AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

 

AGREEMENT AND PLAN OF MERGER

 

dated as of

 

August 2, 2005

 

by and among

 

CHART INDUSTRIES, INC.,

 

CERTAIN OF ITS STOCKHOLDERS,

 

FIRST RESERVE FUND X, L.P.

 

And

 

CI ACQUISITION, INC.

TABLE OF CONTENTS

 

 

i

 

ii

 

iii

 

iv

GLOSSARY OF DEFINED TERMS

 

 

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AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER, dated as of August 2, 2005 (this “ Agreement ”), is made by and among Chart Industries, Inc., a Delaware corporation (the “ Company ”), the shareholders of the Company set forth on the Principal Stockholders Schedule attached hereto (each a “ Principal Stockholder ” and, collectively, the “ Principal Stockholders ”), First Reserve Fund X, L.P., a Delaware limited partnership (“ Buyer ”), and CI Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of Buyer (“ Merger Subsidiary ”).

 

WHEREAS, the Board of Directors of each of Buyer, Merger Subsidiary and the Company has approved, and deems it advisable and in the best interests of its respective stockholders to consummate, the acquisition of the Company by Buyer upon the terms and subject to the conditions set forth herein; and

 

WHEREAS, as of the date hereof, each Principal Stockholder is the record and/or beneficial owner of the number of shares of common stock, par value $0.01 per share, of the Company (“ Shares ”) set forth opposite such Principal Stockholder’s name on the Principal Stockholders Schedule attached hereto (together with all other Shares acquired by such Principal Stockholder after the date hereof, the “ Principal Stockholder Shares ” of such Principal Stockholder).

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE TRANSACTIONS

 

SECTION 1.01 The Purchase and Sale . On and subject to the terms and conditions set forth in this Agreement, at the Stock Purchase Closing, each Principal Stockholder shall sell and transfer to Merger Subsidiary, and Merger Subsidiary shall, and Buyer shall take all actions necessary or advisable to enable and cause Merger Subsidiary to, purchase from each Principal Stockholder, all of the Principal Stockholder Shares then held by such Principal Stockholder (the “ Stock Purchase ”), for a purchase price per Share (the “ Per Share Purchase Price ”) equal to (a) $65.74, minus (b) the result (rounded to the nearest cent) of (x) the aggregate amount of Company Transaction Expenses, divided by (y) the sum of the number of Shares issued and outstanding immediately prior to the earlier of the Stock Purchase Closing and the Effective Time plus the number of Shares issuable upon the exercise of Company Stock Options and Warrants outstanding immediately prior to the earlier of the Stock Purchase Closing and the Effective Time.

For purposes hereof, “ Company Transaction Expenses ” means all out-of-pocket costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors (including any fees payable to UBS) and accountants, incurred by the Company on or prior to the Merger Closing Date in respect of the transactions contemplated hereby (excluding (i) all costs and expenses incurred by the Company in connection with the Financing and (ii) all costs and expenses incurred by the Company in connection with the preparation of any information and/or materials to be distributed after the Effective Time to the former holders of Shares in accordance with Section 253 of the DGCL), as estimated in good faith by the chief financial officer of the Company on the third day immediately preceding the earlier of the Stock Purchase Closing Date and the Merger Closing Date (the “ Determination Date ”) based on the latest information then available, which estimate of Company Transaction Expenses (together with a copy of the information used to formulate such estimate) shall be provided to Buyer on the Determination Date.

 

SECTION 1.02 The Stock Purchase Closing .

 

(a) Stock Purchase Closing . The closing of the Stock Purchase (the “ Stock Purchase Closing ”) shall take place at the offices of Kirkland & Ellis LLP, 200 E. Randolph Drive, Chicago, Illinois, commencing at 10:00 a.m. on the second business day immediately following the satisfaction or waiver of all of the conditions set forth in SECTION 9.01 hereof (other than those that by their nature are to be satisfied at the Stock Purchase Closing, but subject to the satisfaction or waiver thereof), or at such other place and/or on such other date as the Company and Buyer agree to in writing. The date on which the Stock Purchase Closing is consummated is referred to herein as the “ Stock Purchase Closing Date .”

 

(b) Stock Purchase Closing Deliveries . At the Stock Purchase Closing, (i) each Principal Stockholder shall deliver to Merger Subsidiary one or more certificate(s) representing the Principal Stockholder Shares to be sold by such Principal Stockholder pursuant to SECTION 1.01 hereof, duly endorsed for transfer or accompanied by duly executed stock powers, and (ii) Merger Subsidiary shall, and Buyer shall take all actions necessary or advisable to enable and cause Merger Subsidiary to, deliver to each Principal Stockholder, by wire transfer of immediately available funds to an account designated in writing by such Principal Stockholder, an aggregate amount in cash equal to the product of (x) the Per Share Purchase Price, multiplied by (y) the number of Principal Stockholder Shares to be sold by such Principal Stockholder pursuant to SECTION 1.01 hereof.

 

SECTION 1.03 Representations and Warranties of Principal Stockholders . Each Principal Stockholder, acting solely in its capacity as a holder of Shares and not as a director or officer of the Company or in any other capacity, hereby, severally and not jointly with any other Principal Stockholder, represents and warrants as of the date hereof to Buyer and Merger Subsidiary as follows:

 

(a) Title to the Shares . Such Principal Stockholder owns the number of Shares set forth opposite such Principal Stockholder’s name on the Principal Stockholders Schedule attached hereto, free and clear of all security interests, liens, claims and pledges. Such Principal Stockholder has exclusive power to vote all of such Shares on all matters submitted to holders of Shares.

 

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(b) Authority Relative to this Agreement . Such Principal Stockholder has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by such Principal Stockholder and the consummation by such Principal Stockholder of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of such Principal Stockholder. This Agreement has been duly and validly executed and delivered by such Principal Stockholder and, assuming the due authorization, execution and delivery by Buyer and Merger Subsidiary, constitutes a legal, valid and binding obligation of such Principal Stockholder, enforceable against such Principal Stockholder in accordance with its terms (i) except as such enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) subject to general principles of equity.

