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Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY
AND AMONG
SMITHWAY MOTOR XPRESS CORP.
WESTERN EXPRESS, INC.
AND
WESTERN EXPRESS ACQUISITION CORPORATION
DATED AS OF
MARCH 22, 2007
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TABLE OF CONTENTS
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ARTICLE I THE
MERGER.....................................................
1
1.1 The
Merger.......................................................
1
1.2
Closing..........................................................
1
1.3 Articles of Incorporation and
Bylaws of the Surviving
Corporation......................................................
2
1.4 Directors and Officers of the
Surviving Corporation.............. 2
ARTICLE II CONVERSION OF
SHARES.......................................... 3
2.1 Conversion of Capital
Stock...................................... 3
2.2 Exchange of
Certificates......................................... 3
2.3 Change in
Shares.................................................
5
2.4 Company Stock Option
Plans....................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY................ 6
3.1
Organization.....................................................
6
3.2
Capitalization...................................................
7
3.3 Authorization; Validity of
Agreement............................. 8
3.4 No Violations; Consents and
Approvals............................ 9
3.5 SEC Reports and Financial
Statements............................. 10
3.6 [Intentionally
Omitted].......................................... 12
3.7 Absence of Certain
Changes....................................... 12
3.8 Absence of Undisclosed
Liabilities............................... 13
3.9 Proxy
Statement..................................................
13
3.10 Employee
Benefit Plans; ERISA....................................
13
3.11 Litigation;
Compliance with Law.................................. 16
3.12
Intellectual Property............................................
17
3.13
Contracts........................................................
18
3.14
Taxes............................................................
19
3.15
Environmental Matters............................................
21
3.16
Assets...........................................................
22
3.17 Real
Property....................................................
23
3.18 Customers
and Suppliers..........................................
24
3.19
Insurance........................................................
24
3.20 Labor
Matters....................................................
24
3.21 Affiliate
Transactions...........................................
25
3.22 Key
Personnel....................................................
25
3.23
Brokers..........................................................
25
3.24 Opinion of
Financial Advisor..................................... 26
3.25 Company's
Independent Investigation..............................
26
3.26 Assurance
of Auditors............................................
26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE
PURCHASER.... 27
4.1
Organization.....................................................
27
4.2 Authorization; Validity of
Agreement............................. 27
4.3 No Violations; Consents and
Approvals............................ 28
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4.4 Information in Proxy Statement;
Merger Documents................. 28
4.5
Broker...........................................................
29
4.6 Financing
Commitments............................................
29
4.7 Ownership or Control of
Shares................................... 29
4.8 Parent's and the Purchaser's
Independent Investigation........... 30
ARTICLE V
COVENANTS......................................................
30
5.1 Interim Operations of the
Company................................ 30
5.2 Acquisition
Proposals............................................ 33
5.3 Takeover
Statute.................................................
37
5.4 Access to Information and
Properties............................. 37
5.5 Further Action; Reasonable
Efforts............................... 38
5.6 Proxy Statement; Stockholders'
Meeting........................... 39
5.7 Notification of Certain
Matters.................................. 40
5.8 Directors' and Officers'
Indemnification and Insurance........... 41
5.9
Publicity........................................................
42
5.10 Ownership
or Control of Shares...................................
42
5.11 Waiver of
Right to Repurchase and Refund Benefit.................
42
ARTICLE VI
CONDITIONS....................................................
42
6.1 Conditions to Each Party's
Obligation to Effect the Merger....... 42
6.2 Conditions to the Obligation of
the Company to Effect the
Merger...........................................................
43
6.3 Conditions to Obligations of
Parent and the Purchaser to Effect
the Merger.......................................................
43
ARTICLE VII
TERMINATION..................................................
45
7.1
Termination......................................................
45
7.2 Effect of
Termination............................................
46
ARTICLE VIII
MISCELLANEOUS...............................................
47
8.1 Fees and
Expenses................................................
47
8.2 Amendment;
Waiver................................................ 49
8.3
Notices..........................................................
50
8.4 Interpretation;
Definitions...................................... 51
8.5 Headings;
Schedules..............................................
59
8.6
Counterparts.....................................................
59
8.7 Entire
Agreement.................................................
59
8.8
Severability.....................................................
59
8.9 Governing
Law....................................................
60
8.10
Assignment.......................................................
60
8.11 Parties in
Interest.............................................. 60
8.12 Specific
Performance.............................................
60
8.13
Incorporation of Disclosure Letters..............................
60
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 22, 2007 (the
"Agreement"),
by and among Smithway Motor Xpress Corp., a Nevada corporation (the
"Company"),
Western Express, Inc., a Tennessee corporation ("Parent"), and
Western Express
Acquisition Corporation, a Nevada corporation and wholly owned
subsidiary of
Parent (the "Purchaser").
WHEREAS, the board of directors of the Company (the "Board"), at a
meeting
duly called and held, unanimously (i) adopted this Agreement, the
Merger (as
defined herein) and the transactions contemplated hereby and (ii)
resolved to
recommend approval of this Agreement and the Merger by the
stockholders of the
Company; and
WHEREAS, Parent,
Purchaser and the Company desire to make certain
representations, warranties, covenants, agreements and conditions
set forth
herein.
NOW,
THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements, and conditions
set forth
herein, and intending to be legally bound hereby, the parties
hereto agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth
in this Agreement and in accordance with the Nevada Revised
Statutes, as amended
(the "NRS"), at the Effective Time, the Purchaser shall be merged
with and into
the Company, the separate corporate existence of the Purchaser
shall cease and
the Company shall continue as the surviving corporation (sometimes
hereinafter
referred to as the "Surviving Corporation") in the merger (the
"Merger"). The
Merger shall have the effect as provided in the applicable
provisions of the
NRS. Without limiting the generality of the foregoing, upon the
Merger, all the
rights, privileges, immunities, powers and franchises of the
Company and the
Purchaser shall vest in the Surviving Corporation and all
obligations, duties,
debts and liabilities of the Company and the Purchaser shall be the
obligations,
duties, debts and liabilities of the Surviving Corporation.
1.2 Closing. Unless this Agreement shall have been terminated and
the
transactions contemplated herein abandoned pursuant to Section 7.1
and subject
to the satisfaction or waiver of the conditions set forth in
Article VI, the
closing of the Merger (the "Closing") will take place at 10:00
a.m., local time,
on a date to be specified by the parties hereto, which shall be no
later than
the third Business Day after satisfaction or waiver (by the party
entitled to
waive the condition) of all of the conditions set forth in
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Article VI hereof (except for those conditions that can by their
nature be
satisfied only at the time of the Closing) (the "Closing Date"), at
the offices
of Scudder Law Firm, P.C., L.L.O., 411 South 13th Street, Suite
200, Lincoln, NE
68508 unless another date or place is agreed to in writing by the
parties
hereto. Subject to the provisions of this Agreement, on the Closing
Date, the
Purchaser and the Company will cause articles of merger (the
"Articles of
Merger") to be executed and filed with the Secretary of State of
the State of
Nevada (the "Secretary of State") in such form and executed as
provided in the
NRS. The Merger shall become effective on the date and at the time
at which the
Articles of Merger have been duly filed with the Secretary of State
or such
other time as is agreed upon by the parties hereto and specified in
the Articles
of Merger, and such time is hereinafter referred to as the
"Effective Time."
1.3 Articles of Incorporation and Bylaws of the Surviving
Corporation.
