Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “
Agreement ”) is made and entered into as of this
28 th day
of January, 2007 by and among Laureate Education, Inc., a Maryland
corporation (the “ Company ”), Wengen Alberta,
Limited Partnership, an Alberta limited partnership (“
Parent ”), and L Curve Sub Inc., a Maryland
corporation and a direct subsidiary of Parent (“ Merger
Sub ”).
RECITALS
A. The
parties intend that Merger Sub be merged with and into the Company
(the “ Merger ”), with the Company surviving the
Merger as a wholly owned subsidiary of Parent (the “
Surviving Corporation ”). The name of the Surviving
Corporation shall be Laureate Education, Inc.
B. The Board
of Directors of the Company, acting upon the unanimous
recommendation of the Special Committee, has (i) determined
that the Merger and this Agreement are advisable and fair to and in
the best interests of the Company and its stockholders,
(ii) approved this Agreement and (iii) resolved to
recommend that stockholders of the Company approve this
Agreement.
C. The Board
of Directors of Merger Sub has unanimously approved this
Agreement.
D. Certain
existing stockholders of the Company desire to contribute shares of
Common Stock to Parent immediately prior to the Effective Time in
exchange for interests in Parent.
E. The
Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe certain conditions to the
Merger, as set forth herein.
AGREEMENT
NOW, THEREFORE, in
consideration of the foregoing and the representations, warranties,
covenants and agreements contained herein, intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definitions . For purposes of this Agreement, the
following terms have the respective meanings set forth below:
“
Acceptable Confidentiality Agreement ” has the meaning
set forth in Section 7.4(h)(i).
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“
Accrediting Body ” means any entity or organization,
whether private or quasi-private, whether foreign or domestic,
which engages in the granting or withholding of accreditation of
post-secondary institutions or their educational programs in
accordance with standards and requirements relating to the
performance, operations, financial condition and/or academic
standards of such institutions.
“ Act
” means the Maryland General Corporation Law.
“
Affiliate ” means, with respect to any Person, any
other Person, directly or indirectly, controlling, controlled by,
or under common control with, such Person. For purposes of
this definition, the term “control” (including the
correlative terms “controlling”, “controlled
by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
“
Agreement ” has the meaning set forth in the
Preamble.
“
Articles of Merger ” has the meaning set forth in
Section 2.1(b).
“
Business Day ” means any day other than the days on
which banks in New York, New York are required or authorized to
close.
“
Certificate ” has the meaning set forth in
Section 2.2(c).
“
Closing ” has the meaning set forth in
Section 2.1(d).
“ Closing
Date ” has the meaning set forth in
Section 2.1(d).
“
Code ” means the Internal Revenue Code of 1986, as
amended.
“ Common
Stock ” means the Company’s common stock, par value
$.01 per share.
“
Company ” has the meaning set forth in the
Preamble.
“ Company
Acquisition Proposal ” has the meaning set forth in
Section 7.4(h)(ii).
“ Company
Benefit Plans ” means the Employee Benefit Plans (other
than any multiemployer plan within the meaning of ERISA
Section 3(37)) and stock purchase, stock option, severance,
retention, employee loan, collective bargaining, employment,
change-in-control, fringe benefit, bonus, incentive, deferred
compensation and all other material employee benefit plans,
agreements, programs, policies or other arrangements, whether or
not subject to ERISA, whether formal or informal, oral or written,
legally binding or not, under which any Company Employee has any
present or future right to benefits and which is maintained or
contributed to by the Company or any of its Material Subsidiaries
or under which the Company or any of its Material Subsidiaries has
any present or future liability.
“ Company
Disclosure Letter ” has the meaning set forth in the
preamble to Article IV.
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“ Company
Employee ” means any current, former or retired employee,
officer, consultant, independent contractor or director of the
Company or any of its Subsidiaries.
“ Company
Equity Awards ” means Company Options, Company Restricted
Shares, and Company Performance Shares.
“ Company
Joint Venture ” means, with respect to the Company, any
corporation or other entity (including partnerships, limited
liability companies and other business associations and joint
ventures) in which the Company, directly or indirectly, owns an
equity interest that does not have voting power under ordinary
circumstances to elect a majority of the board of directors or
other person performing similar functions but in which the Company
has rights with respect to the management of such
Person.
“ Company
Options ” means outstanding options to acquire Common
Stock from the Company granted to Company Employees under the
Company Stock Plans and, to the extent set forth in Section 1.1 of
the Company Disclosure Letter, the other options to acquire Common
Stock from the Company set forth therein.
“ Company
Performance Shares ” means performance shares granted to
Company Employees under the Company Stock Plans that vest and
become issuable upon the attainment of certain performance criteria
pursuant to the Company Stock Plans or any applicable award
agreement and, to the extent set forth in Section 1.1 of the
Company Disclosure Letter, the other performance shares granted to
Company Employees that vest and become issuable upon the attainment
of certain performance criteria pursuant to any applicable award
agreement set forth therein.
“ Company
Proxy Statement ” means the proxy statement relating to
the approval of the Merger by the Company’s stockholders
prepared in accordance with applicable Law and including the
information required to be included therein by
Schedule 13E-3.
“ Company
Restricted Shares ” means, as of a particular date,
Common Stock granted to Company Employees under the Company Stock
Plans that are then outstanding but at such time are subject to
forfeiture conditions or other lapse restrictions pursuant to the
Company Stock Plans or any applicable restricted stock award
agreements and, to the extent set forth in Section 1.1 of the
Company Disclosure Letter, the other Common Stock granted to
Company Employees that are then outstanding but at such time are
subject to forfeiture conditions or other lapse restrictions
pursuant to any applicable restricted stock award agreements set
forth therein.
“ Company
SEC Reports ” has the meaning set forth in
Section 4.7(a).
“ Company
Securities ” has the meaning set forth in
Section 4.5(b).
“ Company
Stockholder Meeting ” has the meaning set forth in
Section 7.1(a).
“ Company
Stock Plans ” means the 1993 Employee Stock Option Plan,
the 1993 Management Stock Option Plan, the Senior Management Option
Plan dated March 29, 1996, the 1998 Stock Incentive Plan, the 2003
Stock Incentive Plan and the 2005 Stock Incentive Plan.
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“
Compensation ” has the meaning set forth in
Section 7.8(a).
“
Confidentiality Agreements ” means the several
confidentiality agreements listed in Section 1.1 of the Parent
Disclosure Letter.
“
Contract ” has the meaning set forth in
Section 4.4.
“
Cooperation Agreement ” means the Cooperation
Agreement of even date herewith between the Company and
DLB.
“ Current
Employee ” has the meaning set forth in
Section 7.8(a).
“ Current
Policies ” has the meaning set forth in
Section 7.5(a).
“
Damages ” has the meaning set forth in
Section 7.5(a).
“ Debt
Financing ” has the meaning set forth in
Section 5.7.
“ Debt
Financing Commitments ” has the meaning set forth in
Section 5.7.
“
Disbursing Agent ” has the meaning set forth in
Section 2.3(a).
“
Disinterested Director ” means a member of the Board
of Directors of the Company who (i) has no direct or indirect
interest in Parent, whether as an investor or otherwise,
(ii) is not a representative of any Person who has any such
interest in Parent and (iii) is not otherwise affiliated with
Parent.
“ DLB
” means Douglas L. Becker.
“ DOE
” means the United States Department of Education.
“ DOJ
” has the meaning set forth in
Section 7.2(b).
“
Domestic Institution ” means the post-secondary
institution comprising a main campus and its additional locations
or branches, identified by a single Office of Post-secondary
Education Identification Number by DOE, and owned and operated by
the Company or any of its Subsidiaries.
