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Exhibit 2.1
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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
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS
1
Section 1.01.
Certain Definitions
1
ARTICLE II THE MERGER
6
Section 2.01.
The Merger
6
Section 2.02.
Effect of Merger
6
Section 2.03.
Additional Actions
6
Section 2.04.
Certificate of Incorporation By-laws, Directors and
Officers of the Surviving Corporation
7
Section 2.05.
Effect of Merger on Capital Stock of Constituent
Corporations
7
Section 2.06.
Effect of Merger on Company Stock Options and Company
Warrants
9
Section 2.07.
Withholding
10
ARTICLE III PAYMENT OF MERGER CONSIDERATION
10
Section 3.01.
Merger Consideration
10
Section 3.02.
Post-Closing Adjustment of Merger Consideration
11
Section 3.03.
Escrow Agreement and Escrow Fund
14
Section 3.04.
Exchange of Certificates Representing Company Securities
14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
16
Section 4.01.
Organization
16
Section 4.02.
Subsidiaries
17
Section 4.03.
Capitalization
17
Section 4.04.
Authorization
18
Section 4.05. No
Violation
18
Section 4.06.
Approvals
19
Section 4.07.
Financial Statements
19
Section 4.08.
Absence of Certain Transactions
20
Section 4.09.
Taxes
21
Section 4.10.
Litigation
23
Section 4.11.
Environmental Matters
23
Section 4.12.
Title to Property
25
Section 4.13.
Condition of Property
26
Section 4.14.
Contracts
26
Section 4.15.
Employee and Labor Matters and Plans
27
Section 4.16.
Insurance Policies
30
Section 4.17.
Intellectual Property
30
Section 4.18.
Permits
30
Section 4.19.
Compliance with Laws
31
Section 4.20.
Brokerage Fees
31
Section 4.21.
Affiliate Agreements
31
Section 4.22. No
Other Representations or Warranties
31
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
32
Section 5.01.
Organization
32
Section 5.02.
Authorization
32
Section 5.03. No
Violation
32
Section 5.04.
Approvals
33
Section 5.05.
Litigation
33
Section 5.06.
Available Funds
33
Section 5.07.
Brokerage Fees
34
Section 5.08. No
Other Representations or Warranties
34
ARTICLE VI COVENANTS
34
Section 6.01.
Interim Operations of the Company
34
Section 6.02.
Access to Information
36
Section 6.03.
Consents and Approvals
37
Section 6.04.
Employment Matters
38
Section 6.05.
Publicity
39
Section 6.06.
Notification of Certain Matters
40
Section 6.07.
Directors' and Officers' Indemnification
40
Section 6.08.
Additional Agreements
41
Section 6.09.
Cooperation with Financing
41
Section 6.10.
Conduct of Business of Parent and Merger Sub
Pending the Merger
42
Section 6.11. No
Adverse Change in Financial Commitments
42
Section 6.12.
Termination of Affiliate Contracts
42
Section 6.13.
Stockholder Approval; Stockholder Notice
43
Section 6.14. No
Solicitation or Negotiation
43
Section 6.15.
Repayment of Outstanding Indebtedness
43
Section 6.16.
Consultation
44
Section 6.17.
Real Property Matters
44
Section 6.18.
Additional Financial Statements
44
Section 6.19. No
Control of Other Party's Business
45
ARTICLE VII CONDITIONS
45
Section 7.01.
Conditions to the Obligations of All Parties
45
Section 7.02.
Conditions to the Obligations of Parent and
Merger Sub
45
Section 7.03.
Conditions to the Obligations of the Company
46
ARTICLE VIII CLOSING; TERMINATION
47
Section 8.01.
Closing
47
Section 8.02.
Termination
48
Section 8.03.
Effect of Termination
48
ARTICLE IX GENERAL PROVISIONS
49
Section 9.01.
Non-Survival of Representations and Warranties
49
Section 9.02.
Costs and Expenses
49
Section 9.03.
Notices
49
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Section 9.04.
Stockholders Representative
51
Section 9.05.
Counterparts
51
Section 9.06.
