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EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
January 28, 2007
among
SYNAGRO TECHNOLOGIES, INC.
SYNATECH HOLDINGS, INC.
and
SYNATECH, INC.
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TABLE OF CONTENTS
-----------------
ARTICLE I THE
MERGER.....................................................1
SECTION 1.01 The
Merger...................................................1
SECTION 1.02
Closing......................................................2
SECTION 1.03 Effective
Time...............................................2
SECTION 1.04 Effect of the
Merger.........................................2
SECTION 1.05 Certificate of Incorporation;
Bylaws.........................2
SECTION 1.06 Directors and
Officers.......................................2
ARTICLE II EFFECT OF MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES....3
SECTION 2.01 Conversion of
Securities.....................................3
SECTION 2.02 Exchange of
Certificates.....................................3
SECTION 2.03 Stock Transfer
Books.........................................6
SECTION 2.04 Company Stock
Options........................................6
SECTION 2.05 Dissenting
Shares............................................7
SECTION 2.06 Adjustment of Merger
Consideration...........................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY..................7
SECTION 3.01 Organization and Qualification;
Subsidiaries.................8
SECTION 3.02 Certificate of Incorporation and
Bylaws......................8
SECTION 3.03
Capitalization...............................................8
SECTION 3.04 Authority Relative to this
Agreement.........................9
SECTION 3.05 No Conflict; Required Filings and
Consents..................10
SECTION 3.06 Company Permits;
Compliance.................................11
SECTION 3.07 SEC Reports; Financial Statements; Undisclosed
Liabilities..11
SECTION 3.08 Information
Supplied........................................12
SECTION 3.09 Absence of Certain Changes or
Events........................13
SECTION 3.10 Absence of
Litigation.......................................14
SECTION 3.11 Employee Benefit
Plans......................................14
SECTION 3.12 Labor and Employment
Matters................................16
SECTION 3.13 Real Property; Title to
Assets..............................16
SECTION 3.14 Intellectual
Property.......................................17
SECTION 3.15
Taxes.......................................................18
SECTION 3.16 Environmental
Matters.......................................20
SECTION 3.17 Material
Contracts..........................................22
SECTION 3.18
Insurance...................................................23
SECTION 3.19 Board Approval; State Antitakeover Statutes; Rights
Plan;
Vote
Required..............................................23
SECTION 3.20 Corrupt Gifts and
Payments..................................23
SECTION 3.21 Opinion of Financial
Advisor................................24
SECTION 3.22
Brokers.....................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB.......24
SECTION 4.01 Corporate
Organization......................................24
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SECTION 4.02 Certificate of Incorporation and
Bylaws.....................24
SECTION 4.03 Authority Relative to This
Agreement........................24
SECTION 4.04 No Conflict; Required Filings and
Consents..................25
SECTION 4.05 Information
Supplied........................................25
SECTION 4.06 Absence of
Litigation.......................................26
SECTION 4.07 Operations of Merger
Sub....................................26
SECTION 4.08
Brokers.....................................................26
SECTION 4.09 Ownership of Company Capital
Stock..........................26
SECTION 4.10 Cash Available or Financing
Arrangements....................26
SECTION 4.11 Solvency; Operation of the Company After the
Effective Time.26
ARTICLE V CONDUCT OF BUSINESS PENDING THE
MERGER........................27
SECTION 5.01 Conduct of Business by the Company Pending the
Merger.......27
SECTION 5.02 Control of the Company's
Operations.........................30
ARTICLE VI ADDITIONAL
AGREEMENTS.........................................30
SECTION 6.01 Proxy
Statement.............................................30
SECTION 6.02 Company Stockholders'
Meeting...............................30
SECTION 6.03 Access to Information;
Confidentiality......................31
SECTION 6.04 No Solicitation of
Transactions.............................31
SECTION 6.05 Directors' and Officers' Indemnification and
Insurance......33
SECTION 6.06 Notification of Certain
Matters.............................35
SECTION 6.07 Further Action; Reasonable Best
Efforts.....................35
SECTION 6.08 Obligations of Parent and Merger
Sub........................36
SECTION 6.09 Public
Announcements........................................36
SECTION 6.10 Employee
Benefits...........................................36
SECTION 6.11 Takeover
Statutes...........................................37
SECTION 6.12
Financing...................................................37
SECTION 6.13 Transfer
Taxes..............................................38
ARTICLE VII CONDITIONS TO THE
MERGER......................................38
SECTION 7.01 Conditions to the Obligations of Each
Party.................38
SECTION 7.02 Conditions to the Obligations of Parent and Merger
Sub......39
SECTION 7.03 Conditions to the Obligations of the
Company................39
ARTICLE VIII TERMINATION, AMENDMENT AND
WAIVER.............................40
SECTION 8.01
Termination.................................................40
SECTION 8.02 Effect of
Termination.......................................41
SECTION 8.03 Fees and
Expenses...........................................41
SECTION 8.04
Amendment...................................................43
SECTION 8.05
Waiver......................................................43
ARTICLE IX GENERAL
PROVISIONS............................................43
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements..43
SECTION 9.02
Notices.....................................................43
SECTION 9.03 Certain
Definitions.........................................44
SECTION 9.04
Severability................................................50
SECTION 9.05 Disclaimer of Other Representations and
Warranties..........50
SECTION 9.06 Entire Agreement;
Assignment................................51
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SECTION 9.07 Parties in
Interest.........................................51
SECTION 9.08 Specific
Performance........................................51
SECTION 9.09 Governing
Law...............................................51
SECTION 9.10 Waiver of Jury
Trial........................................51
SECTION 9.11
Headings....................................................52
SECTION 9.12
Counterparts................................................52
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
January 28,
2007 among SYNAGRO TECHNOLOGIES, INC., a Delaware corporation
(the "Company"),
SYNATECH HOLDINGS, INC., a Delaware corporation ("Parent"), and
SYNATECH, INC.,
a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company (the "Company
Board") has
(i) determined that it is in the best interest of the Company
and the Company's
stockholders, and declared it advisable, to enter into this
Agreement providing
for the merger (the "Merger") of Merger Sub with and into the
Company in
accordance with the General Corporation Law of the State of
Delaware (the
"DGCL"), upon the terms and subject to the conditions set forth
herein, (ii)
approved the execution, delivery and performance of this
Agreement and the
consummation of the transactions contemplated hereby, including
the Merger, in
accordance with the DGCL, upon the terms and conditions
contained herein, and
(iii) resolved to recommend adoption of this Agreement by the
stockholders of
the Company;
WHEREAS, the Board of Directors of Parent and Merger Sub have
each (i)
unanimously approved this Agreement and declared it advisable
for Parent and
Merger Sub to enter into this Agreement, and (ii) unanimously
approved the
execution, delivery and performance of this Agreement and the
consummation of
the transactions contemplated hereby, including the Merger, in
accordance with
the DGCL, upon the terms and conditions contained herein;
WHEREAS, upon consummation of the Merger, each issued and
outstanding share
of common stock, par value $0.002 per share of the Company (the
"Company Common
Stock"), will be converted into the right to receive $5.76 per
share in cash,
without interest, upon the terms and subject to the conditions
of this
Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain
representations, warranties, covenants and agreements in
connection with the
Merger and to prescribe certain conditions with respect to the
consummation of
the transaction contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants
and agreements herein contained, and intending to be legally
bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set
forth in Article VII, and in accordance with the DGCL, at the
Effective Time,
Merger Sub shall be merged with and into the Company. As a
result of the Merger,
the separate corporate existence of Merger Sub shall cease and
the Company shall
continue under the name "Synagro Technologies, Inc." as the
surviving
corporation of the Merger under the DGCL (the "Surviving
Corporation").
