or weather or climatic conditions, except to the extent
such changes
or developments (A) have a disproportionate impact on the Company
and its
Subsidiaries, taken as a whole, relative to other participants in
the industries
in which the Company conducts its businesses or (B) directly affect
the physical
properties of the Company and its Subsidiaries; (iii) reflecting or
resulting
from changes in Law or GAAP (or the interpretation thereof); or (v)
resulting
from actions or omissions of the Company or any of its Subsidiaries
which Parent
has requested, to which Parent has expressly consented or that are
required by
the terms of this Agreement, or arising after the date of this
Agreement and
directly resulting from the announcement of the Merger(including
the loss or
departure of employees or adverse developments in relationships
with customers,
suppliers, distributors or other business partners).
Section 3.2 CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of
75,000,000
shares of Company Common Stock and 2,000,000 shares of preferred
stock, without
par value ("COMPANY PREFERRED STOCK"). As of December 1, 2006, (i)
47,398,488
shares of Company Common Stock were issued and outstanding,
including 16,595,732
shares of Company Common Stock held in treasury, (ii) 5,818,818
shares of
Company Common Stock were reserved for issuance pursuant to the
outstanding
Company Stock Options, and (iii) no shares of Company Preferred
Stock were
issued or outstanding. No shares of Company Common Stock are held
by any
Subsidiary of the Company. All outstanding shares of Company Common
Stock, and
all shares of Company Common Stock reserved for issuance as noted
in clause (ii)
of the foregoing sentence, when issued in accordance with the
respective terms
thereof, are or will be duly authorized, validly issued, fully paid
and
non-assessable and free of pre-emptive rights and issued in
compliance with all
applicable securities Laws.
(b) Except as set forth in subsection (a) above, as of the date
hereof, (i) the Company does not have any shares of its capital
stock issued or
outstanding other than shares of Company Common Stock that have
become
outstanding after December 1, 2006 upon exercise of Company Stock
Options
outstanding as of such date and (ii) there are no outstanding
subscriptions,
options, warrants, calls, convertible securities or other similar
rights,
agreements or commitments relating to the issuance of capital stock
or other
equity interests to which the Company or any of its Subsidiaries is
a party
obligating the Company or any of its Subsidiaries to (A) issue,
transfer or sell
any shares of capital stock or other equity interests of the
Company or any of
its Subsidiaries or securities convertible into or exchangeable for
such shares
or equity
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<PAGE>
interests, (B) grant, extend or enter into any such
subscription,
option, warrant, call, convertible securities or other similar
right, agreement
or arrangement, (C) redeem or otherwise acquire any such shares of
capital stock
or other equity interests or (D) provide funds to, or make any
investment (in
the form of a loan, capital contribution or otherwise) in, any
Subsidiary. Set
forth in Section 3.2(b) of the Company Disclosure Letter is a true,
correct and
complete list of each of the Company Stock Plans and each Company
Stock Option
(such list to include the name of the Company Stock Plan under
which such
options were issued, the holders thereof, the number of shares
subject thereto,
the exercise prices thereof immediately prior to the date of this
Agreement and
without giving effect to the adjustments contemplated by Section
2.3(a) of this
Agreement and the dates of any scheduled time-vesting thereof).
(c) Except for the awards to acquire shares of Company Common
Stock
under the Company Stock Plans, neither the Company nor any of its
Subsidiaries
has outstanding bonds, debentures, notes or other obligations, the
holders of
which have the right to vote (or which are convertible into or
exercisable for
securities having the right to vote) with the stockholders of the
Company on any
matter.
(d) There are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company or any of its
Subsidiaries is
a party with respect to the voting of the capital stock or other
equity interest
of the Company or any of its Subsidiaries.
(e) No holder of securities in the Company or any of its
Subsidiaries
has any right to have such securities or the offering or sale
thereof registered
under or pursuant to any securities Laws by the Company or any of
its
Subsidiaries.
Section 3.3 SUBSIDIARIES. Section 3.3 of the Company Disclosure
Letter
sets forth a complete and correct list of each subsidiary of the
Company (each,
a "SUBSIDIARY") . Section 3.3 of the Company Disclosure Letter also
sets forth
the jurisdiction of organization of each Subsidiary. All equity
interests
(including partnership interests and limited liability company
interests) of the
Company's Subsidiaries held by the Company or by any other
Subsidiary have been
duly and validly authorized and are validly issued, fully paid
and
non-assessable and were not issued in violation of any preemptive
or similar
rights, purchase option, call or right of first refusal or similar
rights. All
such equity interests owned by the Company or its Subsidiaries are
free and
clear of any Liens, other than restrictions imposed by applicable
Law. Except
for its interests in its Subsidiaries, the Company does not own
directly or
indirectly any capital stock or other equity interests in any
corporation,
partnership, joint venture, association or other entity.
Section 3.4 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Company has the requisite corporate power and authority
to
enter into this Agreement and, subject to receipt of the Company
Stockholder
Approval (as hereinafter defined), to consummate the transactions
contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the
transactions contemplated hereby have been duly and validly
authorized by the
Board of Directors of the Company, acting upon the unanimous
recommendation of
the Special Committee, and, except for (i) the Company Stockholder
Approval and
(ii) the filing of the Certificate of Merger with the Secretary of
State of the
State of
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<PAGE>
Connecticut, no other corporate proceedings on the part of the
Company are
necessary to authorize the consummation of the transactions
contemplated hereby.
