EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
L-3 COMMUNICATIONS CORPORATION,
SATURN VI ACQUISITION CORP.
AND
THE TITAN CORPORATION,
DATED AS OF JUNE 2, 2005
TABLE OF CONTENTS
Page
----
ARTICLE 1
The Merger
1.1.
The
Merger...............................................................1
1.2.
Effective Time of the
Merger.............................................1
1.3.
Effects of the
Merger....................................................1
1.4.
Further
Assurances.......................................................2
ARTICLE 2
The Surviving Corporation
2.1.
Certificate of
Incorporation.............................................2
2.2.
By-Laws..................................................................2
2.3.
Directors and Officers of Surviving
Corporation..........................2
ARTICLE 3
Conversion of Shares
3.1.
Merger
Consideration.....................................................2
3.2.
Merger Sub Common
Stock..................................................4
3.3.
Dissenting
Shares........................................................4
3.4.
Surrender and
Payment....................................................4
3.5.
Closing..................................................................6
3.6.
Withholding..............................................................6
ARTICLE 4
Representations and Warranties of Parent and Merger Sub
4.1.
Organization and
Qualification...........................................6
4.2.
Authority; Non-Contravention;
Approvals..................................7
4.3.
Financing
Arrangements...................................................8
4.4.
Disclosure
Documents.....................................................8
4.5.
Advisors'
Fees...........................................................8
4.6.
No Additional
Representations............................................8
4.7.
MOU......................................................................9
ARTICLE 5
Representations and Warranties of the Company
5.1.
Organization and
Qualification...........................................9
5.2.
Capitalization...........................................................9
5.3.
Subsidiaries............................................................10
5.4.
Authority; Non-Contravention;
Approval..................................11
5.5.
SEC
Documents...........................................................12
5.6.
Absence of Undisclosed
Liabilities......................................13
5.7.
Absence of Certain Changes or
Events....................................14
5.8.
Litigation..............................................................14
5.9.
No Violation of
Law.....................................................15
5.10. Compliance with
Agreements..............................................15
5.11.
Taxes...................................................................15
5.12. Employee Benefit Plans;
ERISA...........................................16
5.13.
Labor...................................................................19
5.14. Real
Estate.............................................................19
5.15. Environmental
Matters...................................................20
5.16. Contracts and Commitments; Suppliers and
Customers......................20
5.17. Intellectual Property
Rights............................................22
5.18. Section 203 of the DGCL Not
Applicable..................................22
5.19. Government
Contracts....................................................23
5.20. Relations with
Governments..............................................24
5.21. Stockholder Rights
Plan.................................................24
5.22. Disclosure
Documents....................................................24
5.23. Advisors'
Fees..........................................................25
5.24. Opinion of Financial
Advisor............................................25
5.25. Certain Loans and Other
Transactions....................................25
5.26.
Insurance...............................................................25
5.27.
MOUs....................................................................25
5.28. Navy
Agreement..........................................................26
5.29. No Additional
Representations...........................................26
ARTICLE 6
Covenants
6.1.
Conduct of Business by the Company Pending the
Merger...................26
6.2.
Control of
Operations...................................................28
6.3.
No Solicitation by the
Company..........................................29
6.4.
Meeting of Company
Stockholders.........................................31
6.5.
Agreement to Cooperate; HSR
Filings.....................................31
6.6.
Access to
Information...................................................34
6.7.
Proxy
Statement.........................................................35
6.8.
Expenses and
Fees.......................................................36
6.9.
Public
Statements.......................................................36
6.10. Company
Employees.......................................................36
6.11. Notification of Certain
Matters.........................................37
6.12. Directors' and Officers' Indemnification and
Insurance..................37
6.13. Maintenance of Company
Records..........................................38
6.14. Stockholder
Litigation..................................................38
6.15. Exchange Offer and Consent
Solicitation.................................38
6.16. Debt
Financing..........................................................39
6.17. Navy
Agreement..........................................................39
ARTICLE 7
Conditions
7.1.
Conditions to Each Party's Obligation to Effect the
Merger..............40
7.2.
Conditions to Obligation of the Company to Effect the
Merger............40
7.3.
Conditions to Obligations of Parent to Effect the
Merger................40
ARTICLE 8
Termination, Amendment and Waiver
8.1.
Termination.............................................................42
8.2.
Effect of
Termination...................................................43
8.3.
Termination Payment by the
Company......................................43
8.4.
Amendment...............................................................44
8.5.
Waiver..................................................................44
ARTICLE 9
General Provisions
9.1.
Non-Survival............................................................44
9.2.
Notices.................................................................44
9.3.
Interpretation..........................................................45
9.4.
Miscellaneous...........................................................45
9.5.
Jurisdiction............................................................46
9.6.
Counterparts............................................................46
9.7.
