Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
by and among
AMREP CORPORATION
KABLE MEDIA SERVICES, INC.
GLEN GARRY ACQUISITION, INC.
PALM COAST DATA HOLDCO, INC.
PALM COAST
DATA, LLC
and
THE SELLERS SET FORTH ON THE SIGNATURE PAGE HERETO
Dated as of November 7, 2006
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<PAGE>
TABLE OF CONTENTS
ARTICLE I THE MERGER
SECTION 1.1 The
Merger....................................................2
SECTION 1.2 Closing Date and
Effective Time...............................2
SECTION 1.3
Closing.......................................................3
ARTICLE II MERGER CONSIDERATION
SECTION 2.1 Conversion of
Shares..........................................6
SECTION 2.2 Stock Appreciation
Rights; Options; Phantom Debt..............7
SECTION 2.3 Pre-Closing
Adjustment........................................9
SECTION 2.4 Post-Closing
Adjustment......................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF HOLDINGS
SECTION 3.1 Organization and
Authority...................................12
SECTION 3.2
Capitalization...............................................13
SECTION 3.3 Consents and
Approvals; No Violations........................14
SECTION 3.4 Financial
Statements.........................................15
SECTION 3.5 Absence of Material
Adverse Changes, etc.....................15
SECTION 3.6 No Undisclosed
Liabilities...................................17
SECTION 3.7
Taxes........................................................17
SECTION 3.8 Employee Benefit
Plans.......................................19
SECTION 3.9 Environmental
Matters........................................21
SECTION 3.10
Legal Proceedings, etc.......................................22
SECTION 3.11
Compliance with Applicable Law...............................22
SECTION 3.12
Certain Contracts and Arrangements...........................23
SECTION 3.13
Real Property................................................25
SECTION 3.14
Employees; Labor Matters.....................................27
SECTION 3.15
Insurance....................................................27
SECTION 3.16
Intellectual Property........................................28
SECTION 3.17
Customers....................................................29
SECTION 3.18
Certain Fees.................................................29
SECTION 3.19
Title to Assets..............................................30
SECTION 3.20
Receivables..................................................30
SECTION 3.21
Suppliers....................................................30
SECTION 3.22
Geographic Limitations.......................................30
SECTION 3.23
Records......................................................30
SECTION 3.24
Bank Accounts................................................31
SECTION 3.25
Indebtedness.................................................31
SECTION 3.26
Absence of Certain Business Practices........................31
SECTION 3.27
Disclosure...................................................32
SECTION 3.28
Disclaimer of Warranties by Holdings.........................32
<PAGE>
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SECTION 4.1 Organization and
Authority...................................32
SECTION 4.2 Holdings Share
Ownership.....................................33
SECTION 4.3 Consents and
Approvals; No Violations........................33
SECTION 4.4 Certain
Fees.................................................33
SECTION 4.5 Legal Proceedings,
etc.......................................33
SECTION 4.6 Disclaimer of
Warranties.....................................34
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
SECTION 5.1 Corporate Organization
and Authority.........................34
SECTION 5.2 Consents and
Approvals; No Violations........................35
SECTION 5.3 Legal Proceedings,
etc.......................................36
SECTION 5.4 Certain
Fees.................................................37
SECTION 5.5 Acquisition of
Holdings Shares for Investment................37
SECTION 5.6
Financing....................................................37
SECTION 5.7 Investigation by
Parent; Holdings' Liability.................37
SECTION 5.8 Disclaimer of
Warranties.....................................38
ARTICLE VI COVENANTS
SECTION 6.1 Conduct of the
Business......................................38
SECTION 6.2 Access to Information
and Real Property; Confidentiality.....40
SECTION 6.3 Delivery of Monthly
Financial Statements.....................40
SECTION 6.4 Reasonable Best
Efforts......................................41
SECTION 6.5 Governmental
Authorizations..................................41
SECTION 6.6 Public
Announcements.........................................42
SECTION 6.7 Employee
Matters.............................................42
SECTION 6.8 Tax
Matters..................................................43
SECTION 6.9 Audit;
Cooperation...........................................44
SECTION 6.10
Return of Insurance Receivables..............................44
SECTION 6.11
Update.......................................................45
SECTION 6.12
Further Assurances...........................................45
SECTION 6.13
Restrictive Covenants........................................45
ARTICLE VII CONDITIONS TO PARENT'S OBLIGATION TO CLOSE
SECTION 7.1 Representations and
Warranties; Covenants....................48
SECTION 7.2 Absence of Legal
Proceedings.................................49
SECTION 7.3 Consents and
Terminations....................................49
SECTION 7.4 Additional
Conditions........................................49
SECTION 7.5 HSR
Act......................................................50
SECTION 7.6
Deliverables.................................................50
SECTION 7.7 Restructuring
Transactions...................................50
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<PAGE>
ARTICLE VIII CONDITIONS TO HOLDINGS' OBLIGATIONS TO CLOSE
SECTION 8.1 Representations and
Warranties; Covenants....................50
SECTION 8.2 Absence of Legal
Proceedings.................................50
SECTION 8.3 HSR
Act......................................................50
SECTION 8.4
Deliverables.................................................51
ARTICLE IX TERMINATION
SECTION 9.1
Termination..................................................51
SECTION 9.2 Procedure and Effect
of Termination..........................51
ARTICLE X INDEMNIFICATION
SECTION 10.1
Survival.....................................................52
SECTION 10.2
Indemnification Provisions for Benefit of Parent.............53
SECTION 10.3
Indemnification Provisions for Benefit of Sellers............55
SECTION 10.4
Special Indemnification Provisions for Benefit of Parent.....55
SECTION 10.5
Exclusive Remedy.............................................55
SECTION 10.6
Manner of Payment............................................56
ARTICLE XI MISCELLANEOUS
SECTION 11.1
Certain Definitions..........................................56
SECTION 11.2
Notices......................................................56
SECTION 11.3
Interpretation...............................................57
SECTION 11.4
Amendments, Modification and Waiver..........................57
SECTION 11.5
Expenses.....................................................58
SECTION 11.6
Release......................................................58
SECTION 11.7
Successors and Assigns; Binding Effect.......................58
SECTION 11.8
Governing Law................................................59
SECTION 11.9
Jurisdiction; Forum..........................................59
SECTION 11.10
Severability.................................................59
SECTION 11.11 Third
Party Beneficiaries....................................59
SECTION 11.12
Schedules; Materiality.......................................59
SECTION 11.13 Entire
Agreement.............................................60
SECTION 11.14
Counterparts; Facsimile Delivery.............................60
SECTION 11.15 Specific
Performance.........................................60
SECTION 11.16 Sellers'
Representative......................................61
ARTICLE XII GUARANTEE
SECTION 12.1
Publico Guarantee............................................62
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<PAGE>
INDEX OF DEFINED TERMS
Action......................................................................22
Adverse
Consequences........................................................55
Affected
Employee...........................................................43
Affiliates..................................................................15
Aggregate Liquidation
Preference.............................................7
Aggregate Option
Amount......................................................8
Agreement....................................................................1
Annualized Adjusted
EBITDA...................................................9
Annualized Adjusted Net
Revenues............................................10
Applicable Option
Amount.....................................................8
Applicable SAR
Amount........................................................8
Audit.......................................................................45
Certificate of
Merger........................................................2
Class A Common
Stock.........................................................1
Class B Common
Stock.........................................................1
Closing......................................................................3
Closing
Date.................................................................2
Closing
Notice..............................................................51
Closing
Statement...........................................................10
Closing Working
Capital.....................................................11
Code........................................................................20
Company......................................................................1
Company Common
Interests....................................................14
Company Intellectual
Property...............................................29
Confidential
Information....................................................48
Confidentiality
Agreement...................................................41
Current
Assets..............................................................10
Current
Liabilities.........................................................11
Debt
Amount..................................................................4
DGCL.........................................................................2
Disclosure
Schedule.........................................................12
Effective
Time...............................................................2
Employee Benefit
Plans......................................................19
Encumbrances................................................................15
Environmental
Claim.........................................................21
Environmental
Laws..........................................................21
ERISA.......................................................................19
ERISA
Affiliate.............................................................19
Escrow
Agent.................................................................5
Escrow
Agreement.............................................................5
Escrow
Amount................................................................5
Estimated Working
Capital....................................................9
Extension
Notice............................................................53
Final
Statement.............................................................10
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<PAGE>
Financial
Statements........................................................15
Fully Diluted
Basis.........................................................12
GAAP.........................................................................9
Governmental
Authority......................................................15
Hazardous
Materials.........................................................21
Holdings.....................................................................1
Holdings
Breach.............................................................55
Holdings
Shares..............................................................1
HSR
Act.....................................................................42
Indemnification
Basket......................................................55
Indemnification
Cap.........................................................55
Independent Accounting
Firm.................................................11
Insurance
Proceeds..........................................................46
Intellectual
Property.......................................................28
June Balance
Sheet..........................................................15
June Financial
Statements...................................................15
Knowledge of
Holdings.......................................................58
Law.........................................................................22
Leased Real
Property........................................................26
Leases......................................................................26
Liability...................................................................16
MAE Change
Date.............................................................51
Material Adverse
Effect.....................................................58
Material
Contracts..........................................................23
Material
Customers..........................................................29
Material Maintenance
Contracts..............................................23
Material
Supplier...........................................................31
Merger.......................................................................1
Merger
Consideration.........................................................9
Merger Consideration
Decrease...............................................12
Merger Consideration
Increase...............................................11
Merger
Sub...................................................................1
Operating
Leases............................................................10
Option
Agreements............................................................8
Options......................................................................1
Owned Real
Property.........................................................26
Parent.......................................................................1
Parent
Breach...............................................................56
Per Escrow
Amount............................................................7
Per Share
Amount.............................................................7
Permits.....................................................................22
Permitted
Encumbrances......................................................25
Person......................................................................13
Phantom
Debt.................................................................1
Plan.........................................................................1
Post-Closing Tax
Return.....................................................44
Predecessor.................................................................15
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Preferred
Holder.............................................................4
Preferred
Shares.............................................................1
Prior
Agreements............................................................25
Prior
Sellers...............................................................25
Publico......................................................................1
Real
Property...............................................................26
Release.....................................................................21
Released
Parties............................................................60
Representatives.............................................................41
Restructuring
Transactions...................................................1
SARs.........................................................................1
Seller
Claims...............................................................60
Seller Releasing
Parties....................................................60
Sellers......................................................................1
Sellers'
Representative.....................................................63
Subsidiary..................................................................13
Supplemental
Disclosure.....................................................46
Surviving
Company............................................................2
Target Working
Capital.......................................................9
Tax.........................................................................19
Tax
Return..................................................................19
Tax
Returns.................................................................19
Taxes.......................................................................19
Termination
Date............................................................53
Transfer
Taxes..............................................................45
Working
Capital.............................................................10
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<PAGE>
AGREEMENT AND
PLAN OF MERGER, dated as of November 7, 2006 (this
"Agreement"), by and
among KABLE MEDIA SERVICES, INC., a Delaware corporation
---------
("Parent"), GLEN
GARRY ACQUISITION, INC., a Delaware corporation and a
------
wholly-owned
subsidiary of Parent ("Merger Sub"), PALM COAST DATA HOLDCO,
INC.,
----------
a Delaware corporation
("Holdings"),
and the Persons (as defined in Section
--------
3.1(a) hereof) set
forth on the signature page hereto and designated as sellers
(the "Sellers") and, with respect to Section 12.1 only,
AMREP CORPORATION, an
-------
Oklahoma corporation ("Publico").