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SECTION 1.02 Closing. Unless this Agreement shall have been
terminated in
accordance with Section 8.01, and subject to the satisfaction or
waiver of the
conditions set forth in Article VII, the closing of the Merger
(the "Closing")
will take place at 11:00 a.m., New York time, on a date to be
specified by the
parties, which shall be not later than the fifth business day
after the
satisfaction or waiver of the conditions set forth in Article
VII (other than
those that by their terms are to be satisfied or waived at the
Closing), at the
offices of Locke Liddell & Sapp LLP, 600 Travis Street,
Suite 3400, Houston,
Texas 77002, unless another time, date and/or place is agreed to
in writing by
Parent and the Company.
SECTION 1.03 Effective Time. Upon the terms and subject to the
conditions
set forth in this Agreement, simultaneously with the Closing,
the parties hereto
shall (i) file a certificate of merger (the "Certificate of
Merger") in such
form as is required by, and executed and acknowledged in
accordance with, the
relevant provisions of the DGCL, and (ii) make all other filings
or recordings
required under the DGCL to effect the Merger. The Merger shall
become effective
at such date and time as the Certificate of Merger is duly filed
with the
Secretary of State of the State of Delaware or at such
subsequent date and time
as Parent and the Company shall agree and specify in the
Certificate of Merger.
The date and time at which the Merger becomes effective is
referred to in this
Agreement as the "Effective Time".
SECTION 1.04 Effect of the Merger. At the Effective Time, the
effect of
the Merger shall be as provided in Section 259 of the DGCL.
SECTION 1.05 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
the
Company, as in effect immediately prior to the Effective Time,
shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter
amended in accordance with the provisions thereof and as
provided by Law.
(b) At the Effective Time, the Bylaws of Merger Sub, as in
effect
immediately prior to the Effective Time, shall be the Bylaws of
the
Surviving Corporation until thereafter amended as provided by
Law, the
Certificate of Incorporation of the Surviving Corporation and
such Bylaws,
except that the references to Merger Sub's name shall be
replaced by
references to Synagro Technologies, Inc..
SECTION 1.06 Directors and Officers. The directors of Merger
Sub
immediately prior to the Effective Time shall be the initial
directors of the
Surviving Corporation, each to hold office in accordance with
the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the
officers of the
Company immediately prior to the Effective Time shall be the
initial officers of
the Surviving Corporation, in each case until their respective
successors are
duly elected or appointed and qualified or until the earlier of
their death,
resignation or removal.
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ARTICLE II
EFFECT OF MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities. At the Effective Time,
the following
shall occur by virtue of the Merger and without any action on
the part of Merger
Sub, the Company or the holders of any of the following
securities:
(a) Conversion of Company Common Stock. Each share of Company
Common
Stock (all issued and outstanding shares of Company Common Stock
being
hereinafter collectively referred to as the "Shares") issued
and
outstanding immediately prior to the Effective Time (other than
any Shares
to be canceled pursuant to Section 2.01(b), Shares owned by any
direct or
indirect wholly owned subsidiary of the Company and not owned on
behalf on
a third person and any Dissenting Shares) shall be canceled and
shall be
converted automatically into the right to receive an amount per
Share
(subject to any applicable withholding Tax specified in Section
2.02(f)
hereof) equal to $5.76 in cash, without interest (the
"Merger
Consideration"). At the Effective Time, each holder of a
certificate
theretofore representing any such shares of Company Common Stock
(other
than holders of Dissenting Shares), including any shares of
restricted
stock of the Company issued under the Company's 2005 Restricted
Stock Plan,
whether or not restrictions have lapsed, shall cease to have any
rights
with respect thereto, except the right to receive the Merger
Consideration
and any declared but unpaid dividends, including the Stub Period
Dividend,
if applicable, upon surrender of such certificates in accordance
with
Section 2.02, without interest.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each
Share
held in the treasury of the Company and each Share owned by
Merger Sub,
Parent or any direct or indirect wholly owned subsidiary of
Parent
immediately prior to the Effective Time and not owned on behalf
of a third
person shall automatically be canceled without any conversion
thereof and
no payment or distribution shall be made with respect
thereto.
(c) Capital Stock of Merger Sub. Each share of common stock, par
value
$0.01 per share, 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, par value
$0.002 per
share, of the Surviving Corporation and shall constitute the
only shares of
capital stock of the Surviving Corporation.
SECTION 2.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
(i)
appoint a bank or trust company reasonably acceptable to the
Company (the
"Paying Agent"), and (ii) enter into a paying agent agreement,
in form and
substance reasonably acceptable to the Company, with such Paying
Agent for
the payment of the (A) aggregate Merger Consideration, (B) the
aggregate
amount of cash dividends, if any, that (x) were declared after
the date
hereof and are expressly permitted hereunder to have been so
declared, (y)
have a record date prior to the Effective Time, and (z) are
unpaid at the
Effective Time (such dividends, including the Stub Period
Dividend, the
"Outstanding Dividends") and (C) Option Payments (as defined
below) in
accordance with this Article II. Parent shall provide the Paying
Agent with
irrevocable instructions and authority to pay each respective
holder of
record (or otherwise pursuant to
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Section 2.02(b) below) of certificates evidencing Shares (other
than any
Shares cancelled pursuant to Section 2.01(b), Shares owned by
any direct or
indirect wholly owned subsidiary of the Company and any
Dissenting Shares),
as evidenced by a list of such holders certified by an officer
of the
Surviving Corporation or the Surviving Corporation's transfer
agent, the
Merger Consideration upon surrender of certificates that
formerly evidenced
Shares and the amount of Outstanding Dividends due thereon. At
or prior to
the Effective Time, Parent shall deposit, or cause to be
deposited, with
the Paying Agent, for the benefit of the holders of Shares and
Company
Stock Options and separate and apart from its other funds, as a
trust fund,
cash in an amount sufficient to pay the aggregate Merger
Consideration and
Outstanding Dividends required to be paid pursuant to Section
2.01(a) and
the aggregate Option Payments required to be paid pursuant to
Section
2.04(b) (such cash to pay the Merger Consideration, Outstanding
Dividends
and the Option Payments being hereinafter referred to as the
"Exchange
Fund"). The Exchange Fund shall not be used for any other
purpose. The
Exchange Fund shall be invested by the Paying Agent as directed
by Parent;
provided, however, that such investments shall be in obligations
of or
guaranteed by the United States of America or any agency or
instrumentality
thereof and backed by the full faith and credit of the United
States of
America, in commercial paper obligations rated A-1 or P-1 or
better by
Moody's Investors Service, Inc. or Standard & Poor's
Corporation,
respectively, or in certificates of deposit, bank repurchase
agreements or
banker's acceptances of commercial banks with capital exceeding
$10 billion
(based on the most recent financial statements of such bank
which are then
publicly available). Any net profit resulting from, or interest
or income
produced by, such investments shall be payable to the
Surviving
Corporation.