As of the date hereof, each of the Board of Directors of the
Company (with 2
directors abstaining) and the Special Committee of the Board of
Directors has
unanimously resolved to recommend that the Company's stockholders
approve this
Agreement and the transactions contemplated hereby (including the
Special
Committee's recommendation, the "RECOMMENDATION"). This Agreement
has been duly
and validly executed and delivered by the Company and, assuming
this Agreement
constitutes the valid and binding agreement of Parent and Merger
Sub,
constitutes the valid and binding agreement of the Company,
enforceable against
the Company in accordance with its terms, subject to the effects of
bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar
Laws relating to or affecting creditors' rights generally, general
equitable
principles (whether considered in a proceeding in equity or at Law)
and any
implied covenant of good faith and fair dealing.
(b) Other than in connection with or in compliance with (i) the
CBCA,
(ii) the Securities Exchange Act of 1934 (the "EXCHANGE Act"),
(iii) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
ACT"), (iv)
Council Regulation (EC) 139/2004 of the European Community, as
amended (the
"ECMR") and any other antitrust, competition or similar laws of any
foreign
jurisdiction and (v) the approvals set forth on Section 3.4(b) of
the Company
Disclosure Letter (collectively, the "COMPANY APPROVALS"), no
authorization,
consent or approval of, or filing with, any United States or
foreign
governmental or regulatory agency, commission, court, body, entity
or authority
(each, a "GOVERNMENTAL ENTITY") is necessary, under applicable Law,
for the
consummation by the Company of the transactions contemplated
hereby, except for
such authorizations, consents, approvals or filings that, if not
obtained or
made, would not have, individually or in the aggregate, a Company
Material
Adverse Effect.
(c) The execution, delivery and performance by the Company of
this
Agreement does not, and the consummation of the transactions
contemplated hereby
and compliance with the provisions hereof by the Company will not,
(i) result in
any violation of, or default (with or without notice or lapse of
time, or both)
under, require consent under, or give rise to a right of
termination,
cancellation or acceleration of any obligation or to the loss of
any benefit
under any loan, guarantee of indebtedness or credit agreement,
note, bond,
mortgage, indenture, lease, agreement, contract, instrument,
permit, Company
Permit, concession, franchise, right or license binding upon the
Company or any
of its Subsidiaries or result in the creation of any liens, claims,
mortgages,
encumbrances, pledges, security interests, equities or charges of
any kind
(each, a "LIEN") upon any of the properties or assets of the
Company or any of
its Subsidiaries, (ii) conflict with or result in any violation of
any provision
of the certificate or articles of incorporation or by-laws or other
equivalent
organizational document of the Company or any of its Subsidiaries
or (iii)
assuming that the consents and approvals referred to in Section
3.4(b) are duly
obtained, conflict with or violate any applicable Laws or orders
applicable to
the Company or any of its Subsidiaries, other than, in the case of
clause (i),
as would not have, individually or in the aggregate, a Company
Material Adverse
Effect.
Section 3.5 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company and its Subsidiaries have filed all forms,
documents,
statements and reports required to be filed prior to the date
hereof by them
with the Securities
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<PAGE>
and Exchange Commission (the "SEC") since January 1, 2004 (the
forms, documents,
statements and reports filed with the SEC since January 1, 2004 and
those filed
with the SEC subsequent to the date of this Agreement, if any,
including any
amendments thereto, the "COMPANY SEC DOCUMENTS"). As of their
respective dates,
or, if amended, as of the date of the last such amendment prior to
the date
hereof, the Company SEC Documents complied, and each of the Company
SEC
Documents filed subsequent to the date of this Agreement will
comply, in all
material respects with the requirements of the Securities Act of
1933, as
amended (the "SECURITIES ACT"), and the Exchange Act, as the case
may be, and
the applicable rules and regulations promulgated thereunder. None
of the Company
SEC Documents so filed or that will be filed subsequent to the date
of this
Agreement contained or will contain, as the case may be, any untrue
statement of
a material fact or omitted to state any material fact required to
be stated
therein or necessary to make the statements made therein, in the
light of the
circumstances under which they were made, not misleading.
(b) The financial statements (including all related notes and
schedules) of the Company and its Subsidiaries included in the
Company SEC
Documents (i) fairly present in all material respects the financial
position of
the Company and its Subsidiaries, as at the respective dates
thereof, and the
results of their operations and their cash flows for the respective
periods then
ended (subject, in the case of the unaudited statements, to normal
year-end
audit adjustments and to any other adjustments described therein,
including the
notes thereto) in conformity with United States generally accepted
accounting
principles ("GAAP") (except, in the case of the unaudited
statements or foreign
Subsidiaries, as permitted by the SEC) applied on a consistent
basis during the
periods involved (except as may be indicated therein or in the
notes thereto)
and (ii) have complied as to form in all material respects with the
published
rules and regulations of the SEC with respect thereto.