-------
WITNESSETH
WHEREAS, the Board of
Directors of Parent and the Board of
Directors of
Merger Sub have each approved this Agreement and the merger of Merger
Sub with
and into Holdings,
whereby each outstanding share of Class A Common Stock,
par
value $0.01 per share (the "Class A Common Stock"), and Class B Common Stock,
---------------------
par value $0.01 per share (the "Class B Common Stock"), of Holdings (the
---------------------
"Holdings Shares")
will be converted into the right to receive the Per
Share
----------------
Amount (as defined in
Section 2.1 hereof) in
accordance with this
Agreement,
upon the terms and subject to the conditions and limitations set forth herein
(the "Merger");
------
WHEREAS, the
Board of Directors and stockholders of Holdings have
unanimously determined
that the Merger is
fair to, advisable
and in the best
interests of Holdings and its stockholders and have unanimously approved this
Agreement, the Merger and the other transactions contemplated by
this Agreement;
WHEREAS, the members
of the management of
Palm Coast Data LLC, a Delaware
limited liability company (the "Company") have each elected to
settle for a cash
-------
payment, pursuant to
Section 2.2(c) of this
Agreement,
all of the issued
and
outstanding stock appreciation rights that have been allocated to
phantom equity
("SARs"), all amounts
allocated to phantom debt under the Incentive Agreements
----
set forth in Section 2.2(a) of the Disclosure Schedule (as defined herein)
(the
"Phantom Debt") and,
pursuant to Section 2.2(b) of this Agreement, all of the
------------
issued and outstanding
options to acquire
Class B Common Stock (the "Options")
-------
under Holdings' 2005 Stock Option Plan (the "Plan");
----
WHEREAS, in connection
with the Restructuring
Transactions
described in
Section 1.1 of the
Disclosure
Schedule (the "Restructuring Transactions"),
---------------------------
Holdings will issue shares of its Series A Redeemable Voting Preferred Stock,
par value $0.01 per share (the "Preferred Shares"), which, as a result of the
-----------------
Merger, will be
converted into the
right to receive the Aggregate Liquidation
Preference (as defined in Section 2.1 hereof) in accordance with
this Agreement,
upon the terms and subject to the conditions and limitations set
forth herein.
NOW,
THEREFORE,
in consideration of the representations, warranties,
covenants, agreements
and conditions
hereafter set forth,
and intending to be
legally bound hereby, the parties hereto agree as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
----------
(a)
The Merger. Upon the
terms and subject to the satisfaction or waiver,
----------
if permissible, of the
conditions hereof,
at the Effective
Time, Merger Sub
shall be merged
with and into Holdings, whereupon the separate corporate
existence of Merger Sub shall cease, and Holdings shall survive and
continue to
exist (Holdings,
as the surviving corporation in the Merger, is sometimes
referred to herein as the "Surviving Company").
(b)
Name. The name of the
Surviving Company shall be "Palm Coast Data
----
Holdco, Inc."
(c)
Certificate of Incorporation and Bylaws. As of the Effective
Time, the
----------------------------------------
certificate of
incorporation
and bylaws of the Surviving Company shall be
amended and
restated in their entirety to read as the certificate of
incorporation and bylaws, respectively, of Merger Sub as in effect
immediately
prior to the Merger,
in each case until
thereafter amended in
accordance with
applicable Law (as
defined in
Section 3.11 hereof), except as set forth in
Section 1.1(b) hereof.
(d)
Directors and Officers of the Surviving Company. The directors of
--------------------------------------------------
Merger Sub immediately
before the Merger shall comprise all of the directors of
the Surviving Company
immediately
after the Merger,
each of whom shall
serve
until such time as their successors shall be duly elected. The officers of
Merger Sub immediately
before the Merger
shall comprise all of the officers of
the Surviving Company
immediately
after the Merger,
each of whom shall
serve
until such time as their successors shall be duly elected.
(e)
Effect of the Merger.
At the Effective Time,
the effect of the Merger
--------------------
shall be as provided in Section 259 of the Delaware General
Corporation Law (the
"DGCL"). At the
Effective Time, all Holdings Shares held by Parent shall be
cancelled and
extinguished
and no additional
consideration
shall be payable
therefor.
SECTION 1.2 Closing Date and Effective Time. Subject to the
satisfaction or
-------------------------------
waiver, if
permissible,
of the conditions set
forth in Articles VII and VIII,
other than those
conditions that by
their nature are to be
satisfied at the
consummation of the
Merger, but subject to the fulfillment or waiver, if
permissible, of those
conditions,
the parties
shall cause a
certificate
of
merger relating to the Merger (the "Certificate of Merger") to be
filed with the
---------------------
Secretary of State of
the State of
Delaware pursuant to the DGCL on (i) the
later of (x) January
16, 2007 and (y) a date selected by Parent after such
satisfaction or waiver
that is no later than five (5) business days after such
satisfaction or
waiver, or (ii) such other date to which the parties may
mutually agree (the "Closing Date"). The Merger shall become
effective upon such
------------
filing of the Certificate of Merger (the "Effective Time").
--------------
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<PAGE>
SECTION 1.3 Closing.
-------
(a)
The closing of the
transactions
contemplated by this
Agreement (the
"Closing") shall take
place at the offices of DLA Piper US LLP, 1200 Nineteenth
-------
Street, NW,
Washington, D.C. 20036
at 10:00 a.m., local time, or at such other
place and time as the parties shall mutually agree, on the Closing
Date.
(b)
At the Closing,
Holdings shall
deliver or cause to be
delivered the
following to Parent:
(i) a certificate
of an officer of
Holdings in form and substance
reasonably
satisfactory to
Parent, dated as of
the Closing Date, to
the
effect that the
conditions specified
in Sections 7.1, 7.2
and 7.4 hereof
have
been fulfilled;
(ii) the stockholder
records and minute
books of Holdings and the
limited liability company member records and minute books of the
Company;
(iii) a certificate
of an officer of
Holdings in form and
substance
satisfactory to Parent, to be dated as of the Closing Date,
attaching (A) a
copy
of the resolutions duly adopted by the Board of Directors of
Holdings,
authorizing and
approving the execution, delivery and performance of
this
Agreement and the transactions contemplated hereby and any other
documents
or
instruments
contemplated hereby,
and certifying that
such resolutions
have
not been rescinded,
revoked, amended or modified and remain in
full
force and effect as of
the Closing,
(B) a copy of the
resolutions
duly
adopted by the
stockholders of
Holdings, approving and adopting this
Agreement and the
transactions
contemplated hereby,
and certifying
that
such
resolutions have not been rescinded, revoked, amended or modified
and
remain in full force and effect as of the Closing, (C) a true, correct and
complete copy of the certificate of incorporation and bylaws of Holdings,
as
amended to date, and
certifying
that such documents
are in full force
and
effect as of the Closing, and (D) incumbency, authority and specimen
signatures of each of the officers of Holdings executing this
Agreement and
any
other document or instrument executed on behalf of Holdings in
connection with the
transactions
contemplated
hereby and certifying
the
authenticity of such signatures;
(iv) a certificate
from the Secretary of State of the State of
Delaware as to (A)
Holdings' incorporation, valid existence and good
standing as a domestic
corporation in the
State of Delaware
and (B) the
Company's formation,
valid existence and good standing as a domestic
limited liability
company in the State of Delaware, together with a
certificate of
good standing from the Secretary of State or other
appropriate governmental official of each jurisdiction in which
Holdings or
the
Company, as applicable, is qualified to conduct its business as a
foreign entity, all dated no more than five days prior to the
Closing Date;
(v) the resignations
of the members of the Board of Directors of
Holdings and the Board of Managers of the Company;
(vi) an executed
counterpart to the
Escrow Agreement (as
defined in
Section 1.3(c)(vi) hereof);
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<PAGE>
(vii) certificates
representing
all Company
Common Interests (as
defined in Section
3.2(b) hereof);
(viii) all
appropriate
payoff
letters or other documentation
sufficient to evidence satisfaction and payment of the outstanding
balances
under all Indebtedness
(as defined in Section
3.25 hereof) of the Company
and
Holdings, which Holdings and the Sellers have represented is the
Indebtedness listed in
Section 1.3(b)(viii)
of the Disclosure Schedule
(other than any
Indebtedness
which is specified in Section 1.1 of the
Disclosure Schedule as
not being repaid at the Closing), and any interest
therein or thereon or other amounts payable with respect thereto
(the "Debt
----
Amount"), and all
applicable
Encumbrance
(as defined in Section
3.3(a)
------
hereof) releases,
cancelled notes or
other evidence of Indebtedness duly
marked as cancelled;
(ix) the third party consents and documents evidencing the
termination
of
the agreements, in
each case as specified in Section 1.3(b)(ix) of the
Disclosure Schedule;
(x) certificates
from each of the
Sellers substantially
in the form
set
forth in Treasury Regulation Section 1.1445-2(b);
(xi) an opinion
from DLA Piper US LLP
addressed to the Parent and
dated as of the Closing Date in substantially the form attached hereto as
Exhibit A;
(xii) evidence of the payment of all bonuses accrued through the date
of
Closing under the Company's 2006 Incentive Compensation Plan;
(xiii) evidence of the
completion of the
Restructuring
Transactions
immediately prior to the Closing; and
(xiv) all other
documents required to
be delivered by Holdings on or
prior to the Closing Date pursuant to this Agreement, or otherwise
required
from
Holdings in connection herewith to consummate the transactions
contemplated herein.