“
Education Department ” means any nation or government
or any agency, public or regulatory authority, instrumentality,
department, commission, court, arbitrator, ministry, tribunal or
board of any nation or government or political subdivision thereof,
in each case, whether foreign or domestic and whether national,
supranational, federal, tribal, provincial, state, regional, local
or municipal, having specific jurisdiction over the operation of or
provision of Student Financial Assistance Programs funds to or on
behalf of the students of post-secondary educational or training
institutions or guaranteeing student loans to students at such
institutions.
“
Effective Time ” has the meaning set forth in
Section 2.1(b).
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“
Employee Benefit Plan ” means an employee benefit plan
within the meaning of Section 3(3) of ERISA.
“
Employment Agreement ” means any employment,
severance, retention, termination, indemnification, change in
control or similar agreement between the Company or any of its
Subsidiaries, on the one hand, and any current or former employee
of the Company or any of its Subsidiaries, on the other
hand.
“ End
Date ” has the meaning set forth in
Section 9.1(b)(i).
“ Equity
Financing ” has the meaning set forth in
Section 5.7.
“ Equity
Financing Commitments ” has the meaning set forth in
Section 5.7.
“ Equity
Rollover Commitments ” has the meaning set forth in
Section 5.8.
“
ERISA ” means the Employee Retirement Income Security
Act of 1974, as amended.
“
Exchange Act ” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
“
Execution Date ” means the date on which this
Agreement is executed and delivered by each of the parties
hereto.
“
Excluded Party ” has the meaning set forth in Section
7.4(b).
“
Financing ” has the meaning set forth in
Section 5.7.
“
Financing Commitments ” has the meaning set forth in
Section 5.7.
“
Five-Year Credit Agreement ” means the Five-Year
Credit Agreement dated as of August 16, 2006 among the Company and
a Subsidiary of the Company, as Borrowers, the Lenders party
thereto, JPMorgan Chase Bank, N.A., as Facility Agent, J.P. Morgan
Europe Limited, as London Agent, and others, as amended by the
First Amendment dated as of October 24, 2006.
“ Foreign
Institution ” means any post-secondary institution owned
and operated by the Company or any of its Subsidiaries that is not
a Domestic Institution.
“ FTC
” has the meaning set forth in
Section 7.2(b).
“
GAAP ” means United States generally accepted
accounting principles.
“
Governmental Authority ” means any nation or
government or any agency, public or regulatory authority,
instrumentality, department, commission, court, arbitrator,
ministry, tribunal or board of any nation or government or
political subdivision thereof, in each case, whether foreign or
domestic and whether national, supranational, federal, tribal,
provincial, state, regional, local or municipal, and any Education
Department or Accrediting Body.
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“ HEA
” means the Higher Education Act of 1965, as amended, 20
U.S.C.A. §1070 et seq., and any amendments or successor
statutes thereto.
“ HSR
Act ” means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
“
Insurance Amount ” has the meaning set forth in
Section 7.5(a).
“
Investors Agreement ” shall have the meaning set forth
in Section 6.2.
“
Knowledge of the Company ” means the actual knowledge
of the Persons set forth in Section 1.1 of the Company Disclosure
Letter.
“ Law
” means applicable statutes, common laws, rules, ordinances,
regulations, codes, licensing requirements, orders, judgments,
injunctions, writs, decrees, licenses, governmental guidelines,
standards or interpretations having the force of law, permits,
rules and bylaws, in each case, of or administered by a
Governmental Authority.
“
Liens ” means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
“
Marketing Period ” has the meaning set forth in
Section 7.9(b).
“ Material Adverse Effect on the
Company ” means a material adverse effect on the assets,
liabilities, business, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole;
provided , however , that in no event shall any of
the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining
whether there has been, a Material Adverse Effect on the Company:
(A) any fact, change, development, circumstance, event, effect
or occurrence (an “ Effect ”) in general
economic or political conditions or in the financial or securities
markets, (B) any Effect generally affecting, or resulting from
general changes or developments in, the industries in which the
Company and its Subsidiaries operate, (C) any failure to meet
internal or published projections, forecasts or revenue or earnings
predictions for any period (provided that the underlying causes of
such failures shall not be excluded), (D) any change in the
price or trading volume of the Common Stock in and of itself
(provided that the underlying causes of such changes shall not be
excluded), (E) any Effect that is demonstrated to have
resulted from the announcement of the Merger, or the identity of
Parent or any of its Affiliates as the acquiror of the Company, (F)
compliance with the terms of, or the taking of any action required
by, this Agreement consented to in writing by Parent, (G) any acts
of terrorism or war (other than any of the foregoing that causes
any damage or destruction to or renders unusable any facility or
property of the Company or any of its Subsidiaries or that renders
any of the foregoing facilities or properties inaccessible for a
period of more than 20 calendar days), (H) changes in generally
accepted accounting principles or the interpretation thereof, or
(I) any weather-related event (other than any of the foregoing that
causes any damage or destruction to or renders unusable any
facility or property of the Company or any of its Subsidiaries or
that renders any of the foregoing facilities or properties
inaccessible for a period of more than 20 calendar days) ,
except, in the case of clauses (A) and (B), to the extent
such Effects referred to therein would be reasonably likely to have
a materially disproportionate impact on the assets or liabilities,
business, financial
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condition or results of
operations of the Company and its Subsidiaries, taken as a whole,
relative to other for profit industry participants.
“
Material Subsidiary ” means any Subsidiary (a) the
consolidated assets of which equal 2% or more of the consolidated
assets of the Company and the Subsidiaries as of September 30,
2006, or (b) the consolidated revenues of which equal 2% or more of
the consolidated revenues of the Company and the Subsidiaries for
the four consecutive fiscal quarters ended September 30,
2006.
“
Merger ” has the meaning set forth in the
Recitals.
“ Merger
Consideration ” has the meaning set forth in
Section 2.2(c).
“ Merger
Shares ” has the meaning set forth in
Section 2.2(c).
“ Merger
Sub ” has the meaning set forth in the
Preamble.
“ Merger
Sub Shares ” means the common stock of Merger Sub, par
value $.01 per share.
“ New
Financing Commitments ” has the meaning set forth in
Section 7.9(c).
“ No-Shop
Period Start Date ” has the meaning set forth in Section
7.4(a).
“ Notice
Period ” has the meaning set forth in
Section 7.4(e).
“ Other
Antitrust Laws ” means any Law enacted by any
Governmental Authority relating to antitrust matters or regulating
competition, other than the HSR Act.
“
Parent ” has the meaning set forth in the
Preamble.
“ Parent
Disclosure Letter ” has the meaning set forth in the
preamble to Article V.
“ Parent
Expenses ” has the meaning set forth in
Section 9.2(d).
“ Parent
Plan ” has the meaning set forth in
Section 7.8(b).
“
Permits ” means any licenses, franchises, permits,
accreditations, certificates, consents, approvals, registrations,
qualifications or other similar authorizations of, from or by a
Governmental Authority possessed by or granted to or necessary for
the ownership of the material assets or conduct of the business of
the Company or its Subsidiaries.
“
Permitted Liens ” means (i) Liens for Taxes,
assessments and governmental charges or levies not yet due and
payable or that are being contested in good faith and by
appropriate proceedings; (ii) mechanics’,
carriers’, workmen’s, repairmen’s,
materialmen’s or other Liens or security interests that
secure a liquidated amount that are being contested in good faith
and by appropriate proceedings; (iii) leases, subleases and
licenses (other than capital leases and leases underlying sale and
leaseback transactions); (iv) Liens imposed by applicable Law;
(v) pledges or deposits to secure obligations under
workers’ compensation Laws or similar legislation or
to
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secure public or
statutory obligations; (vi) pledges and deposits to secure the
performance of bids, trade contracts, leases, surety and appeal
bonds, performance bonds and other obligations of a similar nature,
in each case in the ordinary course of business;
(vii) easements, covenants and rights of way (unrecorded and
of record) and other similar restrictions of record, and zoning,
building and other similar restrictions, in each case that do not
adversely affect in any material respect the current use of the
applicable property owned, leased, used or held for use by the
Company or any of its Subsidiaries; (viii) Liens the existence
of which are specifically disclosed in the notes to the
consolidated financial statements of the Company included in any
Company SEC Report filed prior to the date of this Agreement;
(ix) any other Liens that do not secure a liquidated amount,
that have been incurred or suffered in the ordinary course of
business and that would not, individually or in the aggregate, have
a material effect on the Company or the ability of Parent to obtain
the Debt Financing; and (x) any other Liens set forth on Section
1.1 of the Company Disclosure Letter.