Pursuant to the Merger, (a) the Amended and Restated Articles of
Incorporation
of the Company shall be amended at the Effective Time to be in the
form of to be
provided by Purchaser and, as so amended, such Amended and Restated
Articles of
Incorporation shall be the Articles of Incorporation of the
Surviving
Corporation (the "Articles of Incorporation") until thereafter
changed or
amended as provided therein or by applicable Law (as defined in
Section 3.4(a))
and (b) the Bylaws of the Company shall be amended at the Effective
Time to be
in the form to be provided by Purchaser and, as so amended, such
Bylaws shall be
the Bylaws of the Surviving Corporation (the "Bylaws") until
thereafter changed
or amended as provided therein or by applicable Law.
1.4 Directors and Officers of the Surviving Corporation.
(a) At or prior to the Closing, the current directors of the
Company shall submit their resignations effective as of the
Effective Time. By
resolution of the Parent adopted at or after the Effective Time,
the directors
of Purchaser shall be the directors of the Surviving Corporation
until their
successors shall have been duly elected or appointed and qualified
or until
their earlier death, resignation or removal in accordance with the
Articles of
Incorporation and the Bylaws.
(b) At or prior to the Closing, the current officers of the
Company shall submit their respective resignations effective as of
the Effective
Time. By resolution of the board of directors of the Surviving
Corporation, such
board of directors shall elect the new officers of the Surviving
Corporation who
shall hold office until their respective successors are duly
elected and
qualified, or their earlier death, resignation or removal.
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ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue
of
the Merger and without any action on the part of the holders of any
shares of
Class A Stock or Class B Stock (together, referred to herein as
"Shares" or
"Company Common Stock") or the holders of any shares of the common
stock, par
value $0.001 per share, of the Purchaser (the "Purchaser Common
Stock"):
(a) Each issued and outstanding share of Company Common Stock
shall be converted into the right to receive $10.63 per share in
cash, payable
to the holder thereof, without interest (the "Merger
Consideration"). All such
shares of Company Common Stock shall no longer be outstanding and
shall
automatically be cancelled and retired and shall cease to exist,
and each holder
of a certificate or certificates representing any such Shares shall
cease to
have any rights with respect thereto, except the right to receive
the Merger
Consideration therefore upon the surrender of such certificate in
accordance
with Section 2.2. Payment of the Merger Consideration shall be made
upon
surrender of the certificate or certificates that immediately prior
to the
Effective Time represented issued and outstanding shares of Company
Common Stock
in the manner provided in Section 2.2. Any payment made pursuant to
this Section
2.1(a) shall be subject to applicable withholding taxes to the
extent such
withholding is required by Law.
(b) Each issued and outstanding share of the Purchaser Common
Stock shall be converted into and become one fully paid and
nonassessable share
of common stock of the Surviving Corporation.
(c) All shares of Company Common Stock that are held by the
Company or any of its Subsidiaries as treasury stock prior to the
Effective Time
shall be cancelled and retired and shall cease to exist and no
Merger
Consideration shall be delivered in exchange therefor.
2.2 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate the
Company's registrar and transfer agent or such other bank or trust
company as
may be selected by Parent, to act as paying agent for the holders
of Shares in
connection with the Merger (the "Paying Agent"), to receive the
funds to which
holders of Shares shall become entitled pursuant to Section 2.1(a).
Upon the
Effective Time, Parent and the Purchaser will cause to be deposited
in trust
with the Paying Agent for the benefit of holders of Company Common
Stock the
funds necessary to complete the payments contemplated by Section
2.1(a) with
respect to shares of Company Common Stock.
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(b) Promptly following the Effective Time, the Surviving
Corporation will instruct the Paying Agent to mail to each holder
of record of a
certificate or certificates, which immediately prior to the
Effective Time
represented outstanding shares of Company Common Stock (the
"Certificates"),
whose Shares were converted pursuant to Section 2.1(a) into the
right to receive
the Merger Consideration (i) a letter of transmittal (which shall
specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent
and shall be in
such form and have such other provisions as Parent may reasonably
specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in
exchange for payment of the Merger Consideration. Upon surrender of
a
Certificate for cancellation to the Paying Agent or to such other
agent or
agents as may be appointed by the Surviving Corporation, together
with such
letter of transmittal, duly executed, the holder of such
Certificate shall be
entitled to receive in exchange therefore the Merger Consideration
for each
share of Company Common Stock formerly represented by such
Certificate, and the
Certificate so surrendered shall forthwith be cancelled. If payment
of the
Merger Consideration is to be made to a Person other than the
Person in whose
name the surrendered Certificate is registered, it shall be a
condition of
payment that the Certificate so surrendered shall be properly
endorsed or shall
be otherwise in proper form for transfer and that the Person
requesting such
payment shall have paid to the Paying Agent in advance any transfer
and other
taxes required by reason of the payment of the Merger Consideration
to a Person
other than the registered holder of the Certificate surrendered or
shall have
established to the satisfaction of the Surviving Corporation that
such tax
either has been paid or is not applicable. Until surrendered as
contemplated by
this Section 2.2, each Certificate (other than Certificates
representing Company
Common Stock held by Parent, the Purchaser or any of their
respective
affiliates) shall be deemed at any time from and after the
Effective Time to
represent only the right to receive the Merger Consideration as
contemplated by
this Section 2.2. No interest or dividends shall be paid or will
accrue on any
Merger Consideration payable to holders of Certificates pursuant to
the
provisions of this Article II.
(c) In the event any Certificate shall have been lost, stolen
or
destroyed, upon the making of an affidavit of that fact by the
Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent
will issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration
deliverable in respect thereof as determined in accordance with
this Article II,
provided that the Person to whom the Merger Consideration is paid
shall, as a
condition precedent to the payment thereof, give the Surviving
Corporation a
bond in such sum as the Surviving Corporation may direct or
otherwise indemnify
the Surviving Corporation in a manner reasonably satisfactory to it
against any
claim that may be made against the Surviving Corporation with
respect to the
Certificate claimed to have been lost, stolen or destroyed.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no transfers on the
stock transfer
books of the Surviving Corporation of Shares that were outstanding
immediately
prior to the Effective
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Time. If, after the Effective Time, Certificates are presented for
transfer to
the Surviving Corporation, they shall be cancelled and exchanged
for the Merger
Consideration as provided in this Article II, subject to the
NRS.
(e) If any cash deposited with the Paying Agent for purposes of
payment in exchange for Shares remains unclaimed after the one year
anniversary
of the Effective Time, the Paying Agent shall give notice to the
Surviving
Corporation of such cash and such cash, together with all interest
and earnings
thereon shall be returned to the Surviving Corporation, upon
demand, and any
such holder who has not theretofore complied with this Article II
prior to that
time shall thereafter look only to the Surviving Corporation for
payment of the
Merger Consideration. Notwithstanding the foregoing, none of
Parent, the
Surviving Corporation, the Paying Agent or any other Person shall
be liable to
any holder of Shares for any amount paid to a public official
pursuant to
applicable unclaimed property, escheat or similar Laws.
2.3 Change in Shares. If, between the date of this Agreement and
the
Effective Time, the Shares shall have been changed into, or
exchanged for, a
different number of shares or a different class, or if there has
been any stock
dividend, subdivision, reclassification, recapitalization, split,
combination or
exchange of shares, the Merger Consideration shall be
correspondingly adjusted
to provide the holders of Shares the same economic effect as
contemplated by
this Agreement prior to such event.