(b) Exchange Procedures. As promptly as practicable after
the
Effective Time, Parent shall cause the Paying Agent to mail to
each person
who was, at the Effective Time, a holder of record of Shares
entitled to
receive the Merger Consideration and Outstanding Dividends
pursuant to
Section 2.01(a): (i) a letter of transmittal (which shall be in
customary
form and shall specify that delivery shall be effected, and risk
of loss
and title to the certificates evidencing such Shares (the
"Certificates")
shall pass, only upon proper delivery of the Certificates to the
Paying
Agent (or effective affidavits of loss in lieu thereof)) and
(ii)
instructions for use in effecting the surrender of the
Certificates (or
effective affidavits of loss in lieu thereof) in exchange for
payment of
the Merger Consideration and Outstanding Dividends. Upon
surrender to the
Paying Agent of a Certificate (or effective affidavits of loss
in lieu
thereof) for cancellation, together with such letter of
transmittal, duly
completed and validly executed in accordance with the
instructions thereto,
the holder of the Shares represented by such Certificate (or
effective
affidavits of loss in lieu thereof) shall be entitled to receive
in
exchange therefor the Merger Consideration and Outstanding
Dividends
pursuant to Section 2.01(a) in respect of the Shares formerly
represented
by such Certificate (or effective affidavits of loss in lieu
thereof), and
the Certificate so surrendered shall forthwith be cancelled. In
the event
of a transfer of ownership of Shares that is not registered in
the transfer
records of the Company, payment of the Merger Consideration and
Outstanding
Dividends may be made to a person other than the person in whose
name the
Certificate so surrendered is registered if the Certificate
representing
such Shares shall be properly endorsed or otherwise be in proper
form for
transfer and the person requesting such payment shall pay any
transfer or
other taxes required by reason of the payment of the Merger
Consideration
and Outstanding Dividends to a person other than the registered
holder of
such Certificate or establish to the reasonable satisfaction of
Parent that
such tax has been paid or is not applicable. Until surrendered
as
contemplated by this Section 2.02, each
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Certificate shall be deemed at all times after the Effective
Time to
represent only the right to receive upon such surrender the
Merger
Consideration and Outstanding Dividends to which the holder of
such
Certificate is entitled pursuant to this Article II. No interest
shall be
paid or will accrue on any cash payable to holders of
Certificates pursuant
to the provisions of this Article II. The method of payment of
cash for
Shares converted into the right to receive the Merger
Consideration and
Outstanding Dividends shall be by wire transfer, bank check or
other method
that will provide a holder of Shares not later than second day
funds.
Parent shall instruct the Paying Agent to timely pay the
Merger
Consideration and Outstanding Dividends.
(c) No Further Rights. From and after the Effective Time,
holders of
Certificates shall cease to have any rights as stockholders of
the Company,
except as provided herein or by Law.
(d) Termination of Exchange Fund. At any time which is more than
one
year after the Effective Time, the Surviving Corporation shall
be entitled
to require the Paying Agent to deliver to it any Exchange Funds
which had
been deposited with the Paying Agent and have not been disbursed
in
accordance with this Article II (including, without limitation,
interest
and other income received by the Paying Agent in respect of the
funds made
available to it), and after the Exchange Funds have been
delivered to the
Surviving Corporation, Persons entitled to payment in accordance
with this
Article II shall be entitled to look solely to the Surviving
Corporation
(subject to abandoned property, escheat or other similar Laws)
for payment
of the Merger Consideration and Outstanding Dividends upon
surrender of the
Certificates held by them, without any interest thereon;
provided, that
such Person shall have no greater rights against the Surviving
Corporation
than may be accorded to general creditors of the Surviving
Corporation
under applicable Laws. Any portion of the Exchange Funds
deposited with the
Paying Agent remaining unclaimed as of a date which is
immediately prior to
such time as such amounts would otherwise escheat to or become
property of
any government entity shall, to the extent permitted by
applicable Law,
become the property of the Surviving Corporation free and clear
of any
claims or interest of any Person previously entitled
thereto.
(e) No Liability. None of the Paying Agent, Merger Sub, Parent
or the
Surviving Corporation shall be liable to any holder of Shares
for any such
Shares (or dividends or distributions with respect thereto), or
cash
delivered to a public official pursuant to any abandoned
property, escheat
or similar Law.
(f) Withholding Rights. Each of the Paying Agent, the
Surviving
Corporation and Parent shall be entitled to deduct and withhold
from the
consideration otherwise payable pursuant to this Agreement to
any holder of
Shares and Company Stock Options such amounts as it is required
to deduct
and withhold with respect to such payment under all applicable
Tax Laws. To
the extent that amounts are so withheld by the Paying Agent, the
Surviving
Corporation or Parent, as the case may be, such withheld amounts
shall be
treated for all purposes of this Agreement as having been paid
to the
holder of the Shares in respect of which such deduction and
withholding was
made by the Paying Agent, the Surviving Corporation or Parent,
as the case
may be.
(g) Lost Certificates. If any Certificate shall have been lost,
stolen
or destroyed, upon the making of an affidavit of that fact by
the person
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claiming such Certificate to be lost, stolen or destroyed and,
if required
by Parent, the posting by such person of a bond, in such
reasonable and
customary amount as Parent may direct, as indemnity against any
claim that
may be made against it with respect to such Certificate, the
Paying Agent
shall pay in respect of such lost, stolen or destroyed
Certificate the
Merger Consideration and Outstanding Dividends to which the
holder thereof
is entitled pursuant to Section 2.01(a).
SECTION 2.03 Stock Transfer Books. At the Effective Time, the
stock
transfer books of the Company shall be closed and there shall be
no further
registration of transfers of Shares thereafter on the records of
the Company.
From and after the Effective Time, the holders of Certificates
representing
Shares outstanding immediately prior to the Effective Time shall
cease to have
any rights with respect to such Shares, except as otherwise
provided in this
Agreement or by Law. At or after the Effective Time, any
Certificates presented
to the Paying Agent or Parent for any reason shall be canceled
against delivery
of the Merger Consideration and Outstanding Dividends to which
the holders
thereof are entitled pursuant to Section 2.01(a).
SECTION 2.04 Company Stock Options.
(a) As part of the Transactions (as defined in Section 3.04),
the
Company shall use its reasonable best efforts to ensure that
(i)
immediately prior to the Effective Time, each outstanding option
to
purchase Company Common Stock granted under any Company Stock
Plan shall
become immediately vested and exercisable in full, (ii) at the
Effective
Time, each option to purchase shares of Company Common Stock
granted under
the Company Stock Plans (each, a "Company Stock Option") shall
be canceled
as of the Effective Time in exchange for the consideration
contemplated by
Section 2.04(b), and (iii) at the Effective Time, all of the
Company Stock
Plans shall be terminated, in each case, in accordance with and
pursuant to
the terms of the Company Stock Plans and without the creation of
additional
liability to the Company or any Subsidiaries.
(b) Each holder of a Company Stock Option that is outstanding
and
unexercised as of the Effective Time, whether or not exercisable
at the
Effective Time, and has an exercise price per share of Company
Common Stock
that is less than the per share Merger Consideration shall
(subject to the
provisions of this Section 2.04) be paid out of the Exchange
Fund as
promptly as practicable after the Effective Time, in exchange
for the
cancellation of such Company Stock Option, an amount in cash
(subject to
any applicable withholding Taxes) equal to (i) the difference
between the
per share Merger Consideration and the applicable exercise price
of such
Company Stock Option, multiplied by (ii) the aggregate number of
Shares
issuable upon exercise, whether or not exercisable at the
Effective Time,
of such Company Stock Option (the "Option Payment"). Any such
payments
shall be subject to all applicable federal, state and local Tax
withholding
requirements, and shall be by wire transfer, bank check or other
method
that will provide a holder of Shares not later than second day
funds.
Parent shall instruct the Paying Agent to timely pay the Option
Payments;
provided, however that Parent may distribute at the Effective
Time, or
cause the Paying Agent to distribute, the Option Payment to the
Surviving
Corporation for distribution by the Surviving Corporation to
holders of
Company Stock Options through the Company's normal payroll
procedures.