“
Person ” means any individual, corporation, company,
limited liability company, partnership, association, trust, joint
venture or any other entity or organization, including any
government or political subdivision or any agency or
instrumentality thereof.
“
Post-Closing Educational Consents ” has the meaning
set forth Section 7.2(e).
“
Pre-Closing Education Consents ” has the meaning set
forth in Section 7.2(e).
“
Preferred Stock ” has the meaning set forth in
Section 4.5(a).
“
Proceeding ” has the meaning set forth in
Section 4.12.
“
Recommendation ” has the meaning set forth in
Section 7.1(a).
“
Recommendation Withdrawal ” has the meaning set forth
in Section 7.4(e).
“
Replacement Policies ” has the meaning set forth in
Section 7.5(a).
“
Representatives ” has the meaning set forth in
Section 7.4(a).
“
Requisite Stockholder Vote ” has the meaning set forth
in Section 4.2(a).
“
Restraint ” has the meaning set forth in
Section 8.1(c).
“
Rollover Entities ” has the meaning set forth in
Section 5.8.
“
Schedule 13E-3 ” means a Rule 13e-3
Transaction Statement on Schedule 13E-3 relating to the Merger
and the other transactions contemplated hereby.
“
SDAT ” means the Maryland State Department of
Assessments and Taxation.
“ SEC
” means the United States Securities and Exchange
Commission.
“
Securities Act ” means the Securities Act of 1933, as
amended, and the rules and regulations promulgated
thereunder.
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“ Special
Committee ” means a committee of the Company’s
Board of Directors, the members of which are not affiliated with
Parent or Merger Sub and are not members of the Company’s
management, formed on September 8, 2006 for the reasons set forth
in the resolution establishing such committee.
“
Specified SEC Reports ” means the Company’s (i)
Annual Report on Form 10-K, as amended, filed on March 23, 2006,
(ii) Proxy Statement on Schedule 14A, filed on May 1, 2006. (iii)
Quarterly Reports on Form 10-Q, filed on May 10, 2006, August 4,
2006 and November 3, 2006, and (iv) Current Reports on Form 8-K
filed after March 23, 2006 and prior to the date of this
Agreement.
“ ST
” means Steven Taslitz.
“
Sterling ” means Fund Management Services,
LLC.
“
Sterling Confidentiality Agreement ” has the meaning
set forth in Section 7.10.
“ Student
Financial Assistance Programs ” means the Title IV
Programs and any other program authorized by the HEA and
administered by the DOE, as well as any other student assistance
grant or loan programs or other government-sponsored student
assistance programs.
“
Subsidiary ”, with respect to any Person, means any
other Person of which the first Person owns, directly or
indirectly, securities or other ownership interests having voting
power to elect a majority of the board of directors or other
persons performing similar functions (or, if there are no such
voting interests, 50% or more of the equity interests of the second
Person).
“
Subsidiary Securities ” has the meaning set forth in
Section 4.6(b).
“
Substantial Control ” has the meaning set forth in
Section 4.15(e).
“
Superior Proposal ” has the meaning set forth in
Section 7.4(h)(iii).
“
Surviving Corporation ” has the meaning set forth in
the Recitals.
“
Takeover Statute ” has the meaning set forth in
Section 4.18.
“ Tax
” means (i) all U.S. Federal, state, local, foreign
and other taxes (including withholding taxes), fees and other
governmental charges of any kind or nature whatsoever, together
with any interest, penalties or additions imposed with respect
thereto, (ii) any liability for payment of amounts described
in clause (i) whether as a result of transferee liability or
joint and several liability for being a member of an affiliated,
consolidated, combined or unitary group for any period, and
(iii) any liability for the payment of amounts described in
clause (i) or (ii) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or
implied agreement to pay or indemnify any other Person.
“ Tax
Return ” means any return, declaration, report,
statement, information statement or other document filed or
required to be filed with respect to Taxes, including any
amendments or supplements to any of the foregoing.
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“ Termination Fee ” means
$110,000,000 except in the event that any third party has
made a bona fide Company Acquisition Proposal on or before the
No-Shop Period Start Date, which Company Acquisition Proposal the
Board of Directors of the Company (acting through the Special
Committee, if such committee still exists, or otherwise by
resolution of a majority of its Disinterested Directors) determined
in good faith pursuant to Section 7.4(b), and after consultation
with its financial and legal advisors, constituted or could have
reasonably been expected to result in, a Superior Proposal, and
this Agreement is terminated by the Company pursuant to Section
9.1(c)(ii) in order to enter into a definitive agreement with
respect to a Company Acquisition Proposal with such third party in
which case Termination Fee shall mean $55,000,000.
“ Title
IV Programs ” means the programs of student financial
assistance authorized by Title IV of the HEA.
“ Voting
Agreement ” has the meaning set forth in
Section 4.2(a).
Section 1.2
Terms Generally .
The definitions in Section 1.1 shall apply equally to
both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation”, unless the context
expressly provides otherwise. All references herein to Sections,
paragraphs, subparagraphs, clauses, Exhibits or Schedules shall be
deemed references to Sections, paragraphs, subparagraphs or clauses
of, or Exhibits or Schedules to this Agreement, unless the context
requires otherwise. Unless otherwise expressly defined, terms
defined in this Agreement have the same meanings when used in any
Exhibit or Schedule hereto, including the Company Disclosure
Letter. Unless otherwise specified, the words “herein”,
“hereof”, “hereto” and
“hereunder” and other words of similar import refer to
this Agreement as a whole (including the Schedules and Exhibits)
and not to any particular provision of this Agreement. The term
“or” is not exclusive. The word “extent” in
the phrase “to the extent” shall mean the degree to
which a subject or other thing extends, and such phrase shall not
mean simply “if”. The phrase “date hereof”
or “date of this Agreement” shall be deemed to refer to
January 28, 2007. Any Contract, instrument or Law defined or
referred to herein or in any Contract or instrument that is
referred to herein means such Contract, instrument or Law as from
time to time amended, modified or supplemented, including (in the
case of Contracts or instruments) by waiver or consent and (in the
case of Laws) by succession of comparable successor Laws and
references to all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted
successors and assigns.
ARTICLE II
THE MERGER
Section 2.1
The Merger .
(a)
At the Effective Time, in accordance with the Act, and upon the
terms and subject to the conditions set forth in this Agreement,
Merger Sub shall be merged with and into the Company, at which time
the separate existence of Merger Sub shall cease and the Company
shall survive the Merger as a subsidiary of Parent.
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(b)
Subject to the provisions of this Agreement, on the Closing Date,
the Company and Merger Sub shall file articles of merger (the
“ Articles of Merger ”) meeting the requirements
of the Act for acceptance of record by the SDAT. The Merger shall
become effective at such time as the Articles of Merger are filed
with and accepted of record by the SDAT, or at such later time as
the Company and Merger Sub may agree and specify in the Articles of
Merger (such time as the Merger becomes effective, the “
Effective Time ”).
