AGREEMENT AND PLAN OF MERGER
among
PROJECT ATHENA HOLDING CORPORATION,
PROJECT ATHENA MERGER CORPORATION
and
INDUSTRIAL DISTRIBUTION GROUP, INC.
Dated as of February 20, 2008
TABLE OF CONTENTS
| |
|
Page
|
|
ARTICLE I
|
|
THE MERGER
|
|
Section
1.01.
|
The
Merger
|
1
|
|
Section
1.02.
|
Closing
|
1
|
|
Section
1.03.
|
Effective
Time
|
1
|
|
Section
1.04.
|
Effect
of the Merger
|
1
|
|
Section
1.05.
|
Certificate
of Incorporation; Bylaws
|
2
|
|
Section
1.06.
|
Directors
and Officers
|
2
|
|
ARTICLE II
|
|
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
|
|
Section
2.01.
|
Conversion
of Securities
|
2
|
|
Section
2.02.
|
Treatment
of Options and Other Equity Awards
|
3
|
|
Section
2.03.
|
No
Further Rights; Stock Transfer Books
|
3
|
|
Section
2.04.
|
Exchange
of Certificates
|
4
|
|
Section
2.05.
|
Appraisal
Rights
|
5
|
|
ARTICLE III
|
|
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
|
Section
3.01.
|
Organization
and Qualification; Subsidiaries
|
6
|
|
Section
3.02.
|
Charter
Documents
|
7
|
|
Section
3.03.
|
Capitalization
|
7
|
|
Section
3.04.
|
Corporate
Authority Relative to This Agreement
|
8
|
|
Section
3.05.
|
No
Conflict; Required Filings and Consents
|
9
|
|
Section
3.06.
|
Permits;
Compliance
|
9
|
|
Section
3.07.
|
SEC
Filings; Financial Statements; Undisclosed
Liabilities
|
10
|
|
Section
3.08.
|
Absence
of Certain Changes or Events
|
11
|
|
Section
3.09.
|
Absence
of Litigation
|
11
|
|
Section
3.10.
|
Employee
Benefit Plans
|
11
|
|
Section
3.11.
|
Labor
and Employment Matters
|
12
|
|
Section
3.12.
|
Real
Property
|
13
|
|
Section
3.13.
|
Intellectual
Property
|
13
|
|
Section
3.14.
|
Taxes
|
14
|
|
Section
3.15.
|
Environmental
Matters
|
15
|
|
Section
3.16.
|
Material
Contracts
|
16
|
|
Section
3.17.
|
Insurance
|
17
|
|
Section
3.18.
|
Company
Rights Agreement
|
17
|
|
Section
3.19.
|
Takeover
Statutes
|
18
|
|
Section
3.20.
|
Affiliate
Transactions
|
18
|
|
Section
3.21.
|
Customers
and Suppliers
|
18
|
|
Section
3.22.
|
Guarantees,
Bonds and Letters of Credit
|
18
|
|
Section
3.23.
|
Opinion
of Financial Advisor
|
18
|
|
Section
3.24.
|
Brokers
|
19
|
|
ARTICLE IV
|
|
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER CO
|
|
Section
4.01.
|
Organization
|
19
|
|
Section
4.02.
|
Authority
Relative to This Agreement
|
19
|
|
Section
4.03.
|
No
Conflict; Required Filings and Consents
|
19
|
|
Section
4.04.
|
Absence
of Litigation
|
20
|
|
Section
4.05.
|
Operations
of Merger Co.
|
20
|
|
Section
4.06.
|
Financing
|
20
|
|
Section
4.07.
|
Capitalization
of Merger Co
|
20
|
|
Section
4.08.
|
No
Vote of Parent Stockholders
|
20
|
|
Section
4.09.
|
Finders
or Brokers
|
21
|
|
Section
4.10.
|
Lack
of Ownership of Company Common Stock
|
21
|
|
Section
4.11.
|
No
Additional Representations
|
21
|
|
Section
4.13.
|
Solvency
|
21
|
|
ARTICLE V
|
|
COVENANTS OF BUSINESS PENDING MERGER
|
|
Section
5.01.
|
Conduct
of Business by the Company Pending the Merger
|
21
|
|
Section
5.02.
|
Conduct
of Business by Parent and Merger Co Pending the
Merger
|
23
|
|
Section
5.03.
|
No
Control of Other Party’s Business
|
23
|
|
ARTICLE VI
|
|
ADDITIONAL AGREEMENTS
|
|
Section
6.01.
|
Proxy
Statement; Other Filings
|
24
|
|
Section
6.02.
|
Information
Supplied
|
24
|
|
Section
6.03.
|
Company
Stockholders’ Meeting
|
25
|
|
Section
6.04.
|
Access
to Books and Records; Confidentiality
|
25
|
|
Section
6.05.
|
No
Solicitation of Transactions
|
26
|
|
Section
6.06.
|
Directors’
and Officers’ Indemnification, Advancement of Expenses
and Insurance
|
28
|
|
Section
6.07.
|
Employee
Benefits Matters
|
30
|
|
Section
6.08.
|
Notification
of Certain Matters
|
31
|
|
Section
6.09.
|
Further
Action; Reasonable Best Efforts
|
31
|
|
Section
6.10.
|
Public
Announcements
|
32
|
|
Section
6.11.
|
Resignations
|
32
|
|
Section
6.12.
|
State
Takeover Statutes
|
33
|
|
ARTICLE VII
|
|
CONDITIONS TO THE MERGER
|
|
Section
7.01.
|
Conditions
to the Obligations of Each Party
|
33
|
|
Section
7.02.
|
Conditions
to the Obligations of Parent and Merger Co
|
33
|
|
Section
7.03.
|
Conditions
to the Obligation of the Company
|
34
|
|
Section
7.04.
|
Frustration
of Closing Conditions
|
34
|
|
ARTICLE VIII
|
|
TERMINATION, AMENDMENT AND WAIVER
|
|
Section
8.01.
|
Termination
|
34
|
|
Section
8.02.
|
Effect
of Termination
|
36
|
|
Section
8.03.
|
Fees
and Expenses
|
36
|
|
Section
8.04.
|
Amendment
|
38
|
|
Section
8.05.
|
Waiver
|
38
|
|
ARTICLE IX
|
|
GENERAL PROVISIONS
|
|
Section
9.01.
|
Non-Survival
of Representations, Warranties and Agreements
|
38
|
|
Section
9.02.
|
Notices
|
38
|
|
Section
9.03.
|
Certain
Definitions
|
39
|
|
Section
9.04.
|
Severability
|
42
|
|
Section
9.05.
|
Disclaimer
of Other Representations and Warranties; Company Disclosure
Schedules
|
42
|
|
Section
9.06.
|
Entire
Agreement; Assignment
|
43
|
|
Section
9.07.
|
Parties
in Interest
|
43
|
|
Section
9.08.
|
Governing
Law
|
43
|
|
Section
9.09.
|
Waiver
of Jury Trial
|
44
|
|
Section
9.10.
|
Headings
|
44
|
|
Section
9.11.
|
Counterparts
|
44
|
|
|
|
|
|
Exhibit A
|
Form
of Certificate of Merger
|
|
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 20,
2008 (this “ Agreement
”), is by and among Project Athena Holding Corporation, a
Delaware corporation (“ Parent
”), Project Athena Merger Corporation, a Delaware corporation
and a wholly-owned subsidiary of Parent (“ Merger Co
”), and Industrial Distribution Group, Inc., a Delaware
corporation (the “ Company
”).