Section 3.6 INTERNAL CONTROLS AND PROCEDURES. The Company has
established and maintains disclosure controls and procedures and
internal
control over financial reporting (as such terms are defined in
paragraphs (e)
and (f), respectively, of Rule 13a-15 under the Exchange Act) as
required by
Rule 13a-15 under the Exchange Act. The Company's disclosure
controls and
procedures are reasonably designed to ensure that all material
information
required to be disclosed by the Company in the reports that it or
they file
under the Exchange Act are recorded, processed, summarized and
reported within
the time periods specified in the rules and forms of the SEC, and
that all such
material information is accumulated and communicated to the
management of the
Company as appropriate to allow timely decisions regarding required
disclosure
and to make the certifications required pursuant to Sections 302
and 906 of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations
promulgated thereunder (the "SARBANES-OXLEY ACT"). The management
of the Company
has completed its assessment of the effectiveness of the Company's
internal
control over financial reporting in compliance with the
requirements of Section
404 of the Sarbanes-Oxley Act for the year ended December 31, 2005,
and such
assessment concluded that such controls were effective. The Company
has
disclosed, based on its most recent evaluation, to the Company's
outside
auditors and the audit committee of the board of directors of the
Company, (A)
all significant deficiencies and material weaknesses in the design
or operation
of internal controls over financial reporting (as defined in Rule
13a-15(f) of
the Exchange Act) which are reasonably likely to adversely affect
in any
material respect the Company's ability to record, process,
summarize and report
financial data
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<PAGE>
and (B) any fraud, whether or not material, that involves
management or other
employees who have a significant role in the Company's internal
controls over
financial reporting.
Section 3.7 NO UNDISCLOSED LIABILITIES. Except (i) as reflected
or
reserved against in the Company's consolidated balance sheets (or
the notes
thereto) included in the Company SEC Documents filed prior to the
date hereof,
(ii) for transactions contemplated by this Agreement or the
financing of such
transactions and (iii) for liabilities and obligations incurred in
the ordinary
course of business consistent with past practice since December 31,
2005,
neither the Company nor any Subsidiary of the Company has any
liabilities or
obligations of any nature, whether or not accrued, contingent or
otherwise,
whether known or unknown and whether due or to become due, that
would,
individually or in the aggregate, have a Company Material Adverse
Effect.
Section 3.8 COMPLIANCE WITH LAW; PERMITS.
(a) The Company and each of its Subsidiaries is, and since the
later
of December 31, 2004 and its respective date of formation or
organization has
been, in compliance with and is not in default under or in
violation of any
applicable federal, state, local or foreign or provincial law,
statute,
ordinance, rule, regulation, judgment, order, injunction, decree or
agency
requirement of or undertaking to or agreement with any Governmental
Entity,
including common law, (collectively, "LAWS" and each, a "LAW"),
except where
such non-compliance, default or violation would not have,
individually or in the
aggregate, a Company Material Adverse Effect.
(b) The Company and its Subsidiaries are in possession of all
franchises, tariffs, grants, authorizations, licenses, permits,
easements,
variances, exceptions, consents, certificates, approvals and orders
of any
Governmental Entity necessary for the Company and its Subsidiaries
to own, lease
and operate their properties and assets or to carry on their
businesses as they
are now being conducted (the "COMPANY PERMITS"), except where the
failure to
have any of the Company Permits would not have, individually or in
the
aggregate, a Company Material Adverse Effect. All Company Permits
are in full
force and effect, except where the failure to be in full force and
effect would
not have, individually or in the aggregate, a Company Material
Adverse Effect.
No suspension or cancellation of any of the Company Permits is
pending or, to
the Knowledge of the Company, threatened, except where such
suspension or
cancellation would not, individually or in the aggregate, have a
Company
Material Adverse Effect. The Company and its Subsidiaries are not,
and since
December 31, 2004 have not been, in violation or breach of, or
default under,
any Company Permit, except where such violation, breach or default
would not,
individually or in the aggregate, have a Company Material Adverse
Effect. As of
the date of this Agreement, to the Knowledge of the Company, no
event or
condition has occurred or exists which would result in a violation
of, breach,
default or loss of a benefit under, or acceleration of an
obligation of the
Company or any of its Subsidiaries under, any Company Permit (in
each case, with
or without notice or lapse of time or both), except for violations,
breaches,
defaults, losses or accelerations that would not, individually or
in the
aggregate, have a Company Material Adverse Effect.
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<PAGE>
Section 3.9 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as disclosed in the Company SEC Documents filed prior
to
the date hereof and except as would not, individually or in the
aggregate, have
a Company Material Adverse Effect, (i) the Company and each of its
Subsidiaries
have conducted their respective businesses in compliance with all
applicable
Environmental Laws (as hereinafter defined), (ii) there has been no
Release of
any Hazardous Substance by the Company or any of its Subsidiaries
in any manner
that could reasonably be expected to give rise to any remedial
obligation or
corrective action requirement under applicable Environmental Laws,
(iii) neither
the Company nor any of its Subsidiaries has received in writing any
notices,
demand letters or requests for information from any federal, state,
local or
foreign or provincial Governmental Entity or any other person
asserting that the
Company or any of its Subsidiaries is in violation of, or liable
under, any
Environmental Law except for any notices, demand letters or
requests for
information that have been resolved, (iv) no Hazardous Substance
has been
Released or transported in violation of any applicable
Environmental Law, or in
a manner giving rise to any liability under Environmental Law, from
any
properties while owned or operated by the Company or any of its
Subsidiaries or
as a result of any operations or activities of the Company or any
of its
Subsidiaries and (v) neither the Company, its Subsidiaries, to the
Company's
Knowledge, its Company Joint Ventures nor any of their respective
current or
former properties are, or, to the Knowledge of the Company,
threatened to
become, subject to any liabilities relating to any suit,
settlement, court
order, administrative order, regulatory requirement, judgment or
written claim
asserted or arising under any Environmental Law or any agreement
relating to
environmental liabilities.