2.4 Company Stock Option Plans.
(a) The Company, the Board and each relevant committee of the
Board shall take any and all actions necessary or desirable
(including, without
limitation, obtaining consents) to provide that, effective
immediately prior to
the consummation of the Merger, each option to purchase shares of
Company Common
Stock (collectively, the "Stock Options") held by or issued or
granted to any
current or former employee, consultant or director that is
outstanding
immediately prior to the consummation of the Merger granted under
the Company
New Employee Incentive Stock Plan, the Company 2005 Omnibus Stock
Plan, the
Company Incentive Stock Plan, as amended, the Company Outside
Director Stock
Option Plan, as amended, or any other stock option plan
(collectively, the
"Stock Option Plans"), or otherwise, shall in accordance with the
Stock Option
Plans and related agreements (i) become fully vested or exercisable
and (ii)
unless otherwise terminated, be cancelled in exchange for an amount
in cash
(less any applicable tax withholding), payable at the Effective
Time, equal to
(A) in the case of Stock Options with respect to which the Merger
Consideration
is greater than the per share exercise price of such Stock Option,
the product
of (x) (1) the excess of the Merger Consideration over (2) the per
share
exercise price of such Stock Option, and (y) the number of shares
of Company
Common Stock subject to such Stock Option; and (B) in the case of
Stock Options
with respect to which the per share exercise price of such Stock
Option is equal
to or greater than the Merger Consideration, the
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product of (x) $.01 and (y) the number of shares of Company Common
Stock subject
to such Stock Option.
(b) The Company, the Board and each relevant committee of the
Board shall take any and all actions necessary or desirable to
provide that all
Stock Option Plans shall terminate as of the Effective Time and the
provisions
in any Stock Option Plan or any other plan, agreement or
arrangement providing
for the issuance, transfer or grant of any capital stock of the
Company or any
interest in respect of any capital stock of the Company shall be
terminated as
of the Effective Time, and the Company shall ensure that following
the Effective
Time no holder of a Stock Option or any participant in any Stock
Option Plan or
any other plan, agreement or arrangement shall have any right
thereunder to
acquire any capital stock of the Company or the Surviving
Corporation or any
interest in respect of any capital stock of the Company or the
Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as is disclosed in the disclosure letter delivered by
Company to
Parent on or prior to the date hereof (the "Disclosure Letter") and
subject to
Section 8.13, the Company hereby represents and warrants to Parent
and the
Purchaser as follows:
3.1 Organization.
(a) The Company and each of its Subsidiaries is a corporation,
in
each case, 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, use and operate its properties and to
carry on its
business as it is now being conducted. Except as set forth in
Section 3.1(a) of
the Disclosure Letter, each of the Company and each of its
Subsidiaries is duly
qualified or licensed to do business as a foreign corporation and
is in good
standing in each jurisdiction in which such qualification or
licensing is
required except when the failure to be so qualified would not be
reasonably
expected, either individually or in the aggregate, to have a
Material Adverse
Effect on the Company. The Company has previously delivered to
Parent a complete
and correct copy of each of its articles of incorporation and
bylaws in each
case as amended (if so amended) to the date of this Agreement, and
has delivered
the articles of incorporation and bylaws of each of its
Subsidiaries, in each
case as amended (if so amended) to the date of this Agreement.
Neither the
Company nor any of its Subsidiaries is in violation of its articles
of
incorporation or bylaws.
(b) Section 3.1(b) of the Disclosure Letter sets forth a true
and
correct list of all of the Subsidiaries of the Company and their
respective
jurisdictions of incorporation. Other than as set forth in Section
3.1(b) of the
Disclosure Letter, the
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respective articles of incorporation and bylaws of the Subsidiaries
of the
Company do not contain any provision limiting or otherwise
restricting the
ability of the Company to control its Subsidiaries.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Class A Common Shares, par value $0.01 per
share (the
"Class A Stock"), 5,000,000 shares of Class B Common Shares, par
value $0.01 per
share (the "Class B Stock"), and 5,000,000 shares of Preferred
Shares, par value
$0.01 per share. As of the date hereof, (i) 3,991,124 shares of
Class A Stock
are issued and outstanding, (ii) 1,000,000 shares of Class B Stock
are issued
and outstanding, and (iii) 149,350 shares of Class A Stock are
reserved for
issuance upon exercise of previously issued Stock Options under the
Stock Option
Plans. No bonds, debentures, notes or other indebtedness having the
right to
vote (or convertible into or exchangeable for securities having the
right to
vote) on any matters on which stockholders of the Company may vote
are issued or
outstanding. All issued and outstanding shares of the Company's
capital stock
are, and all shares that may be issued or granted pursuant to the
exercise of
Stock Options will be, when issued or granted in accordance with
the terms
thereof, duly authorized, validly issued, fully paid and
non-assessable and free
of preemptive rights. Except as set forth in Section 3.2(a) of the
Disclosure
Letter, there are no outstanding or authorized (i) options,
warrants, preemptive
rights, subscriptions, calls, or other rights, convertible
securities,
agreements, claims or commitments of any character obligating the
Company or any
of its Subsidiaries to issue, transfer or sell any shares of
capital stock or
other equity interest in, the Company or any of its Subsidiaries or
securities
convertible into or exchangeable for such shares or equity
interests, (ii)
obligations of the Company or any of its Subsidiaries to
repurchase, redeem or
otherwise acquire any capital stock of the Company or any of its
Subsidiary or
any such securities or agreements listed in clause (i) of this
sentence or (iii)
voting trusts or similar agreements to which the Company or any of
its
Subsidiaries is a party with respect to the voting of the capital
stock of the
Company or any of its Subsidiaries.
(b) Except as set forth in Section 3.2(b) of the Disclosure
Letter (i) all of the issued and outstanding shares of capital
stock of each of
the Company's Subsidiaries are owned, directly or indirectly, by
the Company
free and clear of any Liens, and all such shares have been duly
authorized,
validly issued and are fully paid and non-assessable and free of
preemptive
rights, and (ii) neither the Company nor any of its Subsidiaries
owns any shares
of capital stock or other securities of, or interest in, any other
Person, or is
obligated to make any capital contribution to or other investment
in any other
Person.
(c) Section 3.2(c) of the Disclosure Letter lists all
indebtedness, and obligations to issue indebtedness of the Company
and its
Subsidiaries, having a principal amount outstanding in excess of
$100,000, other
than trade payables
7
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arising in the Ordinary Course of Business. The Company has made
available to
Parent and the Purchaser all material operative documents relating
to the
indebtedness of the Company and its Subsidiaries and any
obligations to issue
indebtedness of the Company and its Subsidiaries.
3.3 Authorization; Validity of Agreement.
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder
and to consummate the transactions contemplated hereby, subject to,
in the case
of consummation of the Merger, approvals of its stockholders as
contemplated by
Section 5.6. The execution, delivery and performance by the Company
of this
Agreement and the consummation by the Company of the transactions
contemplated
hereby have been duly authorized by the Board. The Board has
directed that this
Agreement and the transactions contemplated hereby be submitted to
the Company's
stockholders for approval and adoption at a meeting of such
stockholders and,
except for (i) setting the record date and the meeting date for
the
Stockholders' Meeting and (ii) the approval and adoption of this
Agreement by
the Required Vote no other corporate proceedings on the part of the
Company are
necessary to authorize the execution, delivery and performance of
this Agreement
by the Company and the consummation of the transactions
contemplated hereby.