WHEREAS, the respective Boards of Directors of each of the
Company, Parent and Merger Co deem it in the best interests of
their respective companies and stockholders to consummate the
merger (the “ Merger
”), on the terms and subject to the conditions set forth in
this Agreement, of Merger Co with and into the Company, and each
such Board of Directors has adopted this Agreement (and, in the
case of the Board of Directors of the Company (the “
Company
Board ”), recommended that this Agreement be approved
by the Company’s stockholders); and
WHEREAS, in order to induce Parent and Merger Co to enter
into this Agreement, the directors and certain of the executive
officers of the Company have entered into and delivered to Parent
and Merger Co, concurrently with the execution and delivery of this
Agreement, support agreements.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to
be legally bound hereby, Parent, Merger Co and the Company hereby
agree, subject to the conditions herein contained, 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 Delaware General Corporation Law (the
“ DGCL ”),
at the Effective Time, Merger Co shall be merged with and into the
Company, the separate corporate existence of Merger Co shall cease
and the Company shall continue as the surviving corporation of the
Merger (the “ Surviving
Corporation ”).
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., Eastern Time, on a date to
be specified by the parties, which shall be no later than the
second Business Day following 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, but subject to satisfaction or waiver of those
conditions), at the offices of Kilpatrick Stockton LLP, 1100
Peachtree Street, NE, Atlanta, Georgia 30309, unless
another time, date and/or place is agreed to in writing by Parent
and the Company (the date on which the Closing occurs, the “
Closing
Date ”).
Section 1.03.
Effective
Time . Upon the
terms and subject to the conditions set forth in this Agreement, at
the Closing, the parties shall (a) file a certificate of merger in
such form as is required by, and executed and acknowledged in
accordance with, the relevant provisions of the DGCL, in
substantially the form attached hereto as Exhibit A (the
“ Certificate of
Merger ”), and (b) 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 is specified 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
the applicable provisions of the DGCL and this
Agreement.
Section 1.05. Certificate of
Incorporation; Bylaws .
(a)
Certificate of
Incorporation . At the Effective Time, the
Certificate of Incorporation of Merger Co, 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)
Bylaws .
At the Effective Time, the Bylaws of Merger Co, 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.
Section 1.06. Directors
and Officers . At the
Effective Time, (a) the directors of Merger Co shall be the
directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation, and (b) the officers of Merger Co shall be
the 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.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.01. Conversion
of Securities . At the
Effective Time, by virtue of the Merger and without any action on
the part of Merger Co, the Company or the holders of any of the
following securities, the following shall occur:
(a)
Conversion of
Company Common Stock . Each share of the
common stock, par value $0.01 per share, of the Company (the
“ 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 cancelled pursuant
to Section
2.01(b) and any Dissenting Shares) shall be cancelled
and shall be converted automatically into the right to receive
$10.30 per share in cash, without interest (the “
Per
Share Merger Consideration ”), payable in the
manner provided in Section
2.04 . (The result of (i) the number of
Shares entitled to payment pursuant to this Section
2.01(a) times (ii) the Per Share Merger Consideration
is referred to herein from time to time as the “
Merger
Consideration ”.)
(b)
Cancellation of
Treasury Stock and Parent-Owned Stock . Each
Share held in the treasury of the Company and each Share
directly owned by Parent, Merger Co or any direct or indirect
wholly-owned subsidiary of Parent, Merger Co or the Company
immediately prior to the Effective Time shall automatically be
cancelled without any conversion thereof, and no payment or
distribution shall be made with respect thereto.
(c)
Capital Stock of
Merger Co . Each share of common stock, par
value $0.01 per share,
of Merger Co 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 $0.01 per share, of the Surviving
Corporation. Following the Effective Time, each
certificate evidencing ownership of shares of Merger Co common
stock shall evidence ownership of such shares of the Surviving
Corporation.
(d)
Adjustments
. If, between the date of this Agreement and the
Effective Time, there is a reclassification, recapitalization,
stock split, stock dividend, subdivision, combination or
exchange of shares with respect to, or rights issued in
respect of, the Shares, the Per Share Merger Consideration
shall be adjusted accordingly, without duplication, to provide
the holders of Shares the same economic effect as contemplated
by this Agreement prior to such event.
Section
2.02.
Treatment
of Options and Other Equity Awards .
(a)
Options
. As of the Effective Time, each option then
outstanding to purchase shares of Company Common Stock (each,
a “ Company Stock
Option ”) granted under any plan, arrangement or
agreement, including without limitation those set forth in
Schedule
3.03(a) (collectively, the “ Company Stock
Option Plans ”), regardless of whether vested or
exercisable, shall fully vest and be deemed to be exercised
and cancelled. Each holder of a Company Stock
Option with respect to which the exercise price therefor is
less than the Per Share Merger Consideration (an “
In-the-Money
Option ”) shall be entitled to receive, in
consideration of the deemed exercise and cancellation of such
In-the-Money Option, a payment of an amount of cash, without
interest, equal to the product of (i) the total number of
shares of Company Common Stock subject to such In-the-Money
Option multiplied by (ii) the excess, if any, of the Per Share
Merger Consideration over the exercise price per share of such
In-the-Money Option, less applicable Taxes, if any, required
to be withheld with respect to such payment. Any
Company Stock Option that is not an In-the-Money Option shall
not be entitled to any payment in respect
thereof.
(b)
Restricted
Shares . As of the Effective Time, each
Share then subject to vesting or other restrictions pursuant
to any Company Stock Option Plan (collectively, “
Restricted
Shares ”) shall become fully vested or
unrestricted and shall be converted into the right to receive
the Per Share Merger Consideration under Section
2.01(a) , less any required withholding
Taxes.