Parties In
Interest.....................................................46
9.8.
Severability............................................................46
9.9.
Waiver of Trial by
Jury.................................................46
9.10. Parent
Guarantee........................................................47
9.11. Specific
Performance....................................................47
Exhibit A Definitions
Merger Agreement
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 2, 2005 (the
"Agreement"), is by and among L-3 Communications Corporation, a
Delaware
corporation ("Parent"), Saturn VI Acquisition Corp., a Delaware
corporation and
a wholly owned subsidiary of Parent ("Merger Sub"), and The Titan
Corporation, a
Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Board of Directors of the Company has (i) unanimously
determined that this Agreement, the Merger and the transactions
contemplated
hereby are fair to, and in the best interests of, the Company and
the
stockholders of the Company, (ii) unanimously approved this
Agreement and
declared it advisable, and (iii) unanimously resolved to recommend
that the
stockholders of the Company approve and adopt this Agreement, the
Merger and the
transactions contemplated hereby; and
WHEREAS, the respective boards of directors of Parent and Merger
Sub have
approved the Merger on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations,
warranties, covenants and agreements contained herein, the parties
hereto,
intending to be legally bound, agree as follows (all capitalized
terms used in
this Agreement are defined for convenience of reference on Exhibit
A attached
hereto):
ARTICLE 1
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions of
this
Agreement, at the Effective Time in accordance with the Delaware
General
Corporation Law (the "DGCL"), Merger Sub shall be merged with and
into the
Company and the separate existence of Merger Sub shall thereupon
cease (the
"Merger"). The Company, as the surviving corporation after the
Merger, is
hereinafter sometimes referred to as the "Surviving Corporation."
At Parent's
election and subject to Section 9.4(c), any direct or indirect
wholly owned
Subsidiary of Parent other than Merger Sub may be merged with and
into the
Company instead of Merger Sub. In the event of such an election,
the parties
agree to execute an appropriate amendment of this Agreement in
order to reflect
such election.
1.2. EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at
such time (the "Effective Time") as shall be stated in the
Certificate of
Merger, in a form reasonably acceptable to Parent, the Company and
Merger Sub,
respectively, to be filed with the Secretary of State of the State
of Delaware
in accordance with the DGCL (the "Merger Filing"). The Merger
Filing shall
provide for the effectiveness of the Merger immediately upon its
filing. The
Merger Filing shall be made at the Closing.
1.3. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in
the DGCL.
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Merger Agreement
1.4. FURTHER ASSURANCES. If, at any time after the Effective Time,
the
Surviving Corporation shall consider or be advised that any further
deeds,
assignments or assurances in law or any other actions are
necessary, desirable
or proper to vest, perfect or confirm of record or otherwise, in
the Surviving
Corporation, the title to any property or rights of the Company
acquired or to
be acquired by reason of, or as a result of, the Merger, the
Company agrees that
the Surviving Corporation and its proper officers and directors
shall and will
execute and deliver all such proper deeds, assignments and
assurances in law and
do all things necessary, desirable or proper to vest, perfect or
confirm title
to such property or rights in the Surviving Corporation and
otherwise to carry
out the purpose of this Agreement, and that the proper officers and
directors of
the Surviving Corporation are fully authorized and directed in the
name of the
Company or otherwise to take any and all such actions.
ARTICLE 2
THE SURVIVING CORPORATION
2.1. CERTIFICATE OF INCORPORATION. Unless otherwise determined by
Parent
before the Effective Time, at the Effective Time the certificate of
incorporation of the Company, as in effect immediately before the
Effective
Time, shall be the certificate of incorporation of the Surviving
Corporation
until thereafter amended as provided by law and such certificate of
incorporation.
2.2. BY-LAWS. The by-laws of the Company, as in effect immediately
before
the Effective Time, shall be the by-laws of the Surviving
Corporation until
thereafter amended as provided by law, the certificate of
incorporation of the
Surviving Corporation and such by-laws.
2.3. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The directors
of
Merger Sub and the officers of the Company in office immediately
prior to the
Effective Time shall be the directors and officers of the Surviving
Corporation
as of the Effective Time, and thereafter such directors and
officers shall serve
in accordance with the by-laws of the Surviving Corporation until
their
respective successors are duly elected or appointed and qualified.
ARTICLE 3
CONVERSION OF SHARES
3.1. MERGER CONSIDERATION. The manner and basis of converting the
shares of
Company Common Stock upon consummation of the Merger shall be as
set forth in
this Section 3.1. At the Effective Time, by virtue of the Merger
and without any
action on the part of the Company, Merger Sub or any holder of
Company Common
Stock or holder of capital stock of Merger Sub:
(a) Subject to the other provisions of this Section 3.1, each share
of
common stock, par value $.01 per share, of the Company (the
"Company Common
Stock") issued and outstanding immediately prior to the Effective
Time
(excluding any treasury shares and shares held by Parent, Merger
Sub or any
Subsidiary of Parent or Merger Sub, which will be cancelled in
accordance with
Section 3.1(c), and Dissenting Shares, which will be treated in
accordance with
2
Merger Agreement
Section 3.3) shall be converted into the right to receive $23.10,
without
interest (the "Merger Consideration").