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SECTION 2.05 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary
and to the extent available under the DGCL, Shares that are
issued and
outstanding immediately prior to the Effective Time and that are
held by
any stockholder who is entitled to demand and properly demands
the
appraisal for such Shares (the "Dissenting Shares") pursuant to,
and who
complies in all respects with, the provisions of Section 262 of
the DGCL
("Section 262") shall not be converted into, or represent the
right to
receive, the Merger Consideration. Any such stockholder shall
instead be
entitled to receive payment of the fair value of such
stockholder's
Dissenting Shares in accordance with the provisions of Section
262;
provided, however, that all Dissenting Shares held by any
stockholder who
shall have failed to perfect or who otherwise shall have
withdrawn or lost
such stockholder's rights to appraisal of such Shares under
Section 262
shall thereupon be deemed to have been converted into, and to
have become
exchangeable for, as of the Effective Time, the right to receive
the Merger
Consideration and Outstanding Dividends, without any interest
thereon, upon
surrender in the manner provided in Section 2.02 of the
Certificate or
Certificates that formerly evidenced such Shares. At the
Effective Time,
any holder of Dissenting Shares shall cease to have any rights
with respect
thereto, except the rights provided in Section 262 of the DGCL
and as
provided in the preceding sentence.
(b) The Company shall give Parent (i) notice as promptly as
practicable of any demands received by the Company for appraisal
of any
Shares and withdrawals of such demands and (ii) the right to
participate in
and direct all negotiations and proceedings with respect to
demands for
appraisal under the DGCL. The Company shall not, except with the
prior
written consent of Parent, make any payment or agree to make any
payment
with respect to any demands for appraisal or offer to settle or
settle any
such demands, except to the extent it is expressly required to
do so by
court order.
SECTION 2.06 Adjustment of Merger Consideration. Notwithstanding
anything
in this Agreement to the contrary, if, between the date of this
Agreement and
the Effective Time, the issued and outstanding Shares shall have
been changed
into a different number of shares or a different class by reason
of any stock
split, reverse stock split, stock dividend, reclassification,
redenomination,
recapitalization, split-up, combination, exchange of shares or
other similar
transaction, the Merger Consideration and any other dependent
items shall be
appropriately adjusted to provide to the holders of Company
Common Stock the
same economic effect as contemplated by this Agreement prior to
such action and
as so adjusted shall, from and after the date of such event, be
the Merger
Consideration or other dependent item, subject to further
adjustment in
accordance with this sentence.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Parent in the schedules
attached hereto
(the "Company Schedules") or as disclosed in the SEC Reports
publicly available
prior to the date of this Agreement (other than forward looking
statements set
forth in the "risk factors" and "management's discussion and
analysis of
financial condition and results of operations" portions of the
SEC Reports), the
Company hereby makes the following representations and
warranties to Parent and
Merger Sub. Any disclosures in any section of the Company
Schedules shall
7
<PAGE>
qualify any other section in this Article III to the extent
relevant, as long as
the applicability of such matter to such other section is
reasonably apparent on
its face, and disclosure in any section of the Company Schedules
shall be
effectively made whether or not expressly excepted in the
corresponding section
of this Agreement.
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its Subsidiaries is duly
organized,
validly existing and in good standing under the laws of its
respective
jurisdiction of organization, and has the requisite corporate or
similar
power and authority and all necessary governmental approvals to
own, lease
and operate its properties and to carry on its business as it is
now being
conducted, except where the failure to be in good standing would
not,
individually or in the aggregate, have a Material Adverse
Effect. Each of
the Company and each Subsidiary is duly qualified or licensed as
a foreign
corporation or other entity to do business, and is in good
standing (where
such concept exists), in each jurisdiction where the character
of the
properties owned, leased or operated by it or the nature of its
business
makes such qualification or licensing necessary, except for such
failures
to be so qualified or licensed and in good standing that would
not have a
Material Adverse Effect.
(b) Schedule 3.01(b) sets forth a true and complete list of all
the
Company's Subsidiaries and the jurisdiction of organization
thereof. All
the outstanding Equity Interests of each Subsidiary of the
Company are
owned, directly or indirectly, by the Company free and clear of
any Liens,
other than Liens securing Company indebtedness. There are no
stockholder
agreements, voting trusts or other agreements or understandings
to which
the Company or any of its Subsidiaries is a party or by which
any of them
are bound relating to the voting of any shares of capital stock
of the
Company's Subsidiaries. Except for its interests in its
Subsidiaries, the
Company does not own, directly or indirectly, any Equity
Interest in any
other Person.
SECTION 3.02 Certificate of Incorporation and Bylaws. The
Company has made
available to Parent a complete and correct copy of the
Certificate of
Incorporation and the Bylaws, or equivalent organizational
documents, in each
case as amended to date ("Organizational Documents"), of the
Company and each
Material Subsidiary. Such Organizational Documents are in full
force and effect
and no other organizational documents are applicable or binding
upon the Company
or any of its Material Subsidiaries. Neither the Company nor any
Subsidiary is,
nor has the Company been, in violation of any of the provisions
of its
Organizational Documents. No Subsidiary has been in material
violation of any of
the provisions of its Organizational Documents. The Company has
made available
to Parent complete and correct copies of the minutes of all
meetings of the
Company Board (and each committee thereof) and of the
stockholders of the
Company, in each case since January 1, 2003.
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of
(i)
100,000,000 shares of Company Common Stock and (ii) 10,000,000
shares of
preferred stock, par value $0.002 per share ("Preferred Stock").
As of the
date of this Agreement, (i) 77,818,096 shares of Company Common
Stock are
issued and outstanding, all of which are validly issued, fully
paid and
nonassessable and were issued free of preemptive (or similar)
rights, (ii)
no shares of Company
8
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Common Stock are held in the treasury of the Company, (iii) no
shares of
Company Common Stock are held by the Subsidiaries, (iv)
5,241,548 shares of
Company Common Stock are issuable upon exercise of outstanding
Company
Stock Options granted under the Company Stock Plans at a
weighted average
per share exercise price of $3.16, and (v) 7,512,197 shares of
Company
Common Stock are reserved for future issuance in connection with
the
Company Stock Plans (including shares reserved pursuant to
outstanding
Company Stock Options). All of the aforesaid shares of Company
Common Stock
and Company Stock Options have been offered, sold and delivered
by the
Company in compliance in all material respects with all
applicable federal
and state securities laws. As of the date of this Agreement, no
shares of
Preferred Stock are issued and outstanding. Except as set forth
on Schedule
3.03(a), there are no (A) options, warrants or other rights,
agreements,
arrangements or commitments of any character relating to the
issued or
unissued capital stock of the Company or any Subsidiary or
obligating the
Company or any Subsidiary to issue or sell any shares of capital
stock of,
or other Equity Interests in, the Company or any Subsidiary,
(B)
outstanding voting securities of the Company or any Subsidiary
(other than
Company Common Stock) or securities convertible, exchangeable
or
exercisable for shares of capital stock or voting securities of
the Company
or any Subsidiary, or (C) outstanding equity equivalents,
interests in the
ownership or earnings of the Company or similar rights. All
shares of
Company Common Stock subject to issuance as aforesaid, upon
issuance on the
terms and conditions specified in the instruments pursuant to
which they
are issuable, will be duly authorized, validly issued, fully
paid and
nonassessable and free of preemptive (or similar) rights. There
are no
outstanding contractual obligations of the Company or any
Subsidiary to
repurchase, redeem or otherwise acquire any issued or unissued
shares of
Company Common Stock or any Equity Interests of any Subsidiary
or to
provide funds to or make any investment (in the form of a loan,
capital
contribution or otherwise) in any Subsidiary or any other
person. None of
the Company or any Subsidiary is a party to any stockholders'
agreement,
voting trust agreement or registration rights agreement relating
to any
equity securities of the Company or any Subsidiary or any other
Contract
relating to the holding, disposition, voting or dividends with
respect to
any issued or unissued Equity Interests of the Company or of
any
Subsidiary, or that restricts the transfer of any issued or
unissued Equity
Interests of the Company. All dividends on the Company Common
Stock that
have been declared or have accrued prior to the date of this
Agreement have
been paid in full to the Company's paying agent.