(c)
Company
Action . Prior to the Effective Time, the
Company shall take or cause to be taken all actions necessary
to (i) effectuate the treatment of the Company Stock Options
and Restricted Shares set forth in this Section
2.02 (which shall include, with respect to Company
Stock Options, delivery of at least 15 days’ prior
written notice of the treatment described in Section
2.02(a) ), and (ii) terminate each of the Company Stock
Option Plans (in each case, to the extent not already
terminated) effective as of or prior to the Effective
Time. Parent shall cause the Surviving Corporation
to pay to the holders of the Company Stock Options the cash
payments to which they are entitled pursuant to this
Section
2.02 prior to the later of (x) five (5) Business Days
following the Effective Time and (y) the next regularly
scheduled payroll date of the Surviving
Corporation.
Section 2.03.
No
Further Rights; 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 on
the records of the Company of Shares issued and outstanding
immediately prior to the Effective Time. 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. On or after the
Effective Time, any Certificates presented to the Paying Agent or
Parent for any reason shall be cancelled against delivery of the
Per Share Merger Consideration to which the holders thereof are
entitled pursuant to Section
2.01(a) , without interest.
Section
2.04.
Exchange
of Certificates .
(a)
Paying
Agent . Prior to the Effective Time, Parent
shall enter into a paying agent agreement, in form and
substance reasonably acceptable to the Company, with a bank or
trust company reasonably acceptable to the Company to act as
agent for the stockholders of the Company in connection with
the Merger (the “ Paying
Agent ”). At the Closing, Parent shall
deposit with the Paying Agent, for the benefit of the holders
of Shares, cash in an amount sufficient to pay the aggregate
Merger Consideration required to be paid pursuant to
Section
2.01(a) (such cash 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: (i) no such investment or losses thereon
shall affect the Per Share Merger Consideration payable to the
holders of Company Common Stock entitled thereto, and,
following any losses, Parent shall promptly provide additional
funds to the Paying Agent for the benefit of the stockholders
of the Company in the amount of any such losses; and (ii) 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 that are then publicly
available). Any net profit resulting from, or
interest or income produced by, such investments shall be
payable to the Surviving Corporation or Parent, as Parent
directs.
(b)
Exchange
Procedures for Shares . As promptly as
practicable, but no later than three (3) Business Days, after
the Effective Time, Parent shall cause the Paying Agent to
mail to each Person who was, at the Effective Time, a holder
of Shares entitled to receive the Per Share Merger
Consideration 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 (collectively, the “
Certificates
”) shall pass, only upon proper delivery of the
Certificates to the Paying Agent); and (ii) instructions for
use in effecting the surrender of the Certificates in exchange
for the Per Share Merger Consideration. Upon
surrender to the Paying Agent of a Certificate for
cancellation, together with such letter of transmittal, duly
completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
required pursuant to such instructions (or, if such Shares are
held in book-entry or other uncertificated form, upon the
entry through a book-entry transfer agent of the surrender of
such Shares on a book-entry account statement (it being
understood that any references herein to
“Certificates” shall be deemed to include
references to book-entry account statements relating to the
ownership of Shares)), the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash
that such holder has the right to receive in respect of the
Shares formerly represented by such Certificate pursuant to
Section
2.01(a) , and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer
of ownership of Shares that are not registered in the transfer
records of the Company, payment of the Per Share Merger
Consideration with respect thereto 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 is properly endorsed or otherwise in proper form for
transfer, and the Person requesting such payment pays any
transfer or other taxes required by reason of the payment of
the Per Share Merger Consideration applicable to such Shares
to a Person other than the registered holder of such
Certificate or establishes to the reasonable satisfaction of
Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by
this Section
2.04(b) , each Certificate shall be deemed at all times
after the Effective Time to represent only the right to
receive upon such surrender the Per Share Merger Consideration
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 .
(c)
Termination of
Exchange Fund . Any portion of the Exchange
Fund that remains undistributed to the holders of Shares on
the date that is six (6) months after the Effective Time shall
be delivered to Parent, upon demand, and any holders of Shares
who have not theretofore complied with this Article
II shall thereafter look only to Parent for, and Parent
shall remain liable for, payment of their respective claims
for the Per Share Merger Consideration. Any portion
of the Exchange Fund remaining unclaimed by holders of Shares
as of a date which is immediately prior to such time that such
amounts would otherwise escheat to or become property of any
Governmental Entity shall, to the extent permitted by
applicable law, become the property of Parent free and clear
of any claims or interest of any Person previously entitled
thereto.
(d)
No
Liability . None of the Paying Agent,
Parent, Merger Co or the Surviving Corporation shall be liable
to any holder of Shares or Company Stock Options for any such
Shares or Company Stock Options (or dividends or distributions
with respect thereto), or cash delivered to a public official
pursuant to any abandoned property, escheat or similar
law.
(e)
Withholding
Rights . Each of the Paying Agent, the
Surviving Corporation and Parent shall be entitled to deduct
and withhold from any amounts otherwise payable pursuant to
this Agreement to any holder of Shares or Company Stock
Options such amounts as it is required to deduct and withhold
with respect to such payment under all applicable Tax laws and
pay such withholding amount over to the appropriate taxing
authority. To the extent that amounts are so
properly 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 or Company Stock
Options in respect of which such deduction and withholding was
made by the Paying Agent, the Surviving Corporation or Parent,
as the case may be.
(f)
Lost
Certificates . If any Certificate has been
lost, stolen, defaced or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate
to be lost, stolen, defaced or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a
bond, in such reasonable amount as the Surviving Corporation
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, defaced or
destroyed Certificate the Per Share Merger Consideration to
which the holder thereof is entitled pursuant to Section
2.01(a) , without interest.
Section
2.05.
Appraisal
Rights .
(a)
Treatment of
Dissenting Shares . Notwithstanding any
provision of this Agreement to the contrary and to the extent
available under the DGCL, Shares that are outstanding
immediately prior to the Effective Time and that are held by
any stockholder who is entitled to exercise, and who properly
exercises, appraisal rights with respect to such Shares (the
“ Dissenting
Shares ”) pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL,
shall not be converted into, exchangeable for or represent the
right to receive, the Per Share 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 of the DGCL; provided
, however ,
that all Dissenting Shares held by any stockholder who shall
have failed to perfect or who otherwise shall have withdrawn,
in accordance with Section 262 of the DGCL, or lost such
stockholder’s rights to demand payment in respect of
such Shares under Section 262 of the DGCL, 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 Per Share Merger Consideration, without any
interest thereon, upon surrender 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 other than as provided in Section 262 of the
DGCL.
(b)
Notice and
Participation . The Company shall give
Parent: (i) prompt notice of any such demands
received by the Company for payment for Dissenting Shares,
withdrawals of such demands and any other instruments served
pursuant to the DGCL and received by the Company; and (ii) the
opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands for payment 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 such demands for payment
or offer to settle or settle any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except
as set forth in the disclosure schedule delivered by the
Company to Parent and Merger Co concurrently with the
execution and delivery of this Agreement (the “
Company
Disclosure Schedule ”), the Company hereby
represents and warrants to Parent and Merger Co as
follows:
Section
3.01.