This Agreement has been duly executed and delivered by the Company
and, assuming
due authorization, execution and delivery of this Agreement by
Parent and the
Purchaser, is a valid and binding obligation of the Company
enforceable against
the Company in accordance with its terms, except that such
enforceability (i)
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other
similar laws affecting or relating to the enforcement of creditors'
rights
generally and (ii) is subject to general principles of equity
(regardless of
whether considered in a proceeding in equity or at law).
(b) The Board has adopted all resolutions necessary under the
sections of the NRS that are applicable to the Merger or any of the
other
transactions contemplated by this Agreement. Assuming that the
representations
and warranties of Parent and the Purchaser contained in Section 4.7
are true and
correct and that Parent and the Purchaser are in full compliance
with the
covenants contained in Section 5.10, no "moratorium," "control
share," "fair
price" or other antitakeover laws are applicable to the Merger or
any of the
other transactions contemplated by this Agreement.
(c) Under applicable Law, the articles of incorporation and
bylaws of the Company, and this Agreement, the affirmative vote of
the holders
of a majority of the voting power of the outstanding Shares, voting
as a single
class (the "Required Vote"), is the only vote of the Company's
stockholders
required to approve this Agreement and the transactions
contemplated hereby.
8
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(d) The Board, at a meeting duly called and held, unanimously
(i)
determined that this Agreement, the Merger, and the transactions
contemplated
hereby are fair to, and in the best interests of, the Company and
its
stockholders, (ii) adopted this Agreement, the Merger, and
transactions
contemplated hereby and (iii) recommended approval of this
Agreement, the
Merger, and the transactions contemplated hereby by the
stockholders of the
Company.
(e) Notwithstanding any representations or warranties of the
Company or any other provisions contained in this Agreement,
pursuant to NRS
92A.120(10), the Board has an express obligation to cancel the
contemplated
meeting of the Company's stockholders or remove this Agreement and
the Merger
from consideration at such meeting if the Board determines that it
is not
advisable to submit this Agreement or the Merger to the Company's
stockholders
for approval; no such representations, warranties, or other
provisions shall
operate to abrogate or limit the Board's express or implicit duties
and
responsibilities under such NRS provision.
3.4 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation by the Company of the
Merger or
any other transactions contemplated hereby will (i) violate any
provision of the
articles of incorporation or the bylaws of the Company or any of
the Company's
Subsidiaries, (ii) except as set forth in Section 3.4(a) of the
Disclosure
Letter, violate, conflict with, result in a breach of any provision
of or the
loss of any benefit under, constitute a default (or an event which,
with notice
or lapse of time, or both, would constitute a default) under,
result in the
termination of or a right of termination, cancellation or amendment
under,
accelerate the performance required by, or result in the creation
of any Lien
(as defined in Section 8.4) upon any of the respective properties
or assets of
the Company or any of its Subsidiaries under, or result in the
acceleration or
trigger of any payment, time of payment, vesting or increase in the
amount of
any compensation or benefit payable pursuant to, any of the terms,
conditions or
provisions of any note, bond, mortgage, indenture, guarantee or
other evidence
of indebtedness, lease, license, contract, agreement, plan or other
instrument
or obligation to which the Company or any of its Subsidiaries is a
party or by
which any of them or any of their respective properties or assets
may be bound
or affected or (iii) conflict with or violate any federal, state,
local or
foreign order, writ, injunction, judgment, settlement, award,
decree, statute,
law, rule or regulation (collectively, "Laws") applicable to the
Company, any of
its Subsidiaries or any of their respective properties or assets;
except in the
case of clauses (ii) and (iii) for such conflicts, violations,
breaches,
defaults or Liens which have been waived or which, individually or
in the
aggregate, would not reasonably be likely to have or result in a
Material
Adverse Effect on the Company.
(b) Except (i) for the Proxy Statement relating to the meeting
of
the Company's stockholders to be held in connection with this
Agreement and the
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<PAGE>
transactions contemplated hereby, (ii) for the filing of the
Articles of Merger
with the Secretary of State, and (iii) as disclosed in Section
3.4(b) of the
Disclosure Letter, no material filing or registration with,
declaration or
notification to, or order, authorization, consent or approval of,
any federal,
state, local or foreign court, arbitral, legislative, executive or
regulatory
authority or agency (a "Governmental Entity") or any other Person
is required in
connection with the execution, delivery and performance of this
Agreement by the
Company or the consummation by the Company of the Merger or any
other
transactions contemplated hereby.
3.5 SEC Reports and Financial Statements.
(a) Except as set forth in Section 3.5(a) of the Disclosure
Letter, the Company has timely filed, after giving effect to any
extended time
for filing under Rule 12b-25, with the SEC all forms and documents
required to
be filed by it since January 1, 2004, under the Securities Exchange
Act of 1934,
as amended (the "Exchange Act"), including (i) its Annual Reports
on Form 10-K,
(ii) its Quarterly Reports on Form 10-Q, (iii) its Current Reports
on Form 8-K,
(iv) all proxy statements relating to meetings of stockholders of
the Company
(in the form mailed to stockholders) and (v) all other forms,
reports and
registration statements required to be filed by the Company with
the SEC. The
documents described in clauses (i)-(v) above, as amended (whether
filed before,
on or after the date hereof), are referred to in this Agreement
collectively as
the "Company SEC Documents." As of their respective dates, the
Company SEC
Documents, including the financial statements and schedules
provided therein or
incorporated by reference therein, (x) did not contain any untrue
statement of a
material fact or omit to state a material fact required to be
stated therein or
necessary in order to make the statements therein, in light of the
circumstances
under which they were made, not misleading and (y) complied in all
material
respects with the applicable requirements of the Exchange Act and
the Securities
Act of 1933, as amended (the "Securities Act"), as the case may be,
and the
applicable rules and regulations of the SEC thereunder.
(b) The December 31, 2004 and December 31, 2005 consolidated
balance sheets of the Company and the related consolidated
statements of
operations, consolidated statements of stockholders' equity and
consolidated
statements of cash flows (including, in each case, the related
notes, where
applicable), as reported in the Company's Annual Report on Form
10-K for the
fiscal year ended December 31, 2005 filed with the SEC under the
Exchange Act,
and the unaudited consolidated balance sheets of the Company and
its
Subsidiaries (including the related notes, where applicable) as of
September 30,
2005 and September 30, 2006 and the related (i) unaudited
consolidated
statements of operations for the three and nine-month periods then
ended and
(ii) unaudited consolidated statements of cash flows and changes
in
stockholders' equity for the nine-month periods then ended (in each
case
including the related notes, where applicable), as reported in the
Company's
Quarterly Report on Form 10-Q for the period ended September 30,
2006 filed with
the SEC under the Exchange Act, fairly present in all material
respects, and the
financial statements to be filed by the Company
10
<PAGE>
with the SEC after the date of this Agreement will fairly present
in all
material respects (subject, in the case of the unaudited
statements, to
recurring audit adjustments normal in nature and amount), the
consolidated
financial position and the results of the consolidated operations
of the Company
and its Subsidiaries as of the respective dates or for the
respective fiscal
periods therein set forth; each of such statements (including the
related notes,
where applicable) complies, and the financial statements to be
filed by the
Company with the SEC after the date of this Agreement will comply,
with
applicable accounting requirements and with the published rules and
regulations
of the SEC with respect thereto; and each of such statements
(including the
related notes, where applicable) has been, and the financial
statements to be
filed by the Company with the SEC after the date of this Agreement
will be,
prepared in accordance with generally accepted accounting
principles ("GAAP")
consistently applied during the periods involved, except as
indicated in the
notes thereto or, in the case of unaudited statements, as permitted
by Form
10-Q. The books and records of the Company and its Subsidiaries
have been, and
are being, maintained in accordance with GAAP and any other
applicable legal and
accounting requirements. KPMG LLP is an independent public
accounting firm with
respect to the Company and has not resigned or been dismissed as
independent
public accountants of the Company as a result of or in connection
with any
disagreements with the Company on a matter of accounting principles
or
practices, financial statement disclosure or auditing scope or
procedure.