(b) As used herein, "ENVIRONMENTAL LAW" means any Law relating to
(i)
the protection, preservation or restoration of the environment
(including air,
surface water, groundwater, drinking water supply, surface land,
subsurface
land, plant and animal life or any other natural resource), or (ii)
the exposure
to, or the use, storage, recycling, treatment, generation,
transportation,
processing, handling, labeling, production, release or disposal of
Hazardous
Substances, in each case as in effect at the date hereof.
(c) As used herein, "HAZARDOUS SUBSTANCE" means any substance
listed,
defined, designated, classified or regulated as hazardous, toxic,
radioactive or
dangerous under any Environmental Law. Hazardous Substance includes
any
substance to which exposure is regulated by any Governmental Entity
or any
Environmental Law as a toxic waste, pollutant, contaminant,
hazardous substance
or material, toxic substance, hazardous waste, special waste or
petroleum or any
derivative or byproduct thereof, radon, radioactive material,
asbestos or
asbestos containing material, urea formaldehyde, foam insulation
or
polychlorinated biphenyls. As used herein, "RELEASE" when used as a
verb, means
release, spill, leak, emit, deposit, discharge, leach, migrate or
dispose of
Hazardous Substances into the environment or in any building or
structure, or
any location that poses a threat thereof and, when used as a noun,
has a
corresponding meaning.
Section 3.10 EMPLOYEE BENEFIT PLANS.
(a) Section 3.10(a)(i) of the Company Disclosure Letter lists
all
Company Benefit Plans with respect to which the Company or any of
its
Subsidiaries has or could
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<PAGE>
reasonably be expected to have any material liabilities. "COMPANY
BENEFIT PLANS"
means all compensation or employee benefit plans, programs,
policies, agreements
or other arrangements, whether or not "employee benefit plans"
(within the
meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974,
as amended ("ERISA"), whether or not subject to ERISA), providing
cash- or
equity-based incentives, health, medical, dental, disability,
accident or life
insurance benefits or vacation, severance, retirement, pension or
savings
benefits, that are sponsored, maintained or contributed to by the
Company or any
of its Subsidiaries for the benefit of employees, directors or
consultants
employed or formerly employed by, or providing services to, the
Company or its
Subsidiaries in the United States and all employment agreements
providing
compensation, vacation, severance or other benefits to any employee
or
consultant employed or formerly employed by, or providing services
to, the
Company or its Subsidiaries in the United States. For purposes of
this
Agreement, the term "COMPANY FOREIGN PLAN" shall refer to each
material plan,
program or contract that is subject to or governed by the laws of
any
jurisdiction other than the United States, and which would have
been treated as
a Company Benefit Plan had it been a United States plan, program or
contract.
Section 3.10(a)(ii) of the Company Disclosure Letter lists all
Company Foreign
Plans with respect to which the Company or any of its Subsidiaries
has or could
reasonably be expected to have any material liabilities. The
Company shall use
its reasonable best efforts to make available to Parent within
thirty (30) days
following the date of this Agreement copies of the Company Foreign
Plans. Except
as would not, individually or in the aggregate, have a Material
Adverse Effect,
there does not now exist, and there are no existing circumstances
that would
reasonably be expected to result in, any Controlled Group Liability
that would
be a liability of the Company or any of its Subsidiaries following
the Closing.
"CONTROLLED GROUP LIABILITY" means any and all liabilities (i)
under Title IV of
ERISA (as defined in Section 4.15(a)(ii)), (ii) under Section 302
of ERISA,
(iii) under Sections 412 and 4971 of the Code, (iv) resulting from
a violation
of the continuation coverage requirements of Section 601 ET SEQ. of
ERISA and
Section 4980B of the Code or the group health plan requirements of
Sections 601
ET SEQ. of the Code and Section 601 ET SEQ. of ERISA and (v) under
corresponding
or similar provisions of foreign laws or regulations, other than
liabilities
that arise solely out of, or relate solely to, the Company Benefit
Plans or the
Company Foreign Plans.
(b) The Company has made available to Parent correct and
complete
copies of (i) all plan documents related to the Company Benefit
Plans, (ii) all
trust agreements or other funding media related to the Company
Benefit Plans,
(iii) the three most recent annual reports, including audited
financial
statements, for all Company Benefit Plans required to file such
reports, (iv) to
the extent applicable, the most recent actuarial valuation
performed with
respect to each Company Benefit Plan and (v) if any Company Benefit
Plan is
intended to be "qualified" under Section 401 of the Code, the most
recent
determination letter issued by the Internal Revenue Service with
respect to that
Plan.