 

(c) No Conflict . The execution and delivery of this Agreement by such Principal Stockholder does not, and the performance of this Agreement by such Principal Stockholder will not, (i) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority (other than the SEC), domestic or foreign, by such Principal Stockholder or (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to such Principal Stockholder.

 

SECTION 1.04 Covenants of Principal Stockholders .

 

(a) Each Principal Stockholder, acting solely in its capacity as a holder of Shares and not as a director or officer of the Company or in any other capacity, hereby, severally and not jointly with any other Principal Stockholder, covenants and agrees during the time this Agreement is in effect that, except as otherwise contemplated herein, such Principal Stockholder shall not, and shall not offer or agree to, sell, transfer, tender, assign, hypothecate or otherwise dispose of, or create any security interest, lien, claim or pledge with respect to, all or any portion of its Principal Stockholder Shares, unless in each case (i) the transferee agrees in writing to be bound by the terms and conditions of this Agreement to the same extent as the transferor and (ii) the transferee is an affiliate of such Principal Stockholder, is an “accredited investor” (as defined in the Securities Act and the rules and regulations promulgated thereunder) or acquires all of the Principal Stockholder Shares of such Principal Stockholder.

 

(b) Subject to the terms and conditions of this Agreement, each Principal Stockholder will use commercially reasonable efforts to promptly take, or cause to be taken, all action and to promptly do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement.

 

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ARTICLE II

 

THE MERGER

 

SECTION 2.01 The Merger .

 

(a) At the Effective Time, Merger Subsidiary shall be merged (the “ Merger ”) with and into the Company in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), whereupon the separate existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation (the “ Surviving Corporation ”). The Stock Purchase and the Merger are sometimes hereinafter referred to as the “ Transaction .”

 

(b) Unless another date is agreed to in writing by the Company and Buyer, as soon as practicable, but in no event later than five business days, after satisfaction and/or, to the extent permitted hereunder, waiver of all conditions set forth in SECTION 9.02 hereof (other than those that by their nature are to be satisfied at the Merger Closing, but subject to the satisfaction or waiver thereof), the Company and Merger Subsidiary will, and Buyer shall cause the Company and Merger Subsidiary to, file (i) a certificate of merger or (ii) in the event Merger Subsidiary shall own 90% or more of the outstanding Shares, a certificate of ownership and merger (in either such case, the “ Certificate of Merger ”), with the Secretary of State of the State of Delaware and make all other filings or recordings required by the DGCL in connection with the Merger. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware (the “ Effective Time ”).

 

(c) From and after the Effective Time, the Surviving Corporation shall succeed to all the assets, rights, privileges, powers and franchises and be subject to all of the liabilities, restrictions, disabilities and duties of the Company and Merger Subsidiary, all as provided under the DGCL.

 

(d) The closing of the Merger (the “ Merger Closing ”) shall take place on the date on which the Effective Time occurs (the “ Merger Closing Date ”), at the offices of Kirkland & Ellis LLP, 200 East Randolph Drive, Chicago, IL, 60601, unless another place is agreed to in writing by the Company and Buyer. At the Merger Closing, the Company shall, and Buyer shall take all actions necessary or advisable to enable and cause the Company to, pay all unpaid out-of-pocket costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors (including any fees payable to UBS) and accountants, incurred on or prior to the Merger Closing Date by the Company.

 

(e) Notwithstanding any implication herein to the contrary, if, on the Merger Closing Date, the Stock Purchase Closing has previously occurred but the Principal Stockholder Shares owned by Merger Subsidiary represent less than 90% of the Shares then outstanding, then, immediately prior to the Effective Time, the Company shall issue to Merger Subsidiary, and Merger Subsidiary shall, and Buyer shall take all actions necessary or advisable to enable and cause Merger Subsidiary to, purchase from the Company, the lowest number of Shares (the “ Top-Up Shares ”) that, when added to the number of Shares then owned by Merger Subsidiary, shall represent one Share more than 90% of the Shares then outstanding (after giving effect to the issuance of such Top-Up Shares), for a purchase price per Top-Up Share equal to the Per Share Purchase Price. Concurrently with the issuance and purchase of the Top-Up Shares, (i) the Company shall deliver to Merger Subsidiary a certificate representing the Top-Up Shares, and (ii) Merger Subsidiary shall, and Buyer shall take all actions necessary or advisable to enable and cause Merger Subsidiary to, deliver to the Company, by wire transfer of immediately available funds to an account designated in writing by the Company, an aggregate amount in cash equal to the product of (x) the Per Share Purchase Price, multiplied by (y) the number of Top-Up Shares to be purchased by Merger Subsidiary pursuant to this SECTION 2.01(e).

 

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SECTION 2.02 Conversion of Shares . At the Effective Time and by virtue of the Merger and without any action on the part of the holders of Shares or shares of the capital stock of Merger Subsidiary:

 

(a) Each share of capital stock of the Company held by the Company as treasury stock or owned by Buyer, Merger Subsidiary or any subsidiary of either of them immediately prior to the Effective Time, including without limitation all Shares acquired in the Stock Purchase and all Top-Up Shares acquired pursuant to SECTION 2.01(e), shall be canceled, and no payment shall be made with respect thereto;

 

(b) Each share of capital stock of Merger Subsidiary outstanding immediately prior to the Effective Time shall be converted into and become one share of capital stock of the Surviving Corporation with the same rights and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation; and

 

(c) Each Share outstanding immediately prior to the Effective Time shall, except as otherwise provided in clause (a) above or as provided in SECTION 2.04 with respect to Shares as to which appraisal rights have been exercised, be converted into the right to receive the Per Share Purchase Price or, if greater, the price per Share paid in the Stock Purchase, in cash without interest (the “ Merger Consideration ”). As of the Effective Time, all such Shares shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive upon the surrender of such certificates, the Merger Consideration.

 

SECTION 2.03 Exchange of Shares .