(c)
At the Closing, Parent shall deliver:
(i) to each holder of Holdings Shares, the Per Share Amount in cash
multiplied by the aggregate number of Holdings Shares next to the name of
such
holder in Section 4.2 of the Disclosure Schedule by wire transfer of
immediately available funds to the bank accounts designated by such
Holders
not
less than three business days prior to the Closing;
(ii) to each holder of Preferred Shares (the "Preferred Holder"),,
an
----------------
amount in cash
equal to the Aggregate Liquidation Preference of such
Preferred Shares by
wire transfer of
immediately available
funds to the
bank
accounts designated by such Preferred Holder not less than three
business days prior to the Closing;
(iii) on behalf of Holdings or the Company, as applicable, the Debt
Amount, by wire
transfer of immediately available funds to the bank
account(s)
designated in
the payoff letters described in Section
1.3(b)(viii), in the
amounts and in the
manner specified
in such payoff
letters;
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<PAGE>
(iv) on behalf of Holdings, to each holder of SARs, the portion of
the
Aggregate SAR Amount
allocable to such holder, as calculated pursuant to
Section 2.2(c)
hereof, less any amounts required to be withheld under
applicable Law, by wire transfer of immediately available funds to
the bank
accounts designated by such Holder prior to the Closing;
(v) on behalf of Holdings, to each holder of Options,
the portion of
the
Aggregate Option Amount allocable to such holder, as calculated
pursuant to Section 2.2(b)
hereof, less any amounts required to be withheld
under applicable
Law, by wire transfer
of immediately
available funds to
the
bank accounts designated by such Holder prior to the Closing;
(vi) to an escrow agent (the "Escrow Agent"), mutually acceptable to
------------
Parent and Holdings, as part of the Merger Consideration, an amount equal
to
$3,500,000
(the "Escrow Amount") pursuant to an escrow agreement,
--------------
substantially in the
form attached hereto as Exhibit B (the "Escrow
------
Agreement"), in order
to secure the
indemnification
obligations
of the
---------
Sellers pursuant to Section 10.2 hereof;
(vii) to Holdings, a
certificate of an
officer of Parent in form and
substance reasonably
satisfactory
to Holdings, dated as of the Closing
Date, to the effect that the conditions specified in Sections 8.1 and
8.2
hereof have been fulfilled;
(viii) to Holdings,
a certificate of the Secretary or Assistant
Secretary of Parent in form and substance satisfactory to Holdings,
to be
dated as of the Closing Date, attaching (A) a copy of the
resolutions duly
adopted by the Board of Directors of Parent, authorizing and approving the
execution, delivery
and performance of this Agreement and the transactions
contemplated hereby
and any other
documents or
instruments
contemplated
hereby, and
certifying
that such resolutions have not been rescinded,
revoked, amended or
modified and remain in full force and effect as of the
Closing, (B) a true,
correct and complete
copy of each of the certificate
of
incorporation and
bylaws of Parent, as
amended to date, and certifying
that
such documents are in full force and effect as of the Closing, and
(C)
incumbency, authority
and specimen
signatures of each of
the officers of
Parent executing
this Agreement and any other document or instrument
executed on
behalf of Parent in connection with the transactions
contemplated hereby and certifying the authenticity of such
signatures;
(ix) to Holdings, an executed counterpart to the Escrow Agreement;
and
(x) all other documents required to be delivered by Parent on or
prior
to
the Closing Date pursuant to this Agreement or otherwise
required from
Parent in connection
herewith to consummate the transactions contemplated
herein.
(d)
At the Closing, Merger Sub shall deliver to Holdings:
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<PAGE>
(i) a certificate
of an officer of
Merger Sub in form and
substance
satisfactory to Holdings, to be dated as of the Closing Date,
attaching (A)
a
copy of the resolutions duly adopted by the Board of
Directors of Merger
Sub,
authorizing and
approving the execution, delivery and performance of
this
Agreement and the transactions contemplated hereby and any other
documents or instruments contemplated hereby, and certifying that such
resolutions have not
been rescinded,
revoked, amended or modified and
remain in full
force and effect as of the Closing, (B) a copy of the
resolutions duly
adopted by the Parent as the stockholder of Merger Sub,
approving and adopting this Agreement and the transactions contemplated
hereby, and
certifying
that such resolutions have not been rescinded,
revoked, amended or
modified and remain in full force and effect as of the
Closing, (C) a true,
correct and complete copy of the certificate of
incorporation and
bylaws of Merger Sub, as amended to date, and certifying
that
such documents are in full force and effect as of the Closing, and
(D)
incumbency, authority
and specimen
signatures of each of
the officers of
Merger Sub executing
this Agreement and any
other document or
instrument
executed on behalf
of Merger Sub in connection with the transactions
contemplated hereby and certifying the authenticity of such
signatures; and
(ii) to Holdings,
all other documents required to be delivered by
Merger Sub on or prior to the Closing Date pursuant to this Agreement or
otherwise required from Merger Sub in connection herewith to
consummate the
transactions contemplated herein.
(e)
At the Closing, each Seller shall deliver to Parent:
(i) a certificate
of such Seller in form and substance reasonably
satisfactory to
Parent, dated as of
the Closing Date, to
the effect that
the
conditions
specified in Sections 7.1, 7.2 and 7.4 hereof have been
fulfilled;
(ii) an executed counterpart to the Escrow Agreement;
(iii) stock
certificates
representing all of the Holdings Shares and
Preferred Shares owned by such Seller, if any; and
(iv) evidence
of the settlement of all of the SARs, Options and
Phantom Debt held by
such Seller,
if any, in the manner specified in
Section 2.3 of this Agreement.
ARTICLE II
MERGER CONSIDERATION
SECTION 2.1 Conversion of Shares.
--------------------
(a)
Subject to the provisions of this Agreement, each Holdings Share
issued
and outstanding
immediately prior to the Effective Time shall, by virtue of the
Merger, be
cancelled and shall as of the Effective Time automatically be
converted into and
shall thereafter
only represent (i) the right to receive
- 6 -
<PAGE>
cash, without any
interest, in the
amount of the Per Share Amount and (ii) the
right to receive
in cash such
Holdings Shares' pro rata share, on a Fully
Diluted Basis (as
defined in Section 2.4(c) hereof), of any amounts to be
distributed or paid to
the Sellers
pursuant to the Escrow
Agreement and any
other amounts to be distributed or paid to the Sellers pursuant to the terms of
this Agreement. For
purposes of this Agreement, the "Per Share Amount" and the
----------------
"Per Share Escrow
Amount" shall be calculated as set forth in Section 2.1(a) of
------------------------
the Disclosure Schedule.
(b)
Subject to the
provisions of this
Agreement,
each Preferred Share
issued and outstanding
immediately prior to the Effective Time shall, by virtue
of the Merger, be cancelled and shall as of the Effective Time
automatically be
converted into and
shall thereafter
only represent the
right to receive cash,
without any
interest, in the amount of the liquidation preference for such
Preferred Share as
provided in Holdings'
Amended and Restated
Certificate of
Incorporation
establishing the terms
of the Preferred
Shares (the
"Aggregate
---------
Liquidation Preference").
----------------------
(c)
At the Effective Time,
the transfer books of
Holdings shall be closed
as to holders of Holdings Shares and Preferred Shares immediately prior to the
Effective Time and no
transfer of Holdings
Shares or Preferred
Shares by any
such holder shall thereafter be made or recognized.
(d)
At and after the Effective Time, each share of common stock 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 of the Surviving Company and the common stock so
converted shall
constitute the only outstanding capital stock of the Surviving
Company.
SECTION 2.2 Stock Appreciation Rights; Options; Phantom Debt.