(c)
The Merger shall have the effects set forth in this Agreement and
the applicable provisions of the Act. Without limiting the
generality of the foregoing, and subject thereto, from and after
the Effective Time, all property, rights, privileges, immunities,
powers, franchises, licenses and authority of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions and duties of each of the
Company and Merger Sub shall become the debts, liabilities,
obligations, restrictions and duties of the Surviving
Corporation.
(d)
The closing of the Merger (the “ Closing ”)
shall take place (i) at the offices of Simpson
Thacher & Bartlett LLP located in New York, New York, as
soon as reasonably practicable (but in any event, no later than the
second Business Day) after the day on which the last condition to
the Merger set forth in Article VIII is satisfied or validly
waived (other than those conditions that by their nature cannot be
satisfied until the Closing Date, but subject to the satisfaction
or valid waiver of such conditions) (provided, that if all the
conditions set forth in Article VIII shall not have been
satisfied or validly waived on such day, then the Closing shall
take place on the first Business Day on which all such conditions
shall have been or can be satisfied or shall have been validly
waived) or (ii) at such other place and time or on such other
date as the Company and Parent may agree in writing (the actual
date of the Closing, the “ Closing Date
”). Notwithstanding the foregoing, in the event
the Closing would have occurred as provided in this Section 2.1(d)
but the date on which the Closing would have occurred is after the
fifteenth (15th) day of the applicable month, at the option of
Merger Sub, the Closing may occur on the first Business Day of the
subsequent month.
Section 2.2
Conversion of Securities
. At the Effective Time, pursuant to this Agreement and by
virtue of the Merger and without any action on the part of the
Company, Parent, Merger Sub or the holders of Common Stock:
(a)
Each share of Common Stock owned by Parent immediately prior to the
Effective Time (including Common Stock acquired by Parent
immediately prior to the Effective Time pursuant to the Equity
Rollover Commitments), if any, shall be canceled and retired and
shall cease to exist, and no payment or distribution shall be made
or delivered with respect thereto. Each share of Common Stock
held by any wholly owned Subsidiary of Parent or of the Company
immediately prior to the Effective Time shall remain outstanding
following the Effective Time.
(b)
Each Merger Sub Share issued and outstanding immediately prior to
the Effective Time shall be converted into and become one newly
issued, fully paid and non-assessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
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(c)
Each share of Common Stock (including any Company Restricted
Shares) issued and outstanding immediately prior to the Effective
Time (other than shares of Common Stock to be canceled or remain
outstanding pursuant to Section 2.2(a)), automatically shall
be canceled and converted into the right to receive $60.50 in cash,
without interest (the “ Merger Consideration ”),
payable to the holder thereof upon surrender of the certificate
formerly representing such share of Common Stock (a “
Certificate ”) in the manner provided in
Section 2.3. Such shares of Common Stock (including any
Company Restricted Shares), other than those canceled or remaining
outstanding pursuant to Section 2.2(a), sometimes are referred
to herein as the “ Merger Shares .”
(d)
No dissenters’ or appraisal rights shall be available with
respect to the Merger or the other transactions contemplated
hereby.
(e)
If between the date of this Agreement and the Effective Time the
number of shares of outstanding Common Stock is changed into a
different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization,
split-up, combination, exchange of shares or the like, other than
pursuant to the Merger, the amount of Merger Consideration payable
per share of Common Stock shall be correspondingly
adjusted.
(f)
For the avoidance of doubt, the parties acknowledge and agree that
the contribution of shares of Common Stock (including Company
Restricted Shares, if any) to Parent pursuant to the Equity
Rollover Commitments shall be deemed to occur immediately prior to
the Effective Time and prior to any other above-described
event.
(g)
The Company Equity Awards outstanding immediately prior to the
Effective Time shall be treated as provided in
Section 2.4.
Section 2.3
Payment of Cash for Merger Shares
.
(a)
Prior to the Closing Date, Parent shall designate a bank or trust
company that is reasonably satisfactory to the Company to serve as
the disbursing agent for the Merger Consideration and payments in
respect of the Company Options, unless another agent is designated
as provided in Section 2.4(a) (the “ Disbursing
Agent ”). Promptly after the Effective Time, Parent will
cause to be deposited with the Disbursing Agent cash in the
aggregate amount sufficient to pay the Merger Consideration in
respect of all Merger Shares outstanding immediately prior to the
Effective Time plus any cash necessary to pay for Company Options
and Company Performance Shares outstanding immediately prior to the
Effective Time pursuant to Section 2.4. Pending distribution
of the cash deposited with the Disbursing Agent, such cash shall be
held in trust for the benefit of the holders of Merger Shares,
Company Options and Company Performance Shares outstanding
immediately prior to the Effective Time and shall not be used for
any other purposes; provided , however , that Parent
may direct the Disbursing Agent to invest such cash in
(i) obligations of or guaranteed by the United States of
America or any agency or instrumentality thereof, (ii) money
market accounts, certificates of deposit, bank repurchase agreement
or banker’s acceptances of, or demand deposits with,
commercial banks having a combined capital and surplus of at least
$500,000,000, or (iii) commercial paper obligations rated P-1
or A-1 or better by Standard & Poor’s Corporation or
Moody’s Investor
12
Services, Inc. Any profit or loss resulting
from, or interest and other income produced by, such investments
shall be for the account of Parent.
(b)
As promptly as practicable after the Effective Time, the Surviving
Corporation shall send, or cause the Disbursing Agent to send, to
each record holder of Merger Shares as of immediately prior to the
Effective Time a letter of transmittal and instructions for
exchanging their Merger Shares for the Merger Consideration payable
therefor. The letter of transmittal will be in customary form and
will specify that delivery of Certificates will be effected, and
risk of loss and title will pass, only upon delivery of the
Certificates to the Disbursing Agent. Upon surrender of such
Certificate or Certificates to the Disbursing Agent together with a
properly completed and duly executed letter of transmittal and any
other documentation that the Disbursing Agent may reasonably
require, the record holder thereof shall be entitled to receive the
Merger Consideration payable in exchange therefor, without
interest. Until so surrendered and exchanged, each such Certificate
shall, after the Effective Time, be deemed to represent only the
right to receive the Merger Consideration, and until such surrender
and exchange, no cash shall be paid to the holder of such
outstanding Certificate in respect thereof.
(c)
If payment is to be made to a Person other than the registered
holder of the Merger Shares formerly represented by the Certificate
or Certificates surrendered in exchange therefor, it shall be a
condition to such payment that the Certificate or Certificates so
surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the Person requesting such payment shall
pay to the Disbursing Agent any applicable stock transfer taxes
required as a result of such payment to a Person other than the
registered holder of such Merger Shares or establish to the
satisfaction of the Disbursing Agent that such stock transfer taxes
have been paid or are not payable.
(d)
After the Effective Time, there shall be no further transfers on
the stock transfer books of the Company of the shares of Common
Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, Parent or the Disbursing Agent, such
shares shall be canceled and exchanged for the consideration
provided for, and in accordance with the procedures set forth, in
this Article II.
(e)
If any cash deposited with the Disbursing Agent remains unclaimed
twelve months after the Effective Time, such cash shall be returned
to Parent or the Surviving Corporation upon demand, and any holder
who has not surrendered such holder’s Certificates for the
Merger Consideration payable in respect thereof prior to that time
shall thereafter look only to the Surviving Corporation for payment
of the Merger Consideration. Notwithstanding the foregoing, none of
Parent, Merger Sub, the Company, the Surviving Corporation or the
Disbursing Agent shall be liable to any holder of Certificates for
an amount paid to a public official pursuant to any applicable
unclaimed property laws. Any amounts remaining unclaimed by holders
of Certificates as of a date immediately prior to such time that
such amounts would otherwise escheat to or become property of any
Governmental Authority shall, to the extent permitted by applicable
Law, become the property of the Surviving Corporation on such date,
free and clear of any claims or interest of any Person previously
entitled thereto.