(b) Prior to the Effective Time, Parent shall designate a bank or
trust
company reasonably acceptable to the Company to act as exchange
agent hereunder
(the "Exchange Agent") for the purpose of exchanging Company
Certificates and
Company Book-Entry Shares hereunder for the Merger Consideration.
(c) Each share of Company Common Stock held in the treasury of the
Company
and each share of Company Common Stock owned by Parent, Merger Sub
or any
Subsidiary of Parent or Merger Sub immediately prior to the
Effective Time shall
be canceled and extinguished without any conversion thereof and no
payment shall
be made with respect thereto.
(d) At the Effective Time, all shares of Company Common Stock will
no
longer be outstanding and will automatically be canceled and
retired, and each
holder of a Company Certificate or Company Book-Entry Shares will
cease to have
any rights with respect thereto, except the right to receive the
Merger
Consideration applicable thereto pursuant to Section 3.1(a).
(e) The Company, immediately before the Effective Time, shall
cancel all
rights with respect to each outstanding option or right to purchase
shares of
Company Common Stock (the "Company Stock Options") under any
employee or
director stock option or stock purchase plan or arrangement or
agreement of the
Company listed on Section 3.1 of the Company Disclosure Schedule
(the "Company
Stock Option Plans"), and Parent immediately after the Effective
Time shall pay
(less applicable withholdings and without interest) to each holder
of a Company
Stock Option which has been cancelled an amount equal to (A) times
(B), where
(A) equals $23.10 minus the per share exercise price under his or
her Company
Stock Option and (B) is the number of shares of Company Common
Stock subject to
his or her Company Stock Option immediately before the Effective
Time. Prior to
the Effective Time and subject to the effectiveness of the Merger,
the Company
shall take all actions that may be necessary (under the plans
and/or agreements
pursuant to which Company Stock Options are outstanding and
otherwise) to
effectuate the provisions of this Section 3.1(e). The foregoing
provisions of
this Section 3.1(e) shall not apply to the following Company Stock
Option Plans:
the Company's 2002 Employee Stock Purchase Plan, the Company's 2000
Employee
Stock Purchase Plan and the Company's 1995 Employee Stock Purchase
Plan or any
other plan, program or arrangement intending to qualify as a stock
purchase plan
under Section 423 of the Code (the "Company ESPPs"). The Company
ESPPs and all
outstanding rights thereunder shall terminate at the Effective Time
and the
offering periods thereunder shall be deemed to end on the NYSE
trading day
immediately following the date hereof, and the rights of each
participating
employee then outstanding shall be deemed to be automatically
exercised on such
NYSE trading day. On such trading day, each participating employee
will be
credited with the number of shares of Company Common Stock
purchased for his or
her account(s) under the Company ESPPs during such offering period.
The Board of
Directors of the Company shall send written notice of the Merger
that will
result in the termination of the Company ESPPs to all participating
employees
not later than ten (10) Business Days after the date hereof. No new
offering
periods will be allowed to commence under the Company ESPPs during
the period
prior to the Closing unless this Agreement has been terminated.
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Merger Agreement
(f) As of the Effective Time, each outstanding Company Warrant
listed on
Section 3.1 of the Company Disclosure Schedule shall be converted
into a warrant
to receive cash as provided in this Section 3.1(f). Following the
Effective
Time, each outstanding Company Warrant shall continue to have, and
shall be
subject to, the terms and conditions of the applicable Company
Warrant, except
that
(x) each such Company Warrant shall be exercisable for $23.10 in
cash
for each share of Company Common Stock into which such Company
Warrant may
be exercised (the "Warrant Consideration"); and
(y) the exercise price payable to receive the Warrant Consideration
shall be equal to the exercise price per share of Company Common
Stock
under such Company Warrant at the Effective Time.
3.2. MERGER SUB COMMON STOCK. Each share of common stock, par value
$0.01
per share, of Merger Sub issued and outstanding immediately before
the Effective
Time shall thereafter represent one validly issued, fully paid and
non-assessable share of common stock, par value $0.01 per share, of
the
Surviving Corporation.