 

(a) Prior to the Effective Time, Buyer shall appoint an agent (the “ Exchange Agent ”) reasonably acceptable to the Company for the purposes of exchanging certificates representing Shares for the Merger Consideration in accordance with this SECTION 2.03 and exchanging certificates representing certain Warrants for Warrant Consideration in accordance with SECTION 2.06. Buyer will, at the Effective Time, deposit with the Exchange Agent, the full amount of the Merger Consideration to be paid in respect of Shares. For purposes of determining the Merger Consideration to be so deposited, Buyer shall assume that no stockholder of the Company will perfect his right to appraisal of his, her or its Shares. Promptly after the Effective Time, Buyer will send, or will cause the Exchange Agent to send, to each holder of Shares at the Effective Time a letter of transmittal and related instructions for use in such exchange.

 

(b) Each holder of Shares that have been converted into a right to receive the Merger Consideration, upon surrender to the Exchange Agent of a certificate or certificates representing such Shares (or evidence of loss in lieu thereof), together with a properly completed letter of transmittal covering such Shares, will be entitled to receive the Merger Consideration payable in respect of such Shares and the certificate or certificates so surrendered shall forthwith

 

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be cancelled; provided that in no event will a holder of a certificate or certificates be entitled to receive the Merger Consideration if the Merger Consideration was already paid with respect to the Shares underlying such certificate or certificates in connection with an affidavit of loss. Until so surrendered, each such certificate shall, after the Effective Time, represent for all purposes only the right to receive such Merger Consideration.

 

(c) If any portion of the Merger Consideration payable in respect of any Share is to be paid to a person other than the registered holder of the Shares represented by the certificate or certificates surrendered, 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 Exchange Agent any transfer or other taxes required as a result of such payment to a person other than the registered holder of such Shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable.

 

(d) After the Effective Time, there shall be no further registration of transfers of Shares outstanding immediately prior to the Effective Time.

 

(e) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to SECTION 2.03(a) that remains unclaimed by the holders of Shares entitled thereto six months after the Effective Time shall be returned to Buyer, upon demand, and any stockholder of the Company who has not exchanged his Shares for the Merger Consideration in accordance with this SECTION 2.03 prior to that time shall thereafter look only to Buyer for payment of the Merger Consideration in respect of his Shares. None of Buyer, Merger Subsidiary or the Company shall be liable to any holder of the Shares for any Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

(f) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to SECTION 2.03(a) to pay for Shares for which appraisal rights shall have been perfected shall be returned to Buyer, upon demand.

 

(g) In the event that any certificate representing Shares shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed and, if required by Buyer, the posting by such person of a bond in such reasonable amount as Buyer may direct as indemnity against any claim that may be made against it with respect to such certificate (provided that, if such person is a financial institution or other institutional investor, its own agreement shall be satisfactory), the Exchange Agent will issue in exchange for such lost, stolen or destroyed certificate the Merger Consideration with respect to such certificate, to which such person is entitled pursuant hereto.

 

SECTION 2.04 Dissenting Shares . Notwithstanding SECTION 2.02, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing, if any such vote or consent is required, and who has demanded appraisal for such Shares in accordance with the DGCL (“ Dissenting Shares ”) shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. At the

 

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Effective Time, all Dissenting Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive, subject to and net of any applicable withholding of Taxes, payment of the appraised value of such Dissenting Shares held by them in accordance with the provisions of Section 262 of the DGCL. If, after the Effective Time, such holder fails to perfect or withdraws or loses his right to appraisal, such Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration payable in respect of such Shares pursuant to SECTION 2.02, without any interest thereon. The Company shall give Buyer prompt notice of any demands received by the Company for appraisal of Shares, and Buyer shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Buyer, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.

 

SECTION 2.05 Company Stock Options .

 

(a) At the Effective Time, each stock option, stock equivalent right or other right to acquire Shares granted under the Chart Industries, Inc. 2004 Stock Option and Incentive Plan or the Chart Industries, Inc. 2004 Stock Option Plan for Outside Directors (each a “ Company Stock Option ”) that is outstanding immediately prior to the Effective Time (regardless of whether then vested or exercisable, but excluding any Company Stock Options, or portions thereof, for which a Rollover Election has been delivered in accordance with SECTION 2.05(b)) shall be canceled in the Merger. Thereafter, no holder of any such Company Stock Option shall have any rights in respect thereof, other than the right to receive therefor an amount in cash from the Company at the Merger Closing, and the Company shall, and Buyer shall take all actions necessary or advisable to enable and cause the Company to, pay an amount in cash at the Merger Closing to such holder in respect of such Company Stock Option, equal to the product of (i) the number of Shares issuable upon the exercise of such Company Stock Option as of immediately prior to the Effective Time (assuming, for this purpose, that such Company Stock Option is fully vested and exercised for cash) and (ii) the excess, if any, of the Merger Consideration over the exercise price per Share under such Company Stock Option, less any required withholding taxes. Prior to the Effective Time, the Company shall take all action necessary to effect the foregoing.

 

(b) Notwithstanding anything in SECTION 2.05(a) to the contrary, the Compensation Committee of the Board (the “ Committee ”) may elect, by delivering written notice to Buyer and one or more employees of the Company or any Company Subsidiary holding any Company Stock Option (each an “ Eligible Optionee ”) at least 10 days prior to the Merger Closing (a “ Rollover Election ”), to have all or any portion of the Company Stock Options held by such Eligible Optionee(s) and which remain outstanding as of the Effective Time adjusted in accordance with the terms of the Plans and SECTION 2.05(c) below to represent stock options to acquire shares of common stock of the Surviving Corporation (each a “ Rollover Option ”), on the same terms and conditions applicable to such Company Stock Option(s) (or portions thereof) immediately prior to the Effective Time; provided that: (i) unless otherwise agreed to in writing by such Eligible Optionee prior to the Effective Time, each such Rollover Option shall vest in the manner that was due to occur under the terms of such corresponding Company Stock Option(s) before or at the Effective Time; and (ii) to the extent the Committee elects to have any

 

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Company Stock Option that was granted with an exercise price per share less than the per share fair market value of the Shares underlying such Company Stock Option on the grant date thereof (each a “ Discount Option ”), and which remains outstanding as of immediately prior to the Effective Time, adjusted into a Rollover Option in accordance with the terms of the Plans and SECTION 2.05(c) below, then immediately prior to the Effective Time, such Discount Option shall be modified in accordance with Internal Revenue Service Notice 2005-1, Q&A 18(d) (any Discount Option so modified is referred to herein as a “ Replacement Option ”) by increasing the aggregate exercise price of such Discount Option by an amount equal to the excess of (A) the aggregate fair market value of the Shares underlying such Discount Option on the grant date thereof over (B) the aggregate exercise price of such Discount Options on the grant date thereof (such excess, the “ Aggregate Original Option Spread ”). Prior to the Effective Time, the Company shall take all action necessary to effect the foregoing.