------------------------------------------------
(a)
Effective as of the date of this
Agreement,
each of the Amended
and
Restated Incentive Agreements (the "Incentive Agreements") between Holdings
and
the holders of phantom debt ("Phantom Debt") as set forth in Section
2.2(a) of
-------------
the Disclosure
Schedule shall be further amended to provide that the holder
may
elect to receive
payment of such Phantom Debt that is otherwise payable in the
future under Section 4
of the Incentive
Agreements as of the
later of (i) the
Effective Time or (ii) January 2, 2007 (the "Payment Date"). By executing this
-------------
Agreement, each such holder agrees to such amendment and elects
under his or her
Incentive Agreement,
as amended by this
Agreement, to receive
payment of such
Phantom Debt on the
Payment Date.
Thus, on the Payment Date, Parent shall
settle, or cause to be
settled, on behalf of
Holdings and its Subsidiary, all
amounts allocated to Phantom Debt under the Incentive Agreements,
as amended by
this Agreement,
whether or not such
Phantom Debt is then vested or exercisable
(it being understood
that any outstanding
Phantom Debt shall vest in full upon
the Closing), for a
dollar amount
applicable to such Phantom Debt as set forth
in Section 2.2(a) of
the Disclosure
Schedule (the "Applicable Phantom Debt
------------------------
Amount"). Each Phantom Debt holder who is entitled to receive his
or her portion
------
of the Applicable
Phantom Debt Amount,
all of whom are
Sellers, shall
accept
such amount (less payroll tax withholdings) in full settlement
and discharge of
all rights of the Phantom Debt holder as to all of the
Phantom Debt that he
or
she holds under the applicable Incentive Agreement, as amended by this
Agreement. In addition, any unpaid interest on such Phantom Debt
provided for in
Sections 4(a)(ii) and
4(a)(iii) of the Incentive Agreements, as accrued after
- 7 -
<PAGE>
the last full calendar
quarter ending immediately before the Closing Date
through the Closing Date, shall be paid to the applicable
holder on the
Closing
Date.
(b)
At the Effective Time, Parent shall settle, or cause to be settled,
on
behalf of Holdings and its Subsidiary, each outstanding Option
granted under the
2005 Stock Option Plan between Holdings and the holders of Options
and listed in
Section 2.2(b) of the Disclosure Schedule (together, the "Option Agreements"),
------------------
whether or not such Options are then vested or exercisable (it
being understood
that any outstanding Options shall vest in full upon the Closing),
for a dollar
amount equal to the excess of the Per Share Amount over the Exercise Price as
set forth in Section 2.2(b) of the Disclosure Schedule (such excess, if any,
in
respect of such Option, the "Applicable Option Amount").
Each Option holder
who
------------------------
is entitled to receive the Applicable Option Amount, all of whom are Sellers,
shall accept such
amount (less
applicable payroll tax
withholdings)
in full
settlement and discharge of all rights of the Option holder for
each Option that
he or she holds under the applicable Option Agreement. The
aggregate amount paid
at Closing pursuant to
this Section 2.2(b)
(including applicable
withholding
taxes) shall be referred to in this Agreement as the "Aggregate
Option Amount."
-----------------------
(c)
At the Effective Time, Parent shall settle, or cause to be settled,
on
behalf of Holdings and its Subsidiary, each outstanding SAR granted under
the
Incentive Agreements,
whether or not such
SARs are then vested or exercisable
(it being understood
that any outstanding SARs shall vest in full upon the
Closing), for a dollar
amount equal to the SAR Exercise Price in respect of the
SAR (which for purposes of this Section 2.2(c) shall equal the Per
Share Amount)
(the "Applicable
SAR Amount").
Such payment shall be
made pursuant to Section
----------------------
4(e) of the Incentive
Agreements, and Parent
agrees to amend such Section 4(e)
by the end of 2007 (or
by such later
time as is permitted by the Internal
Revenue Service) to
provide that such payments may only be made in the event of
a "change in control,"
as defined in the final regulations to be issued under
Section 409A of the Code and to otherwise amend such Incentive Agreements to
comply with
Section 409A of the Code and the final
regulations
to be issued
thereunder. Each SAR
holder who is
entitled to receive the Applicable SAR
Amount, all of whom
are Sellers,
shall accept such amount (less applicable
payroll tax
withholdings) in full settlement and discharge of all rights of
the
SAR holder
for each SAR that he
or she holds under the
applicable
Incentive
Agreement. The aggregate amount paid at the Effective Time
(including applicable
withholding taxes)
shall be referred to in this Agreement as the "Aggregate SAR
-------------
Amount".
------
(d)
Notwithstanding anything to the contrary in Sections 2.2(b) and
2.2(c),
each holder of SARs
and each holder of
Options shall be
entitled to receive
their pro rata share, on a Fully Diluted Basis, of any amounts to
be distributed
or paid to Sellers
pursuant to the Escrow Agreement and any other amounts to be
distributed or paid to
the Sellers pursuant
to the terms of this Agreement (in
each case, less
applicable
payroll tax
withholdings).
All amounts payable
pursuant to
Sections 2.2(b) and 2.2(c) shall be paid by wire transfer of
immediately available
funds to the bank
accounts designated by
the applicable
Sellers prior to the Closing.
(e)
Notwithstanding
anything to the
contrary in Section 2.2(a) hereof, if
the Closing occurs before January 2, 2007, Parent on the Closing Date, in
lieu
of making future
payments of Phantom Debt under Section 4 of the Incentive
- 8 -
<PAGE>
Agreements or making payments of Phantom Debt under Section 2.2(a)
hereof, shall
instead deposit an amount equal to the aggregate amount of such payments into a
separate subaccount in
the escrow account
established
pursuant to the
Escrow
Agreement, to be paid
on January 2, 2007, as
contemplated
by Section
2.2(a)
hereof. Such subaccount shall be subject to the creditors of
Parent. No interest
shall be added to the funds in such subaccount other than interest
earned by the
escrow subaccount itself.
(f)
The amendment
and election described in Section 2.2(a) hereof are
intended to comply with the IRS's transition rules under Section 409A of the
Code, as set forth in the preamble to Section 1.409A-1,
et seq. of the
Proposed
Treasury Regulations
and in Notice
2006-79, and, therefore, to result in a
permissible amendment
and election as to timing and form of the payment of
deferred compensation
under Section 409A to the extent such
amounts would not
otherwise be payable in 2006 and to the extent such amendment and
election would
not cause an amount to be paid in 2006 that would not otherwise be payable in
2006, under a good faith interpretation of the Incentive Agreements, Section
409A of the Code and applicable guidance thereunder. The required amendment to
Section 4(e) of the
Incentive Agreements
that is described in
Section 2.2(c)
hereof is intended to allow payment under Section 4(e) of the Incentive
Agreements in
good-faith
compliance
with Section 409A of the Code and the
applicable guidance thereunder.
SECTION 2.3 Pre-Closing Adjustment.
----------------------
(a)
The "Target Working Capital" is $1,800,000. At least three (3) but not
----------------------
more than five (5) business days prior to Closing,
Holdings shall deliver to
Parent a statement that sets forth Holdings' good faith estimate of
the Working
Capital of Holdings
estimated through
and including the Closing Date (the
"Estimated Working Capital"). The Estimated Working Capital
shall be determined
-------------------------
in accordance with generally accepted accounting principles
("GAAP"), except
as
----
set forth in Section 3.4 of the Disclosure Schedule, using the same methodology
(in terms of selection of GAAP accounting policies and principles) as was
used
to prepare Holding's unaudited consolidated balance sheet as of June 30,
2006.
If Parent disputes
Holdings' calculation of the Estimated Working Capital,
Parent shall notify Holdings of such dispute at least one (1)
business day prior
to Closing and in such event the Estimated Working Capital for purposes of
this
Section 2.3 shall be deemed to equal the Working Capital
reflected on
Holdings'
unaudited
consolidated
balance sheet
as of June 30, 2006. The Merger
Consideration shall be
increased by the positive amount by which the Estimated
---------
Working Capital
exceeds Target Working
Capital, or the Merger Consideration
shall be decreased
by the positive amount by which Target Working Capital
exceeds the Estimated Working Capital. For the avoidance of doubt,
the Estimated
Working Capital shall exclude the Insurance Proceeds (as defined in Section
6.9
hereof). The "Merger Consideration" shall be $92,000,000, minus the
Debt Amount,
--------------------
-----
minus the Aggregate
Liquidation
Preference,
minus the amount specified in
-----
-----
Section 2.3(b), plus
the amount specified
in Section 2.3(c),
plus the amount
----
----
specified in Section
2.3(d), plus or minus the amounts
specified in
Sections
----
-----
2.3(a) and 2.4 (Working Capital). If the Annualized Adjusted EBITDA
of Holdings
derived from the Audit
for the period from
August 9, 2005 to June
30, 2006 is
equal to or more than
$7,847,000 but less
than $8,500,000, then the Merger
Consideration shall be
reduced by an amount
equal to 9.75
multiplied
by the
difference between (i) the Annualized Adjusted EBITDA derived from
the Audit for
the period
from August 9, 2005 to June 30, 2006 and (ii) $8,500,000. For
purposes of this
Agreement, (A)
"Annualized
Adjusted EBITDA" means earnings
----------------------------
- 9 -
<PAGE>
before interest, taxes, depreciation and amortization multiplied by
1.123, after
making the adjustments
set forth on Schedule
3.4 and Schedule
2.3(a) and (B)
"Annualized Adjusted Net Revenues" means net revenues multiplied by
1.123, after
--------------------------------
making the adjustments set forth on Schedule 3.4 and Schedule
2.3(a). Under no
circumstances shall
Parent pay any amount pursuant to this Article II in excess
of the Merger Consideration.