Organization and
Qualification; Subsidiaries .
(a)
Organization and
Qualification . Each of the Company and each
subsidiary of the Company (each, a “ Subsidiary
”) is a corporation, limited partnership, limited
liability company or other legal entity duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization (except, in the case of good
standing, for legal entities organized under the laws of any
jurisdiction that does not recognize such concept) and has the
requisite corporate or entity power and authority to own,
lease and operate its properties and to carry on its business
as it is now being conducted. Each of the Company
and each Subsidiary is duly qualified or licensed to do
business, and is in good standing (where such concept is
recognized and applicable), 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 where the failure to be so
qualified or licensed and in good standing would not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each of the
jurisdictions where the character of the properties owned,
leased or operated by the Company or a Subsidiary, or the
nature of its business, makes such qualification or licensing
necessary, is set forth in Schedule
3.01(a) .
(b)
List of
Subsidiaries . A true and complete list of
all Subsidiaries of the Company is set forth in Schedule
3.01(b) , together with a description of each
Subsidiary’s (i) jurisdiction of organization, (ii)
outstanding capital stock (or other equity, membership,
partnership or economic interest) and the holders thereof, and
(iii) officers and directors. Except as set forth
in Schedule
3.01(b) , neither the Company nor any Subsidiary
directly or indirectly owns, beneficially or of record, any
capital stock (or other equity, membership, partnership or
economic interest) in any Person.
(c)
The term “ Material Adverse
Effect ” means any change, circumstance, effect,
event or occurrence that is or would be reasonably likely to
be, individually or in the aggregate, materially adverse to
the assets, liabilities, business, financial condition or
results of operations of the Company and the Subsidiaries
taken as a whole, other than any such change, circumstance,
effect, event or occurrence that the Company is able to
demonstrate resulted directly from (i) changes in general
economic conditions affecting any geographic market in
which the Company operates, (ii) general changes or
developments in the industries in which the Company or the
Subsidiaries operate, (iii) the announcement of this Agreement
and the transactions contemplated hereby, including any
termination of, reduction in or similar negative impact on
relationships, contractual or otherwise, with any customers,
suppliers, distributors, partners or employees of the Company
or the Subsidiaries to the extent due to the announcement or
performance of this Agreement or the identity of the parties
to this Agreement, or the performance of this Agreement and
the transactions contemplated hereby, including compliance
with the covenants set forth herein, (iv) any actions required
under this Agreement to obtain any approval or authorization
under applicable antitrust or competition laws for the
consummation of the Merger, or (v) changes in any tax
laws or regulations or applicable accounting regulations or
principles, unless, in the case of the foregoing clauses (i),
(ii) and (v), such changes referred to therein have a
materially disproportionate effect on the Company and the
Subsidiaries taken as a whole relative to other participants
in the industries or markets, as the case may be, in which the
Company and the Subsidiaries operate.
Section 3.02.
Charter
Documents . The
Company has made available to Parent a complete and correct copy of
the certificate of incorporation and the bylaws (or comparable
organizational or charter documents), each as amended to date, of
the Company and each Subsidiary. Such certificate of
incorporation and bylaws (or comparable organizational or charter
documents) are in full force and effect. Neither the
Company nor any Subsidiary is in violation of any of the provisions
of its certificate of incorporation or bylaws (or comparable
organizational or charter documents).
Section
3.03.
Capitalization
.
(a)
Generally
. The authorized capital stock of the Company
consists of (i) 50,000,000 shares of Company Common Stock and
(ii) 10,000,000 shares of preferred stock, par value $0.10 per
share (“ Company
Preferred Stock ”). As of February 19,
2008 (the “ Measurement
Date ”), (i) 10,288,731 shares of Company Common
Stock are issued and outstanding (excluding shares of Company
Common Stock held in the treasury of the Company), all of
which are duly authorized, validly issued, fully paid and
nonassessable and were issued free of preemptive (or similar)
rights, (ii) 0 shares of Company Common Stock are held in the
treasury of the Company, (iii) no shares of Company Common
Stock are held by the Subsidiaries, and (iv) 1,082,070 shares
of Company Common Stock are reserved for future issuance in
connection with the Company Stock Option Plans (including
shares reserved pursuant to outstanding Company Stock
Options). Since the Measurement Date through the
date of this Agreement, other than in connection with the
issuance of Shares pursuant to the exercise of Company Stock
Options outstanding as of the Measurement Date, there has been
no change in the number of shares of outstanding capital stock
of the Company or the number of outstanding Company Stock
Options. Schedule
3.03(a) sets forth, as of the Measurement Date, the
number of shares of Company Common Stock issuable upon
exercise of outstanding Company Stock Options granted under
each Company Stock Option Plan and the holder, expiration date
and exercise price for each. No shares of Company
Preferred Stock are issued and outstanding.
(b)
Other
Rights . Except as set forth in Section
3.03(a) and except for the rights (the “
Rights
”) issued pursuant to the Rights Agreement, dated as of
August 28, 2000 (the “ Company Rights
Agreement ”), between the Company and American
Stock Transfer & Trust Company, a New York corporation, as
rights agent, in respect of which no Distribution Date (as
defined in the Company Rights Agreement) has occurred, there
are no (i) subscriptions, calls, contracts, options, warrants
or other rights, agreements, arrangements, understandings,
restrictions or commitments of any character to which the
Company or any Subsidiary is a party or by which the Company
or any Subsidiary is bound 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, other equity interests in or debt securities
of, the Company or any Subsidiary, (ii) securities of the
Company or securities convertible, exchangeable or exercisable
for shares of capital stock or voting securities of the
Company, or (iii) equity equivalents, restricted stock units,
stock appreciation rights, phantom stock, ownership interests
in the Company or any Subsidiary or similar
rights. All shares of Company Common Stock subject
to issuance in connection with the Company Stock Option Plans
(all of which are reflected on Schedule
3.03(a) ) 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 outstanding securities of the
Company or any Subsidiary, to vote or to dispose of any shares
of Company Common Stock or any capital stock of any Subsidiary
or to 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 disposition, voting or dividends
with respect to any equity securities of the Company or of any
Subsidiary. No dividends on the Company Common
Stock have been declared or have accrued from December 31,
2006 through the date hereof. To the knowledge of
the Company, all of the Shares have been issued by the Company
in compliance with applicable federal securities
laws.
(c)
Validity of
Issuance . 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 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 of any nature whatsoever.
Section 3.04.
Corporate
Authority Relative to This Agreement .