 

(c) The adjustment of any Company Stock Option(s) (or portions thereof) (including any Replacement Option(s)) into a Rollover Option shall be effected in a manner such that: (i) the excess of the aggregate fair market value of the shares of common stock of the Surviving Corporation subject to such Rollover Option immediately following such adjustment over the aggregate exercise price of such Rollover Option immediately following such adjustment shall be equal to the aggregate amount of cash to which the holder of such corresponding Company Stock Option(s) (or portions thereof) would have been entitled pursuant to SECTION 2.05(a) (before any reduction for withholding taxes) in respect of such Company Stock Option(s) (or portions thereof) had such Company Stock Option(s) (or portions thereof) been cancelled in accordance with such section (for the avoidance of doubt, with respect to any Replacement Option(s), the “aggregate amount of cash to which the holder of such corresponding Company Stock Option(s) (or portions thereof) would have been entitled pursuant to SECTION 2.05(a)“ shall be determined after giving effect to the increase in the exercise price of such Replacement Option(s) pursuant to the proviso in SECTION 2.05(b) above); and (ii) all of the other requirements of Internal Revenue Service Notice 2005-1, and Treasury Regulation Section 1.424-1, as modified by Internal Revenue Service Notice 2005-1, Q&A 4(d), are intended to be satisfied.

 

(d) Each Eligible Optionee who holds a Discount Option that the Committee has elected to adjust into a Rollover Option in accordance with SECTION 2.05(b) shall be entitled to receive an amount in cash from the Company at the Merger Closing, and the Company shall, and Buyer shall take all actions necessary or advisable to enable and cause the Company to, pay an amount in cash at the Merger Closing to such Eligible Optionee, equal to the Aggregate Original Option Spread for such Discount Option, less any required withholding taxes. Prior to the Effective Time, the Company shall take all action necessary to effect the foregoing.

 

SECTION 2.06 Warrants .

 

(a) At the Effective Time, each warrant issued pursuant to that certain Warrant Agreement (the “ Warrant Agreement ”), dated September 15, 2003, between the Company and National City Bank, as Warrant Agent (the “ Warrants ”), that is outstanding immediately prior to the Effective Time shall be canceled in the Merger. Thereafter, no holder of any such Warrant shall have any rights in respect thereof, other than the right to receive

 

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therefor in accordance with this SECTION 2.06 an amount in cash equal to the product of (i) the number of Shares issuable upon the exercise of such Warrant as of immediately prior to the Effective Time (assuming, for this purpose, that such Warrant is exercised for cash) and (ii) the excess, if any, of the Merger Consideration over the exercise price per Share under such Warrant (the “ Warrant Consideration ”). Prior to the Effective Time, the Company shall take all actions necessary to effect the foregoing.

 

(b) Buyer will, at the Effective Time, deposit with the Exchange Agent, the full amount of the Warrant Consideration to be paid in respect of the Warrants. Promptly after the Effective Time, Buyer will send, or will cause the Exchange Agent to send, to each holder of Warrants at the Effective Time a letter of transmittal and related instructions for the exchange of certificates representing Warrants for the Warrant Consideration payable in respect thereof. Each holder of Warrants, upon surrender to the Exchange Agent of a certificate or certificates representing such Warrants (or evidence of loss in lieu thereof), together with a properly completed letter of transmittal covering such Warrants, will be entitled to receive the Warrant Consideration payable in respect of such Warrants, and the certificate or certificates so surrendered shall forthwith be cancelled; provided that in no event will a holder of a certificate or certificates representing Warrants be entitled to receive the Warrant Consideration if the Warrant Consideration was already paid with respect to the Warrants underlying such certificate or certificates in connection with an affidavit of loss. Until so surrendered, each such certificate shall, after the Effective Time, represent for all purposes only the right to receive such Warrant Consideration.

 

(c) If any portion of the Warrant Consideration payable in respect of any Warrant is to be paid to a person other than the registered holder of the Warrant represented by the certificate or certificates surrendered, 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 Exchange Agent any transfer or other taxes required as a result of such payment to a person other than the registered holder of such Warrants or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable.

 

(d) After the Effective Time, there shall be no further registration of transfers of Warrants outstanding immediately prior to the Effective Time.

 

(e) Any portion of the Warrant Consideration made available to the Exchange Agent pursuant to SECTION 2.06(b) that remains unclaimed by the holders of Warrants entitled thereto six months after the Effective Time shall be returned to Buyer, upon demand, and any warrantholder of the Company who has not exchanged his Warrants for the Warrant Consideration in accordance with this SECTION 2.06 prior to that time shall thereafter look only to Buyer for payment of the Warrant Consideration in respect of his Warrants. None of Buyer, Merger Subsidiary or the Company shall be liable to any holder of the Warrants for any Warrant Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

(f) In the event that any certificate representing Warrants shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such

 

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certificate to be lost, stolen or destroyed and, if required by Buyer, the posting by such person of a bond in such reasonable amount as Buyer may direct as indemnity against any claim that may be made against it with respect to such certificate (provided that, if such person is a financial institution or other institutional investor, its own agreement shall be satisfactory), the Exchange Agent will issue in exchange for such lost, stolen or destroyed certificate the Warrant Consideration with respect to such certificate, to which such person is entitled pursuant hereto.

 

ARTICLE III

 

THE SURVIVING CORPORATION

 

SECTION 3.01 Certificate of Incorporation . The Certificate of Incorporation of the Company in effect at the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation until amended in accordance with applicable law.

 

SECTION 3.02 Bylaws . The Bylaws of the Company in effect at the Effective Time shall be the Bylaws of the Surviving Corporation until amended in accordance with applicable law.