(b)
The Merger
Consideration shall be
reduced, dollar for
dollar, by the
net present
value amount (using a discount rate of 10.25%) of any and all
remaining lease
obligations
under the operating
lease agreements listed on
Section 2.3(b) of the Disclosure Schedule (the "Operating Leases"),
such amount
----------------
of lease obligations
under the Operating
Leases being $196,415 as of and after
giving effect to the
payments due on October 1, 2006,
the net present
value
amount of which equals
$189,216, which amount will be reduced by any lease
obligations paid by the Holdings or the Company in respect of lease
obligations
(or buy-out amounts) due after October 1, 2006.
(c)
The Merger
Consideration shall be increased, dollar for dollar, by an
amount equal to (i)
35% of the product of (A) the Per Share Amount plus the Per
----
Share Escrow Amount minus the Base Price (as defined in the
Incentive
Agreement
-----
applicable to each
SAR and set
forth in Section 2.2(c) of the Disclosure
Schedule) multiplied by (B) the number of SARs, plus (ii)
$70,000.
(d)
The Merger
Consideration shall be increased, dollar for dollar, by an
amount equal to 35% of
the product
of (i) the Per Share
Amount plus the Per
----
Share Escrow Amount minus the Exercise Price (as defined in the
Option Agreement
-----
applicable to each
Option and set forth in Section
2.2(b) of the
Disclosure
Schedule) multiplied by (ii) the number of Options.
SECTION 2.4 Post-Closing Adjustment
-----------------------
(a)
Within 60 days
following the Closing Date, Parent shall prepare, or
cause to be prepared, and deliver to the Sellers' Representative (as defined in
Section 11.16) the statement (the "Closing Statement") that sets
forth as of the
-----------------
close of business on
the Closing Date the
Working Capital of Holdings. The
Closing Statement
shall be determined in
accordance with GAAP,
except as set
forth in Section 3.4 of the Disclosure Schedule, using the same methodology (in
terms of selection of GAAP accounting policies and principles) as was used to
calculate the Estimated Working Capital. Sellers' Representative shall have 30
days after receipt by Sellers' Representative of the Closing Statement during
which to notify Parent
of any dispute
of any item
contained in the Closing
Statement, which
notice shall set forth in reasonable detail the basis for such
dispute. If Sellers'
Representative fails
to notify Parent of any such dispute
within such 30-day period, the Closing Statement shall be deemed to
be the final
statement ("Final
Statement"),
shall be binding and
conclusive on the parties
----------------
and shall for all purposes be used to determine any adjustment to the Merger
Consideration
pursuant to
Section 2.4(c). In the event that Sellers'
Representative shall
so notify Parent of any dispute, Parent and Sellers'
Representative and their respective accountants shall cooperate in
good faith to
resolve such dispute as promptly as possible. "Working Capital" shall mean the
----------------
sum of Current Assets less Current Liabilities. "Current Assets" shall mean
the
--------------
current assets
(including
cash and cash equivalents and, for the sake of
- 10 -
<PAGE>
clarity, excluding any
deferred income Tax
assets) of Holdings
which would be
set forth on a
consolidated balance
sheet of Holdings
prepared in
accordance
with GAAP,
except as set forth in Section 3.4 of the Disclosure Schedule.
"Current Liabilities"
shall mean the
current liabilities of Holdings as set
--------------------
forth on a consolidated balance sheet of Holdings
prepared in accordance
with
GAAP (including all postal deposits and other customer deposits and
advances and
excluding any amounts
reflected as "accrued
interest" on such balance sheet),
except as set forth in Section 3.4 of the Disclosure Schedule. Any liabilities
relating to (i)
SARs, (ii) Options, or (iii) the Debt Amount shall not be
treated as Current Liabilities for the purposes of calculating
Working Capital.
(b)
If Parent and Sellers'
Representative and their respective accountants
are unable to resolve
any dispute within 30
days of Sellers'
Representative's
delivery of any notice of dispute provided pursuant to Section 2.4(a) hereof,
such dispute shall be resolved by Deloitte & Touche USA LLP or
another mutually
agreed to nationally
recognized accounting
firm (the "Independent
Accounting
-----------------------
Firm"), which
shall be retained to
resolve any
disputes between Parent and
----
Sellers'
Representative over
any items contained in the Closing Statement and
shall make its determination as promptly as practicable,
and such
determination
shall be final and binding on the parties. The Independent
Accounting Firm shall
determine in
accordance
with GAAP (except as set forth in Section
3.4 of the
Disclosure Schedule),
whether and to what extent, if any, the Closing Statement
requires adjustment;
provided, however,
that the amount of
Working Capital as
--------
-------
set forth on the Final
Statement (the
"Closing Working Capital") must fall
-------------------------
within the bounds of Sellers' Representative's and Parent's
calculations of the
Working Capital as of
the Closing Date. Each Seller shall bear, his, her or its
pro rata share, on a
Fully Diluted
Basis, of the percentage of the expenses
relating to the engagement of the Independent Accounting Firm that equals the
absolute value of the difference between Sellers' Representative's calculation
of the Working Capital
as of the Closing Date and the Closing Working Capital
divided by
the absolute value of the difference between Sellers'
Representative's and
Parent's calculation of the Working Capital as of the
Closing Date. Parent and Sellers' Representative shall deliver a
written notice
to the Escrow Agent
setting forth the amount of such expenses and directing the
Escrow Agent to pay
such amount to the
Independent
Accounting
Firm from the
Escrow Amount;
provided that if the Escrow Amount is not sufficient for
payment
--------
of the entire
amount, each Seller shall pay its pro rata share on a Fully
Diluted Basis of such expense payment in cash. The Surviving
Company shall bear
the percentage of the
expenses relating to
the engagement of the
Independent
Accounting Firm
that equals the absolute value of the difference between
Parent's calculation
of the Working Capital as of the Closing Date and the
Closing Working Capital divided by the absolute value of the
difference between
Sellers'
Representative's and Parent's calculation of the Working Capital as
of
the Closing Date. The
Independent
Accounting
Firm shall be
instructed to use
every reasonable
effort to perform its
services within
fifteen (15)
business
days after submission
of the Closing
Statement to it and, in any case, as soon
as practicable
after submission. The Closing Statement, as modified by
resolution of any
disputes by Parent and Sellers' Representative or by the
Independent Accounting Firm, shall be the Final Statement.
(c)
The Merger Consideration (after giving effect to the adjustment
pursuant to Section 2.3 hereof) shall be increased by the positive amount by
---------
which the Closing
Working Capital
exceeds the Estimated
Working Capital
(the
"Merger Consideration
Increase"),
or the Merger
Consideration
(after giving
-------------------------------
effect to the
adjustment pursuant to
Section 2.3 hereof) shall be decreased by
---------
the positive amount by
which the Estimated
Working Capital exceeds the Closing
- 11 -
<PAGE>
Working Capital (the "Merger Consideration Decrease"). To the extent there is
a
------------------------------
Merger Consideration Increase, Parent shall within five (5)
business days after
the Closing Statement becomes the Final Statement deliver to each
Seller by wire
transfer of immediately available funds such Seller's pro rata
share, on a Fully
Diluted Basis,
of the Merger
Consideration
Increase, together with interest
thereon at a fixed
rate equal to the prime rate per annum as quoted in the Wall
Street Journal
on the Closing Date according to the wiring instructions
previously provided
to Parent for the Closing unless Parent is otherwise
notified in writing by the Sellers' Representative prior to the
authorization of
the wire transfer. To
the extent that there is a Merger Consideration Decrease
and such amount is not paid from the Escrow Amount, each Seller
shall deliver to
Parent within five (5)
business days after
the Closing Statement
becomes the
Final Statement, by
wire transfer of immediately available funds, such Seller's
pro rata share, on a Fully Diluted Basis, of the excess of such Merger
Consideration Decrease, together with interest thereon at
a fixed rate equal to
the prime rate per annum as quoted in the Wall Street Journal on the Closing
Date. For purposes of this Agreement, "Fully Diluted Basis" shall mean
(A) all
-------------------
Holdings Shares
outstanding
immediately prior to the Effective Time plus (B) a
----
number of Holdings
Shares equal to the number of SARs outstanding immediately
prior to the Effective
Time, regardless of
whether any such SAR is then vested
or exercisable
plus (C) a number of
Holdings Shares equal to the number of
----
shares issuable upon exercise of the Options outstanding immediately prior to
the Effective
Time, regardless of whether any such Option is then vested
or
exercisable.
(d)
Amounts payable to Parent or the Independent Accounting Firm pursuant
to this Section 2.4
(including expenses of the Independent Accounting Firm), up
to $500,000 in the aggregate, may be paid from the Escrow Amount.
Any amounts so
payable in excess of $500,000 in the aggregate shall not be paid
from the Escrow
Amount except with the consent of Parent, in its sole
discretion.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Except as set forth
under the section
heading referring to a specific
section of this Agreement in the Disclosure Schedule of Holdings
and the Company
(the "Disclosure Schedule"), Holdings and Sellers (severally on
a Fully Diluted
-------------------
Basis and not jointly) represent and warrant that all of the statements
contained in this
Article III are true and correct (i) as of
the date of this
Agreement (or, if made as of a specified date, as of such date);
and (ii) as of
the Closing Date (or if made as of a specified date, as of such date) as
though
made then as follows:
SECTION 3.1 Organization and Authority.
--------------------------
(a)
Holdings is duly organized, validly existing and in good standing
under
the Laws of the
jurisdiction
of its incorporation, and has all requisite
corporate power and
authority to own, lease and operate the properties owned,
leased and operated by it and to carry on the operations of its business as
now
being conducted by it.
Holdings is duly qualified to do business and is in good
standing in each jurisdiction in which the property owned, leased
or operated by
it with respect to its
business or the nature of the business conducted by it
makes such
qualification
necessary,
except in such
jurisdictions
where the
- 12 -
<PAGE>
failure to be so duly qualified or in good standing would not
individually,
or
in the aggregate,
be or reasonably be expected to be material to Holdings.