(c) Since January 1, 2004, the Company and each of its
Subsidiaries has had in place "internal control over financial
reporting" (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
designed and
maintained to provide reasonable assurance that (a) transactions
are executed in
accordance with management's general or specific authorizations,
(b)
transactions are recorded as necessary to permit preparation of
financial
statements in conformity with generally accepted accounting
principles and to
maintain accountability for assets, (c) access to assets is
permitted only in a
manner designed to prevent or timely detect unauthorized
acquisition, use or
disposition that could have a material effect on the Company's
financial
statements, and (d) the recorded accountability for assets is
compared with the
existing assets at reasonable intervals and appropriate action is
taken with
respect to any differences. Since January 1, 2004, the Company and
each of its
Subsidiaries has had in place "disclosure controls and procedures"
(as defined
in Rules 13a-15(e) and 15d-15(e)) designed and maintained to ensure
that (a) all
information (both financial and non-financial) required to be
disclosed by the
Company in the reports that it files or submits under the Exchange
Act is
recorded, processed, summarized and reported within the time
periods specified
in the rules and forms of the SEC and (b) all such information is
accumulated
and communicated to the Company's management as appropriate to
allow timely
decisions regarding required disclosure and to make the
certifications of the
Chief Executive Officer and Chief Financial Officer of the Company
required
under the Exchange Act with respect to such reports. The Company's
and its
Subsidiaries' financial records, data or information are maintained
under the
direct control of the Company or its Subsidiaries. Except as
provided in Section
3.5(c) of the Disclosure
11
<PAGE>
Letter, since September 30, 2006, there have been no changes in the
Company's
"internal control over financial reporting" (as such term is
defined in Rule
13a-15(f) and Rule 15d-15(f) under the Exchange Act) that have
materially
affected, or are reasonably likely to materially affect, the
Company's internal
control over financial reporting.
(d) The Company has made available to Parent and the Purchaser
copies of all comment letters and other material correspondence
received by the
Company from the SEC since January 1, 2004, relating to the Company
SEC
Documents, together with all written responses of the Company
thereto. There are
no outstanding or unresolved comments in any such comment letters
received by
the Company from the SEC. As of the date of this Agreement, to the
Knowledge of
the Company, none of the Company SEC Documents is the subject of
any ongoing
review by the SEC.
3.6 [Intentionally Omitted].
3.7 Absence of Certain Changes.
(a) Except as disclosed in Section 3.7(a) of the Disclosure
Letter, since September 30, 2006, (i) the Company and its
Subsidiaries have
conducted their respective operations only in the Ordinary Course
of Business,
and (ii) there has not occurred or continued to exist any event,
change,
occurrence, effect, fact, circumstance or condition which,
individually or in
the aggregate, has had, or is reasonably likely to have, a Material
Adverse
Effect on the Company.
(b) Except as set forth in Section 3.7(b) of the Disclosure
Letter, since September 30, 2006, neither the Company nor any of
its
Subsidiaries has (i) increased or agreed to increase the wages,
salaries,
compensation, pension, or other fringe benefits or perquisites
payable to any
officer or director from the amount thereof in effect as of
September 30, 2006,
granted any severance or termination pay, entered into any contract
to make or
grant any severance or termination pay, entered into or made any
loans to any of
its officers, directors, employees, affiliates, agents or
consultants other than
advances of expenses in the Ordinary Course of Business and not
material in the
aggregate or made any change in its borrowing or lending
arrangements for or on
behalf of any of such Persons, whether pursuant to an employee
benefit plan or
otherwise, or granted, issued, accelerated, paid, accrued or agreed
to pay or
make any accrual or arrangement for payment of salary or other
payments or
benefits pursuant to, or adopted or amended any new or existing
Plan, (ii)
declared, set aside or paid any dividend or other distribution
(whether in cash,
stock or property) with respect to any of the Company's capital
stock, (iii)
effected or authorized any split, combination or reclassification
of any of the
Company's capital stock or any issuance thereof or issued any other
securities
in respect of, in lieu of or in substitution for shares of the
Company's capital
stock, except
12
<PAGE>
for issuances of Company Common Stock upon the exercise of Company
Stock
Options, in each case awarded prior to the date hereof in
accordance with their
present terms, (iv) changed, or has Knowledge of any reason that
would have
required or would require changing, any accounting methods (or
underlying
assumptions), principles or practices of the Company or its
Subsidiaries,
including any reserving, renewal or residual method, practice or
policy, (v)
made any tax election or settled or compromised any income tax
liability, (vi)
to the Knowledge of the Company, had any union organizing
activities, (vii)
sold, leased, exchanged, transferred or otherwise disposed of any
of its Assets
other than in the Ordinary Course of Business, (viii) revalued, or
has Knowledge
of any reason that would have required or would require revaluing,
any of the
Assets, including writing down the value of any Assets or writing
off notes or
accounts receivable other than in the Ordinary Course of Business,
or (ix) made
any agreement or commitment (contingent or otherwise) to do any of
the
foregoing.
3.8 Absence of Undisclosed Liabilities. Except as and to the
extent
reflected or reserved against in the balance sheet dated as of
September 30,
2006 included in the Company's Quarterly Report on Form 10-Q for
the period
ended September 30, 2006 (the "Balance Sheet") or in the notes
thereto, neither
the Company nor any of its Subsidiaries had as of that date any
liabilities or
obligations (accrued, contingent or otherwise) that would be
material to the
Company and its Subsidiaries taken as a whole. Except as set forth
in the
Balance Sheet or in Section 3.8 of the Disclosure Letter, since the
date of the
Balance Sheet, neither the Company nor any of its Subsidiaries has
incurred any
liabilities or obligations (accrued, contingent or otherwise) that
would be
material to the Company and its Subsidiaries taken as a whole,
except for
liabilities and obligations (i) arising in the Ordinary Course of
Business, or
(ii) resulting from the execution and delivery of this Agreement.
Except as set
forth in Section 3.8 of the Disclosure Letter, neither the Company
nor any of
its Subsidiaries is in default in respect of the terms and
conditions of any
indebtedness or other agreement which would reasonably be expected
to have,
individually or in the aggregate, a Material Adverse Effect on the
Company.
3.9 Proxy Statement. The Proxy Statement (and any amendment thereof
or
supplement thereto) at the date mailed to Company stockholders and
at the time
of the Stockholders' Meeting, (i) will not contain any untrue
statement of a
material fact or omit to state any material fact required to be
stated therein
or necessary in order to make the statements therein, in light of
the
circumstances under which they are made, not misleading and (ii)
will comply in
all material respects with the provisions of the Exchange Act and
the rules and
regulations thereunder.