 

SECTION 3.03 Directors and Officers . From and after the Effective Time, until successors are duly elected or appointed in accordance with applicable law, (i) the directors of Merger Subsidiary at the Effective Time shall constitute the directors of the Surviving Corporation, until the earlier of their resignation or removal, and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the Company Disclosure Schedule delivered by the Company to Buyer at or prior to the execution of this Agreement (the “ Company Disclosure Schedule ”) or as expressly disclosed in the Company SEC Reports filed with SEC prior to the date hereof, the Company represents and warrants to Buyer and Merger Subsidiary that:

 

SECTION 4.01 Organization and Qualification; Subsidiaries .

 

(a) Each of the Company and each Material Subsidiary is a corporation, limited liability company, partnership or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the

 

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failure to be so organized, existing or in good standing or to have such power, authority and governmental approvals would not, individually or in the aggregate, have a Company Material Adverse Effect. The Company and each Material Subsidiary are duly qualified or licensed as foreign corporations to do business, and are in good standing, in each jurisdiction where the character of the properties owned, leased or operated by them or the nature of their business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that would not, individually or in the aggregate, have a Company Material Adverse Effect. The term “ Company Material Adverse Effect ” means any change, condition, circumstance or effect that is, or is reasonably likely to be, materially adverse to the assets and liabilities (taken together), business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole (other than changes, conditions, circumstances or effects that are the result of (i) economic factors affecting the economy or financial markets as a whole or generally affecting any of the industries and markets in which the Company or any of the Company Subsidiaries operates, (ii) natural disasters, acts of war, sabotage or terrorism, military actions or the escalation thereof, (iii) any change in applicable laws, rules or regulations or accounting rules or (iv) actions contemplated by the parties in connection with this Agreement or the announcement or performance of this Agreement, except that the exclusions set forth in clauses (i), (ii) and (iii) shall only be effective if the Company and the Company Subsidiaries, taken as a whole, are not substantially, disproportionately impacted in financial terms by such events when compared to other companies in the industries in which the Company and the Company Subsidiaries operate).

 

(b) For purposes hereof, “ Material Subsidiary ” means a subsidiary (as defined in Rule 1-02 of Regulation S-X of the United States Securities and Exchange Commission (the “ SEC ”)) of the Company (a “ Company Subsidiary ”) that constitutes a “significant subsidiary” of the Company within the meaning of Rule 1-02 of Regulation S-X of the SEC.

 

SECTION 4.02 Certificate of Incorporation and Bylaws . The Company has heretofore made available to Buyer a complete and correct copy of the Certificate of Incorporation and the Bylaws or equivalent organizational documents, each as amended to date, of the Company and each Company Subsidiary. Such Certificates of Incorporation, Bylaws and equivalent organizational documents are in full force and effect.

 

SECTION 4.03 Capitalization . The authorized capital stock of the Company consists of 9,500,000 Shares and 500,000 shares of preferred stock, par value $0.01 per share (the “ Preferred Stock ”). As of July 18, 2005, (a) 5,360,409 Shares were outstanding and (b) no shares of Preferred Stock were outstanding. All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. As of July 18, 2005, Warrants to purchase 249,983 Shares were outstanding at an exercise price of $32.97 per Share (subject to adjustment). SECTION 4.03 of the Company Disclosure Schedule contains a true and complete list of all outstanding Company Stock Options as of the date hereof, the exercise price for each such Company Stock Option as of the date hereof and the holders of each such Company Stock Option as of the date hereof. As of March 31, 2005, 729,080 Shares were reserved for issuance upon the exercise of outstanding Company Stock Options and Warrants, which consisted of (i) Company Stock Options to purchase 477,701 Shares at a weighted average exercise price of $18.18 per Share (subject to adjustment) and (ii) Warrants to purchase 251,379 Shares at an exercise price of $32.97 per Share (subject to

 

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adjustment) pursuant to the Warrant Agreement, and, except for such Company Stock Options and Warrants, no preemptive rights, conversion rights, stock appreciation rights, redemption rights, repurchase rights options, warrants or other rights, agreements, arrangements or commitments of any character obligating the Company or any Company Subsidiary to issue or sell, or to cause to be issued or sold, any shares of capital stock of, other equity interests in, or rights to acquire equity interests in, the Company or any Material Subsidiary were outstanding. Other than with respect to the Company Subsidiaries listed on SECTION 4.03 of the Company Disclosure Schedule, the Company does not directly or indirectly own any securities or other beneficial ownership interests in any other entity (including through joint ventures or partnership arrangements) representing more than 5% of the beneficial ownership interests of such entity, or have any similar equity investment in any other person. There are no material outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital stock of any Material Subsidiary, or to make any investment (in the form of a loan, capital contribution or otherwise) in any Company Subsidiary. Each outstanding share of capital stock or other equity interest of each Company Subsidiary is validly issued and, with respect to each outstanding share of capital stock of any Company Subsidiary that is a domestic corporation, fully paid, and each such share owned by the Company or another Company Subsidiary is free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements imposing restrictions on assets, limitations on the Company’s or such other Company Subsidiary’s voting rights, charges and other encumbrances of any nature whatsoever (“ Encumbrances ”) other than any such encumbrances imposed by applicable law (including securities laws). Except as otherwise expressly contemplated by SECTION 2.05 hereof, following the consummation of the Merger, there will not be outstanding any rights, warrants, options or other securities entitling the holder thereof to purchase, acquire or otherwise receive any shares of the capital stock of the Company or any of the Company Subsidiaries (or any other securities exercisable for or convertible into such shares). Neither the Company nor any of the Company Subsidiaries has outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company or any Company Subsidiary on any matter or any agreements with respect to which Company stockholders, as such, have the right to vote.

 

SECTION 4.04 Authority Relative to this Agreement . The Company has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated herein (other than, with respect to the Merger, the approval and adoption of this Agreement by the holders of a majority of the then outstanding Shares and the filing and recordation of appropriate merger documents as required by the DGCL). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Buyer, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors rights generally and to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

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SECTION 4.05 No Conflict; Required Filings and Consents .