(b) Each outstanding share of capital stock or other Equity
Interest
of each Subsidiary is duly authorized, validly issued, fully
paid and
nonassessable and was issued free of preemptive (or similar)
rights, and
each such share or other Equity Interest is owned by the Company
or another
Subsidiary free and clear of all options, rights of first
refusal,
agreements, limitations on the Company's or any Subsidiary's
voting,
dividend or transfer rights, charges and other encumbrances or
Liens (other
than Liens securing Company indebtedness) of any nature
whatsoever.
(c) Except as set forth on Schedule 3.03(c), neither the Company
nor
any of its Subsidiaries have any outstanding indebtedness for
borrowed
money not reflected in the Financial Statements.
SECTION 3.04 Authority Relative to this Agreement. The Company
has all
necessary corporate power and authority to execute and deliver
this Agreement
9
<PAGE>
and, subject to the required approval and adoption of this
Agreement and the
Transactions by the Company's stockholders, to perform its
obligations hereunder
and to consummate the Merger and the other transactions
contemplated hereby
(collectively, the "Transactions"). Subject to the required
approval and
adoption of this Agreement and the Transactions by the Company's
stockholders,
the execution, delivery and performance of this Agreement by the
Company and the
consummation by the Company of the Transactions have been duly
and validly
authorized by all necessary corporate action, and no other
corporate proceedings
on the part of the Company are necessary to authorize this
Agreement or to
consummate the Transactions. This Agreement has been duly and
validly executed
and delivered by the Company and, assuming the due
authorization, execution and
delivery by Parent and Merger Sub, constitutes a legal, valid
and binding
obligation of the Company, enforceable against the Company in
accordance with
its terms, subject to the effect of any applicable bankruptcy,
insolvency
(including all Laws relating to fraudulent transfers),
reorganization,
moratorium or similar Laws affecting creditors' rights generally
and subject to
the effect of general principles of equity.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company
do
not, and the performance of this Agreement by the Company and
the
consummation by the Company of the Transactions will not, (i)
conflict with
or violate the Certificate of Incorporation or Bylaws (or
similar
organizational documents) of the Company or any Subsidiary, (ii)
assuming
that all consents, approvals and other authorizations described
in Section
3.05(b) have been obtained and that all filings and other
actions described
in Section 3.05(b) have been made or taken, materially conflict
with or
violate any federal, state, local or foreign statute, law,
ordinance,
regulation, rule, code, executive order, judgment, injunction,
decree or
other order ("Law") applicable to the Company or any Subsidiary
or by which
any property or asset of the Company or any Subsidiary is bound
or
affected, or (iii) except as set forth on Schedule 3.05(a)(iii),
result in
any breach or violation of, or constitute a default (or an event
which,
with notice or lapse of time or both, would become a default)
under,
require consent or result in the loss of a material benefit
under, give
rise to a right or obligation to purchase or sell assets or
securities
under, give to others any right of termination, amendment,
acceleration or
cancellation of, or result in the creation of a Lien (other than
a
Permitted Lien) on any property or asset of the Company or any
Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract
(written or
oral), agreement, lease, license, Permit, franchise or other
binding
commitment, instrument or obligation (each, a "Contract") to
which the
Company or any Subsidiary is a party or by which the Company or
a
Subsidiary or any property or asset of the Company or any
Subsidiary is
bound or affected, except with respect to (ii) and (iii) above
for those
conflicts, violations, breaches, defaults or losses, or for
which the
failure to obtain such consents, would not reasonably be
expected to have,
individually or in the aggregate, a Material Adverse Effect. The
Company
has not been advised of any reason why the consents required
under the
contracts set forth on Schedule 3.05(a)(iii) could not be
obtained prior to
the Closing.
(b) The execution and delivery of this Agreement by the Company
do
not, and the performance of this Agreement by the Company and
the
consummation by the Company of the Transactions will not,
require any
consent, approval, authorization or permit of, or filing with
or
notification to, any supranational, national, provincial,
federal, state or
local government, regulatory or administrative authority, or any
court,
tribunal, or judicial or
10
<PAGE>
arbitral body (a "Governmental Authority"), except (i) as may be
required
by the Exchange Act, (ii) the filing with the SEC of the Proxy
Statement,
(iii) any filings required under the rules and regulations of
the NASDAQ
Stock Market, Inc. ("NASDAQ"), (iv) the filing and recordation
of
appropriate merger documents as required by the DGCL and
appropriate
documents with the relevant authorities of other states in which
the
Company or any Subsidiary is qualified to do business, (v) as
may be
required pursuant to state securities, takeover and "blue sky"
laws, (vi)
any filings and consents required under the Hart-Scott-Rodino
Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (vii) any
other
consent, approval, authorization, permit, action, filing or
notification
the failure of which to make or obtain would not have a Material
Adverse
Effect, or (viii) as otherwise listed on Schedule 3.05(b).
(c) Except as set forth on Schedule 3.05(c), no Subsidiaries of
the
Company are prohibited by any contractual obligations (other
than the
Company's existing senior credit facilities) from guaranteeing
any
obligations of the Company under its senior credit facilities
(including
the Financings) or from securing such guarantees with a lien
on
substantially all of their assets.
SECTION 3.06 Company Permits; Compliance Each of the Company and
each
Subsidiary is in possession of all grants, authorizations,
licenses, permits,
easements, variances, exceptions, consents, certificates,
approvals and orders
of any Governmental Authority necessary for each such entity to
own, lease and
operate its properties or to carry on its business as it is now
being conducted
(the "Permits"), except where the failure to have, or the
suspension or
cancellation of, any of the Permits would not have a Material
Adverse Effect. No
suspension or cancellation of any of the Permits is pending or,
to the knowledge
of the Company, threatened, except where the failure to have, or
the suspension
or cancellation of, any of the Permits would not have a Material
Adverse Effect.
Each of the Company and each Subsidiary is, and has been, in
compliance with,
and has taken any necessary steps to become in compliance with:
(a) any Material
Contract or Permit to which such entity is a party or by which
such entity or
any property or asset of such entity is bound; and (b) any Law
applicable to
such entity or by which any property or asset of such entity is
bound or
affected; and all notices, reports, documents and other
information required to
be filed under any Material Contract, Permit, or Law were
properly filed and
were in compliance with such Material Contract, Permit, or Law,
except where
such failure to file or to be in compliance would not have a
Material Adverse
Effect.
SECTION 3.07 SEC Reports; Financial Statements; Undisclosed
Liabilities.