Holdings is not
qualified to do
business as a foreign
business entity in
any
jurisdiction. Other than the Company, Holdings does not have any
Subsidiaries or
other equity
investments. For
purposes of this Agreement, "Subsidiary" means
----------
with respect to any Person, any corporation or other legal
entity of which such
Person owns, directly
or indirectly, more
than 50% of the outstanding stock or
other equity
interests,
the holders of which are entitled to vote for the
election of the Board of Directors or other governing body of such
corporation
or other legal
entity. For purposes of this Agreement, "Person" means an
------
individual, a
corporation,
a partnership,
a limited liability company, an
association, a joint-stock company, a trust, any unincorporated
organization, a
government or political subdivision thereof or any other
entity.
(b)
The Company is duly
organized, validly
existing and in good
standing
under the Laws of the
jurisdiction
of its formation, and has all requisite
limited liability
company power and authority to own, lease and operate the
properties owned,
leased and operated by
it and to carry on the
operations of
its business as now being conducted by it. The Company is
duly qualified to
do
business and is in
good standing in each
jurisdiction
in which the
property
owned, leased or
operated by it with
respect to its
business or the nature of
the business conducted by it makes such qualification necessary,
except in such
jurisdictions where
the failure to be so
duly qualified
or in good
standing
would not individually, or in the aggregate, be or
reasonably be expected to be
material to the Company. Section 3.1(b) of the Disclosure Schedule lists each
jurisdiction in which
the Company is
qualified to do business as a foreign
business entity. The Company does not have any Subsidiaries.
(c)
Holdings has the requisite corporate power and authority to execute
and
deliver this Agreement
and the Escrow
Agreement and each
other agreement
and
instrument to be executed and delivered in connection
herewith or therewith
or
pursuant hereto
or thereto and to perform its obligations hereunder and
thereunder. The
execution and delivery of this Agreement and the Escrow
Agreement and the performance of its obligations hereunder and thereunder have
been duly and
validly unanimously authorized by the Board of Directors of
Holdings and by the holders of Holdings Shares. No other corporate proceedings
on the part of Holdings are necessary to authorize the execution, delivery and
performance of this Agreement and the Escrow Agreement. This Agreement and the
Escrow Agreement
have been duly
executed and delivered
by Holdings, and
this
Agreement constitutes,
and the Escrow
Agreement and each
other agreement
and
instrument to be executed and delivered in connection
herewith or therewith
or
pursuant hereto
or thereto will constitute, assuming due authorization,
execution and delivery of this Agreement by Parent and Merger Sub
and the Escrow
Agreement by Parent,
valid and binding
obligations of
Holdings, enforceable
against Holdings in
accordance with their terms, except that such enforcement
may be subject
to or limited by (i) the effect of bankruptcy, insolvency,
reorganization,
moratorium and similar Laws relating to or affecting the rights
of creditors
generally and (ii) the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding
at law or in
equity).
SECTION 3.2 Capitalization.
--------------
(a)
The authorized capital stock of Holdings consists of 3,030.90
shares of
the Class A Common Stock and 23,663.90 shares of the Class B Common
Stock. As of
- 13 -
<PAGE>
the date of this Agreement, there are 1,311.13272 shares of Holdings' Class A
Common Stock issued and outstanding and 21,742.507 shares of Holdings' Class B
Common Stock issued
and outstanding.
Other than the
warrant, dated July 30,
2005, issued to Allied Capital Corporation to purchase shares of
Class A Common
Stock (the "Allied
Warrant"), the
Holdings Shares, the SARs, the Options or as
contemplated by the
Restructuring
Transactions, there
are no other classes or
series of authorized capital stock or any other equity interest in
Holdings. As
of the date hereof,
1,911.1 shares of Class B Common
Stock are reserved for
issuance upon exercise
of Options under the Plan, of which Options exercisable
for 1,790.30
shares of Class B Common Stock are outstanding, and stock
appreciation rights
with respect to
516.06680 shares of Class B Common Stock
have been allocated to accounts under outstanding SARs. The
outstanding Holdings
Shares (i) have been duly authorized and validly issued, (ii) are
fully paid and
nonassessable, and (iii) were issued in compliance with all
applicable state and
federal Laws (as in effect on the date of issuance). Other than the SARs, the
Options, the
Allied Warrant or as contemplated by the Restructuring
Transactions, there
are no outstanding (A)
securities of Holdings
convertible
into or exchangeable
for Holdings Shares or (B) options or other rights to
acquire from Holdings, or any obligation of Holdings to issue,
sell, repurchase,
redeem or otherwise acquire, any Holdings Shares or securities
convertible into
or exchangeable
for Holdings Shares. The Sellers are all of the record
and
beneficial owners of all outstanding Holdings Shares, SARs and Options. There
are no voting trusts or proxies or similar voting arrangements with respect to
the Holdings Shares.
(b)
The authorized equity
interests of the
Company consist only of Member
Units (the "Company Common Interests") and there are no other
authorized equity
-------------------------
interests of the Company. There is only one Company Common
Interest, which is
held by Holdings
free and clear of all
Encumbrances
except those listed on
Disclosure Schedule 3.2(b), issued and outstanding and there are no
other equity
interests of the Company issued or outstanding. The outstanding Company Common
Interest (i) has been duly authorized and validly issued, (ii) is
fully paid and
nonassessable, and
(iii) was issued in compliance with all applicable state and
federal Laws (as in effect on the date of issuance). There are no outstanding
(A) securities
of the Company
convertible
into or exchangeable for Company
Common Interests and (B) options or other rights to acquire from
the Company, or
any obligation of the Company to issue, sell, repurchase, redeem or otherwise
acquire, any
Company Common Interests or securities convertible into or
exchangeable for Company Common Interests. There are no voting
trusts or proxies
or similar voting arrangements with respect to the Company Common
Interest.
SECTION 3.3 Consents and Approvals; No Violations.
-------------------------------------
(a)
Except as set forth in
Section 3.3(a) of the Disclosure Schedule,
neither the execution and delivery of this Agreement or the Escrow
Agreement nor
the performance by Holdings of its obligations hereunder and
thereunder and will
(i) conflict with or result in any breach of any provision of the
certificate of
incorporation or
bylaws of Holdings or
the certificate
of formation or the
limited liability
company agreement of the Company; (ii) result in a violation
or breach of or
default under
(or give rise to any penalty or any right of
termination,
modification,
cancellation or
acceleration),
or result in the
creation of any Encumbrance under any of, the terms, conditions or
provisions of
any Material Contract
(as defined in Section
3.12 below);
(iii) require the
consent, approval,
waiver, authorization or notification to or of any
other
Person; or
(iv) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in Section
3.3(b) hereof have
- 14
-
<PAGE>
been obtained
or made, as the case may be, violate any order, injunction,
decree, statute,
rule or regulation of
any governmental agency or authority or
court to which
Holdings is subject,
excluding from the
foregoing clause
(ii)
such violations,
defaults,
breaches,
or Encumbrances that would not,
individually or in the aggregate, be material to Holdings. For
purposes of this
Agreement,
"Encumbrances" shall
mean any lien, encumbrance, claim, right,
------------
demand, charge,
mortgage,
option,
pledge, security interest or similar
interests, title defects, tenancies (and other possessory
interests), easements,
rights of way,
covenants,
encroachments, rights
of first refusal,
preemptive
rights, judgments,
conditional
sale or other title
retention agreements and
other impositions or
imperfections of title
or restrictions on transfer of any
nature whatsoever.
(b)
No filing or
registration with,
notification
to, or authorization,
consent or approval of, any local, state, federal or foreign court,
legislative,
executive, governmental or regulatory authority or agency (each, a
"Governmental
------------
Authority") is
required in connection
with the execution and
delivery of this
---------
Agreement and the Escrow Agreement by Holdings or the performance
by Holdings of
its obligations hereunder or thereunder, except (i) those that
become applicable
as a result of the matters specifically related to Parent or
its affiliates (as
such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended)
("Affiliates") or (ii)
in connection with the HSR Act as provided for
----------
in Section 6.5 hereof..
SECTION 3.4 Financial
Statements. Holdings
has delivered to Parent a true
---------------------
and complete copy of (a) the unaudited consolidated balance sheet
of Holdings as
of June 30, 2006 (the "June Balance Sheet"), unaudited consolidated
statements
------------------
of income and cash flows of Holdings for the period from August 9, 2005
to June
30, 2006 (together with the June Balance Sheet, the "June Financial
----------------
Statements"), (b) the unaudited consolidated balance sheet of the
predecessor of
----------
Holdings (the
"Predecessor") as of
August 9, 2005 and
unaudited
consolidated
-----------
statements of income
and cash flows of the
Predecessor
for the period from
January 1,
2005 to August 9,
2005 and (c) the
audited consolidated balance
sheets of the Predecessor and audited consolidated statements of
income and cash
flows of the
Predecessor as of and for the fiscal years ended December 31,
2004
and December
31, 2003 (including, in each case, any notes thereto)
(collectively, the
"Financial
Statements").