3.3. DISSENTING SHARES. Notwithstanding anything in this Agreement
to the
contrary, shares of Company Common Stock 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 and who has properly demanded
appraisal for such
Company Common Stock in accordance with the requirements of Section
262 of the
DGCL (the "Dissenting Shares") shall not be converted into the
right to receive
the relevant Merger Consideration and the holders thereof shall be
entitled to
only such rights as are granted by the DGCL, unless such holder
fails to
perfect, withdraws or otherwise loses the right to appraisal, in
which case such
shares of Company Common Stock shall be treated as if they had been
converted as
of the Effective Time into the right to receive the relevant Merger
Consideration, as set forth in Section 3.1, without any interest
thereon. The
Company shall give Parent prompt notice of any demands received by
the Company
for appraisal of shares of Company Common Stock and withdrawals of
such demands,
any other instruments or documents served pursuant to the DGCL and
received by
the Company with respect to such demands, and the Company shall
give Parent the
opportunity to direct all negotiations and proceedings with respect
to such
demands. Except with the prior written consent of Parent, the
Company shall not
make any payment with respect to, or offer to settle or settle, any
such
demands. Each holder of Dissenting Shares who becomes entitled to
payment for
such Dissenting Shares under the provisions of Section 262 of the
DGCL will
receive payment thereof from the Surviving Corporation and as of
the Effective
Time such shares of Company Common Stock will no longer be
outstanding and will
automatically be canceled and retired and will cease to exist.
3.4. SURRENDER AND PAYMENT.
(a) Promptly after the Effective Time, the Surviving Corporation
shall
cause the Exchange Agent to mail to each record holder, as of the
Effective
Time, of certificates representing outstanding shares of Company
Common Stock
("Company Certificates") or shares of Company Common Stock
represented by
book-entry ("Company Book-Entry Shares") (in
4
Merger Agreement
each case, other than Dissenting Shares), a letter of transmittal
(which shall
specify that delivery shall be effected, and risk of loss and title
to the
Company Certificates shall pass, only upon proper delivery of the
Company
Certificates to the Exchange Agent or, in the case of Company
Book-Entry Shares,
upon adherence to the procedures set forth in the letter of
transmittal) (the
"Letter of Transmittal") and instructions for use in effecting the
surrender of
the Company Certificates or, in the case of Company Book-Entry
Shares, the
surrender of such shares for payment of the Merger Consideration
therefor. After
the Effective Time, upon surrender in accordance with this Section
3.4(a), to
the Exchange Agent of a Company Certificate or Company Book-Entry
Shares,
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, the Exchange Agent shall
promptly
deliver to the holder of such Company Certificate or Company
Book-Entry Shares
in exchange therefor, the Merger Consideration (without interest),
to be
received by the holder thereof pursuant to this Agreement. The
Exchange Agent
shall accept such Company Certificates or Company Book-Entry Shares
upon
compliance with such reasonable terms and conditions as the
Exchange Agent may
impose to effect an orderly exchange thereof in accordance with
normal exchange
practices. After the Effective Time, there shall be no further
transfer on the
records of the Company or its transfer agent of shares of Company
Common Stock
and, if Company Certificates or Company Book-Entry Shares are
presented to the
Company for transfer, they shall be canceled against delivery of
the applicable
Merger Consideration. If any Merger Consideration is to be paid in
a name other
than that in which the Company Certificate surrendered for exchange
is
registered, it shall be a condition of such exchange that the
Company
Certificate so surrendered shall be properly endorsed, with
signature
guaranteed, or otherwise in proper form for transfer, and that the
person
requesting such exchange shall pay to the Company or its transfer
agent any
transfer or other taxes required by reason of the payment of the
Merger
Consideration in a name other than that of the registered holder of
the Company
Certificate surrendered, or establish to the satisfaction of the
Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered
as contemplated by this Section 3.4(a), each Company Certificate
and each
Company Book-Entry Share shall be deemed at any time after the
Effective Time to
represent only the right to receive upon such surrender the
applicable Merger
Consideration as contemplated by Section 3.1.
(b) The Merger Consideration paid upon the surrender for exchange
of
Company Certificates or Company Book-Entry Shares in accordance
with the terms
of this Article 3 shall be deemed to have been paid in full
satisfaction of all
rights pertaining to the shares of Company Common Stock so
exchanged.
(c) At any time following the date which is nine months after the
Effective
Time, Parent shall be entitled to require the Exchange Agent to
deliver to it
any funds (including any interest received with respect thereto)
which have been
made available to the Exchange Agent and which have not been
disbursed to
holders of Company Certificates or Company Book-Entry Shares and
thereafter such
holders shall be entitled to look to Parent and the Surviving
Corporation
(subject to abandoned property, escheat or other similar laws) only
as general
creditors thereof with respect to the applicable Merger
Consideration payable
upon due surrender of their Company Certificates or Company
Book-Entry Shares.