 

(a) The execution and delivery of this Agreement by the Company do not, and the performance of the transactions contemplated herein by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws or equivalent organizational documents of the Company or any Company Subsidiary, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any Company Subsidiary or by which any property or asset of the Company or any Company Subsidiary is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the loss of a material benefit under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of an Encumbrance on any property or asset of the Company or Company Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or such Company Subsidiary is a party or by which the Company or such Company Subsidiary or any property or asset of the Company or such Company Subsidiary is bound or affected, except, in the case of clauses (ii) and (iii) above, for any such conflicts, violations, breaches, defaults or other occurrences which would not prevent or delay consummation of the Merger in any material respect, or otherwise prevent the Company from performing its obligations under this Agreement in any material respect, or would not, individually or in the aggregate, have a Company Material Adverse Effect (provided that, for purposes of this SECTION 4.05(a), the definition of Company Material Adverse Effect shall not include the exclusion in clause (iv) thereof).

 

(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign (each a “ Governmental Entity ”), except (i) for (A) applicable requirements, if any, of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”), the Securities Act of 1933, as amended (the “ Securities Act ”), state securities or “blue sky” laws (“ Blue Sky Laws ”) and state takeover laws, (B) the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the “ HSR Act ”), (C) filing and recordation of appropriate merger documents as required by the DGCL and (D) applicable requirements, if any, of any non-United States competition, antitrust and investment laws and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Merger in any material respect, or otherwise prevent the Company from performing its obligations under this Agreement in any material respect, or would not, individually or in the aggregate, have a Company Material Adverse Effect (provided that, for purposes of this SECTION 4.05(b), the definition of Company Material Adverse Effect shall not include the exclusion in clause (iv) thereof).

 

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SECTION 4.06 Compliance .

 

(a) Neither the Company nor any Company Subsidiary is in conflict with, or in default or violation of, (i) any material law, statute, ordinance, writ, injunction, settlement agreement, rule, regulation, order, judgment or decree (including, without limitation, material laws, rules and regulations relating to franchises) applicable to the Company or any Company Subsidiary or by which any property or asset of the Company or any Company Subsidiary is bound or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which the Company or any Company Subsidiary or any property or asset of the Company or any Company Subsidiary is bound or affected, except for any such conflicts, defaults or violations that would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

(b) Except for such deficiencies that would not individually or in the aggregate have a Company Material Adverse Effect, the Company and each Company Subsidiary has duly obtained all material permits, consents, concessions, grants, franchises, licenses and other governmental authorizations, agreements and approvals (collectively, “ Permits ”) required under any applicable law, statute, ordinance, writ, injunction, settlement agreement, rule, regulation, order, judgment or decree in order to conduct the business of the Company and the Company Subsidiaries as conducted on the date hereof, each Permit is in full force and effect, and there are no proceedings pending or to the knowledge of the Company threatened which could result in the revocation, cancellation, suspension or modification of any Permit. For purposes of this Agreement, “knowledge” of the Company means the actual knowledge of Samuel F. Thomas, Michael F. Biehl and Mark Ludwig and the knowledge that such individuals would reasonably be expected to have upon reasonable inquiry.

 

(c) This SECTION 4.06 does not address compliance with, or Permits required under, Environmental Laws, which are addressed solely in SECTION 4.18.

 

SECTION 4.07 SEC Filings; Financial Statements .

 

(a) The Company has filed all forms, reports and documents required to be filed by it with the SEC since September 15, 2003 (the “ Company SEC Reports ”) and has heretofore made available to Buyer, in the form filed with the SEC (excluding any exhibits thereto), the Company SEC Reports. The Company SEC Reports and any forms, reports and other documents filed by the Company with the SEC after the date of this Agreement (x) were or will be prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not at the time they were filed, or will not at the time they are filed, 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 circumstances under which they were made, not misleading (provided that no representation is made under this clause (y) with respect to agreements filed as exhibits to any such forms or reports). No Company Subsidiary is required to file any form, report or other document with the SEC.

 

(b) Except as set forth in SECTION 4.07(b) of the Company Disclosure Schedule, each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Reports (other than any such financial statements

 

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furnished to the SEC and not deemed to be “filed” for purposes of Section 18 of the Exchange Act) was prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods indicated (“ GAAP ”) (except as may be indicated in the notes thereto) and each fairly presented the financial position, results of operations and cash flows of the Company and the consolidated Company Subsidiaries, as the case may be, at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to year-end adjustments which were not and are not expected, individually or in the aggregate, to be material in amount and the absence in such unaudited statements of certain footnote disclosures).

 

(c) Except for (i) liabilities recorded or disclosed in the consolidated financial statements or the notes thereto contained in the Company SEC Reports, (ii) liabilities that were not required to be disclosed in such consolidated financial statements or the notes thereto pursuant to GAAP, (iii) liabilities or obligations incurred in the ordinary course of business consistent with past practices since March 31, 2005, (iv) liabilities or obligations incurred pursuant to the transactions contemplated by this Agreement and/or (v) liabilities or obligations that have been discharged or paid in full prior to the date of this Agreement, there are no material liabilities or obligations of the Company or any of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined or otherwise.

 

(d) Since the enactment of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), the Company has been and is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder applicable to the Company.

 

SECTION 4.08 Brokers . Except for UBS Securities LLC (“ UBS ”) whose fees will be paid by the Company, there is no investment banker, broker or finder which has been retained by or is authorized to act on behalf of the Company or any Company Subsidiary who might be entitled to any fee or commission from the Company, any Company Subsidiary, Merger Subsidiary or Buyer or any of their affiliates upon consummation of the transactions contemplated by this Agreement.

 

SECTION 4.09 Events Subsequent to Most Recent Fiscal Quarter End. Since March 31, 2005, there has not been any adverse change in the financial condition of the Company and the Material Subsidiaries taken as a whole which would constitute a Company Material Adverse Effect or any action by the Company or a Company Subsidiary that would have required Buyer’s consent pursuant to SECTION 6.01 had such action been taken after the date hereof.