(c) Except for such claims which would not have, individually or
in
the aggregate, a Company Material Adverse Effect, no action,
dispute, suit,
claim, arbitration, or legal, administrative or other proceeding or
governmental
action (other than claims for benefits in the ordinary course) is
pending or, to
the Knowledge of the Company, threatened with respect to any
Company Benefit
Plan (other than a "multiemployer plan" (within the meaning of
Section
4001(a)(3) of ERISA) (a "MULTIEMPLOYER PLAN")) by any current or
former
employee, officer or director of the Company or any of its
Subsidiaries.
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<PAGE>
(d) Each Company Benefit Plan (other than a Multiemployer Plan)
has
been maintained and administered in compliance with its terms and
with
applicable Law, including ERISA and the Code to the extent
applicable thereto,
except for such non-compliance which would not have, individually
or in the
aggregate, a Company Material Adverse Effect. Any Company Benefit
Plan (other
than a Multiemployer Plan) intended to be qualified under Section
401(a) or
401(k) of the Code has received a favorable determination letter
from the United
States Internal Revenue Service that has not been revoked and to
the Knowledge
of the Company, no fact or event has occurred since the date of
such
determination letter or letters from the Internal Revenue Service
that would
reasonably be expected to affect adversely the qualified status of
any such
Company Benefit Plan. Neither the Company nor any of its
Subsidiaries maintains
or contributes to any plan or arrangement which provides medical
benefits to any
employee or former employee following his retirement, except as
required by
applicable Law or as provided in individual agreements upon a
severance event.
(e) With respect to each Company Benefit Plan (other than a
Multiemployer Plan) that is subject to Title IV or Section 302 of
ERISA or
Section 412 or 4971 of the Code, (i) there does not exist any
accumulated
funding deficiency within the meaning of Section 412 of the Code or
Section 302
of ERISA, (ii) all premiums to the Pension Benefit Guaranty
Corporation (the
"PBGC") have been timely paid in full, (iii) the PBGC has not
instituted
proceedings to terminate any such Company Benefit Plan, (iv) there
has been no
"reportable event" as defined in Section 4043 of ERISA for which
the 30-day
notice requirement has not been waived, (v) except as disclosed in
Section
3.10(e) of the Company Disclosure Letter the fair market value of
the assets of
each such Company Benefit Plan, based upon the actuarial
assumptions used for
funding purposes in the most recent actuarial report prepared by
such Company
Benefit Plan's actuary with respect to such Company Benefit Plan,
are at least
equal to the actuarial present value of all benefits accrued under
such Company
Benefit Plan, and (vi) other than the payment of premiums described
above in
this Section 3.10(e) no liability to the PBGC with respect to any
such Company
Benefit Plan has been incurred or is reasonably likely to be
incurred by reason
of the transactions contemplated by this Agreement.
(f) All contributions required to be made to any Company Benefit
Plan
by applicable Law or by any plan document or other contractual
undertaking, and
all premiums due or payable with respect to insurance policies
funding any
Company Benefit Plan, for any period through the date hereof have
been timely
made or paid in full or, to the extent not required to be made or
paid on or
before the date hereof, have been fully reflected on the financial
statements
included in the Company SEC Documents.
(g) Neither the Company nor its Subsidiaries has, at any time
for
which any relevant statute of limitations remains open, contributed
to or been
required to contribute to any Multiemployer Plan other than as
listed in Section
3.10(g) of the Company Disclosure Letter. Neither the Company nor
any Subsidiary
has incurred any material liability to any Multiemployer Plan as a
result of a
complete or partial withdrawal from such Multiemployer Plan (as
those terms are
defined in part I of Subtitle E of Title IV of ERISA) nor has the
Company or any
Subsidiary received any written notice that any such Multiemployer
Plan is in
reorganization, has been terminated, is insolvent or may reasonably
be expected
to be in reorganization, terminated or insolvent.
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<PAGE>
(h) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another
event, (i)
entitle any current or former employee, consultant or officer of
the Company or
any of its Subsidiaries to severance pay, retention bonuses,
non-competition
payments, unemployment compensation or any other payment, except as
expressly
provided in this Agreement or as required by applicable Law, (ii)
accelerate the
time of payment or vesting, or increase the amount of compensation
due any such
employee, consultant or officer, except as expressly provided in
this Agreement,
(iii) result in any forgiveness of indebtedness or obligation to
fund benefits
with respect to any such employee, director or officer, (iv) result
in any
payment that would reasonably be expected to constitute an "excess
parachute
payment" as defined in Section 280G (b)(i) of the Code or (v)
entitle any
current or former officer or employee of the Company to any gross
up payment
with respect to any excise tax imposed under Section 4999 of the
Code.
(i) All Company Foreign Plans (i) have been maintained in all
material
respects in accordance with all applicable requirements, (ii) if
they are
intended to qualify for special Tax treatment meet all material
requirements for
such treatment, and (iii) if they are required to be funded and/or
book-reserved
are funded and/or book-reserved, as appropriate, based upon
reasonable actuarial
assumptions and in accordance with applicable Law.