The Surviving Corporation shall pay all charges and expenses,
including those of
the Exchange Agent, in connection with the exchange of shares of
Company Common
Stock for the Merger Consideration. None of Parent, the Surviving
Corporation,
any Subsidiary or Affiliate of Parent or the Surviving Corporation
or the
Exchange
5
Merger Agreement
Agent shall be liable to any former holder of Company Common Stock
for cash
delivered to public officials pursuant to any applicable abandoned
property,
escheat or other similar laws.
(d) If any Company Certificate shall have been lost, stolen or
destroyed,
upon the making of an affidavit of that fact by the Person claiming
such Company
Certificate to be lost, stolen or destroyed and, if requested 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 Company Certificate, the
Exchange Agent
will pay, in exchange for such lost, stolen or destroyed Company
Certificate,
the Merger Consideration to be paid in respect of the shares of
Company Common
Stock represented by such Company Certificate.
3.5. CLOSING. The closing (the "Closing") of the Merger shall take
place at
the offices of Simpson Thacher & Bartlett LLP, 425 Lexington
Avenue, New York
New York 10017-3954, or such other location as shall be mutually
agreeable to
Parent and the Company on the Business Day immediately following
the date on
which the last of the conditions set forth in Article 7 (other than
the delivery
of certificates, opinions and other instruments and documents to be
delivered at
the Closing, but subject to the delivery at the Closing of such
certificates,
opinions and other instruments and documents) is fulfilled or
waived, or at such
other time and place as Parent and the Company shall agree (the
date on which
the Closing occurs is referred to in this Agreement as the "Closing
Date").
3.6. WITHHOLDING. Parent will be entitled to deduct and withhold
from the
aggregate Merger Consideration otherwise payable to any former
holder of Company
Common Stock all amounts required by law to be deducted or withheld
therefrom.
To the extent that amounts are so withheld by Parent or Merger Sub,
such
withheld amounts will be treated for all purposes of this Agreement
as having
been paid to the holder of the shares of Company Common Stock in
respect of
which such deduction and withholding was made by Parent or Merger
Sub.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except to the extent set forth in the reports filed by Parent with
the SEC
and publicly available on the EDGAR system prior to the date
hereof, Parent and
Merger Sub represent and warrant to the Company as follows:
4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and Merger Sub
is a
corporation duly organized, validly existing and in good standing
under the laws
of the state of its incorporation and has the requisite corporate
power and
authority to own, lease and operate its assets and properties and
to carry on
its business as it is now being conducted. Each of Parent and
Merger Sub is
qualified to do business and is in good standing in each
jurisdiction in which
the properties owned, leased or operated by it or the nature of the
business
conducted by it makes such qualification necessary, except where
the failure to
be so qualified and in good standing would not, when taken together
with all
other such failures, reasonably be expected to have a material
adverse effect on
the ability of Parent or Merger Sub to perform its obligations
under this
Agreement.
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Merger Agreement
4.2. AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Parent and Merger Sub have full corporate power and authority
to enter
into this Agreement and, subject to the Parent Required Statutory
Approvals, to
consummate the transactions contemplated hereby. This Agreement has
been
approved by the respective boards of directors of Parent and Merger
Sub and by
Parent as the sole stockholder of Merger Sub and no other corporate
proceedings
on the part of Parent or Merger Sub are necessary to authorize the
execution and
delivery of this Agreement and the consummation by Parent and
Merger Sub of the
transactions contemplated hereby. This Agreement has been duly
executed and
delivered by Parent and Merger Sub and, assuming the due
authorization,
execution and delivery thereof by the Company, constitutes a valid
and legally
binding agreement of Parent and Merger Sub enforceable against each
of them in
accordance with its terms, except as such enforcement may be
limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws
affecting or relating to enforcement of creditors' rights generally
and (ii)
general equitable principles.