3.10 Employee Benefit Plans; ERISA.
(a) Section 3.10(a) of
the Disclosure Letter contains a true and
complete list of each bonus, deferred compensation, incentive
compensation,
stock purchase, stock option, stock appreciation right or other
equity-based
incentive,
13
<PAGE>
severance, termination, change in control, retention,
employment,
hospitalization or other medical, life or insurance, disability,
other welfare,
supplemental unemployment benefits, profit-sharing, pension, or
retirement plan,
program, agreement or arrangement, and each other employee
compensation or
benefit plan, program, agreement or arrangement, sponsored,
maintained or
contributed to by the Company, any of its Subsidiaries or by any
trade or
business, whether or not incorporated (an "ERISA Affiliate"), since
January 1,
2004 that together with the Company or any of its Subsidiaries
would be deemed a
"single employer" within the meaning of section 4001 of the
Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), for the benefit
of any
current or former employee or director of the Company, any of its
Subsidiaries
or any ERISA Affiliate or with respect to which the Company or any
of its
Subsidiaries has or would reasonably be expected to have any
material liability
(matured or unmatured, absolute or contingent) (the "Plans").
Section 3.10(a) of
the Disclosure Letter identifies each of the Plans that is an
"employee benefit
plan," subject to ERISA (the "ERISA Plans").
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Parent true and complete copies of
each of the
following documents (including all amendments to such
documents):
(i) the Plans or a written description of any Plans not in
writing;
(ii) a copy of the annual report or Internal Revenue Service
Form
5500 Series, if required under ERISA, with respect to each ERISA
Plan
for
the last three Plan years ending prior to the date of this
Agreement
for
which such a report was filed;
(iii) a copy of the actuarial report, if required under
ERISA, with respect to each ERISA Plan for the last three Plan
years ending
prior to the date of this Agreement;
(iv) a copy of the most recent Summary Plan Description
("SPD"), together with all Summaries of Material Modification
issued with
respect to such SPD, if required under ERISA, with respect to each
ERISA
Plan, and all other material employee communications relating to
each ERISA
Plan;
(v) if the Plan or any obligations thereunder are funded
through a trust or any other funding vehicle, the trust or other
funding
agreement and the latest financial statements thereof;
(vi) all contracts relating to the Plans with respect to
which the Company, any of its Subsidiaries or any ERISA Affiliate
may have
any
14
<PAGE>
liability, including insurance contracts, investment management
agreements,
subscription and participation agreements and record keeping
agreements;
(vii) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to
qualify
under section 401(a) of the Code; and
(viii) material communications that the Company or any of
its
ERISA affiliates or Subsidiaries has received from or sent to
the
Pension Benefit Guaranty Corporation, the Department of Labor, the
Internal
Revenue Service or any comparable agency of any foreign
Governmental Entity
concerning any termination of, withdrawal from or appointment of a
trustee
to
administer any plan or the failure or alleged failure to comply
with any
provision of ERISA, the Code or comparable legislation of a
foreign
jurisdiction with respect to any plan, including any existing
written
description of any such oral communication.
(c) At no time within the past six (6) years has the Company,
any
of its Subsidiaries or any ERISA Affiliate ever, maintained,
established,
sponsored, participated in or contributed to any ERISA Plan that is
subject to
Title IV of ERISA. Except as disclosed in Section 3.10(c) of the
Disclosure
Letter, no ERISA Plan is a "multiemployer plan," as defined in
section 3(37) of
ERISA, nor is any ERISA Plan a plan described in section 4063(a) of
ERISA.
(d) None of the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder,
nor, to the
Knowledge of the Company, any trustee or administrator thereof has
engaged in a
transaction or has taken or failed to take any action in connection
with which
the Company, any of its Subsidiaries or any ERISA Affiliate could
be subject to
any material liability for either a civil penalty assessed pursuant
to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975(a)
or (b), 4976
or 4980B of the Code.
(e) All contributions and premiums that the Company, any of its
Subsidiaries or any ERISA Affiliate is required to pay under the
terms of each
of the ERISA Plans and Section 412 of the Code, have, to the extent
due, been
paid in full or properly recorded on the financial statements or
records of the
Company or its Subsidiaries. None of the ERISA Plans or any trust
established
thereunder has incurred any "accumulated funding deficiency" (as
defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of
the last day of the most recent fiscal year of each of the ERISA
Plans ended
prior to the date of this Agreement. No Lien has been imposed under
Section
412(n) of the Code or Section 302(f) of ERISA on the Assets or any
assets of an
ERISA Affiliate. No event or circumstance has occurred that is
reasonably likely
to result in the imposition of any such Lien on any such assets on
account of
any ERISA Plan.
15
<PAGE>
(f) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including
ERISA and the
Code.
(g) Each of the ERISA Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified.
The Company
has applied for and received a currently effective determination
letter from the
IRS stating that it is so qualified, or is entitled to rely on an
opinion letter
issued to a prototype plan sponsor regarding the qualified status
of such plan,
and no event has occurred which would reasonably be expected to
affect such
qualified status. Any fund established under an ERISA Plan that is
intended to
satisfy the requirements of Section 501(c)(9) of the Code has so
satisfied such
requirements.
(h) Except as disclosed in Section 3.10(h) of the Disclosure
Letter, no amounts payable under any of the Plans or any other
contract,
agreement or arrangement with respect to which the Company or any
of its
Subsidiaries may have any liability could fail to be deductible for
federal
income tax purposes by virtue of Sections 280G or 162(m) of the
Code.
(i) Except as disclosed in Section 3.10(i) of the Disclosure
Letter, no ERISA Plan that provides life or medical benefit
coverage (whether or
not insured) provides such coverage after retirement or other
termination of
service (other than coverage mandated by applicable laws).
(j) Except as disclosed in Section 3.10(j) of the Disclosure
Letter, the consummation of the transactions contemplated by this
Agreement will
not, either alone or in combination with any other event, (i)
entitle any
current or former employee, officer or director of the Company, any
of its
Subsidiaries or any ERISA Affiliate to severance pay, unemployment
compensation
or any other similar termination payment, or (ii) accelerate the
time of payment
or vesting, or increase the amount of or otherwise enhance any
benefit due any
such employee, officer or director.
(k) There are no pending or, to the Knowledge of the Company,
threatened claims by or on behalf of any Plan, by any employee or
beneficiary
under any such Plan or otherwise involving any such Plan (other
than routine
claims for benefits).
3.11
Litigation; Compliance with Law.
(a) Except as set forth in Section 3.11(a) of the Disclosure
Letter, there is no Litigation (other than workers compensation and
auto
liability claims that have a reserve of, or are reasonably likely
to be settled
for, $100,000 or less) pending or, to the Knowledge of the Company,
threatened
against, relating to or naming as a party thereto the Company or
any of its
Subsidiaries, any of their respective properties or assets or any
of the
Company's officers or directors (in their capacities as such), (i)
that if
16
<PAGE>
determined in a manner adverse to the Company or its Subsidiaries
would
reasonably be expected to have a Material Adverse Effect on the
Company, or (ii)
seeking to restrain, enjoin, alter or delay the consummation of the
Merger or
any of the other transactions contemplated by this Agreement. There
is no
agreement, order, judgment, decree, injunction or award of any
Governmental
Entity against or binding upon the Company, any of its Subsidiaries
or any of
the Company's officers or directors (in their capacities as such)
that would
prevent, enjoin, alter or delay the consummation of the Merger or
any of the
other transactions contemplated by this Agreement or that would
have a Material
Adverse Effect on the Company. There is no material Litigation that
the Company
or any of its Subsidiaries has pending against other parties.