13
(f)
No dividends or other distributions with respect to capital stock
of the Surviving Corporation with a record date after the Effective
Time shall be paid to the holder of any unsurrendered
Certificate.
(g)
Except as provided in Section 2.2(a), from and after the
Effective Time, the holders of shares of Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such Common Stock, other than the right to
receive the Merger Consideration as provided in this
Agreement.
(h)
In the event that any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed,
in addition to the posting by such holder of any bond in such
reasonable amount as the Surviving Corporation or the Disbursing
Agent may direct as indemnity against any claim that may be made
against the Surviving Corporation or the Disbursing Agent with
respect to such Certificate, the Disbursing Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration in respect thereof entitled to be received pursuant
to this Agreement.
(i)
Parent, Surviving Corporation and the Disbursing Agent shall be
entitled to deduct and withhold from the Merger Consideration
otherwise payable hereunder any amounts required to be deducted and
withheld under any applicable Tax Law. To the extent any amounts
are so withheld, such withheld amounts shall be treated for all
purposes as having been paid to the holder from whose Merger
Consideration the amounts were so deducted and
withheld.
Section 2.4
Treatment of Company Equity Awards
.
(a)
As of the Effective Time, except as otherwise agreed by Parent and
a holder of Company Options with respect to such holder’s
Company Options or as otherwise provided in this Agreement, each
Company Option which is outstanding immediately prior to the
Effective Time (whether vested or unvested, exercisable or not
exercisable) will be canceled and extinguished by the Company, and
the holder thereof will be entitled to receive from the Surviving
Corporation in consideration for such cancellation promptly
following the Effective Time an amount in cash equal to the product
of (i) the number of shares of Common Stock subject to such Company
Option multiplied by (ii) the excess, if any, of (x) the Merger
Consideration over (y) the exercise price per share of such Company
Option, without interest and less any amounts required to be
deducted and withheld under any applicable Law. In the event that
the per share exercise price of any Company Option is equal to or
greater than the Merger Consideration, such Company Option shall be
canceled without payment therefor and have no further force or
effect. All payments with respect to canceled Company Options
shall be made by the Disbursing Agent (or such other agent
reasonably acceptable to Parent as the Company shall designate
prior to the Effective Time) as promptly as reasonably practicable
after the Effective Time from funds deposited by or at the
direction of the Surviving Corporation to pay such amounts in
accordance with Section 2.3.
(b)
As of the Effective Time, except as otherwise agreed by Parent and
a holder of unvested Company Restricted Shares or as otherwise
provided in this Agreement, with respect to such holder’s
unvested Company Restricted Shares, each unvested
Company
14
Restricted Share
outstanding immediately prior to the Effective Time shall vest and
become free of restrictions as of the Effective Time and shall, as
of the Effective Time, be canceled and converted into the right to
receive the Merger Consideration in accordance with Section 2.2,
without interest and less any amounts required to be deducted and
withheld under any applicable Law.
(c)
At the Effective Time, except as otherwise agreed by Parent and a
holder of Company Performance Shares with respect to such
holder’s Company Performance Shares, each Company Performance
Share which, in each case, is outstanding immediately prior to the
Effective Time (whether vested or unvested) shall be canceled by
the Company and the holder thereof shall be entitled to receive
promptly following the Effective Time from the Surviving
Corporation, in consideration for such cancellation, an amount
equal to the product of (i) the Merger Consideration, multiplied by
(ii) the total number of shares of Common Stock subject to such
Company Performance Share, without interest and less any amounts
required to be deducted and withheld under any applicable
Law.
(d)
Those certain unvested Company Options and Company Restricted
Shares set forth in Section 2.4(d) of the Company Disclosure Letter
shall, in lieu of becoming vested and canceled in exchange for the
applicable payments described in Sections 2.4(a) and 2.4(b) above,
respectively, be canceled in exchange for the payment in cash of a
retention bonus, subject to certain vesting requirements, all as
described in Section 2.4(d) of the Company Disclosure
Letter.
(e)
Prior to the Effective Time, the Company will adopt such
resolutions and will take such other actions as may be reasonably
required to effectuate the actions contemplated by this Section
2.4, without paying any consideration or incurring any debts or
obligations on behalf of the Company or the Surviving
Corporation.
(f)
Parent, the Surviving Corporation and the Disbursing Agent (or such
other agent reasonably acceptable to the Company as Parent shall
designate prior to the Effective Time) shall be entitled to deduct
and withhold from any amounts to be paid under this
Section 2.4 in respect of Company Options and Company
Performance Shares amounts required to be deducted and withheld
under any applicable Tax Law. To the extent any amounts are so
withheld, such withheld amounts shall be treated for all purposes
as having been paid to the holder of Company Options and Company
Performance Shares from whose payments in respect of Company
Options and Company Performance Shares the amounts were so deducted
and withheld.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1
Articles
of Incorporation . The Articles of Incorporation, as
amended, of the Company shall be the articles of incorporation of
the Surviving Corporation until thereafter amended in accordance
with the terms thereof and as provided by applicable
Law.
15
Section 3.2
Bylaws . The Bylaws, as in effect immediately prior to
the Effective Time, of Merger Sub, shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with
the terms thereof and as provided by applicable Law.
Section 3.3
Directors and Officers . From and after the Effective
Time, (i) the directors of Merger Sub at the Effective Time
shall be the directors of the Surviving Corporation and
(ii) the officers of the Company at the Effective Time (other
than those who Parent determines shall not remain as officers of
the Surviving Corporation) shall be the officers of the Surviving
Corporation, in each case until their respective successors are
duly elected or appointed and qualified in accordance with
applicable Law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (x) as set
forth in the corresponding sections or subsections of the
disclosure letter delivered to Parent and Merger Sub by the Company
on the date hereof (the “ Company Disclosure Letter
”) (it being understood that any information set forth in a
particular section or subsection of the Company Disclosure Letter
shall be deemed to be disclosed in each other section or subsection
thereof to which the relevance of such information is reasonably
apparent) or (y) as may be disclosed in the Specified SEC Reports,
the Company hereby represents and warrants to Parent and Merger Sub
that:
Section 4.1
Corporate Existence and Power . Each of the Company and
its Material Subsidiaries is duly organized, validly existing and
in good standing under the laws of its jurisdiction (with respect
to jurisdictions that recognize the concept of good standing). Each
of the Company, its Subsidiaries and, to the Knowledge of the
Company, the Company Joint Ventures has all corporate or similar
powers and authority required to own, lease and operate its
respective properties and to carry on its business as now
conducted. Each of the Company, its Material Subsidiaries and, to
the Knowledge of the Company, the Company Joint Ventures, is duly
licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or
location of the properties and assets owned or leased by it makes
such qualification necessary, except where the failure to be so
licensed or qualified has not had, and would not be reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Neither the Company nor any Material
Subsidiary nor, to the Knowledge of the Company, any Company Joint
Venture, is in violation of its organizational or governing
documents in any material respect.
Section 4.2
Corporate Authorization
(a)
The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the Merger and the other
transactions contemplated hereby and to perform each of its
obligations hereunder. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company
of the Merger and the other transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of the
Company. Except for the approval, at a meeting of Company
stockholders called for such purpose, of this Agreement by the
affirmative vote of the holders (present at such meeting in person
or by proxy) of a majority of the shares of Company
Common
16
Stock outstanding (the
“ Requisite Stockholder Vote ”), no other
corporate proceedings on the part of the Company are necessary to
approve this Agreement or to consummate the Merger or the other
transactions contemplated hereby. The Board of Directors of the
Company, acting upon the unanimous recommendation of the Special
Committee, at a duly held meeting has (i) determined that the
Merger and this Agreement are advisable and fair to and in the best
interests of the Company and its stockholders, (ii) approved
the Merger, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby, (iii) approved the execution, delivery and performance
of the Voting Agreement, dated as of the Execution Date, among the
Company (to the extent provided therein), Parent, DLB, ST and the
other parties thereto (the “ Voting Agreement
”), and (iv) resolved to recommend that the Company
stockholders approve this Agreement and directed that such matter
be submitted for consideration of the stockholders of the Company
at the Company Stockholder Meeting.