Section 3.11 INTERESTED PARTY TRANSACTIONS. Except for
employment
Contracts filed or incorporated by reference as an exhibit to a
Company SEC
Document filed prior to the date hereof, this Agreement and the
Limited
Guarantees, or Company Benefit Plans, Section 3.11 of the Company
Disclosure
Letter sets forth a correct and complete list of the contracts or
arrangements
that are in existence as of the date of this Agreement under which
the Company
has any existing or future liabilities that would be required to be
reported by
the Company pursuant to Item 404 of Regulation S-K promulgated by
the SEC
between the Company or any of its Subsidiaries, on the one hand,
and, on the
other hand, any (A) present officer or director of either the
Company or any of
its Subsidiaries or any person that has served as such an officer
or director
within the past two years or any of such officer's or director's
immediate
family members, (B) record or beneficial owner of more than 5% of
the Shares as
of the date hereof, or (C) to the Knowledge of the Company, any
Affiliate of any
such officer, director or owner (other than the Company or any of
its
Subsidiaries) (each, an "AFFILIATE TRANSACTION"). The Company has
provided to
Parent correct and complete copies of each Contract or other
relevant
documentation (including any amendments or modifications thereto)
available as
of the date hereof providing for each Affiliate Transaction.
Section 3.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31,
2005, except as otherwise required or contemplated by this
Agreement, (a) the
business of the Company and its Subsidiaries has been conducted, in
all material
respects, in the ordinary course of business consistent with past
practice, (b)
prior to the date hereof, no event has occurred and no action has
been taken
that would be prohibited by the terms of Section 5.1(b) hereof if
such section
had been in effect as of and at all times since December 31, 2005
except for
such events or actions that would not have, individually or in the
aggregate, a
Company Material Adverse Effect and (c) there have not been any
facts,
circumstances, events, changes, effects or occurrences that have
had or would
have, individually or in the aggregate, a Company Material Adverse
Effect.
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<PAGE>
Section 3.13 INVESTIGATIONS; LITIGATION. There are no (i)
investigations or proceedings pending (or, to the Knowledge of the
Company,
threatened) by any Governmental Entity with respect to the Company
or any of its
Subsidiaries or (ii) actions, suits or proceedings pending (or, to
the Knowledge
of the Company, threatened) against or affecting the Company or any
of its
Subsidiaries, or any of their respective properties, at Law or in
equity before,
and there are no orders, judgments or decrees of, any Governmental
Entity
against the Company or any of its Subsidiaries, in each case of
clause (i) or
(ii), which have had or would have, individually or in the
aggregate, a Company
Material Adverse Effect.
Section 3.14 PROXY STATEMENT; OTHER INFORMATION. The
information
included or incorporated by reference to the Proxy Statement (as
hereinafter
defined) will not at the time of the mailing of the Proxy Statement
to the
stockholders of the Company, at the time of the Company Meeting,
and at the time
of any amendments thereof or supplements thereto, and the
information supplied
or to be supplied by the Company for inclusion or incorporation by
reference in
the Schedule 13E-3 (as hereinafter defined) to be filed with the
SEC
concurrently with the filing of the Proxy Statement, will not, at
the time of
its filing with the SEC, and at the time of any amendments thereof
or
supplements thereto, contain any untrue statement of a material
fact or omit to
state any material fact required to be stated therein or necessary
in order to
make the statements therein, in light of the circumstances under
which they were
made, not misleading; PROVIDED that no representation is made by
the Company
with respect to information supplied by Parent or any Affiliate of
Parent. The
Proxy Statement and the Schedule 13E-3 will comply as to form in
all material
respects with the Exchange Act, except that no representation is
made by the
Company with respect to information supplied by Parent or any
Affiliate of
Parent. The letter to stockholders, notice of meeting, proxy
statement and forms
of proxy to be distributed to stockholders in connection with the
Merger to be
filed with the SEC in connection with seeking the adoption and
approval of this
Agreement are collectively referred to herein as the "PROXY
STATEMENT." The Rule
13E-3 Transaction Statement on Schedule 13E-3 to be filed with the
SEC in
connection with seeking the adoption and approval of this Agreement
is referred
to herein as the "SCHEDULE 13E-3."
Section 3.15 TAX MATTERS.