The Financial Statements were
---------------------
prepared in
accordance
with GAAP, applied on a basis consistent with past
practice (except
that the Financial Statements of Holdings apply purchase
accounting with respect to Holdings' acquisition of the Predecessor)
(subject,
in the case of unaudited statements, to normal, recurring and year-end
audit
adjustments and the
exclusion of footnotes), and are consistent with the
books
and records of
Holdings or the Predecessor, as applicable. The Financial
Statements fairly present, in all material respects, the consolidated financial
condition of Holdings, the Company or the Predecessor, as applicable, as of the
dates thereof and the
results of operations
and cash flows of
Holdings, the
Company or the Predecessor for the periods then ended
(subject, in the case
of
unaudited statements,
to normal,
recurring and year-end
audit adjustments and
the exclusion of footnotes thereto). To the Knowledge of Holdings,
except as set
forth in Section 3.4 of the Disclosure Schedule, there are no material normal,
recurring and year-end
audit adjustments that would be required for the
June
Financial Statements to comply with GAAP.
SECTION 3.5 Absence of Material Adverse Changes, etc. Except as set forth
------------------------------------------
in Section 3.5 of the Disclosure Schedule or as otherwise
contemplated by
this
Agreement:
(a)
Since August 9, 2005, neither Holdings nor the Company has:
- 15 -
<PAGE>
(i) suffered any Material Adverse Effect;
(ii) suffered any
damage, destruction
or loss of physical
property
(whether or not covered by insurance) that could reasonably be expected to
have
a Material Adverse Effect;
(iii) incurred
any direct or
indirect Indebtedness (as defined in
Section 3.25 hereof), liability, assessment, expense, claim, loss,
damage,
deficiency, obligation or responsibility (including any liability
under any
guarantees, or letters of credit) whether absolute, accrued, contingent or
otherwise (a
"Liability"),
except (A) current
Liabilities
for trade or
---------
business obligations
incurred in connection
with the purchase of goods or
services in the ordinary course of business consistent with prior
practice,
which Liabilities
could not reasonably be expected to have a Material
Adverse Effect and (B) Liabilities related to this Agreement or any
of the
transactions contemplated by this Agreement;
(iv) instituted, settled or agreed to settle any litigation, action
or
proceeding before any court or Government Authority relating to the
Company
or
its operations,
which resulted (or could result) in net payments or
obligations by the Company in excess of $100,000;
(v) had any actual or threatened employee strikes, work stoppages,
slowdowns or
lockouts and, to the Knowledge of Holdings, none of the
Company's or
Holdings' employees were involved in any labor union
organizing activity with respect to Holdings or the Company, as
applicable;
(vi) made any material change in its accounting methods, policies or
practices with respect to its condition, operations, business,
properties,
assets or Liabilities;
(vii) received
any notices
from any Governmental Authority or any
insurance company
which has issued a policy with respect to any portion of
the
Owned Real Property
or the Leased Real
Property of material
zoning,
building, fire or
health code violations
with respect to the Owned Real
Property or the Leased Real Property, or material violations pertaining
to
the
use and occupancy
of the Owned Real Property or the Leased Real
Property; and
(viii) transferred or granted any rights or licenses under, or
entered
into
any settlement
regarding the breach or infringement of, any material
Company Intellectual
Property, or modified any material
existing rights
with
respect thereto.
(b)
Since March 31, 2006, neither Holdings nor the Company has:
(i) made or permitted
any material amendment
or termination
of any
Material Contract, other than in the ordinary course of
business;
(ii) paid or obligated
itself to pay in
excess of $100,000 in the
aggregate for fixed assets;
- 16 -
<PAGE>
(iii) sold, transferred, leased to others or otherwise disposed of,
or
agreed to sell, transfer, lease or otherwise dispose of any
portion of the
Owned Real Property or any assets having a fair market value at the
time of
sale, transfer or
disposition
of $100,000 or more in
the aggregate,
or
forgiven, canceled
or compromised, or agreed to forgive, cancel or
compromise, any debts
or claims or waived or released any material right,
other than in the ordinary course of business consistent with past
practice;
(iv) had any resignation or termination of employment, or received
any
written notice of any threatened or impending resignation or
termination of
employment, of any of
its officers or
employees at the level of director,
vice
president or above;
(v) made any change in the rate of compensation, commission, bonus or
other direct or indirect remuneration payable, or paid or
promised to pay,
conditionally or
otherwise,
any bonus, incentive, retention or other
compensation,
retirement, welfare, fringe or severance benefit or vacation
pay,
or adopted or increased any benefit under any insurance, pension or
other employee benefit
plan, payment or
arrangement made to or in respect
of
any of its
officers or employees at the level of director, vice
president or above or executive level consultants;
(vi) made any prepayment of any accounts payable, delayed payment of
any
trade payables or other obligations other than in the ordinary
course
of
business consistent with past practice, or made any other material
cash
payments other than in the ordinary course of business; and
(vii) failed to
maintain all of the tangible assets and all other
tangible properties
and assets
owned, leased, occupied or used by the
Company in good repair, working order and operating condition,
subject only
to
ordinary wear and tear; and
(viii) subjected
to any Encumbrance, other than Permitted
Encumbrances, the Owned Real Property or the Leased Real
Property.
SECTION 3.6 No
Undisclosed
Liabilities.
Except as and to the
extent set
------------------------
forth in Section 3.6 of the Disclosure Schedule or on the face of the June
Balance Sheet,
which does not
account for any change
in liability
resulting
solely from SARs or
Options since
August 9, 2005,
neither Holdings nor the
Company has any material undisclosed Liabilities required: (a) to be set forth
on a balance sheet
prepared in accordance
with GAAP; or (b) to be disclosed in
the footnotes to audited financial statements pursuant to the requirements
of
FAS 5. Neither
Holdings nor the
Company has any
"off-balance sheet
financing
arrangements" (as defined in Item 303 of Regulation S-K under the
Securities Act
of 1933, as amended).
SECTION 3.7 Taxes.
-----
(a)
Each of Holdings and
the Company has duly filed (taking into account
extensions) all Tax Returns (as defined in Section 3.7(f) hereof)
required to be
filed by either
of them, and all such Tax Returns were true, correct and
complete in all
material respects. All Taxes (as defined in Section 3.7(f)
hereof) owed by
Holdings or the Company (whether or not reflected on any Tax
Return) have been timely paid. Neither Holdings nor the Company
currently is the
- 17 -
<PAGE>
beneficiary of any
extension of time
within which to file any Tax Return or to
pay any Tax. There are no Encumbrances on any of the assets of Holdings
or the
Company, other
than liens for Taxes not yet due and
payable, that arose in
connection with the failure to pay any Tax.
(b)
Each of Holdings and the Company has timely withheld and paid all
Taxes
required to have been withheld and paid in connection with any amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party.
(c)
There are no pending or threatened in writing claims, actions, suits,
proceedings, audits or
investigations for the assessment or collection of Taxes
of Holdings or the
Company. Neither Holdings nor the Company has waived any
statute of limitations in respect of any Taxes or has agreed to any
extension of
time with respect to a Tax assessment of deficiency.
(d)
Neither Holdings nor the Company is a party to any Tax
allocation,
sharing, or similar agreement or arrangement, nor does either have
any Liability
for the Taxes of any other Person (other than Holdings and the Company) as a
transferee, successor, by contract, or otherwise.
(e)
The Company has, for
all taxable periods of
its existence,
properly
been disregarded
as an entity
separate from Holdings within the meaning of
Treasury Regulation Section 301.7701-3 for all applicable federal,
state, local
and foreign Tax
purposes, and
Holdings has, for all taxable periods of its
existence, properly been classified as a corporation, for all such
purposes.
(f)
The Company (i) has not made any payments, is not obligated to make
any
payments, and is not a
party to any agreement that would reasonably be expected
to obligate the Company to make any payments that would reasonably be expected
to result in a Tax under Section 409A(a)(1)(B) of the Internal Revenue Code
of
1986, as amended (the "Code"); (ii) is not a party to any
agreement (including,
but not limited
to, the SARs and
Options) or understanding under which the
Company may become obligated to make a "parachute payment" within
the meaning of
Section 280G
of the Code; (iii) is not a party to any joint venture,
partnership, or other
arrangement
or contract that could be treated as a
partnership for federal income tax purposes; (iv) has not engaged in
operations
or activities that are subject to reporting obligations under
Section 999 of the
Code; and (v) has not participated in any "reportable transaction"
as defined in
Section 1.6011-4(b)(1) of the Treasury Regulations.
(g)
No tax is required to be withheld pursuant to Section 1445 of the
Code
as a result of the transfers contemplated by this Agreement.
(h)
The Company
(1) is not currently subject to any adjustment under
Section 481(a) of the
Code with respect
to a change in
accounting
method or
otherwise, (2) does
not own the stock of any "passive foreign investment
company," within the
meaning of Section
1297 of the Code,
(3) has not made a
transfer of any intangible assets that is subject to
Section 367(d)
or 482 of
the Code, and (4) has not been either a "distributing corporation" or a
"controlled
corporation" (within
the meaning of
Section 355(a)(1)(A)
of the
Code) in a distribution of stock to which Section 355 of the Code
(or so much of
- 18 -
<PAGE>
Section 356 of the Code as relates to Section 355 of the Code)
applies and which
occurred within two years of the date of this Agreement.
(i)
The Company has not been included in any other "consolidated,"
"unitary" or
"combined"
Tax Return
provided for under the
laws of the United
States, any foreign
jurisdiction or any state or locality with respect to Taxes
for any taxable year. The Company is not a party to any agreement
providing (in
whole or in part) for the allocation, sharing or indemnification of Taxes (or
any such agreement shall be terminated on or before the Closing
Date).