(a) The Company has filed with the SEC all forms, reports,
statements,
schedules and other documents required to be filed by it since
January 1,
2003 (as amended to date, the "SEC Reports"). The Company has
delivered or
made available to Parent copies of all such SEC Reports. As of
their
respective dates, or, if amended, as of the date of the last
such
amendment, the SEC Reports complied as to form in all material
respects in
accordance with the then-applicable requirements of the
Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act or
the
Sarbanes-Oxley Act, as the case may be, in each case, the rules
and
regulations promulgated thereunder. None of the SEC Reports, at
the time
they were filed, or, if amended, as of the date of such
amendment,
contained 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 made therein, in the light of the
11
<PAGE>
circumstances under which they were made, not misleading. No
Subsidiary is
required to file any form, report or other document with the
SEC. As of the
date hereof, there are no material unresolved comments issued by
the staff
of the SEC with respect to any of the SEC Reports.
(b) Each of the consolidated financial statements (collectively,
and
including, in each case, any notes and schedules thereto, the
"Financial
Statements") contained in the SEC Reports, fairly presents in
all material
respects the consolidated financial position of the Company and
its
consolidated Subsidiaries as at the respective dates thereof and
their
consolidated results of operations and consolidated cash flows
for the
respective periods indicated (subject, in the case of the
unaudited
statements, to normal year-end audit adjustments and to any
other
adjustments described therein including the notes thereto, which
are not
expected to be significant) in conformity with United States
generally
accepted accounting principles ("GAAP") (except, in the case of
the
unaudited statements, as permitted by Form 10-Q or Form 8-K or
any
successor forms under the Exchange Act) applied on a consistent
basis
during the periods involved (except as may be indicated therein
or in the
notes thereto).
(c) Except (a) as reflected or reserved against on the
consolidated
balance sheet of the Company (including the notes thereto)
included in the
Company's Quarterly Report on Form 10-Q for the nine months
ended September
30, 2006, (b) for liabilities or obligations incurred in the
ordinary
course of business since September 30, 2006, (c) liabilities
and
obligations arising under this Agreement, (d) liabilities or
obligations
which have been discharged or paid in full in the ordinary
course of
business and in a manner consistent with past practice, and (e)
liabilities
and obligations that would not have a Material Adverse Effect,
neither the
Company nor any of its Subsidiaries has any liabilities or
obligations of
any nature, whether or not accrued, contingent or otherwise,
that would be
required by GAAP to be reflected on a consolidated balance sheet
(or the
notes thereto) of the Company and its Subsidiaries.
(d) Except as set forth on Schedule 3.07(d), neither the Company
nor
any of its Subsidiaries is indebted to any director or officer
of the
Company or any of its Subsidiaries (except for amounts due as
normal
salaries and bonuses or in reimbursement of ordinary business
expenses and
directors' fees), and no such person is indebted to the Company
or any of
its Subsidiaries, and there have been no other transactions of
the type
required to be disclosed pursuant to Items 402 or 404 of
Regulation S-K
promulgated by the SEC. SECTION
SECTION 3.08 Information Supplied.
(a) Each document required to be filed by the Company with the
SEC in
connection with the Transactions (the "Company Disclosure
Documents"),
including, without limitation, the proxy or information
statement of the
Company containing information required by Regulation 14A under
the
Exchange Act, and, if applicable, Rule 13e-3 and Schedule 13E-3
under the
Exchange Act (together with all amendments and supplements
thereto, the
"Proxy Statement"), to be filed with the SEC in connection with
the Merger,
will, when filed, comply as to form in all material respects
with the
applicable requirements of the Exchange Act.
(b) None of the information included or incorporated by
reference in
the Proxy Statement will, at the date it is first mailed to the
Company's
stockholders or at the time of the Company Stockholders' Meeting
or at the
time of any amendment or supplement thereof, contain any untrue
statement
of a
12
<PAGE>
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.
(c) The representations and warranties contained in this Section
3.08
will not apply to statements or omissions included in the
Company
Disclosure Documents based upon information furnished to the
Company in
writing by Merger Sub or Parent or any of their
Representatives
specifically for use therein.
SECTION 3.09 Absence of Certain Changes or Events. Except as set
forth on
Schedule 3.09:
(a) Since September 30, 2006 through to the date hereof, there
has not
been any Material Adverse Effect or any event or circumstance
that would
reasonably be expected to have a Material Adverse Effect.
(b) Since September 30, 2006 through to the date hereof, except
as
expressly contemplated by this Agreement, the Company and the
Subsidiaries
have conducted their businesses only in the ordinary course of
business and
in a manner consistent with past practice.
(c) Since September 30, 2006 through to the date hereof, except
as
expressly contemplated by this Agreement, neither the Company
nor any of
its Subsidiaries has:
(i) amended or otherwise changed its Organizational
Documents;
(ii) declared, set aside, made or paid any dividend or other
distribution, payable in cash, stock, property or otherwise,
with
respect to any of its capital stock; except for dividends
declared and
paid in the accordance with the Company's dividend policy
referenced
in the SEC Reports and consistent with past practice;
(iii) reclassified, combined, split, subdivided or redeemed,
or
purchased or otherwise acquired, directly or indirectly, any of
its
capital stock;
(iv) materially increased, or announced the increase of, the
compensation payable or to become payable or the benefits
provided to
its directors, officers or employees, except for increases in
the
ordinary course of business and in a manner consistent with
past
practice, or granted any severance or termination pay to, or
entered
into any employment, bonus, change of control or severance
agreement
with, any director or officer or, except in the ordinary course
of
business in a manner consistent with past practice, any other
employee
of the Company or of any Subsidiary;
(v) suffered any damage, destruction or loss (whether or not
covered by insurance), other than in the ordinary course of
business,
that has had a Material Adverse Effect;
(vi) made any change in financial or Tax accounting methods,
practices or policies other than as required by GAAP or a
Governmental
Authority;
13
<PAGE>
(vii) (A) acquired from any Person (by merger,
consolidation,
acquisition of stock or assets or otherwise), or sold or
disposed of
(by merger, consolidation, sale of stock or assets or otherwise)
any
corporation, partnership or other business organization or
division
thereof, any Equity Interests therein, or any assets of any
Person
which are material to the Company and its Subsidiaries, taken as
a
whole, except in connection with acquisitions or dispositions
of
inventory or equipment in the ordinary course of business in a
manner
consistent with past practice, (B) incurred or guaranteed, or
modified
in any material respect, any material indebtedness for borrowed
money
or (C) made any material loans, advances or capital
contributions to
any other Person (other than a Subsidiary of the Company);
(viii) made any material tax election or settled or
compromised
any material United States federal, state or local income
tax
liability, except as required by applicable Law;
(ix) commenced or settled any material Action; or
(x) announced an intention, entered into any formal or
informal
agreement or otherwise made a commitment to do any of the
foregoing.
SECTION 3.10 Absence of Litigation. Except as set forth on
Schedule 3.10,
neither the Company nor any Subsidiary is a party to any, and
there is no
pending or, to the knowledge of the Company, threatened,
litigation, suit,
claim, action, proceeding, hearing, petition, grievance, review,
complaint or
investigation (an "Action"), the outcome of which would have a
Material Adverse
Effect. There is no judgment, decree, injunction, writ or order
of any
Governmental Authority outstanding against the Company or any of
its
Subsidiaries (or any of their respective assets or properties)
except as would
not have a Material Adverse Effect. Schedule 3.10 sets forth a
list of all
Actions to which the Company or any of its Subsidiaries is
subject, involving
(a) monetary claims against the Company or any of its
Subsidiaries for more than
$500,000 or (b) a request for injunctive relief.
SECTION 3.11 Employee Benefit Plans.