(a)
Corporate
Authority . The Company has all necessary
corporate power and authority to execute and deliver this
Agreement, and, subject to the receipt of Stockholder
Approval, to consummate the Merger and the other transactions
contemplated by this Agreement (the “ Other
Contemplated Transactions ”) to be consummated by
the Company.
(b)
Approval of
Agreement by Company Board . The execution
and delivery of this Agreement and the consummation of the
Merger and the Other Contemplated Transactions have been duly
and validly authorized by the Company Board, pursuant to the
recommendation of the Strategic Alternatives Review Committee
of the Company Board (the “ Independent
Committee ”) and, except for (i) Stockholder
Approval and (ii) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware, no other
corporate proceedings on the part of the Company are necessary
to authorize this Agreement or the consummation of the Merger
and the Other Contemplated Transactions. The
Independent Committee has determined and resolved (i) that the
Merger is fair to, and in the best interests of, the Company
and its stockholders and (ii) to recommend that the Company
Board approve this Agreement, propose this Agreement to the
Company’s stockholders for adoption thereby and
recommend that the Company’s stockholders adopt this
Agreement and the transactions contemplated hereby (the
“ Independent
Committee Recommendation ”). The
Company Board has determined and resolved (i) that the Merger
is fair to, and in the best interests of, the Company and its
stockholders, (ii) to propose this Agreement for adoption by
the Company’s stockholders, and (iii) to recommend that
the Company’s stockholders adopt this Agreement and the
transactions contemplated by this Agreement (the “
Company Board
Recommendation ” and, together with the
Independent Committee Recommendation, the “ Recommendation
”), all of which determinations and resolutions have not
been rescinded, modified or withdrawn in any way as of the
date of this Agreement. This Agreement has been
duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this
Agreement by Parent and Merger Co, constitutes the valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms.
(c)
Required
Stockholder Vote . The only vote of the
holders of any class or series of capital stock or other
securities of the Company necessary to adopt this Agreement or
consummate the Merger is the affirmative vote of the holders
of a majority of the outstanding shares of Company Common
Stock in favor of the adoption of this Agreement (the “
Stockholder
Approval ”).
Section
3.05.
No
Conflict; Required Filings and Consents .
(a)
No
Conflict . The execution and delivery by the
Company of this Agreement does not, and, except as described
in Schedule
3.05(a) , the consummation of the Merger and the Other
Contemplated Transactions and compliance with the provisions
of this Agreement will not, (i) result in any violation of,
conflict with or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
modification, amendment, cancellation or acceleration of any
obligation or to the loss of a benefit under, or require any
consent, waiver, approval, authorization or permit of, action
by, registration, declaration or filing with or notification
to any Person pursuant to, any loan, guarantee of indebtedness
or credit agreement, note, bond, mortgage, indenture, lease,
sublease, assignment of lease or occupancy agreement,
contract, obligation, arrangement, understanding, undertaking,
instrument, permit, franchise or license agreement, or other
material agreement, whether oral or written (collectively,
“ Contracts
”) binding upon the Company or any of the Subsidiaries,
or to which any of them is a party or any of their respective
properties or assets are bound, or result in the creation of
any liens, claims, mortgages, encumbrances, pledges, security
interests, equities, options, rights of first refusal, or
charges of any kind whatsoever (including any limitation on
voting, sale, transfer or other disposition, or exercise of
any other attribute of ownership) (each, a “ Lien
”) upon any of the Shares or any of the properties or
assets of the Company or any of the Subsidiaries; (ii)
conflict with or result in any violation of any provision of
the certificate of incorporation or bylaws or other equivalent
organizational or charter document, in each case as amended,
of the Company or any of the Subsidiaries; or (iii) except as
described in Section
3.05(b) , conflict with or violate any applicable Laws,
other than, in the case of clauses (i) and (iii), any such
violation, conflict, default, termination, modification,
amendment, cancellation, acceleration, loss or Lien that would
not have, individually or in the aggregate, a Material Adverse
Effect.
(b)
Consents and
Approvals . Other than (i) the filing of the
Certificate of Merger with the Secretary of State of the State
of Delaware pursuant to the DGCL, (ii) such filings as are
required pursuant to the Securities Exchange Act of 1934, as
amended (the “ Exchange
Act ”), (iii) the filing of a pre-merger
notification form pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “ HSR Act
”), (iv) any filings required to be made with the Nasdaq
Global Market, Inc. (“ Nasdaq
”), and (v) the approvals set forth on Schedule
3.05(b) (collectively, the “ Company
Approvals ”), and subject to the accuracy of the
representations and warranties of Parent and Merger Co in
Section
4.03 hereof, no authorization, consent, permit, action
or approval of, or filing with, or notification to, any United
States federal, state or local or foreign government or
regulatory agency, commission, court, body, entity, arbitral
panel or authority (each, a “ Governmental
Entity ”) is necessary, under applicable Law, in
connection with the execution, delivery and performance of
this Agreement or the consummation by the Company of the
Merger and Other Contemplated Transactions, except for
authorizations, consents, permits, actions, approvals,
notifications or filings that, if not obtained or made, would
not have, individually or in the aggregate, a Material Adverse
Effect.
Section
3.06.
Permits;
Compliance .
(a)
Permits
. Each of the Company and each Subsidiary is in
possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity
necessary for each such entity to own, lease and operate its
properties or to carry on its business as it is now being
conducted (collectively, the “ Company
Permits ”), except where the failure to have, or
the suspension or cancellation of, any Company Permit would
not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. To the knowledge
of the Company, neither it nor any Subsidiary has received any
written notification from any Governmental Entity threatening
to revoke any material Company
Permit. Notwithstanding anything contained in this
Section
3.06(a) , no representation or warranty shall be deemed
to be made in this Section
3.06(a) in respect of the matters specifically covered
in Section
3.15 .
(b)
Compliance with
Law . The Company and each Subsidiary is,
and since January 1, 2007 has been, in compliance with any Law
applicable to such entity or by which any property or asset of
such entity is bound or affected, except (i) where the failure
to be in such compliance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, and (ii) for compliance with Environmental Law, which
compliance is covered exclusively in Section
3.15 .
(c)
Compliance with
the Sarbanes-Oxley Act . The Company and, to
the knowledge of the Company, each of its officers and
directors are in compliance with, and have complied in all
material respects with, all applicable provisions of the
Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley
Act ”).
(d)
Compliance with
Economic and Trade Sanctions . (i) Each of
the Company and the Subsidiaries is in material compliance
with United States and international economic and trade
sanctions, including those administered by the Office of
Foreign Asset Control (“ OFAC
”) within the United States Department of Treasury; and
(ii) each of the Company and the Subsidiaries is in material
compliance with the anti-boycott regulations administered by
the United States Department of Commerce, the Foreign Corrupt
Practices Act, and all laws and regulations administered by
the Bureau of Customs and Border Protection in the United
States Department of Homeland Security.