(b)
This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due and valid execution and delivery
of this Agreement by Parent and Merger Sub, constitutes a legal,
valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar Laws affecting the enforcement of
creditors’ rights generally and general equitable
principles.
Section 4.3
Governmental Authorization
. The execution, delivery and performance by the Company of
this Agreement and the consummation of the Merger by the Company do
not require any consent, approval, authorization or permit of,
action by, filing with or notification to any Governmental
Authority, other than (i) the filing and acceptance for record
of the Articles of Merger with the SDAT; (ii) compliance with the
applicable requirements of the HSR Act or the applicable Other
Antitrust Laws of jurisdictions other than the United States
specified in Section 4.3(ii) of the Company Disclosure Letter;
(iii) compliance with the applicable requirements of the
Exchange Act including the filing of the Company Proxy Statement
and the Schedule 13E-3; (iv) compliance with the rules
and regulations of the Nasdaq Global Select Market;
(v) compliance with any applicable foreign or state securities
or Blue Sky laws; (vi) any such consent, approval, authorization,
permit, action, filing or notification required from or to any
Education Department, Accrediting Body or DOE (as specified in
Section 4.3(vi) of the Company Disclosure Letter); and
(vii) any such consent, approval, authorization, permit,
action, filing or notification the failure of which to make or
obtain would not (A) be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or (B) prevent or materially delay the consummation of
the Merger or the Company’s ability to observe and perform
its material obligations hereunder.
Section 4.4
Non-Contravention . The execution, delivery and
performance by the Company of this Agreement and the Voting
Agreement and the consummation by the Company of the Merger and the
other transactions contemplated hereby and thereby do not and will
not (i) contravene or conflict with the organizational or
governing documents of the Company or any of its Material
Subsidiaries or Company Joint Ventures; (ii) assuming
compliance with the matters referenced in Section 4.3 and the
receipt of the Requisite Stockholder Vote, contravene or conflict
with or constitute a violation of any provision of any Law binding
upon or applicable to the Company or any of its Subsidiaries or
Company Joint Ventures or any of their respective properties or
assets; (iii) require the consent, approval or authorization
of, or notice to or filing with any third party
17
with respect to, 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)
or result in the loss of benefit under, or give rise to any right
of termination, cancellation, amendment or acceleration of any
right or obligation of the Company or any of its Subsidiaries, or
result in the creation of any Lien on any of the properties or
assets of the Company or its Subsidiaries under any loan or credit
agreement, note, bond, mortgage, indenture, contract, agreement,
lease, license, Permit or other instrument or obligation (each, a
“ Contract ”) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or its or any of their respective properties or assets
are bound, except in the case of clauses (ii) and (iii) above,
which would not (A) be reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on the Company or
(B) prevent or materially delay the consummation of the Merger
or the Company’s ability to observe and perform its material
obligations hereunder.
Section 4.5
Capitalization
(a)
The authorized share capital of the Company is 100,000,000 shares,
divided into 90,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, par value $0.01per share (the “
Preferred Stock ”). As of the Execution Date, there
were (i) 51,855,444 shares of Common Stock issued and
outstanding (including 420,313 outstanding Company Restricted
Shares) and no shares of Preferred Stock issued and outstanding,
(ii) outstanding Company Options to purchase an aggregate of
5,226,757 shares of Common Stock, with a weighted average exercise
price of $24.44 per share, and (iii) 166,000 shares of Common Stock
subject to outstanding Company Performance Shares. Section
4.5 of the Company Disclosure Letter sets forth, as of the
Execution Date, the number of shares of (i) Common Stock issuable
upon exercise of outstanding Company Options, (ii) Company
Performance Shares and (iii) Company Restricted Stock, in each case
granted under each Company Stock Plan or otherwise, including, as
applicable, the per share exercise price, the date of grant, the
vesting commencement date and the vesting schedule thereof.
All outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and non-assessable, and are not subject to and
were not issued in violation of any preemptive or similar right,
purchase option, call or right of first refusal or similar
right.
(b)
Except as set forth in Section 4.5(a), there are no
outstanding (i) shares of capital stock or other voting
securities of the Company; (ii) securities of the Company or
any of its Subsidiaries convertible into or exchangeable for shares
of capital stock or voting securities of the Company;
(iii) Company Options, Company Performance Shares or other
rights or options to acquire from the Company, or obligations of
the Company to issue, any shares of capital stock, voting
securities or securities convertible into or exchangeable for
shares of capital stock or voting securities of the Company; or
(iv) equity equivalent interests in the ownership or earnings
of the Company or other similar rights in respect of the Company
(the items in clauses (i) through (iv) collectively,
“ Company Securities ”). There are no
outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any Company Securities.
There are no preemptive rights of any kind which obligate the
Company or any of its Subsidiaries to issue or deliver any Company
Securities. 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 it is bound relating to the
voting or registration of any shares
18
of capital stock of the
Company or preemptive rights with respect thereto. None of
the Subsidiaries of the Company own any Common Stock.
(c)
Other than the issuance of Common Stock upon exercise of Company
Options or the settlement of Company Performance Shares from
September 30, 2006 to the date of this Agreement, the Company has
not declared or paid any dividend or distribution in respect of any
Company Securities, and neither the Company nor any Subsidiary of
the Company has issued, sold or repurchased any Company Securities,
and their respective Boards of Directors have not authorized any of
the foregoing.
(d)
Neither the Company nor any of the Subsidiaries has entered into
any commitment, arrangement or agreement, or are otherwise
obligated, to contribute capital, loan money or otherwise provide
funds or make additional investments in any Subsidiary of the
Company, Company Joint Venture or any other Person, other than
intercompany debt.
(e)
No bonds, debentures, notes or other indebtedness having the right
to vote on any matters on which Company stockholders may vote are
outstanding.
Section 4.6
Company Subsidiaries and Joint Ventures
. (a) Section 4.6(a) of the Company Disclosure
Letter sets forth all Material Subsidiaries of the Company and
Company Joint Ventures. All equity interests of any Material
Subsidiary of the Company held by the Company or any other
Subsidiary of the Company are validly issued, fully paid and
non-assessable (to the extent such concepts are applicable) and
were not issued in violation of any preemptive or similar rights,
purchase option, call, or right of first refusal or similar rights.
All such equity interests in Material Subsidiaries held by the
Company or any Subsidiary of the Company are free and clear of any
Liens or any other limitations or restrictions on such equity
interests (including any limitation or restriction on the right to
vote, pledge or sell or otherwise dispose of such equity interests)
other than Permitted Liens. All equity interests of the
Company Joint Ventures held by the Company or any Subsidiary of the
Company are free and clear of any Liens other than Permitted
Liens.
(b)
There have not been reserved for issuance, and there are no
outstanding (i) securities of the Company or any of its
Material Subsidiaries convertible into or exchangeable for shares
of capital stock or voting securities of any Material Subsidiary of
the Company; (ii) rights or options to acquire from the
Company or its Material Subsidiaries, or obligations of the Company
or its Material Subsidiaries to issue, any shares of capital stock,
voting securities or securities convertible into or exchangeable
for shares of capital stock or voting securities of any Material
Subsidiary of the Company; or (iii) equity equivalent
interests in the ownership or earnings of any Material Subsidiary
of the Company or other similar rights in respect of any Material
Subsidiary of the Company (the items in clauses (i) through
(iii) collectively, “ Subsidiary Securities
”). There are no outstanding obligations of the Company or
any Material Subsidiary to repurchase, redeem or otherwise acquire
any Subsidiary Securities. There are no preemptive rights of any
kind which obligate the Company or any of its Subsidiaries to issue
or deliver any Subsidiary Securities. 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
it is bound relating to the voting or registration of any shares of
capital stock of any Subsidiary of the Company or preemptive rights
with respect thereto.