(a) Schedule 3.11(a) lists all employee benefit plans (as
defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as
amended ("ERISA")) and all bonus, stock option, stock purchase,
restricted
stock, incentive, deferred compensation, retiree medical or life
insurance,
supplemental retirement, severance or other benefit plans,
programs or
arrangements, and all employment, termination, severance or
other contracts
or agreements to which the Company or any Subsidiary is a party,
with
respect to which the Company or any Subsidiary has any
obligation or which
are maintained, contributed to or sponsored by the Company or
any
Subsidiary for the benefit of any current or former employee,
consultant,
officer or director of the Company or any Subsidiary
(collectively, the
"Plans"). The Company has made available to Parent a true and
complete copy
of each Plan and has made available to Parent a true and
complete copy of
(where applicable) (A) each trust or funding arrangement
prepared in
connection with each such Plan, (B) the two most recently filed
annual
reports on Internal Revenue Service ("IRS") Form 5500, (C) the
most
recently received IRS determination letter for each such Plan,
(D) the two
most recently prepared actuarial reports and financial
statements in
14
<PAGE>
connection with each such Plan, and (E) the most recent summary
plan
description and any material written communications (or a
description of
any material oral communications) by the Company or the
Subsidiaries to any
current or former employees, consultants, or directors of the
Company or
any Subsidiary concerning the extent of the benefits provided
under a Plan.
(b) Neither the Company nor any Subsidiary has now or any
time
contributed to, sponsored, maintained or had any liability with
respect to
(i) a pension plan (within the meaning of Section 3(2) of ERISA)
subject to
Section 412 of the Code or Title IV of ERISA; (ii) a
multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a
"Multiemployer Plan"); or (iii) a single employer pension plan
(within the
meaning of Section 4001(a)(15) of ERISA) for which the Company
or any
Subsidiary could incur liability under Section 4063 or 4064 of
ERISA.
Except as set forth on Schedule 3.11(b), no Plan exists that
could result
in the payment to any present or former employee, director or
consultant of
the Company or any Subsidiary of any money or other property or
accelerate
or provide any other rights or benefits to any current or former
employee
of the Company or any Subsidiary as a result of the consummation
of the
Transactions (whether alone or in connection with any subsequent
event).
Except as set forth on Schedule 3.11(b), there is no contract,
plan or
arrangement (written or otherwise) covering any current or
former employee
of the Company or any Subsidiary that, individually or
collectively, could
give rise to the payment of any amount that would not be
deductible
pursuant to the terms of Section 280G of the United States
Internal Revenue
Code of 1986, as amended (the "Code").
(c) With respect to the Plans, no event has occurred and, to
the
knowledge of the Company, there exists no condition or set
of
circumstances, in connection with which the Company or any
Subsidiary could
be subject to any actual or contingent material liability under
the terms
of such Plan or any applicable Law.
(d) Each Plan that is intended to be qualified under Section
401(a) of
the Code or Section 401(k) of the Code has received a
favorable
determination letter from the IRS covering all of the provisions
applicable
to the Plan for which determination letters are currently
available that
the Plan is so qualified and each trust established in
connection with any
Plan which is intended to be exempt from federal income taxation
under
Section 501(a) of the Code has received a determination letter
from the IRS
that it is so exempt, and, to the knowledge of the Company, no
circumstance
exists that could reasonably be expected to result in the
revocation of
such letter.
(e) (i) Each Plan has been established and administered in
accordance
with its terms and in compliance with the applicable provisions
of ERISA,
the Code and other applicable Laws, and (ii) no Plan provides
retiree
welfare benefits, and neither the Company nor any Subsidiary has
any
obligation to provide any retiree welfare benefits other than as
required
by Section 4980B of the Code.
(f) With respect to any Plan, (i) no Actions (other than
routine
claims for benefits in the ordinary course) are pending or, to
the
knowledge of the Company, threatened, (ii) no facts or
circumstances exist
that could reasonably be expected to give rise to any such
Actions, and
(iii) no administrative investigation, audit or other
administrative
proceeding by the
15
<PAGE>
Department of Labor, the IRS or other Governmental Authority is
pending, in
progress or, to the knowledge of the Company, threatened that
would
reasonably be expected to have a Material Adverse Effect.
SECTION 3.12 Labor and Employment Matters. Except as set forth
on Schedule
3.12, neither the Company nor any Subsidiary is a party to any
collective
bargaining agreement or other labor union contract applicable to
persons
employed by the Company or any Subsidiary, nor, to the knowledge
of the Company,
are there any activities or proceedings of any labor union to
organize any such
employees. Except as set forth on Schedule 3.12, as of the date
hereof, there
are no complaints or representation claims pending against the
Company or any
Subsidiary before the National Labor Relations Board or any
other Governmental
Authority or any current union representation questions
involving employees of
the Company or any Subsidiary. As of the date hereof, there is
no strike,
controversy, slowdown, work stoppage or lockout, or, to the
knowledge of the
Company, threatened in writing, by or with respect to any
employees of the
Company or any Subsidiary.
SECTION 3.13 Real Property; Title to Assets.
(a) Schedule 3.13(a) sets forth a true, correct and complete
list of
all of the Material Real Property used in connection with the
business of
the Company or any Subsidiary, or owned or leased by the Company
or any
Subsidiary, including:
(i) with respect to each parcel of Material Owned Real
Property,
(A) the street address of such parcel of Material Owned Real
Property
and (B) the current owner of such parcel of Material Owned
Real
Property; and
(ii) with respect to each lease of Material Leased Real
Property,
the parties to and the date of such lease.
(b) The Company and each of its Subsidiaries has good fee simple
title
to all of the Material Owned Real Property, free and clear of
all Liens,
except Permitted Liens. Except as set forth on Schedule 3.13(b),
there are
no outstanding options, right of first offer or rights of first
refusal to
purchase the Material Owned Real Property or any portion thereof
or
interest therein. There are no leases, subleases, licenses
concessions or
other agreements (written or oral) granting any person the right
to use or
occupy the Material Owned Real Property except as set forth on
Schedule
3.13(b). The Company has previously made available to Parent a
true,
correct and complete copy of each title insurance policy, title
opinion,
survey and appraisal relating to the Material Owned Real
Property which is
in its possession or reasonably available to it, without
representation or
warranty as to the specific matters set forth therein.
(c) All Material Leased Real Property is leased by the Company
and its
Subsidiaries (as the case may be) under valid and subsisting
leases or
subleases. Neither the Company nor any Subsidiary has received
written
notice of any material breach or default, or cancellation or
termination
thereunder. The Company does not have knowledge of any
condition, event or
circumstance which with notice or lapse of time, or both, would
constitute
a material breach or default under such lease or sublease.
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(d) The Company and its Subsidiaries own, lease or have the
right to
use all the Material Real Property and material assets for the
conduct of
their respective business free and clear of all Liens, except
Permitted
Liens. In the case of material leased equipment and other
material tangible
assets, the Company and its Subsidiaries hold valid leasehold
interests in
such assets, free and clear of all Liens, except Permitted
Liens.
(e) Schedule 3.13(e) sets forth an accurate listing of each
lease of
real property pursuant to which the Company or any Subsidiary
acts as
lessor and which has an annual rental amount in excess of
$500,000.
SECTION 3.14 Intellectual Property.
(a) Schedule 3.14(a) sets forth an accurate and complete
description
of all patents and patent applications, registered trademarks,
trade names
and service marks, domain names, and registered copyrights,
together with
applications to register the same, for each of the foregoing
owned by the
Company and material to the business of the Company and its
subsidiaries
taken as a whole ("Registered Intellectual Property").
Excluding
"shrinkwrap" or "clickwrap" agreements or agreements contained
in or
pertaining to "off-the-shelf" software, the Company has not
entered into
any material agreements relating to Intellectual Property.