(e)
Compliance with
OFAC Listings . To the knowledge of the
Company, no director, officer or employee of the Company or
any of the Subsidiaries is identified on any of the following
documents: (i) the OFAC list of “Specially
Designated Nationals and Blocked Persons” (“
SDNs
”); (ii) the Bureau of Industry and Security of the
United States Department of Commerce “Denied Persons
List”; or (iii) the Office of Defense Trade Controls of
the United States Department of State “List of Debarred
Persons”. Neither the Company nor any of the
Subsidiaries are involved in business arrangements or
otherwise engage in transactions with or involving sanctioned
countries or SDNs in violation of the regulations maintained
by the OFAC.
Section
3.07.
SEC
Filings; Financial Statements; Undisclosed Liabilities
.
(a)
SEC
Filings . The Company has filed all forms,
reports, statements, schedules and other documents required to
be filed by it with the Securities and Exchange Commission
(the “ SEC
”) since January 1, 2007 (collectively, the “
SEC
Reports ”). The SEC Reports (i) were
prepared in accordance with all of the then material
applicable requirements of the Securities Act of 1933, as
amended (the “ Securities
Act ”), the Exchange Act, the Sarbanes-Oxley Act
and, in each case, the rules and regulations promulgated
thereunder, and (ii) did not, at the time they were filed, or,
if amended, as of the date of such amendment, or in the case
of registration statements and proxy statements as of the
respective dates of effectiveness or mailing thereof, as
applicable, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading (including any financial statements or other
documentation incorporated by reference
therein). No Subsidiary is required to file any
form, report or other document with the SEC.
(b)
Financial
Statements . Each of the consolidated
financial statements (including, in each case, any notes
thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting
principles (“ GAAP
”) applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or,
in the case of unaudited statements, as permitted by the SEC)
and each fairly presents, in all material respects, the
consolidated financial position, results of operations and
cash flows of the Company and its consolidated Subsidiaries as
at the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments and,
in the case of any pro forma financial statements, to the
qualifications stated therein). All of the
Subsidiaries are consolidated for accounting
purposes.
(c)
No Undisclosed
Liabilities . Neither the Company nor any of
the Subsidiaries has any liabilities of a nature required by
GAAP to be reflected in a consolidated balance sheet or the
notes thereto, except liabilities that (i) are accrued or
reserved against in the most recent financial statements or
the notes thereto included in the SEC Reports filed prior to
the date hereof, (ii) were incurred in the ordinary course of
business since the date of such financial statements or
otherwise in accordance with Section
5.01 , (iii) are incurred pursuant to or as expressly
contemplated by this Agreement, (iv) have been discharged or
paid in full prior to the date of this Agreement in the
ordinary course of business consistent with past practice, or
(v) as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
Section 3.08.
Absence
of Certain Changes or Events .
(a)
Material Adverse
Effect . Since September 30, 2007, there has
not been any Material Adverse Effect in the business of the
Company and the Subsidiaries.
(b)
Certain Changes
or Events . Since September 30, 2007 and
prior to the date hereof, except as expressly contemplated by
this Agreement, (i) the Company and the Subsidiaries have
conducted their businesses only in the ordinary course of
business and in a manner consistent with past practice, and
(ii) neither the Company nor any Subsidiary
has: (A) suffered any damage, destruction or loss
(regardless of whether covered by insurance), other than in
the ordinary course of business, that has had or would be
reasonably expected to have a Material Adverse Effect; or (B)
taken any action that would be prohibited by Section
5.01 if taken after the date hereof.
Section 3.09.
Absence
of Litigation .
Schedule
3.09 lists each litigation, suit, claim, action, proceeding,
hearing, arbitration, petition or investigation (an “
Action
”) pending or, to the knowledge of the Company, threatened in
writing against the Company or any Subsidiary, or any property or
asset of the Company or any Subsidiary, before any Governmental
Entity or arbitrator. As of the date of this Agreement,
to the knowledge of the Company, no executive officer or director
of the Company is a defendant in any Action in connection with his
or her status as an executive officer or director of the Company or
any Subsidiary. Neither the Company nor any Subsidiary
nor any property or asset of the Company or any Subsidiary is
subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the
knowledge of the Company, continuing investigation by, any
Governmental Entity, or any order, writ, judgment, injunction,
decree, determination or award of any Governmental
Entity.
Section 3.10.
Employee
Benefit Plans .
(a)
Benefit
Plans . Schedule
3.10(a) lists: (i) 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,
retention, stay or other benefit plans, programs or
arrangements; and (ii) all employment, termination, severance,
retention, stay or other contracts, agreements or commitments
to which the Company or any Subsidiary is a party, with
respect to which the Company or any Subsidiary has or may
reasonably be expected to have any material obligation or that
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 complete and correct copy (where applicable) of (A) each
Plan (or, where a Plan has not been reduced to writing, a
summary of all material Plan terms of such Plan), (B) each
trust or funding arrangement prepared in connection with each
such Plan, (C) the most recently filed annual report on
Internal Revenue Service (“ IRS
”) Form 5500, (D) the most recently received IRS
determination letter for each such Plan, (E) the most recently
prepared actuarial report and financial statement in
connection with each such Plan, and (F) the most recent
summary plan description, any summaries of material
modifications and employee handbooks.
(b)
Pension Plans;
Multiemployer Plans . None of the Company or
any Subsidiary or any other Person that, together with the
Company or any Subsidiary, is or was treated as a single
employer under Section 414(b), (c), (m) or (o) of the United
States Internal Revenue Code of 1986, as amended (the “
Code
”) (each, together with the Company and any Subsidiary,
an “ ERISA
Affiliate ”), has now or at any time within the
past three years (and in the case of any such other Person,
only during the period within the past three years that such
other Person was an ERISA Affiliate) contributed to,
sponsored, or maintained (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
an ERISA Affiliate would reasonably be expected to incur
liability under Section 4063 or 4064 of ERISA (a “
Multiple
Employer Plan ”).
(c)
Change in
Control Agreements . Schedule
3.10(c) lists each Plan (each, a “ Change in
Control Agreement ”) that would reasonably be
expected to 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, director or consultant of the Company or any
Subsidiary as a result of the consummation of the Merger or
any other transaction contemplated by this Agreement (whether
alone or in connection with any other
event). Except as set forth on Schedule
3.10(c) , 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, would reasonably be expected to give rise to the
payment of any amount that would not be deductible pursuant to
the terms of Section 280G of the Code.
(d)
Qualified
Plans . Each Plan that is intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS that the Plan is
so qualified or has adopted a prototype plan with an IRS
opinion letter, and, to the knowledge of the Company, no fact
or circumstance exists that would reasonably be expected to
result in the revocation of such letter.