"Litigation" means
any action, claim, suit, proceeding, citation, summons, subpoena,
inquiry or
investigation of any nature, civil, criminal or regulatory, in law
or in equity,
by or before any Governmental Entity or arbitrator (including
worker's
compensation claims).
(b) Except as set forth in Section 3.11(b) of the Disclosure
Letter, each of the Company and its Subsidiaries has complied, and
is in
compliance, in all material respects with all Laws and Permits
which affect the
respective businesses of the Company or any of its Subsidiaries,
the Real
Property or the Assets, and the Company and its Subsidiaries have
not been and
are not in violation of any such Law or Permit except where the
failure to so
comply would have a Material Adverse Effect on the Company; nor has
any written
notice, charge, claim or action been received by the Company or any
of its
Subsidiaries or been filed, commenced, or to the Knowledge of the
Company,
threatened against the Company or any of its Subsidiaries alleging
any material
violation of the foregoing.
(c) The Company and its Subsidiaries hold all material
licenses,
permits, variances, consents, authorizations, waivers, grants,
franchises,
concessions, exemptions, orders, registrations and approvals of
Governmental
Entities or other Persons necessary for the ownership, leasing,
operation,
occupancy and use of the Real Property, the Assets and the conduct
of their
respective businesses as currently conducted ("Permits"). Neither
the Company
nor any of its Subsidiaries has received written notice that any
Permit will be
terminated or modified or cannot be renewed in the Ordinary Course
of Business,
and the Company has no Knowledge of any reasonable basis for any
such
termination, modification or nonrenewal. The execution, delivery
and performance
of this Agreement and the consummation of the Merger or any other
transactions
contemplated hereby do not and will not violate any Permit, or
result in any
termination, modification or nonrenewals thereof.
3.12 Intellectual Property.
(a) The Company and its Subsidiaries own, or possess sufficient
and legally enforceable licenses or other sufficient and legally
enforceable
rights to use, any and all United States and foreign patents,
patent
applications, patent disclosures, mask works, computer software,
trademarks,
trade dress, trade names, logos,
17
<PAGE>
Internet domain names, copyrights and service marks, including
applications to
register and registrations for any of the foregoing, as well as
trade secrets,
know-how, data and other proprietary rights and information (all of
the
foregoing, referred to as "Technology" and together with
trademarks, trade names
and service marks, referred to as "Intellectual Property")
necessary for the
conduct of, or otherwise material to, the business and operations
of the Company
and its Subsidiaries as currently conducted, free and clear of any
Liens (except
for any Permitted Liens except where the failure to own or possess
such rights
would not have a Material Adverse Effect on the Company. Section
3.12(a) of the
Disclosure Letter lists as of the date hereof, (i) all material
patents, patent
applications, patent disclosures, trademarks, trade dress, service
marks, trade
names, logos, Internet domain names, copyrights, mask works, and
any
applications or registrations of the foregoing, (ii) any material
computer
software owned or used by the Company or any of its Subsidiaries,
(iii) any
agreements to which the Company or any of its Subsidiaries are a
party granting
or obtaining any right to use or practice any rights under any
material
Intellectual Property or restricting the Company's or any of its
Subsidiaries'
right to use any material Intellectual Property. The material
Intellectual
Property owned by the Company or any of its Subsidiaries, and to
the Knowledge
of the Company, used by the Company or any of its Subsidiaries, is
valid and
enforceable, in full force and effect, and has not been cancelled,
expired or
abandoned.
(b) Except as disclosed in Section 3.12(b) of the Disclosure
Letter, the conduct of the business of the Company and its
Subsidiaries as
currently or previously conducted does not infringe, conflict with
or otherwise
violate any Intellectual Property of any Person except for such
conduct that
would not have a Material Adverse Effect on the Company, and none
of the Company
or any of its Subsidiaries has received written notice or has
Knowledge of any
such infringement, conflict or other violation.
(c) Except as set forth in Section 3.12(c) of the Disclosure
Letter, to the Knowledge of the Company, no Person is infringing,
conflicting
with or otherwise violating any Intellectual Property owned or used
by the
Company or any of its Subsidiaries, and no such claims, suits or
other
proceedings have been brought or threatened against any Person by
the Company or
any of its Subsidiaries, except for such conduct that would not
have a Material
Adverse Effect on the Company. The execution and delivery of this
Agreement and
the consummation of the transactions contemplated hereby will not
result in the
loss of, or any Lien on, the rights of the Company or any of its
Subsidiaries
with respect to any material Intellectual Property owned or used by
the Company
or any of its Subsidiaries.
3.13
Contracts.
(a) Except as set forth in Section 3.13(a) of the Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party
to or bound
by any contract, arrangement, commitment or understanding (whether
written or
oral) that: (i) has been entered into with any officer, director of
affiliate of
the Company or its
18
<PAGE>
Subsidiaries, (ii) requires remaining payments by the Company or
any of its
Subsidiaries in excess of $100,000 and is not terminable by the
Company or its
Subsidiaries, as the case may be, on notice of three months or less
without
penalty, (iii) which is a material contract (as defined in Item
601(b)(10) of
Regulation S-K of the SEC), (iv) restrains, limits or impedes the
Company's or
any of its Subsidiaries', or will restrain, limit or impede the
Surviving
Corporation's, ability to compete with or conduct any business or
any line of
business, including geographic limitations on the Company's or any
of its
Subsidiaries' or the Surviving Corporation's activities, (v) is a
joint venture
agreement, partnership agreement, profit-sharing or similar
agreement, (vi)
governs the terms of indebtedness or any other obligation of third
parties owed
to the Company or any of its Subsidiaries, other than receivables
arising from
the sale of goods or services by the Company or such Subsidiary in
the Ordinary
Course of Business, (vii) governs the terms of indebtedness or any
other
obligation of third parties owed by or guaranteed by the Company or
any of its
Subsidiaries, other than with respect to any indebtedness of, or
advances made
to, any owner-operator, or (viii) which is material to the Company
and its
Subsidiaries taken as a whole. Each contract, arrangement,
commitment or
understanding of the type described in this Section 3.13(a),
whether or not set
forth in Section 3.13(a) of the Disclosure Letter, is referred to
herein as a
"Material Contract." The Company has previously provided or made
available to
Parent true, complete and correct copies of each Material
Contract.
(b) Except as set forth in Section 3.13(b) of the Disclosure
Letter, each Material Contract is valid and binding and in full
force and
effect, and the Company and each of its Subsidiaries has performed
all material
obligations required to be performed by it to date under each
Material Contract.
No event or condition exists which constitutes or, after notice or
lapse of time
or both, would constitute, a material default on the part of the
Company or any
of its Subsidiaries under any Material Contract and to the
Knowledge of the
Company, no other party to any such Material Contract is in default
in any
respect thereunder.