19
Section 4.7
Reports and Financial
Statements
(a)
The Company has filed all forms, reports, statements,
certifications and other documents (including all exhibits,
amendments and supplements thereto) required to be filed by it with
the SEC since January 1, 2004 (all such forms, reports,
statements, certificates and other documents filed with or
furnished to the SEC since January 1, 2004, with any
amendments thereto, collectively, the “ Company SEC
Reports ”), each of which, including any financial
statements or schedules included therein, as finally amended prior
to the date hereof, has complied as to form in all material
respects with the applicable requirements of the Securities Act and
Exchange Act as of the date filed with the SEC. None of the
Company’s Subsidiaries is required to file periodic reports
with the SEC. None of the Company SEC Reports contained, when filed
with the SEC and, if amended prior to the date of this Agreement,
as of the date of such amendment, any untrue statement of a
material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. As of the date of this
Agreement, there are no outstanding or unresolved comments in
comment letters received from the SEC staff with respect to the
Company SEC Reports. To the Knowledge of the Company, none of the
Company SEC Reports is the subject of ongoing SEC review,
outstanding SEC comment or outstanding SEC
investigation.
(b)
Each of the consolidated financial statements of the Company and
its Subsidiaries included (or incorporated by reference) in the
Company SEC Reports (including the related notes and schedules,
where applicable) fairly present (subject, in the case of the
unaudited statements, to normal year-end auditing adjustments, none
of which are expected to be material in nature or amount), in all
material respects, the results of the consolidated operations and
changes in stockholders’ equity and cash flows and
consolidated financial position of the Company and its Subsidiaries
for the respective fiscal periods or as of the respective dates
therein set forth. Each of such consolidated financial statements
(including the related notes and schedules, where applicable)
complied, as of the date of filing, in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC applicable thereto and each of such
financial statements (including the related notes and schedules,
where applicable) were prepared in accordance with GAAP (except, in
the case of unaudited statements, as permitted by the rules and
regulations of the SEC) consistently applied during the periods
involved, except in each case as indicated in such statements or in
the notes thereto.
Section 4.8
Sarbanes-Oxley Compliance; Internal
Controls .
The Company has
made all certifications and statements required by Sections 302 and
906 of the Sarbanes-Oxley Act of 2002, as amended, and the related
rules and regulations promulgated thereunder with respect to the
Company’s filings pursuant to the Exchange Act. The
Company has established and maintains disclosure controls and
procedures (as defined in Rule 13a-15 under the Exchange Act)
designed to ensure that material information relating to the
Company, including its Subsidiaries, is made known on a timely
basis to the individuals responsible for the preparation of the
Company’s filings with the SEC and other public disclosure
documents. Except as would not reasonably be expected to have
a Material Adverse Effect on the Company, (a) the Company has
established and maintains a system of internal
20
accounting control over
financial reporting sufficient to comply with all legal and
accounting requirements applicable to the Company, (b) the Company
has disclosed, based on its most recent evaluation of internal
controls, to the Company’s auditors and its audit committee,
(i) any significant deficiencies and material weaknesses in the
design or operation of its internal accounting controls which are
reasonably likely to materially and adversely affect the
Company’s ability to record, process, summarize, and report
financial information, and (ii) any fraud known to the Company that
involves management or other employees who have a significant role
in internal controls, and (c) the Company has not received any
complaint, allegation, assertion, or claim in writing regarding the
accounting practices, procedures, methodologies, or methods of the
Company or its internal accounting controls over financial
reporting, including any such complaint, allegation, assertion, or
claim that the Company has engaged in questionable accounting or
auditing practices.
Section 4.9 Undisclosed
Liabilities . Except (i) for those liabilities that
are fully reflected or reserved against on the consolidated balance
sheet of the Company and its consolidated Subsidiaries included in
the most recent consolidated financial statements of the Company
included in the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 2006, (ii) for
liabilities incurred in the ordinary course of business consistent
with past practice since September 30, 2006, which are not material
taken as a whole, (iii) for liabilities that have been
discharged or paid in full prior to the date hereof in the ordinary
course of business consistent with past practice or (iv) for
liabilities that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute,
accrued or contingent or otherwise and whether due or to become
due).
Section 4.10
Disclosure Documents . The
Schedule 13E-3 and the Company Proxy Statement will not, at
the date it is filed with the SEC (in the case of the
Schedule 13E-3), at the date it is first mailed to
stockholders of the Company (in the case of the Company Proxy
Statement) or at the time of the Company Stockholder Meeting (other
than as to information supplied in writing by Parent or Merger Sub
or any of their Affiliates (other than the Company and its
Subsidiaries), expressly for inclusion therein, as to which no
representation is made), 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. The Company will cause the Company Proxy Statement, the
Schedule 13E-3 and all related SEC filings to comply as to
form in all material respects with the requirements of the Exchange
Act applicable thereto and any other applicable Law as of the date
of such filing.
Section 4.11
Absence
of Certain Changes or Events . Since September 30,
2006, (i) no change, circumstance, event or effect has occurred
which has had or would be reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on the Company and
(ii) the Company and its Subsidiaries and, to the Knowledge of the
Company, the Company Joint Ventures, have carried on their
respective businesses in all material respects in the ordinary
course of business.
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Section 4.12
Litigation . Except as publicly disclosed in the Company
SEC Reports filed with or furnished to the SEC prior to the date
hereof, neither the Company nor any of its Subsidiaries is a party
to any, and there are no pending or, to the Knowledge of the
Company, threatened, legal, administrative, arbitral or other
material proceedings, claims, actions or governmental or regulatory
investigations (a “ Proceeding ”) of any nature
against the Company or any of its Subsidiaries, except for any
Proceeding which has not had or would not be reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on the Company. Neither the Company nor any of its Subsidiaries or
any of their businesses or properties are subject to or bound by
any injunction, order, judgment, decree or regulatory restriction
of any Governmental Authority specifically imposed upon the
Company, any of its Subsidiaries or their respective properties or
assets, except for any injunction, order, judgment, decree or
regulatory restriction which (i) has not had or would not be
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company or (ii) would not prevent or
materially delay the consummation of the Merger or the
Company’s ability to observe and perform its obligations
hereunder.
Section 4.13
Taxes . Except as have not had or would not be
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company:
(a)
all Tax Returns required to be filed by the Company or any of its
Subsidiaries have been properly prepared and timely filed, and all
such Tax Returns (including information provided therewith or with
respect thereto) are true, correct and complete;
(b)
the Company and its Subsidiaries have fully and timely paid all
Taxes (whether or not shown to be due on the Tax Returns referred
to in Section 4.13(a)) other than Taxes that are not yet due
and payable or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in the applicable financial statements in accordance
with GAAP if such reserves are required under GAAP;
(c)
no audit or other proceeding by any taxing authority is pending or,
to the Knowledge of the Company, threatened in writing against the
Company or any of its Subsidiaries;
(d)
there are no Tax sharing agreements (or similar agreements) to
which the Company or any of its Subsidiaries is a party to or by
which the Company or any of its Subsidiaries is bound (other than
agreements exclusively between or among the Company and its
Subsidiaries); and
(e)
neither the Company nor any of its Subsidiaries has engaged in any
reportable transaction under Section 6011 of the Code and the
regulations thereunder.