(b) Except as set forth in Section 4.2(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent
and Merger Sub
do not violate, conflict with or result in a breach of any
provision of, or
constitute a default (or an event which, with notice or lapse of
time or both,
would constitute a default) under, or result in the termination of,
or
accelerate the performance required by, or result in a right of
termination or
acceleration under, or give rise to any obligation to make payments
or provide
compensation under, or result in the creation of any Lien upon any
of the
properties or assets of Parent or any of its Subsidiaries, under
any of the
terms, conditions or provisions of (i) the respective charters,
by-laws,
partnership agreements, trust declarations, or other similar
organizational
instruments of Parent or any of its Subsidiaries; (ii) except as
would,
individually or in the aggregate together with such other
violations, conflicts,
breaches, defaults, terminations, accelerations, payments,
compensations or
creations of Liens as apply to the terms, conditions or provisions
described in
clause (iii) below or the subsequent sentence, not reasonably be
expected to
have a material adverse effect on the ability of Parent or Merger
Sub to perform
its obligations under this Agreement, any statute, law, ordinance,
rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any
court or Governmental Entity applicable to Parent or any of its
Subsidiaries or
any of their respective properties or assets; or (iii) except as
would,
individually or in the aggregate together with such other
violations, conflicts,
breaches, defaults, terminations, accelerations, payments,
compensations or
creations of Liens as apply to the terms, conditions or provisions
described in
clause (ii) above or the subsequent sentence, not reasonably be
expected to have
a material adverse effect on the ability of Parent or Merger Sub to
perform its
obligations under this Agreement any note, bond, mortgage,
indenture, deed of
trust, license, franchise, permit, concession, contract, lease,
partnership
agreement, joint venture agreement or other instrument, obligation
or agreement
of any kind to which Parent or any of its Subsidiaries is now a
party or by
which Parent or any of its Subsidiaries or any of their respective
properties or
assets may be bound or affected. Except as would, individually or
in the
aggregate together with such other violations, conflicts, breaches,
defaults,
terminations, accelerations, payments, compensations or creations
of Liens as
apply to the terms, conditions or provisions described in clauses
(ii) and (iii)
above, not reasonably be expected to have a material adverse effect
on the
ability of Parent or Merger Sub to perform its obligations under
this Agreement,
the consummation by Parent and Merger Sub of the transactions
contemplated by
this Agreement will not result in any violation,
7
Merger Agreement
conflict, breach, termination, acceleration or creation of any
Liens under any
of the terms, conditions or provisions described in clauses (i)
through (iii) of
the preceding sentence, subject (A) in the case of the terms,
conditions or
provisions described in clause (ii) above, to obtaining (prior to
the Effective
Time) the Parent Required Statutory Approvals, and (B) in the case
of the terms,
conditions or provisions described in clause (iii) above, to those
consents that
have been obtained as of the date of this Agreement.
(c) Except for Parent Required Statutory Approvals and filings with
and
actions by the SEC in connection with the Proxy Statement, and
except as would,
individually or in the aggregate, not reasonably be expected to
have a material
adverse effect on the ability of Parent or Merger Sub to perform
its obligations
under this Agreement, no declaration, filing or registration with,
or notice to,
or authorization, consent or approval of, any Governmental Entity
is necessary
for the execution or delivery of this Agreement by Parent or Merger
Sub or the
consummation by Parent or Merger Sub of the transactions
contemplated hereby.
4.3. FINANCING ARRANGEMENTS.
(a) Parent has or will have funds available to it sufficient (i) to
enable
Parent or the Surviving Corporation to pay (A) the amount to which
holders of
Shares become entitled upon consummation of the Merger, (B) the
amount that
Parent or the Surviving Corporation may become obligated hereunder
to pay with
respect to the cancellation of Company Stock Options and upon
exercise of the
Company Stock Options and (C) the fees and expenses it will incur
in connection
therewith. Parent will make such funds available to Merger Sub as
are necessary
to enable Merger Sub to fulfill its obligations hereunder.
(b) Prior to the execution of this Agreement, Parent has delivered
to the
Company a true and correct executed copy of the Commitment Letter,
dated June 2,
2005, from various financial institutions named therein to the
Parent in
connection with the financing of the transactions contemplated
hereby (the "Debt
Financing").
4.4. DISCLOSURE DOCUMENTS. None of the information supplied or to
be
supplied by Parent for inclusion or incorporation by reference in
the Proxy
Statement or any amendment or supplement thereto shall at the date
the Proxy
Statement or any such amendment or supplement is first mailed to
the Company
Common Stockholders or at the time of the Stockholders' Approval,
contain any
untrue statement of a material fact or omit to state any material
fact required
to be stated therein or necessary in order to make the statements
therein, in
light of the circumstances under which they are made, not
misleading.
4.5. ADVISORS' FEES. There is no investment banker, broker, finder,
financial advisor or other intermediary that has been retained by
or is
authorized to act on behalf of Parent or any of its Subsidiaries
who might be
entitled to any fee from Parent or any of its Subsidiaries in
connection with
the Merger or any of the other transactions contemplated by this
Agreement.
4.6. NO ADDITIONAL REPRESENTATIONS. Parent and Merger Sub
acknowledge that
neither the Company nor any other Person advising or acting on
behalf of the
Company or any Affiliate of the Company has made any representation
or warranty,
express or implied, as to the accuracy or completeness of any
information
regarding the Company or the business conducted by the
8
Merger Agreement
Company, in each case except as expressly set forth in this
Agreement or as and
to the extent required by this Agreement to be set forth in the
Company
Disclosure Schedule.