3.14 Taxes.
(a) Except as set forth in Section 3.14(a) of the Disclosure
Letter, (i) all Returns required to be filed with any taxing
authority on or
before the Closing Date by, or with respect to, the Company and its
Subsidiaries
have (or by the Closing Date shall have) been filed in accordance
with all
applicable laws and all such returns are true, correct and complete
in all
material respects; (ii) the Company and its Subsidiaries have
timely paid all
Taxes shown as due and payable on the Returns referred to in clause
(i) above;
(iii) the Company and its Subsidiaries have made provision in
accordance with
GAAP in the Balance Sheet for all Taxes that are or may become
payable by the
Company and its Subsidiaries relating to periods on or prior to the
Closing Date
for which no Return has been filed; (iv) all material Employment
and Withholding
Taxes have been either duly and timely paid to the proper
governmental authority
or properly set aside in accounts for such purpose in accordance
with applicable
Laws; (v)
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the charges, accruals and reserves for Taxes with respect to the
Company and its
Subsidiaries reflected in the Balance Sheet are adequate under GAAP
to cover the
Tax liabilities accruing through the date thereof; (vi) no
deficiencies for any
Taxes have been asserted or assessed, or, to the Knowledge of the
Company,
proposed, against the Company or any of its Subsidiaries that are
not subject to
adequate reserves in accordance with GAAP in the Balance Sheet; and
(vii) as of
the Closing Date, there is no action, suit, proceeding,
investigation, audit or
claim pending or, to the Knowledge of the Company, threatened,
against or with
respect to the Company or any of its Subsidiaries in respect of any
Tax.
(b) Neither the Company nor any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return
(other than
Returns which include only the Company and any Subsidiaries of the
Company)
provided for under the laws of the United States, any foreign
jurisdiction or
any state or locality for any taxable period for which the statute
of
limitations has not expired.
(c) The Company is not, nor has it been within the most recent
five years, a "United States real property holding corporation" as
defined in
Section 897 of the Code.
(d) There are no Tax sharing, allocation, indemnification or
similar agreements in effect as between the Company, any of its
Subsidiaries or
any predecessor or affiliate of any of them and any other party
under which the
Company or any of its Subsidiaries could be liable for any Taxes of
any party
other than the Company or any Subsidiary of the Company.
(e) Neither the Company nor any of its Subsidiaries has entered
into an agreement or waiver extending any statute of limitations
relating to the
payment or collection of Taxes of the Company or any of its
Subsidiaries.
(f) There are no Liens for Taxes on any asset of the Company or
its Subsidiaries, except for Permitted Liens.
(g) Each of the Company and its Subsidiaries has disclosed on
its
Returns all positions taken therein that could give rise to a
substantial
understatement of Tax within the meaning of Section 6662 of the
Code. Neither
the Company nor its Subsidiaries has entered into, has any
liability in respect
of, or has any filing obligations with respect to, any
"reportable
transactions," as defined in Section 1.6011-4(b)(1) of the Treasury
Regulations.
(h) Neither the Company nor its Subsidiaries is the subject of
or
bound by any private letter ruling, technical advice memorandum,
closing
agreement or similar ruling, memorandum or agreement with any
taxing authority.
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(i) Neither the Company nor any of its Subsidiaries will be
required to include any item of income in, or exclude any item of
deduction
from, taxable income for any taxable period (or portion thereof)
ending after
the Closing Date as a result of any (i) change in method of
accounting for a
taxable period ending on or prior to the Closing Date under Section
481(c) of
the Code (or any corresponding or similar provision of state, local
or foreign
tax law); (ii) "closing agreement" as described in Section 7121 of
the Code (or
any corresponding or similar provision of state, local or foreign
tax law)
executed on or prior to the Closing Date, and (iii) deferred
intercompany gain
or excess loss account described in Treasury Regulations under
Section 1502 of
the Code (or any corresponding or similar provision of state, local
or foreign
tax law).
(j) Neither the Company nor any of its Subsidiaries has
undergone
an "ownership change" as defined pursuant to Section 382(g) of the
Code.
3.15 Environmental Matters.
(a) Except as disclosed in Section 3.15(a) of the Disclosure
Letter, the Company and its Subsidiaries have complied, and are in
compliance,
in all material respects with all applicable Environmental Laws,
which
compliance includes the possession of all Permits required under
applicable
Environmental Laws and compliance in all material respects with the
terms and
conditions thereof and the making and filing with all applicable
Governmental
Entities of all material reports, forms and documents and the
maintenance of all
records required to be made, filed or maintained by it under any
Environmental
Law. Except as disclosed in Section 3.15(a) of the Disclosure
Letter, neither
the Company nor any of its Subsidiaries has received any written
notice from any
Person, whether a Governmental Entity, citizens group, employee or
otherwise,
that alleges that the Company or any of its Subsidiaries are not in
compliance
with Environmental Laws.
(b) Except as disclosed in Section 3.15(b) of the Disclosure
Letter, there are no past or present actions, activities,
circumstances,
conditions, events or incidents, including the release, emission,
discharge,
presence or disposal of any Hazardous Substance, that would
reasonably be
expected to form the basis of any material Environmental Claim
against the
Company or any of its Subsidiaries, against any Person whose
liability for any
Environmental Claim the Company or any of its Subsidiaries has
retained or
assumed either contractually or by operation of law. There are no
Environmental
Claims pending or, to the Knowledge of the Company, threatened,
against the
Company or any of its Subsidiaries, or, to the Knowledge of the
Company, against
any Person whose liability for any Environmental Claim the Company
or any of its
Subsidiaries has retained or assumed either contractually or by
operation of
law.
(c) Except as disclosed in Section 3.15(c) of the Disclosure
Letter, neither the Company nor any of its Subsidiaries is subject
to any
material liability or obligation (accrued, contingent or
otherwise), including
the obligation, liability or
21
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commitment to cleanup, correct, abate or to take any response,
remedial or
corrective action under or pursuant to any Environmental Laws,
relating to (i)
environmental conditions on, under, or about any of the properties
or assets
owned, leased, operated or used by the Company or any of its
Subsidiaries or any
predecessor thereto at the present time or in the past, including
the air, soil,
surface water and groundwater conditions at, on, under, from or
near such
properties, or (ii) the past or present use, management, handling,
transport,
treatment, generation, storage, disposal or Release of any
Hazardous Substances,
whether on-site at any Real Property, or at any off-site location.
The Company
has made available to Parent all material information, including
such studies,
analyses and test results, in the possession, custody or control of
and of which
the Company has Knowledge relating to (1) the environmental
conditions on, under
or about any of the properties or assets owned, leased, operated or
used by any
of the Company and its Subsidiaries or any predecessor in interest
thereto at
the present time or in the past, and (2) any Hazardous Substances
used, managed,
handled, transported, treated, generated, stored or Released by any
Person on,
under, about or from, or otherwise in connection with the use or
operation of,
any of the properties, assets and businesses of the Company or any
of its
Subsidiaries.
(d) Except as set forth in Section 3.15(d) of the Disclosure
Letter, to the Knowledge of the Company, (i) there are no
underground storage
tanks located at any property owned, leased, operated or used by
the Company or
any of its Subsidiaries currently or at any time since January 1,
1996, (ii)
there are no reports investigating whether asbestos is contained in
or forming
part of any building, building component, structure or office space
currently or
previously owned, leased, operated or used by the Company or any of
its
Subsidiaries, which have not been previously provided to
Parent.
(e) To the Knowledge of the Company, neither the Company nor
any
of its Subsidiaries is required by virtue of the transactions
contemplated by
this Agreement, or as a condition to the effectiveness of any
transactions
contemplated by this Agreement, (i) to perform a site assessment
for Hazardous
Substances, (ii) to remove or remediate any Hazardous Substances,
(iii) to give
written notice to or receive appro