Entire Agreement
51
Section 9.07.
Governing Law; Exclusive Jurisdiction
51
Section 9.08.
Third Party Rights; Assignment
52
Section 9.09.
Waivers and Amendments
52
Section 9.10.
Schedules
52
Section 9.11.
Enforcement
52
Section 9.12.
[Reserved.]
53
Section 9.13.
Headings; Interpretation
53
Section 9.14.
Nonliability of Trustees
53
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INDEX OF SCHEDULES
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
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INDEX OF DEFINED TERMS
Accounting Firm
12
Actual Balance Sheet
11
Actual Net Working Capital
11
Additional Financial Statements
44
Additional Transaction Bonuses
1
Affiliate
2
Agreement
1
Antitrust Division
37
Balance Sheet Date
19
Certificate of Merger
6
Certificates
14
Closing
47
Closing Date
2
Closing Transaction Bonus Payout Amount
10
Code
2
Company
1
Company Balance Sheet
19
Company Closing Costs
2
Company Common Stock
2
Company Material Adverse Effect
2
Company Preferred Stock
17
Company Securities
13
Company Stock
2
Company Stock Option
9
Company Stock Option Exercise Price
9
Company Subsidiary
2
Company Warrant
2
Company Warrant Exercise Price
9
Confidentiality Agreement
36
Constituent Corporations
6
Covered Parties
40
Covered Party
40
D&T
12
Dataroom
3
Declaration
53
DGCL
1
Dissenting Shares
8
Effective Time
3
Employee Plan
27
Environmental Law
3
Environmental Permit
3
ERISA
3
ERISA Affiliate
3
Escrow Agent
14
Escrow Agreement
14
Escrow Amount
14
Escrow Fund
14
Estimated Merger Consideration
11
Estimated Net Working Capital
11
Estimated Per Share Merger Consideration
11
Excess Payment
13
Exchange Act
3
Exchange Agent
14
Exchange Fund
14
Final Statement
13
Financial Statements
19
Financing
33
Financing Commitment
33
FIRPTA Certificate
15
FTC
37
Fully Diluted Basis
3
GAAP
3
Good Faith Deposit
47
Governmental Antitrust Authority
37
Governmental Entity
3
Hazardous Materials
3
HSR Act
3
Indebtedness
4
Intellectual Property
30
Intercompany Indebtedness
4
Interest Factor
4
IRS
4
Judgment
4
knowledge
4
Law
4
Leased Premises
25
Letter of Transmittal
14
Liabilities
4
Lien
4
Material Contracts
27
Merger
1
Merger Consideration
10
Merger Sub.
1
Net Working Capital
11
Notice of Disagreement
12
Oak Hill
1
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Owned Property
25
Parent
1
Parent Closing Costs
4
Payment Shortfall
13
Per Share Merger Consideration
11
Permits
5
Person
5
Proceeding
5
PWC
44
Recipients
13
Requisite Regulatory Approvals
5
SEC
5
Secretary of State
6
Securities
41
Securities Act
5
Special Costs
5
Stock Option Plan
9
Stockholder Approval
5
Stockholder Notice
43
Stockholders
1
Stockholders Agreement
5
Stockholders Representative
1
Subsidiary
5
Surveys
26
Surviving Corporation
6
Target Net Working Capital
5
Tax Return
23
Taxes
23
Transaction Bonus Agreements
6
Warrant Agreement
6
Working Capital Adjustment Amount
11
Working Capital Statement
11
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.
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"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
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"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
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"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
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"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
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"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
6
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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
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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.
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(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.
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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");
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(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
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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.
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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,
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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
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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.
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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
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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
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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
additional stock (other than upon the exercise or conversion of
outstanding options, warrants or convertible securities),
warrants, options or any other similar rights to acquire
Company
Stock or any shares of capital stock of any Company Subsidiary,
or (iv) split, combined or reclassified any shares of Company
Stock or any shares of capital stock of any Company Subsidiary
or
issued or authorized the issuance of any other securities in
respect of, in lieu of or in substitution for shares of, shares