4.7. MOU. Parent's representatives have been duly authorized by
Parent to
enter into the Derivative MOU and have entered into the Derivative
MOU in good
faith.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except to the extent set forth in the Company Reports filed with
the SEC
and publicly available on the EDGAR system prior to the date hereof
or except as
set forth in the Company Disclosure Schedule (arranged in sections
and
subsections corresponding to the numbered and lettered sections and
subsections
contained in this Article 5 with the disclosures in a section or
subsection in
this Article 5, as well as any other section or subsection of this
Article 5 if
the relevance of the disclosed item to such other section or
subsection is
readily apparent on its face), the Company represents and warrants
to Parent and
Merger Sub as follows:
5.1. ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly
organized, validly existing and in good standing under the laws of
the State of
Delaware and has the requisite corporate power and authority to
own, lease and
operate its assets and properties and to carry on its business as
it is now
being conducted. The Company is qualified to do business and is in
good standing
in each jurisdiction in which the properties owned, leased or
operated by it or
the nature of the business conducted by it makes such qualification
necessary,
except where the failure to be so qualified and in good standing
would not, when
taken together with all other such failures, reasonably be expected
to have a
Material Adverse Effect on the Company. True, accurate and complete
copies of
the Company's certificate of incorporation and bylaws, in each case
as in effect
on the date hereof, including all amendments thereto, have
heretofore been
delivered to Parent.
5.2. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of: (1)
5,000,000
shares of Company Preferred Stock, $1.00 par value per share, of
which 1,000,000
have been designated Series A junior participating preference
shares, of which
none are currently issued and outstanding as of the date hereof,
and (2)
200,000,000 shares of Company Common Stock, $.01 par value per
share, 85,384,989
of which were issued and outstanding as of May 27, 2005. All of
such issued and
outstanding shares are validly issued and are fully paid,
nonassessable and free
of preemptive rights.
(b) Except as set forth in Section 5.2 of the Company Disclosure
Schedule,
there are no outstanding subscriptions, options, calls, contracts,
commitments,
understandings, restrictions, arrangements, stock appreciation
rights (SARs),
phantom stock, rights or warrants, including any right of
conversion or exchange
under any outstanding security, instrument or other agreement and
also including
any rights plan or other anti-takeover agreement, obligating the
Company to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional
shares of Company Capital Stock, or obligating the Company to
grant, extend or
enter into any such agreement or
9
Merger Agreement
commitment. There are no voting trusts, proxies or other agreements
or
understandings to which the Company is a party or is bound with
respect to the
voting of any shares of Company Capital Stock. As of the date of
this Agreement
and as of the Closing Date, the terms of the agreements evidencing
the Company
Stock Options will permit the actions contemplated by Section
3.1(e). The
Company has delivered copies of the Company Warrants to Parent. As
of May 31,
2005, there were 8,880,897 shares of Company Common Stock (and no
other shares
of Company Capital Stock) subject to purchase under all outstanding
Company
Stock Options, with a weighted average exercise price equal to
$10.8979 per
share of Company Common Stock.
(c) The Board of Directors of the Company has not declared any
dividend or
distribution with respect to the Company Capital Stock the record
or payment
date for which is on or after the date of this Agreement.
(d) As of the date hereof, (i) no bonds, debentures, notes or other
indebtedness of the Company having the right to vote are issued or
outstanding,
and (ii) there are no outstanding contractual obligations of the
Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of
Company Capital Stock or any shares of capital stock of any of the
Subsidiaries
of the Company.
(e) The Company Common Stock is traded on the NYSE. No other
securities of
the Company or any of its Subsidiaries are listed or quoted for
trading on any
United States domestic or foreign securities exchange.
5.3. SUBSIDIARIES.
Except as set forth in Section 5.3 of the Company Disclosure
Schedule:
(a) Each Subsidiary of the Company is a corporation duly
incorporated (or
an entity duly formed) and organized, validly existing and in good
standing
under the laws of its jurisdiction of incorporation or
organization, as the case
may be, and has all corporate, partnership or other entity derived
powers and
all governmental licenses, authorizations, permits, consents and
approvals
required to carry on its business as now conducted, except for
those licenses,
authorizations, permits, consents and approvals the absence of
which would not,
individually or in the aggregate, reasonably be expected to have a
Material
Adverse Effect on the Company. Each Subsidiary of the Company is
duly qualified
to do business as a foreign corporation or entity, as the case may
be, and is in
good standing in each jurisdiction where such qualification is
necessary, except
for those jurisdictions where failure to be so qualified would not,
individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect on
the Company. No Subsidiary of the Company is in default in any
respect in the
performance, observation or fulfillment of any provision of its
certificate or
articles of incorporation or by-laws (or similar organizational
documents).
Other than its Subsidiaries, the Company does not beneficially own
or control,
directly or indirectly, 5% or more of any class of equity or
similar securities
of any corporation or other entity whether incorporated or
unincorporated. No
securities issued by any Subsidiary of the Company are registered
or required to
be registered with the SEC under the Exchange Act and, except as
set forth in
Section 5.3 of the Company Disclosure Schedule, since January 1,
2002 no
securities issued by any Subsidiary of the Company have been issued
under a
registration statement filed with the SEC under the Securities Act.