 

SECTION 4.10 Tax Matters . (i) The Company and its Material Subsidiaries have duly and timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by any of them and all such filed Tax Returns are complete and accurate in all material respects; (ii) the Company and its Material Subsidiaries have paid all Taxes due and payable or that the Company or any Material Subsidiary is obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith and for which adequate reserves have been provided in accordance with GAAP or for such amounts that, individually or in the aggregate,

 

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could not reasonably be expected to have a Company Material Adverse Effect; (iii) as of the date of this Agreement, there are no pending or, to the knowledge of the Company, threatened in writing audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters relating to the Company or any Material Subsidiary which, if determined adversely to the Company or such Material Subsidiary, could reasonably be expected to have a Company Material Adverse Effect; (iv) there are no deficiencies or claims for any Taxes that have been proposed, asserted or assessed against the Company or any Material Subsidiary, which if such deficiencies or claims were finally resolved against the Company or such Material Subsidiary, could reasonably be expected to have a Company Material Adverse Effect; (v) there are no material liens or claims for Taxes upon the assets of the Company or any Material Subsidiary, other than liens or claims for current Taxes not yet due and payable and liens or claims for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP; (vi) the Company has made available to the Buyer (1) all material Tax Returns filed by or on behalf of the Company or any Material Subsidiary for all completed Tax years that remain open for audit or review by the relevant Tax Authority and (2) all material ruling requests, private letter rulings, notices of proposed deficiencies, closing agreements and settlement agreements, and any similar documents or communications sent or received by the Company or any Material Subsidiary relating to Taxes, to the extent still pending or in effect; (vii) the Company and the Company Subsidiaries have not incurred any material liability for Taxes from and after September 15, 2003 other than Taxes incurred in the ordinary course of business consistent with past practices; (viii) neither the Company nor any Material Subsidiary has made an election under Section 341(f) of the Internal Revenue Code of 1986, as amended (the “ Code ”); (ix) neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will result in the Company and the Company Subsidiaries incurring any material liability to make or possibly make any payments, either alone or in conjunction with any other payments, that (A) are non-deductible under, or would otherwise constitute a “parachute payment” within the meaning of, Section 280G of the Code or (B) are or may be subject to the imposition of an excise Tax under Section 4999 of the Code; (x) as of the date hereof the Company and the Company Subsidiaries have not agreed to, and are not required to, make any adjustments or changes to their accounting methods pursuant to Section 481 of the Code (or similar provisions of state, local or foreign law), and neither the Internal Revenue Service nor any other Tax Authority has proposed in writing any such adjustments or changes in the accounting methods of the Company and the Material Subsidiaries; (xi) to the Company’s knowledge, no unresolved material claim has ever been made in writing by any Tax Authority in a jurisdiction in which the Company or the Company Subsidiaries do not file Tax Returns that any such person is or may be subject to taxation by that jurisdiction; (xii) the Company is not, and has not been during the five-year period ending on the date hereof, a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code; (xiii) neither the Company nor any of its Subsidiaries (1) is a party to any Tax sharing or similar agreement or any arrangement pursuant to which it or any of its Subsidiaries has an obligation to indemnify any party (other than the Company or any Company Subsidiary) with respect to Taxes or (2) is or has been since September 15, 2003 a member of an affiliated group filing a consolidated return (other than a group the common parent of which is the Company); (xiv) neither the Company nor any Company Subsidiary has engaged in any “reportable transactions” within the meaning of Treasury Regulation §1.6011-4(b) during the period for which such regulation is effective; and, (xv) during the five-year period ending on the

 

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date hereof, neither the Company nor any Company Subsidiary was a “distributing corporation” or a “controlled corporation” (as such terms are defined in Treas. Reg. Section 1.355-1(b)) in a transaction intended to be governed by Section 355 of the Code. “ Tax ” means all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, employment, unemployment disability, use, property, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties, fines and additions to tax imposed with respect to such amounts and any interest in respect of such penalties and additions to tax whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other person. “ Tax Return ” means all returns and reports (including elections, claims, declarations, disclosures, schedules, estimates, computations and information returns) required to be supplied to a Tax authority in any jurisdiction relating to Taxes. “ Tax Authority ” shall mean any Governmental Entity or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax.

 

SECTION 4.11 Opinion of Financial Advisor . The Company has received the opinion of UBS, dated the date of this Agreement (the “ Fairness Opinion ”), to the effect that, as of such date, the Merger Consideration to be paid to the stockholders of the Company (other than the Principal Stockholders) is fair, from a financial point of view, to such stockholders, assuming that aggregate Company Transaction Expenses do not exceed the assumed amount of such expenses expressly set forth in the Fairness Opinion (the “ Assumed CTE Amount ”).

 

SECTION 4.12 Litigation . There is no litigation, arbitration, claim, suit, action, investigation or proceeding pending or, to the knowledge of the Company, threatened, against or affecting the Company or any Material Subsidiary (collectively, the “ Actions ”) which, individually or in the aggregate of all such Actions arising out of similar facts or circumstances, could reasonably be expected to have a Company Material Adverse Effect, nor is there any judgment, award, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any Material Subsidiary which could reasonably be expected to have a Company Material Adverse Effect.

 

SECTION 4.13 Anti-takeover Statutes . The Company has taken all action necessary to exempt the Stock Purchase, the Merger, this Agreement and the transactions contemplated hereby from Section 203 of the DGCL, and, to the Company’s knowledge, no other state takeover statute, other than those arising solely under state “blue sky” laws, is applicable to the Merger, this Agreement and the transactions contemplated hereby or thereby.

 

SECTION 4.14 Real Property .