(j)
For purposes of this
Agreement, "Tax" or
"Taxes" shall mean any duty,
--- -----
fee, assessment or
other similar charge imposed by any Governmental Authority,
and shall include income, gross income, gross receipts,
profits, capital
stock,
franchise,
withholding,
payroll, social
security, unemployment, workers'
compensation,
disability, severance,
property, ad valorem, stamp, excise,
occupation, service, sales, use, license, lease, transfer, import,
export, value
added, alternative
minimum, estimated or
other similar tax (including any fee,
assessment, or other
charge in the nature
of or in lieu of any tax) imposed by
any Governmental
Authority or political
subdivision thereof, and any interest,
penalties, additions
to tax, or additional amounts in respect of the foregoing,
and "Tax Return" or "Tax Returns" shall mean all returns, reports and
-----------
------------
information statements
(including
all exhibits
and schedules thereto, and
including any
amendments thereof)
required to be filed
with any
Governmental
Authority with respect to Taxes.
SECTION 3.8 Employee Benefit Plans.
----------------------
(a)
Section 3.8(a) of the Disclosure Schedule lists each deferred
compensation and each bonus or other incentive compensation, stock
option, stock
appreciation right and
other equity
compensation plan, program or arrangement;
each severance,
medical, surgical,
hospitalization,
life insurance and
other
"welfare" plan,
fund or program
(within the meaning of Section 3(1) of the
Employee Retirement
Income Security Act of
1974, as amended
("ERISA")); each
-----
profit-sharing, 401(k)
savings or other "pension" plan, fund or program (within
the meaning of Section 3(2) of ERISA); each employment, retention or severance
agreement; and each
other employee benefit plan, program, policy or agreement,
in each case, that is sponsored, maintained or contributed to or
required to be
contributed to by
Holdings or the Company or by any trade or business, whether
or not incorporated (an "ERISA Affiliate"), that together with Holdings or
the
----------------
Company would be
deemed a "single
employer" within
the meaning of Section
4001(b) of ERISA, for the benefit of any employee or former
employee of Holdings
or the Company (the "Employee Benefit Plans"). Accurate and complete copies
of
-----------------------
all such Employee Benefit Plans have been delivered to Parent.
(b)
(i) All contributions required to be made with respect to each
Employee
Benefit Plan on or
prior to the Closing Date have been timely made or have been
reflected on the Financial Statements; (ii) each Employee Benefit Plan
has been
operated in accordance
with its terms and the
requirements of
applicable Law;
(iii) neither
Holdings nor the Company have incurred any direct or
indirect
Liability under,
arising out of or by operation of Title IV of ERISA, in
connection with the
termination of, or
withdrawal from, any
Employee Benefit
- 19 -
<PAGE>
Plan or other retirement plan or arrangement that Holdings, the Company or any
ERISA Affiliate
maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to
contribute, and,
to the Knowledge of Holdings, no fact or event exists that could
reasonably be
expected to give rise
to any such Liability;
and (iv) none of
Holdings, the
Company, any Employee Benefit Plan, nor any trustee or
administrator thereof has
engaged in a transaction in connection with which Holdings, the Company, any
Employee Benefit Plan, or any trustee or administrator thereof,
could be subject
to either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or
a tax imposed pursuant
to Section 4975 or 4976 of the Internal Revenue Code of
1986, as amended (the "Code").
----
(c)
There is not now, and has not been, any material violation of the Code
or ERISA with respect
to the filing of applicable reports, documents, and
notices regarding the Employee Benefit Plans with the Secretary of
Labor and the
Secretary of
the Treasury or the furnishing of such documents to the
participants or
beneficiaries of the
Employee Benefit
Plans. The Company
has
filed all Form 5500 series forms required to be filed for any
Employee Benefit
Plan before the
Closing Date,
and all such forms
were true and correct in all
material respects at the time of filing.
(d) No Employee
Benefit Plan is subject to Title IV of ERISA or Section 302
of ERISA. None of Holdings, the Company nor any ERISA Affiliate has ever
contributed to or been required to contribute to a "multiemployer
pension plan,"
as defined in Section 3(37) of ERISA.
(e)
Neither the Company nor Holdings has any employees or employee
benefit
plans that are
subject to the Laws of any jurisdiction outside the United
States.
(f)
Except as required by
applicable Law,
none of the
Employee Benefit
Plans provide
for medical or life insurance benefits to retired or former
employees.
(g)
All taxes, penalties,
interest charges and other financial obligations
to federal, state and
local governments and
to participants or
beneficiaries
under the Employee
Benefit Plans with respect to any period ending on or before
the Closing Date have
been or will be met in full on or before the Closing Date
(or accrued on the Financial Statements) and to the extent not
satisfied in full
shall be taken into account in the calculation of Closing Working
Capital.
(h)
There are no
material proceedings, claims, or lawsuits which are
pending or, to the
Knowledge of Holdings,
threatened by the IRS,
the DOL, the
PBGC, the Equal Employment Opportunity Commission, or any participant,
beneficiary, or any
other person or entity involving any aspect of any Employee
Benefit Plan (other than routine benefit claims), nor are there any facts which
could form the basis for any such claim or lawsuit.
(i)
The information set forth on Sections 2.2(a), 2.2(b) and 2.2(c) of the
Disclosure Schedule is
true, complete
and correct and is the actual amount
required to be paid pursuant to the applicable Phantom Debt, Option Agreements
and SARs, respectively. Other than the SARs, Option Agreements,
Phantom Debt and
the 2006 Incentive
Compensation Plan, the
Company and Holdings do not have any
deferred compensation
bonus or incentive
plans or other similar
arrangements.
Except as otherwise
provided in Section 6.7 or for payments to be made prior to
- 20 -
<PAGE>
the Closing, the
Company has no
obligation to pay
severance or other
similar
amounts to any employee whose employment is terminated.
SECTION 3.9 Environmental Matters.
---------------------
(a)
(i) "Environmental
Claim" means any
claim, action,
cause of action,
--------------------
investigation or
notice (written
or oral) by any
Person alleging potential
Liability arising out
of, based on or resulting from (A) the presence, Release
(as defined below) or threatened Release of any Hazardous
Materials (as
defined
below) at any
location, whether or
not owned or operated by the Company or (B)
any violation or alleged violation of any Environmental Law (as
defined below).
(ii) "Environmental Laws" means all federal, state, local and foreign
------------------
Laws
and regulations, all
common Law and all other provisions having the
force or effect of Law relating to pollution or protection of human health
or
the environment,
including,
without limitation, those relating to
Releases or
threatened
Releases of Hazardous Materials or otherwise
relating to the generation, use, treatment, storage, transport, release,
disposal or handling of Hazardous Materials.
(iii) "Hazardous
Materials"
means all substances
which are listed,
--------------------
defined, controlled or regulated as hazardous substances, hazardous
wastes,
solid wastes,
pollutants
or contaminants or otherwise classified or
regulated as hazardous
or toxic in or pursuant to any Environmental Law,
including but not limited to asbestos, radon, any polychlorinated
biphenyl,
urea
formaldehyde foam
insulation,
radioactive material
or any petroleum
hydrocarbons.
(iv) "Release" means any release, spill, emission, discharge,
leaking,
-------
pumping, pouring,
dumping, injection, deposit, disposal, dispersal,
leaching or
migration of Hazardous Materials into the environment
(including, without limitation, ambient air, surface water,
groundwater and
surface or subsurface strata).
(b)
(i) The Company is in material compliance with all applicable
Environmental Laws and the Company has obtained, and is in material compliance
with, all necessary
permits,
authorizations and
licenses under all applicable
Environmental Laws. The Company has not received since April 4,
2002 nor, to the
Knowledge of
Holdings, prior to April 4, 2002, any written communication,
whether from a governmental authority, citizens' group, employee or any other
Person, alleging that the Company is not in such compliance.
(ii) Except
as disclosed in the Phase 1 Environmental Studies
previously provided to
Parent, there is no
material Environmental
Claim
pending or, to the
Knowledge of Holdings,
threatened against the
Company
or,
to the Knowledge of
Holdings, against any
Person whose Liability
for
any
Environmental
Claim the Company
has or may have
retained or
assumed
either contractually or by operation of Law.
(iii) To the Knowledge of Holdings, except as disclosed in the
Phase 1
Environmental Studies
previously provided to Parent, there neither are nor
have
been any actions,
activities,
circumstances,
conditions, events
or
incidents, including,
without limitation,
the Release, threatened Release
or
presence of any
Hazardous Material which could form the basis of
any
- 21 -
<PAGE>
material Environmental Claim against the Company or
against any Person or
entity whose Liability for any Environmental Claim the Company has or may
have
retained or assumed either contractually or by operation of
Law.
(iv) Holdings
has delivered to Parent true, correct and complete
copies of all material
environmental
reports, studies, investigations,
inspection reports and
other documents
regarding any actual or threatened
Environmental Claim,
any liabilities of the Company under applicable
Environmental Law,
or any environmental conditions (including without
limitation any Release of Hazardous Materials) at any currently or
formerly
Owned Real Property or Leased Real Property.
SECTION 3.10 Legal Proceedings, etc.
----------------------
(a)
As of the date of this Agreement, there are no suits, actions,
claims,
demands, hearings,
indictments,
proceedings
or investigations (each, an
"Action") pending against Holdings, or, to the Knowledge of
Holdings, threatened
against or involving Holdings, the equityholders of Holdings or
the officers or
directors of Holdings
in connection
with the business and
affairs of Holdings
before any court,
arbitrator or
administrative or
governmental body,
United
States or foreign.
Holdings is not subject to any judgment, decree, injunction
or order of any court (other than routine wage garnishment and
similar orders).
(b)
Except as set forth in Section 3.10(b) of the Disclosure
Schedule, as
of the date of
this Agreement, there are no Actions pending, or, to the
Knowledge of
Holdings, threatened against or involving the Company, the
equityholders of the
Company or the
officers or managers of the Company in
connection with the
business and affairs of the Company before any court,
arbitrator or administrative or governmental body, United States or
foreign.