(a) Except as would not have, individually or in the aggregate,
a
Company Material Adverse Effect, (i) the Company and each of its
Subsidiaries
have prepared and timely filed (taking into account any extension
of time within
which to file) all Tax Returns required to be filed by any of them
and all such
Tax Returns are complete and accurate, (ii) the Company and each of
its
Subsidiaries have timely paid all Taxes that are required to be
paid by any of
them (whether or not shown on any Tax Return), except with respect
to matters
contested in good faith and for which adequate reserves have been
established on
the financial statements of the Company and its Subsidiaries in
accordance with
GAAP, (iii) the U.S. consolidated federal income Tax Returns of the
Company
through the Tax year ending 2002 have been examined or are
currently being
examined by the Internal Revenue Service (or the period for
assessment of the
Taxes in respect of which such Tax Returns were required to be
filed has
expired), (iv) all assessments for Taxes due with respect to
completed and
settled examinations or any concluded litigation have been fully
paid, (v) there
are no audits, examinations, investigations or other proceedings
pending or
threatened in writing in respect of Taxes or Tax matters of the
Company or any
of its Subsidiaries, (vi) there are no Liens for Taxes on any of
the assets of
the Company
-18-
<PAGE>
or any of its Subsidiaries other than statutory Liens for Taxes not
yet due and
payable or Liens for Taxes that are being contested in good faith
and for which
adequate reserves have been established on the financial statements
of the
Company and its Subsidiaries in accordance with GAAP, (vii) none of
the Company
or any of its Subsidiaries has been a "controlled corporation" or
a
"distributing corporation" in any distribution that was purported
or intended to
be governed by Section 355 of the Code (or any similar provision of
state, local
or foreign Law) (A) occurring during the two-year period ending on
the date
hereof, or (B) that otherwise constitutes part of a "plan" or
"series of related
transactions" (within the meaning of Section 355(e) of the Code)
that includes
the Merger, (viii) the Company and each of its Subsidiaries has
timely withheld
and paid all Taxes required to have been withheld and paid in
connection with
amounts paid or owing to any employee, creditor, independent
contractor,
shareholder or other third party and is in compliance with all
applicable rules
and regulations regarding the solicitation, collection and
maintenance of any
forms, certifications and other information required in connection
therewith,
(ix) neither the Company nor any of its Subsidiaries is a party to
any agreement
or arrangement relating to the apportionment, sharing, assignment
or allocation
of any Tax or Tax asset (other than an agreement or arrangement
solely among
members of a group the common parent of which is the Company) or
has any
liability for Taxes of any Person (other than the Company or any of
its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
predecessor or
successor thereof or any analogous or similar provision of Law), by
contract,
agreement or otherwise, (x) no waivers or extensions of any statute
of
limitations have been granted or requested with respect to any
Taxes of the
Company or any of its Subsidiaries, and (xi) no Taxing authority
with respect to
which the Company and its Subsidiaries do not file Tax Returns has
delivered
written notice to the Company or any of its Subsidiaries that the
they are or
may be subject to Taxes by that Taxing authority.
(b) As used in this Agreement, (i) "TAX" or "TAXES" means (A) any
and
all federal, state, local or foreign or provincial taxes, imposts,
levies or
other assessments, including all net income, gross receipts,
capital, sales,
use, ad valorem, value added, transfer, franchise, profits,
inventory, capital
stock, license, withholding, payroll, employment, social security,
unemployment,
excise, severance, stamp, occupation, property and estimated taxes,
customs
duties, fees, assessments and charges of any kind whatsoever,
including any and
all interest, penalties, fines, additions to tax or additional
amounts imposed
by any Governmental Entity with respect thereto, and (B) any
liability in
respect of any items described in clause (A) payable by reason of
contract,
assumption, transferee liability, operation of Law, Treasury
Regulation Section
1.1502-6(a) (or any predecessor or successor thereof of any
analogous or similar
provision of Law) or otherwise, and (ii) "TAX RETURN" means any
return, report
or similar filing (including any attached schedules, supplements
and additional
or supporting material) filed or required to be filed with respect
to Taxes,
including any information return, claim for refund, amended return
or
declaration of estimated Taxes (and including any amendments with
respect
thereto).
Section 3.16 LABOR MATTERS. Except for such matters which would
not
have, individually or in the aggregate, a Company Material Adverse
Effect,
neither the Company nor any of its Subsidiaries has received
written notice
during the past two years of the intent of any Governmental Entity
responsible
for the enforcement of labor, employment, occupational health and
safety or
workplace safety and insurance/workers compensation Laws to conduct
an
investigation of the Company or any of its Subsidiaries and, to the
Knowledge of
the Company,
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<PAGE>
no such investigation is in progress. Except as set forth in
Section 3.16 of the
Company Disclosure Letter, none of the Company or any of its
Subsidiaries is a
party to, or is bound by, any collective bargaining agreement,
contract or other
agreement or understanding with a labor union or labor
organization. Except for
such matters which would not have, individually or in the
aggregate, a Company
Material Adverse Effect, (i) there are no (and have not been during
the two year
period preceding the date hereof) strikes or lockouts with respect
to any
employees of the Company or any of its Subsidiaries, (ii) to the
Knowledge of
the Company, there is no (and has not been during the two year
period preceding
the date hereof) union organizing effort pending or threatened
against the
Company or any of its Subsidiaries, (iii) there is no (and has not
been during
the two year period preceding the date hereof) unfair labor
practice, labor
dispute (other than routine individual grievances) or labor
arbitration
proceeding pending or, to the Knowledge of the Company, threatened
against the
Company or any of its Subsidiaries and (iv) there is no (and has
not been during
the two year period preceding the date hereof) slowdown, or work
stoppage in
effect or, to the Knowledge of the Company, threatened with respect
to
employees. Except for such non-compliance which would not have,
individually or
in the aggregate, a Company Material Adverse Effect, the Company
and each of its
Subsidiaries is in compliance with all applicable Laws respecting
employment and
employment practices, terms and conditions of employment, wages and
hours and
occupational safety and health (including, without limitation,
classifications
of service providers as employees and/or independent
contractors).
Section 3.17 INTELLECTUAL PROPERTY. Except as would not have,
individually or in the aggregate, a Company Material Adverse
Effect, either the
Company or a Subsidiary of the Company owns, or is licensed or
otherwise
possesses adequate rights to use, all trademarks, trade names,
service marks,
service names, logos, assumed names, copyrights (including
copyrights in
computer software), patents, inventions, trade secrets, proprietary
processes,
methodologies and know-how, and any registrations and applications
for
registration of any of the foregoing used in their respective
businesses as
currently conducted (collectively, the "INTELLECTUAL PROPERTY").