 

(a) The Company or one of the Company Subsidiaries has good and marketable title to real property listed as owned by the Company or one of the Company Subsidiaries on SECTION 4.14(a) of the Company Disclosure Schedule (collectively, the “ Owned Real Property ”), free and clear of all Encumbrances, other than Permitted Encumbrances. For purposes of this Agreement, “ Permitted Encumbrances ” means (i) mechanics’, carriers’, workmen’s, repairmen’s or other like Encumbrances arising or incurred in the ordinary course of business, (ii) Encumbrances arising under original purchase price

 

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conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business and under which the Company or the Company Subsidiaries are not in default, (iii) Encumbrances for current Taxes and utilities not yet due and payable or which may hereafter be paid without penalty, which have been set aside in accordance with GAAP or which are being contested by appropriate proceedings, (iv) imperfections of title or Encumbrances, if any, that do not, individually or in the aggregate, materially impair the continued use and operation of any asset to which they relate in the conduct of the business of the Company or any of the Company Subsidiaries as presently conducted, (v) leases, subleases and similar agreements set forth on the Company Disclosure Schedules, (vi) easements, covenants, rights-of-way and other similar restrictions or conditions of record or which would be shown by a current accurate survey of any of the Real Property that do not materially interfere with the continued use and operation of the Real Property as currently used and operated, (vii) zoning, building and other restrictions imposed by any applicable law (including securities laws) that do not, individually or in the aggregate, materially impair the continued use and operation of any asset to which they relate in the conduct of the business of the Company or any of the Company Subsidiaries as presently conducted, (viii) Encumbrances that have been placed by any developer, landlord or other third party on property over which the Company or any of the Company Subsidiaries have easement rights or under any lease or subordination or similar agreements relating thereto that do not, individually or in the aggregate, materially impair the continued use and operation of any asset to which they relate in the conduct of the business of the Company or any of the Company Subsidiaries as presently conducted, (ix) unrecorded easements, covenants, rights-of-way and other similar restrictions on the Real Property none of which, individually or in the aggregate, materially impairs the continued use and operation of such Real Property as currently used and operated, (x) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations, (xi) cash deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business consistent with past practice, and (xii) bankers’ liens and similar liens, including rights of offset or set-off in respect of deposit accounts and liens in favor of securities intermediaries in respect of securities accounts securing fees and costs owing to such securities intermediaries arising or incurred in the ordinary course of business. Neither the Company nor any Company Subsidiary is a party to nor is any of the Owned Real Property subject to any unrecorded instrument granting a right or option to any other person to purchase or lease or otherwise obtain title to, or an interest in, such Owned Real Property. Neither the Company nor any Company Subsidiary has received written notice of any pending violation of a condition or agreement contained in any easement, restrictive covenant or any similar instrument or agreement affecting any of the Owned Real Property, which in any event could reasonably be expected to have a Company Material Adverse Effect.

 

(b) SECTION 4.14(b) of the Company Disclosure Schedule lists all leases and subleases (collectively, the “ Leases ”) pursuant to which any real estate is leased or subleased by the Company or one of the Company Subsidiaries and used in the business and operations of the Company and the Company Subsidiaries as conducted in the ordinary course of business (collectively, the “ Leased Real Property ” and, together with the Owned Real Property, the “ Real Property ”). Each such Lease is in full force and effect as against the Company or the applicable Company Subsidiary that is a party thereto and constitutes a legal, valid and binding obligation

 

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of, and is legally enforceable against, the Company or the applicable Company Subsidiary that is a party thereto. The Company has delivered to Buyer complete and correct copies of all Leases including all amendments thereto effective as of the date hereof. Neither the Company nor any Company Subsidiary has received written notice of any pending default under any Lease, and there has not occurred any event which (whether with or without notice, lapse of time or the happening or occurrence of any other event) would constitute such a default, which in either such event would reasonably be expected to have a Company Material Adverse Effect.

 

(c) The Real Property listed on SECTION 4.14(a) of the Company Disclosure Schedule is all of the real property interests used in the business of the Company and the Company Subsidiaries as conducted in the ordinary course of business. The Company does not own or lease Real Property except as set forth on SECTION 4.14(a) and (b) of the Company Disclosure Schedule. Neither the Company nor any Company Subsidiary has received written notice of any pending or threatened condemnation proceedings or other similar action to take by eminent domain any of the Real Property. Neither the Company nor any Company Subsidiary is obligated under or bound by any option, right of first refusal, purchase contract or other contractual right to sell, lease or purchase any Real Property or any portion thereof which Real Property, individually or in the aggregate, is material to the Company or any Company Subsidiary. To the knowledge of the Company, each Real Property complies in all material respects with all applicable Laws.

 

SECTION 4.15 Tangible Assets . The Company and each of the Company Subsidiaries has good and marketable title to all of its material tangible assets free and clear of all Encumbrances, other than any such Encumbrances imposed by applicable law, any defect in title or Encumbrance to the extent it would not have a Company Material Adverse Effect, or any other Permitted Encumbrance. The Company and each of the Company Subsidiaries holds valid leaseholds in all of the material tangible assets leased by it, in each case under valid and enforceable leases.

 

SECTION 4.16 Material Contracts .

 

(a) Except as listed and set forth in SECTION 4.16(a) of the Company Disclosure Schedule, the Company is not a party to any legally binding contract, agreement, arrangement, bond, commitment, note, loan, mortgage, lease, subcontract, indenture, instrument, license, purchase order, sale order, proposal or undertaking, whether written or oral, or other agreement legally binding on the parties thereto (“ Contract ”) that is:

 

(i) an agreement limiting or restraining the freedom of Buyer or the Surviving Corporation or their affiliates following the Merger Closing to compete in any material respect in any line of business with any person;

 

(ii) an agreement granting an Encumbrance on assets of the Company or any Company Subsidiary, other than any such encumbrances imposed by applicable law on any asset of the Company or a Company Subsidiary or that otherwise constitute a Permitted Encumbrance, or an agreement guaranteeing the payment of liabilities or performance of obligations of any other person (other than the Company or a Company Subsidiary) in an amount in each case, or in the aggregate with any such related agreements, in excess of $1,000,000 by the Company or a Company Subsidiary;

 

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(iii) an agreement, other than purchase orders, with any of the ten (10) largest customers (based on 2004 sales) and the ten (10) largest suppliers (based on 2004 purchases) of the Company;

 

(iv) an agreement for the lease, sublease, stand-alone co-location, purchase or sale of any material asset or property in an amount in each case, or in the aggregate with any such related agreements, in excess of $1,000,000, or purchase or sale of capital stock in an amount in each case, or in the aggregate with any such related agreements, in excess of $1,000,000 or grant of any preferential rights to purchase any such material asset or capital stock, in each case outside the ordinary course of business;

 

(v) an obligation of the Company or a Material Subsidiary or any predecessor entity of the Company (A) for borrowed money in excess of $1,000,000 evidenced by bonds, debentures, notes or similar instruments, (B) to provide indemnification to any other Person not entered into in the ordinary course of