Section
4.14 ERISA
(a)
Section 4.14(a) of the Company Disclosure Letter contains a true
and complete list of each Employee Benefit Plan (other than any
multiemployer plan within the meaning of ERISA Section 3(37))
and stock purchase, stock option, severance, retention, employee
loan, collective bargaining, employment, change-in-control, fringe
benefit, bonus, incentive, deferred compensation and all other
material employee benefit plans, agreements,
22
programs, policies or
other arrangements, whether or not subject to ERISA, whether formal
or informal, oral or written, legally binding or not, under which
any Company Employee has any present or future right to benefits
and which is maintained or contributed to by the Company or any of
its U.S. Material Subsidiaries or under which the Company or any of
its U.S. Material Subsidiaries has any present or future
liability. Each Company Benefit Plan has been operated,
funded and administered in compliance with its terms, the terms of
any applicable collective bargaining agreement and with all
applicable requirements of Law, including ERISA and the Code,
except as would not subject the Company or any of its Subsidiaries
to any liability that has had or would be reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on the Company. Except as has not had and would not be reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company, none of the Company, any of its
Subsidiaries, any officer of the Company or any of its Subsidiaries
or any Company Benefit Plan that is subject to ERISA, or, to the
Knowledge of the Company, any trust created thereunder or any
trustee or administrator thereof, has engaged in a nonexempt
“prohibited transaction” (as such term is defined in
Section 406 of ERISA and Section 4975 of the Code).
Except as has not had and would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company, no “accumulated funding deficiency” (as such
term is defined in Section 302 of ERISA and Section 412
of the Code (whether or not waived)) has occurred with respect to
any Company Benefit Plan.
(b)
Except as has not had and would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company, no event has occurred and no condition exists that would
subject the Company or its Subsidiaries, either directly or
by reason of their affiliation with any member of their
“Controlled Group” (defined as any organization which
is a member of a controlled group of organizations within the
meaning of Sections 414(b), (c), (m) or (o) of the Code), to
any tax, fine, lien, penalty or other liability imposed by ERISA,
the Code or other applicable laws, rules and regulations.
(c)
Except in the ordinary course of business or as required by
applicable Law, since September 30, 2006, there has been no
amendment to any Company Benefit Plan that would increase
materially the expense to the Company or any of its Subsidiaries of
maintaining such plan above the level of the expense incurred by
the Company or its Subsidiaries therefor for the most recent fiscal
year. Except as contemplated by this Agreement, the execution of
this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or together with any
other related event) (i) result in any material payment by the
Company or any of its Material Subsidiaries to any Company Employee
of any money or other property under any Company Benefit Plan or
Company Stock Plan or (ii) result in the accelerated vesting
or funding through a trust or otherwise of a material amount of
compensation or benefits under any Company Benefit Plan or Company
Stock Plan or (iii) result in payments under any Company Benefit
Plan which would not be deductible under Section 280G of the
Code.
Section 4.15
Compliance With Laws
(a)
The Company and each of its Subsidiaries is, and at all times has
been, in compliance with all Laws applicable to the Company, its
Subsidiaries and their respective businesses and activities, except
for such noncompliance that has not had, and would not
be
23
reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on the Company.
(b)
The Company and each Subsidiary of the Company has and maintains in
full force and effect, and is in compliance with, all Permits and
all orders from Governmental Authorities necessary for the Company
and each Subsidiary to carry on their respective businesses as
currently conducted and currently proposed to be conducted, except
as has not had, and would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company.
(c)
The Domestic Institution is and, since July 1, 2003, has been, duly
qualified as, and in material compliance with the DOE definition
of, a “proprietary institution of higher
education.”
(d)
The Domestic Institution has not derived more than ninety percent
(90%) of its revenues from Title IV Program funds, as determined in
accordance with DOE’s “90/10 Rule” as codified at
34 C.F.R. §600.5(a)(8), for any fiscal year reporting period
required by the DOE ended on or after July 1, 2003.
(e)
Neither the Company, nor any person or entity that exercises
Substantial Control over the Company, any of its Subsidiaries or
the Domestic Institution (as the term “Substantial
Control” is used in 34 C.F.R. §668.174(b) and (c))
(“ Substantial Control ”), or member of such
person’s family (as the term “family” is defined
in 34 C.F.R. §600.21(f)), alone or together, (A) exercises or
exercised Substantial Control over an institution other than the
Domestic Institution or over a third-party servicer (as that term
is defined in 34 C.F.R. §668.2) that owes a liability for a
violation of a Title IV Program or other HEA program requirement,
or (B) owes a liability for a Title IV Program or other HEA program
violation. At no time has the Company, any of its
Subsidiaries, or the Domestic Institution, nor any person or entity
that exercises Substantial Control over any of them, filed for
relief in bankruptcy or had entered against it an order for relief
in bankruptcy. None of the Company, any of its Subsidiaries,
or the Domestic Institution, nor any person or entity that
exercises Substantial Control over any of them, has pled guilty to,
has pled nolo contendere to, or has been found guilty of a crime
involving the acquisition, use, or expenditure of funds under the
Title IV Programs or has been judicially determined to have
committed fraud involving funds under the Title IV Programs.
To the Knowledge of the Company, neither the Company, nor any of
its Subsidiaries, or the Domestic Institution currently employs any
individual or entity in a capacity that involves the administration
or receipt of funds under the Title IV Programs, or contracted with
any institution or third-party servicer, which has been terminated
under the Title IV Programs for a reason involving the acquisition,
use, or expenditure of federal, state or local government funds, or
has been convicted of, or has pled nolo contendere or guilty to, a
crime involving the acquisition, use or expenditure of federal,
state, or local government funds, or has been administratively or
judicially determined to have committed fraud or any other material
violation of law involving federal, state, or local government
funds.
(f)
As of the date hereof, to the Knowledge of the Company, there exist
no facts or circumstances attributable to the Company or any
Affiliate of the Company that would reasonably be expected to cause
the DOE to refuse to deliver a written response that
would
24
satisfy the condition
set forth in Section 8.2(d) of this Agreement. As of the date
hereof, to the Knowledge of the Company, neither the Company nor
any Affiliate of the Company has been or is subject to any actions,
suits, proceedings, investigations, audits, program reviews or
claims that would reasonably be expected to prevent or delay the
issuance by the DOE of a written response that would satisfy the
condition set forth in Section 8.2(d) of this Agreement.
Section 4.16
Finders’ Fees . No agent, broker,
investment banker, financial advisor or other firm or person except
Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce,
Fenner & Smith Incorporated is or will be entitled to any
broker’s or finder’s fee or any other similar
commission or fee in connection with any of the transactions
contemplated by this Agreement. The Company has provided to Parent
a complete and correct copy of any Contract between the Company and
Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, relating to any such
fees.
Section 4.17
Opinion of Financial Advisors . Each of
Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce,
Fenner & Smith Incorporated has delivered to the Special
Committee an opinion to the effect that, as of the Execution Date,
the consideration to be received by holders of Common Stock (other
than any holder who will contribute Common Stock to Parent) in the
Merger is fair, from a financial point of view, to such
holders.
Section 4.18
Anti-Takeover Provisions . The Board of Directors of the
Company has taken all necessary action so that any takeover,
anti-takeover, moratorium, “fair price”, “control
share” or other similar Law enacted under any Law applicable
to the Company (each, a “ Takeover Statute ”) do
not, and will not, apply to this Agreement, the Merger or the other
transactions contemplated hereby. The Company does not have any
stockholder rights plan in effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
Except as set
forth in the corresponding sections or subsections of the
disclosure letter delivered to the Company by Parent and Merger Sub
on the date hereof (the “ Parent Disclosure Letter
”) (it being understood that any information set forth in a
particular section or subsection of the Parent Disclosure Letter
shall be deemed to be disclosed in each other section or subsection
thereof to which the relevance of su
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