(e)
Compliance
. Each Plan has been established and administered
in accordance with its terms, and in material compliance with
the applicable provisions of ERISA, the Code and other
applicable laws.
(f)
Actions
. 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)
to the knowledge of the Company, no facts or circumstances
exist that would reasonably be expected to give rise to any
such Actions, and (iii) no administrative investigation, audit
or other administrative proceeding by the Department of Labor,
the IRS or other Governmental Entity is pending, in progress
or, to the knowledge of the Company, threatened.
Section 3.11.
Labor
and Employment Matters . Except as
set forth on Schedule 3.11
, neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other labor union agreements
applicable to persons employed by the Company or any Subsidiary,
nor to the knowledge of the Company, are there any formal
activities or proceedings of any labor union to organize any such
employees. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, there are no unfair labor practice complaints pending
against the Company or any Subsidiary before the National Labor
Relations Board or any other Governmental Entity or any current
union representation questions involving employees of the Company
or any Subsidiary. 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
3.12.
Real
Property .
(a)
Owned Real
Property . Schedule
3.12(a) lists each parcel of real property owned by the
Company or any Subsidiary (the “ Owned Real
Property ”). The Company or any
Subsidiary has good, valid and marketable title to all of the
Owned Real Property, in each case free and clear of all Liens,
other than (i) Liens for current taxes and assessments not yet
past due, (ii) inchoate mechanics’ and
materialmen’s Liens for construction in progress, (iii)
workmen’s, repairmen’s, warehousemen’s and
carriers’ Liens arising in the ordinary course of
business of the Company or such Subsidiary consistent with
past practice, and (iv) all Liens and other imperfections of
title (including matters of record) and encumbrances that do
not materially interfere with the conduct of the business of
the Company and the Subsidiaries, taken as a whole, or,
individually or in the aggregate, have a Material Adverse
Effect (collectively, “ Permitted
Liens ”).
(b)
Leased Real
Property . Schedule
3.12(b) lists by address each parcel or tract of real
property leased or subleased by the Company or any Subsidiary
that is currently used or held for use in the conduct of the
business of the Company and the Subsidiaries (collectively,
the “ Leased Real
Properties ”), with the name of the lessor and
the title and date of the lease or sublease, any guaranty
given by the Company or any Subsidiary in connection therewith
and each material amendment to any such lease or
sublease. Except as set forth on Schedule
3.12(b) , each of the Leased Real Properties is subject
to a written lease or sublease to which the Company or a
Subsidiary, as applicable, is party as a lessee or sublessee
(each, a “ Real Property
Lease ”), and all such Real Property Leases are
valid and in full force and effect, in accordance with their
terms. There is not, with respect to any Real
Property Lease: (i) any default by the Company or a
Subsidiary, as the case may be, or any event of default or
event that with notice or lapse of time, or both, would
constitute a default by the Company or a Subsidiary, as the
case may be; or (ii) to the knowledge of the Company, any
existing default by any other party to any Real Property
Lease, or event of default or event that with notice or lapse
of time, or both, would constitute a default by any other
party to any Real Property Lease.
(c)
Use of Real
Property . Neither the Company nor any
Subsidiary occupies or uses, or has any inventory located at,
any parcel or tract of real property other than (i) the Owned
Real Property, (ii) the Leased Real Properties and (iii) the
real properties listed on Schedule
3.12(c) (which listing shall include the address
thereof and the name of the owner or lessee or sublessee
thereof, and shall identify the use thereof, e.g., customer
location, bailee, warehouseman, etc.).
Section 3.13.
Intellectual
Property . Except as
set forth on Schedule 3.13
: (a) the Company and the Subsidiaries own (free and
clear of all Liens other than Permitted Liens) or have the right to
use all patents, inventions, copyrights, software, trademarks,
service marks, brand names, logos, domain names, trade dress, trade
secrets, know-how, confidential or proprietary information (and all
applications, registrations, continuations, divisionals, renewals
and reissues relating thereto) and all other intellectual property
rights of any kind or nature arising under U.S. or foreign law
(“ Intellectual
Property ”) as are necessary or appropriate and
material for their businesses as currently conducted; (b) to the
knowledge of Company, such Intellectual Property does not infringe,
dilute or misappropriate the Intellectual Property of any third
party and is not being infringed, misappropriated or diluted by any
third party; (c) neither the Company nor any of the Subsidiaries is
a party to any claim, suit or other action, and to the knowledge of
the Company, no claim, suit or other action is threatened, that
challenges the validity, enforceability, ownership, or right to
use, sell or license their Intellectual Property; and (d) to the
knowledge of the Company, neither the Company or any of the
Subsidiaries have suffered any material violation of the security
of their systems or software.
Section 3.14.
Taxes
.
(a)
Payment and
Filings . Except as set forth on Schedule
3.14 , (i) the Company and the Subsidiaries have timely
filed or caused to be filed or will timely file or cause 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 any such filed Tax Returns are true, correct and
complete; (ii) the Company and the Subsidiaries have timely
paid or will timely pay any 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; and (iii)
without taking into account any transactions contemplated by
this Agreement and based upon activities to date, adequate
reserves in accordance with GAAP have been established by the
Company and the Subsidiaries for all Taxes not yet due and
payable in respect of taxable periods ending on the date
hereof. All material amounts of Tax required to be
withheld by the Company and the Subsidiaries have been or will
be timely withheld and paid over to the appropriate
Governmental Entity.
(b)
Deficiencies;
Liens . No deficiency for any material
amount of Tax has been asserted or assessed by any
Governmental Entity in writing against the Company or any
Subsidiary (or, to the knowledge of the Company, has been
threatened or proposed), except for deficiencies that have
been satisfied by payment, settled or been withdrawn or that
are being contested in good faith and are Taxes for which the
Company or the appropriate Subsidiary has set aside adequate
reserves in accordance with GAAP. There are no
liens for a material amount of Taxes, other than liens for
current Taxes and assessments not yet past due or that are
being contested in good faith and for which the Company or the
appropriate Subsidiary has set aside adequate reserves in
accordance with GAAP, on the assets of the Company or any
Subsidiary.
(c)
Audits and
Examinations . (i) There are no pending or,
to the knowledge of the Company, threatened audits,
examinations, investigations or other proceedings in respect
of a material amount of Taxes of the Company or any Subsidiary
with respect to which the Company or a Subsidiary has been
notified in writing; and (ii) neither the Company nor any
Subsidiary has waived any statute of limitations in respect of
a material amount of Taxes or agreed to any extension of time
with respect to an assessment or deficiency for a material
amount of Taxes (other than pursuant to extensions of time to
file Tax Returns obtained in the ordinary
course).