Except for such
agreements entered into by the Company in connection with the
sale process
that resulted in the execution and delivery of this Agreement,
the Company
has not entered into any nondisclosure or confidentiality
agreements which
remain in effect under which any trade secrets or other
material
confidential or proprietary information of the Company has been
or will be
disclosed to a third party.
(b) Except as would not constitute a Material Adverse Effect,
the
conduct of the business of the Company and the Subsidiaries as
it has been,
or as it currently is conducted, does not and has not infringed
upon,
misappropriated, diluted or violated the Intellectual Property
rights of
any third party. There are no pending actions against the
Company or the
Subsidiaries, and neither the Company nor any of its
Subsidiaries has
received any written notice alleging that the conduct of the
business of
the Company and the Subsidiaries, as it currently is conducted
or as it has
been conducted, may or has infringed upon, misappropriated,
diluted or
violated the Intellectual Property rights of any third party.
Since January
1, 2003, neither the Company nor any of its Subsidiaries has
received any
written communication containing an offer to license to the
Company or any
of its Subsidiaries, or a request that the Company or any of
its
Subsidiaries consider whether it wishes to obtain a license,
under any
patent owned by a third party. With respect to each material
item of
Intellectual Property that is owned by the Company or a
Subsidiary,
including the Registered Intellectual Property ("Owned
Intellectual
Property"), the Company or a Subsidiary is the owner of the
entire right,
title and interest in and to such Owned Intellectual Property
and is
entitled to use such Owned Intellectual Property in the
continued operation
of its respective business in an unrestricted fashion. With
respect to each
material item of Intellectual Property that is licensed to or
otherwise
held or used by the Company or a Subsidiary ("Licensed
Intellectual
Property"), the Company or a Subsidiary has a legally
enforceable right to
use, under valid and subsisting written license agreements, the
Licensed
Intellectual Property in the continued operation of its
respective
business. The Owned Intellectual Property and the Licensed
Intellectual
Property constitute all material Intellectual Property used in
and
necessary for the operation of the businesses of the Company and
the
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Subsidiaries as currently conducted. The Registered Intellectual
Property
is subsisting and, to the knowledge of the Company, valid and
enforceable.
None of the Owned Intellectual Property has been adjudged
invalid or
unenforceable in whole or in part. To the knowledge of the
Company, no
person is engaging in any activity that infringes upon,
misappropriates or
dilutes any of the Owned Intellectual Property. To the knowledge
of the
Company, each license of the Licensed Intellectual Property is
valid and
enforceable, is binding on all parties to such license and is in
full force
and effect. To the knowledge of the Company, no party to any
license of the
Licensed Intellectual Property is in breach thereof or default
thereunder.
Neither the execution of this Agreement nor the consummation of
any
Transaction will result in the loss or impairment of, or give
rise to any
right of any third party to terminate or otherwise modify any of
the
Company's rights with respect to any Owned Intellectual Property
or
Licensed Intellectual Property that is material to the business
of the
Company and its Subsidiaries, taken as a whole.
(c) For purposes of this Agreement, "Intellectual Property"
means all
rights arising from or associated with the following, whether
protected,
created or arising under the laws of the United States or any
other
jurisdiction: (i) patents, patent rights, patent applications
and statutory
invention registrations; (ii) trademarks, service marks, trade
dress,
logos, trade names, corporate names, symbols, domain names and
other source
identifiers, and registrations and applications for registration
thereof,
including all renewals of and goodwill associated with the same;
(iii) all
registered and unregistered copyrightable works (whether
published or
unpublished), copyrights, and registrations and applications
for
registration thereof; and (iv) confidential and proprietary
information,
including trade secrets, works of authorship, inventions,
improvements,
methods, formulas, research and test data, designs,
specifications,
technical data, know-how, moral rights, and all other
confidential,
proprietary, or intellectual property rights.
SECTION 3.15 Taxes. Except as set forth on Schedule 3.15:
(a) The Company and the Subsidiaries (i) have timely filed or
caused
to be filed (taking into account any extension of time to file
granted or
obtained) all Tax Returns required to be filed by them, and all
such filed
Tax Returns are true, correct and complete in all material
respects; and
(ii) have timely paid in all material respects all Taxes due and
payable
except to the extent that such Taxes are being contested in good
faith and
for which the Company or the appropriate Subsidiary has set
aside adequate
reserves in accordance with GAAP. All material amounts of Taxes
required to
have been withheld by or with respect to the Company and the
Subsidiaries
have been withheld and remitted to the applicable taxing
authority.
(b) There are no pending or, to the knowledge of the
Company,
threatened audits, examinations, investigations or other
proceedings in
respect of any Tax or Tax matter of the Company or any
Subsidiary. No
deficiency for any material amount of Tax has been asserted or
assessed by
any taxing authority in writing against the Company or any
Subsidiary,
which deficiency has not been satisfied by payment, settled or
been
withdrawn or contested in good faith and for which the Company
or the
appropriate Subsidiary has not set aside adequate reserves in
accordance
with GAAP. There are no Tax liens on any assets of the Company
or any
Subsidiary (other than any liens for Taxes not yet due and
payable for
which adequate reserves have been made in accordance with GAAP
or for Taxes
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<PAGE>
being contested in good faith). Neither the Company nor any
Subsidiary is
subject to any accumulated earnings tax or personal holding
company tax.
(c) Neither the Company nor any Subsidiary has made or is
obligated to
make any payment that would not be deductible pursuant to
Section 162(m) of
the Code.
(d) Neither the Company nor any Subsidiary has waived any
statute of
limitations in respect of Taxes or agreed to any extension of
time with
respect to a Tax assessment or deficiency (other than pursuant
to
extensions of time to file Tax Returns obtained in the ordinary
course).
(e) No claim is pending by a taxing authority in a jurisdiction
where
the Company or any Subsidiary does not file a Tax Return that
the Company
or such Subsidiary is or may be subject to Tax by such
jurisdiction.
(f) Neither the Company nor any Subsidiary will be required to
include
any item of income in, or exclude any item of deduction from,
taxable
income as a result of any (1) adjustment pursuant to Section 481
of the
Code, the regulations thereunder or any similar provision under
state or
local Law, (2) "closing agreement" as described in Section 7121
of the Code
(or any corresponding or similar provision of state, local or
foreign
income Tax Law) executed on or prior to the Closing, (3)
intercompany
transaction or excess loss account described in the Treasury
Regulations
under Section 1502 of the Code (or any corresponding or similar
provision
of state, local or foreign income Tax law), (4) installment sale
or open
transaction disposition made on or prior to the Closing, or (5)
prepaid
amount received on or prior to the Closing.
(g) The Company is not, and has not been, a "United States
real
property holding corporation" within the meaning of Section
897(c)(2) of
the Code during the applicable period specified in Section
897(c)(1)(A)(ii)
of the Code.
(h) Neither the Company nor any Subsidiary is a party to or
bound by
any Tax sharing or Tax indemnity agreement or any other
agreement of a
similar nature.
(i) For purposes of this Agreement:
(i) "Tax" or "Taxes" shall mean any and all federal, state,
local
and foreign income, gross receipts, license, payroll,
employment,
excise, severance, stamp, occupation, premium, windfall
profits,
environmental, customs duties, capital stock, franchise,
profits,
withholding, social security, unemployment, disability, real
property,
personal property, sales, use, transfer, registration, value
added,
alternative or add-on minimum, estimated, or other taxes of any
kind
(together with any and all interest, penalties
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