Except as would
not have, individually or in the aggregate, a Company Material
Adverse Effect,
(i) there are no pending or, to the Knowledge of the Company,
threatened claims
by any person alleging that the conduct of the business of the
Company or any of
its Subsidiaries infringes, misappropriates or dilutes the
intellectual property
rights of any third party, (ii) to the Knowledge of the Company,
the conduct of
the business of the Company and its Subsidiaries does not infringe
any
intellectual property rights of any person, (iii) neither the
Company nor any of
its Subsidiaries has made any claim of a violation or infringement
by others of
its rights to or in connection with the Intellectual Property of
the Company or
any of its Subsidiaries and (iv) to the Knowledge of the Company,
no person is
infringing any Intellectual Property of the Company or any of its
Subsidiaries.
Except as would not have, individually or in the aggregate, a
Company Material
Adverse Effect, all trademark registrations and applications for
trademark
registration, patents and patent applications, copyright
registrations and
applications for copyright registration held in the name of the
Company or any
of its Subsidiaries are subsisting and in good standing, and, to
the Knowledge
of the Company, with respect to issued patents, trademark and
copyright
registrations held in the name of the Company or any of its
Subsidiaries, valid
and enforceable.
Section 3.18 PROPERTY. Section 3.18 of the Company Disclosure
Letter
contains a complete and accurate listing of all material real
property owned or
leased by the Company and
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<PAGE>
its Subsidiaries. Except as would not have, individually or in the
aggregate, a
Company Material Adverse Effect, the Company or a Subsidiary of the
Company owns
and has good and indefeasible title to all of its owned real
property and good
title to all its personal property and has valid leasehold
interests in all of
its leased properties, sufficient to conduct their respective
businesses as
currently conducted, free and clear of all Liens (except in all
cases for Liens
permissible under all applicable loan agreements and indentures and
for title
exceptions, defects, encumbrances, liens, charges, restrictions,
restrictive
covenants and other matters, whether or not of record, which in the
aggregate do
not materially affect the continued use of the property for the
purposes for
which the property is currently being used), assuming the timely
discharge of
all obligations owing under or related to the owned real property,
the personal
property and the leased property. Except as would not have,
individually or in
the aggregate, a Company Material Adverse Effect, all leases under
which the
Company or any of its Subsidiaries lease any real or personal
property are valid
and effective against the Company or any of its Subsidiaries and,
to the
Company's Knowledge, the counterparties thereto, in accordance with
their
respective terms, and there is not, under any of such leases, any
existing
default by the Company or any of its Subsidiaries or, to the
Company's
Knowledge, the counterparties thereto, or, to the Company's
Knowledge, event
which, with notice or lapse of time or both, would become a default
by the
Company or any of its Subsidiaries or, to the Company's Knowledge,
the
counterparties thereto.
Section 3.19 OPINION OF FINANCIAL ADVISOR. The Board of Directors
of
the Company and the Special Committee have received the opinion of
Merrill
Lynch, Pierce, Fenner & Smith Incorporated, dated as of the
date hereof, to the
effect that, as of the date hereof, the Merger Consideration is
fair to the
holders of the Company Common Stock (other than those holders that
are parties
to a Rollover Commitment, Parent and Merger Sub) from a financial
point of view.
The Company has provided to Parent a correct and complete copy of
such opinion
or, if such opinion has not been delivered to the Special Committee
or the
Company in written form as of the execution of this Agreement, then
the Special
Committee or the Company shall make a correct and complete copy of
any such
opinion received by it available to Parent or any of its Affiliates
promptly
following its delivery to the Special Committee or the Company in
written form.
Section 3.20 REQUIRED VOTE OF THE COMPANY STOCKHOLDERS. The only
vote
of holders of securities of the Company which is required to
approve this
Agreement, the Merger and the other transactions contemplated
hereby (the
"COMPANY STOCKHOLDER APPROVAL") is the affirmative vote of the
holders of
outstanding shares of Company Common Stock, voting together as a
single class,
representing at least a majority of all the votes then entitled to
vote at a
meeting of stockholders.
Section 3.21 MATERIAL CONTRACTS.
(a) Except for this Agreement, the Company Benefit Plans or as
filed
with the SEC prior to the date hereof, neither the Company nor any
of its
Subsidiaries is a party to or bound by, as of the date hereof, any
Contract
(whether written or oral) (i) which is a "material contract" (as
such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) to the
Company; (ii)
which constitutes a contract or commitment relating to indebtedness
for borrowed
money or the deferred purchase price of property (in either case,
whether
incurred, assumed, guaranteed or secured by any asset) in excess of
$5,000,000;
(iii) which contains any provision
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<PAGE>
that prior to or following the Effective Time would by its terms
restrict or
alter the conduct of business of, or purport to restrict or alter
the conduct of
business of, the Company, any of its Subsidiaries, Parent or, to
the Company's
Knowledge, any Affiliate of the Parent; and (iv) which by its terms
calls for
aggregate payments by the Company or any of its Su