(d)
Tax
Sharing . Neither the Company nor any
Subsidiary is a party to any indemnification, allocation or
sharing agreement with respect to Taxes (other than agreements
among the Company and the Subsidiaries and other than
customary Tax indemnifications contained in credit or other
commercial agreements the primary purpose of which does not
relate to Taxes).
(e)
Listed
Transactions . Neither the Company nor any
Subsidiary is required to make any disclosure to the Internal
Revenue Service with respect to a “listed
transaction” pursuant to Section 1.6011-4(b)(2) of the
Treasury Regulations promulgated under the Code.
(f)
Tax Matters
Definitions . For purposes of this
Agreement:
(i) “
Tax
” or “ Taxes
” means any and all federal, state, local and foreign
income, gross receipts, payroll, employment, excise, stamp,
customs duties, capital stock, franchise, profits,
withholding, social security, unemployment, real property,
personal property, sales, use, transfer, value added,
alternative or add-on minimum, estimated, or other taxes
(together with interest, penalties and additions to tax
imposed with respect thereto) imposed by any Governmental
Entity.
(ii) “
Tax
Returns ” means returns, declarations, claims for
refund, or information returns or statements, reports and
forms relating to Taxes filed or required to be filed with any
Governmental Entity (including any schedule or attachment
thereto) with respect to the Company or the Subsidiaries,
including any amendment thereof.
Section
3.15.
Environmental
Matters .
(a)
Compliance with
Environmental Laws . Except as would not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect: (i) none of the
Company or any of the Subsidiaries is in violation of any
applicable Environmental Law or, except for any violation that
has been fully resolved, has violated in the past any
applicable Environmental Law; (ii) there is and has been no
release of Hazardous Substances that requires response action
under applicable Environmental Law at, on or under any of the
properties currently owned, leased or operated or, to the
knowledge of the Company, otherwise occupied by the Company or
any of the Subsidiaries or, during the period of the
Company’s or the Subsidiaries’ ownership, lease or
operation thereof, formerly owned, leased or operated by the
Company or any of the Subsidiaries, that would reasonably be
expected to result in a liability to the Company or any of the
Subsidiaries; (iii) the Company and the Subsidiaries have
obtained and are in compliance with all required Environmental
Permits and, except for any noncompliance that has been fully
resolved, have been in the past in compliance with such
permits; and (iv) there are no written claims or notices
pending or, to the knowledge of the Company, issued to or
threatened against the Company or any of the Subsidiaries
alleging violations of or liability under any Environmental
Law or otherwise concerning the release or management of
Hazardous Substances.
(b)
Environmental
Matters Definitions . For purposes of this
Agreement:
(i) “
Environmental
Laws ” means any laws (including common law) of
the United States or any state or local Governmental Entity
within the United States, relating to: (A) releases
or threatened releases of Hazardous Substances or materials
containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage, emission,
discharge or disposal of Hazardous Substances or materials
containing Hazardous Substances; or (C) pollution or
protection of the environment or of human health and safety as
such is affected by Hazardous Substances or materials
containing Hazardous Substances.
(ii) “
Environmental
Permits ” means any permit, license,
registration, approval, notification or any other
authorization required pursuant to applicable Environmental
Law.
(iii) “
Hazardous
Substances ” means: (A) those
substances, materials or wastes defined as toxic, hazardous,
acutely hazardous, pollutants or contaminants in, or regulated
under, the following United States federal statutes and any
analogous foreign or state statutes, and all regulations
thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the
Clean Water Act, the Safe Drinking Water Act, the Atomic
Energy Act, the Federal Insecticide, Fungicide, and
Rodenticide Act and the Clean Air Act; (B) petroleum and
petroleum products, including crude oil and any fractions
thereof; (C) natural gas, synthetic gas, and any mixtures
thereof; and (D) polychlorinated biphenyls, asbestos, molds
that would reasonably be expected to have an adverse effect on
human health and urea formaldehyde foam
insulation.
Section
3.16.
Material
Contracts .
(a)
Status of
Material Contracts . Except as set forth on
Schedule
3.16 , (i) each Material Contract is a legal, valid and
binding obligation of the Company or a Subsidiary, as
applicable, in full force and effect and enforceable against
the Company or a Subsidiary 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; (ii) the Company has not
received written notice, and has no reason to believe, that
any Material Contract is not a legal, valid and binding
obligation of the counterparty thereto, in full force and
effect and enforceable against such counterparty in accordance
with its terms; (iii) neither the Company nor any of the
Subsidiaries is and, to the Company’s knowledge, no
counterparty is in breach or violation of, or default under,
any Material Contract; (iv) none of the Company or any of the
Subsidiaries have received any claim of default under any
Material Contract; and (v) to the Company’s knowledge,
no event has occurred that would result in a breach or
violation of, or a default under, any Material Contract (in
each case, with or without notice or lapse of time or
both).
(b)
Listing of
Material Contracts . For purposes of this
Agreement, the term “ Material
Contract ” means any of the following Contracts
(together with all amendments, supplements, exhibits and
schedules thereto) to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary or any of
their respective properties or assets are bound or affected as
of the date hereof:
(i) any
limited liability company agreement, joint venture or other
similar agreement or arrangement relating to the formation,
creation, operation, management or control of any partnership
or joint venture that is material to the business of the
Company and the Subsidiaries, taken as a whole, other than any
such limited liability company, partnership or joint venture
that is a Subsidiary and which has been made available to
Parent pursuant to Section
3.02 ;
(ii) any
Contract (other than with or between or among consolidated
Subsidiaries) relating to (A) indebtedness for borrowed money
and having an outstanding principal amount in excess of
$500,000 or (B) conditional sale arrangements, obligations
secured by a Lien, or interest rate or currency hedging
activities, in each case in connection with which the
aggregate actual or contingent obligations of the Company or a
Subsidiary, as the case may be, under such Contract are
greater than $500,000;
(iii) any
Contract filed or required to be filed as an exhibit to the
Company’s registration statements under the Securities
Act or periodic or current reports under the Exchange Act
pursuant to items (1), (2), (4), (9), (10) or (99) of the
Exhibit Table to Item 601 of Regulation S-K under the
Securities Act, other than Plans disclosed in Schedule
3.10(a) ;
(iv) any Contract
that purports to limit the right of the Company or the
Subsidiaries (A) to engage or compete in any line of business
or (B) to compete with any Person or operate in any location
in any respect material to the business of the Company and the
Subsidiaries, taken as a whole;
(v) any
Contract that has resulted in, or would be reasonably likely
over a twelve (12) month period to result in, aggregate
payments to the Company and any Subsidiary under such Contract
of more than $200,000 that (A) contains most favored customer
pricing provisions or (B) grants any exclusive rights, rights
of first refusal, rights of first negotiation or similar
rights to any Person;