10
Merger Agreement
(b) All of the outstanding capital stock of, or other voting
securities or
ownership interests in, each Subsidiary of the Company is owned by
the Company,
directly or indirectly, free and clear of any Lien and free of any
other
limitation or restriction (including, any restriction on the right
to vote, sell
or otherwise dispose of such capital stock or other voting
securities or
ownership interests), other than any restrictions imposed under the
Securities
Act. There are no outstanding (i) shares of capital stock or other
voting
securities or ownership interests in any of the Company's
Subsidiaries, (ii)
securities of the Company or any of its Subsidiaries convertible
into or
exchangeable for shares of capital stock or other voting securities
or ownership
interests in any of the Company's Subsidiaries or (iii) options or
other rights
to acquire from the Company or any of its Subsidiaries, or other
obligation of
the Company or any of its Subsidiaries to issue, any capital stock
or other
voting securities or ownership interests in, or any securities
convertible into
or exchangeable for any capital stock or other voting securities or
ownership
interests in, any of the Company's Subsidiaries. There are no
outstanding
obligations of the Company or any of its Subsidiaries to
repurchase, redeem or
otherwise acquire any of the securities referred to in clauses (i),
(ii) or
(iii) of this Section 5.3(b).
5.4. AUTHORITY; NON-CONTRAVENTION; APPROVAL.
Except as set forth in Section 5.4 of the Company Disclosure
Schedule,
(a) The Company has full corporate power and authority to enter
into this
Agreement and, subject to the Stockholders' Approval and the
Company Required
Statutory Approvals, to consummate the transactions contemplated
hereby. The
Board of Directors of the Company has (i) unanimously determined
that this
Agreement, the Merger and the transactions contemplated hereby are
fair to and
in the best interests of the Company and the Stockholders, (ii)
unanimously
approved this Agreement and declared it advisable and (iii)
unanimously resolved
to recommend that the Stockholders approve and adopt this
Agreement, the Merger
and the transactions contemplated hereby, and, subject to Section
6.4(b), such
resolutions shall be in force and effect and neither rescinded nor
superseded
prior to or as of the Closing Date. No other corporate proceedings
on the part
of the Company are necessary to authorize the execution and
delivery of this
Agreement or, except, in the case of the Merger only, for the
Stockholders'
Approval, the consummation by the Company of the transactions
contemplated
hereby. The Company has duly executed and delivered this Agreement
and, assuming
the due authorization, execution and delivery thereof by Parent and
Merger Sub,
this Agreement constitutes a valid and legally binding agreement of
the Company
enforceable against the Company in accordance with its terms,
except as such
enforcement may be limited by (i) bankruptcy, insolvency,
reorganization,
moratorium or other similar laws affecting or relating to
enforcement of
creditors' rights generally and (ii) general equitable principles.
(b) The execution and delivery of this Agreement by the Company
does not
violate, conflict with or result in a breach of any provision of,
or constitute
a default (or an event which, with notice or lapse of time or both,
would
constitute a default) under, or result in the termination of, or
accelerate the
performance required by, or result in a right of termination or
acceleration
under, or give rise to any obligation to make payments or provide
compensation
under, or result in the creation of any Lien upon any of the
properties or
assets of the Company under any of the terms, conditions or
provisions of (i)
the respective charters, by-laws, partnership agreements, trust
declarations, or
other similar organizational instruments of the Company or any of
its
11
Merger Agreement
Subsidiaries, (ii) any statute, law, ordinance, rule, regulation,
judgment,
decree, order, injunction, writ, permit or license of any court or
governmental
authority applicable to the Company or any of its Subsidiaries or
any of their
respective properties or assets; or (iii) any note, bond, mortgage,
indenture,
deed of trust, license, franchise, permit, concession, contract,
lease,
partnership agreement, joint venture agreement or other instrument,
obligation
or agreement of any kind to which the Company or any of its
Subsidiaries is now
a party or by which the Company or any of its Subsidiaries or any
of their
respective properties or assets may be bound or affected, except,
in the case of
clauses (ii) and (iii) above, as would not, individually or in the
aggregate
together with such other violations, conflicts, breaches defaults,
terminations,
accelerations, payments, compensations or creations of Liens,
reasonably be
expected to have a Material Adverse Effect on the Company. The
consummation by
the Company of the transactions contemplated by this Agreement will
not result
in any violation, conflict, breach, termination, acceleration or
creation of
Liens under any of the terms, conditions or provisions described in
clauses (i)
through (iii) of the preceding sentence, subject (A) in the case of
the terms,
conditions or provisions described in clause (ii) above, to
obtaining (prior to
the Effective Time) Company Required Statutory Approvals and the
Stockholders'
Approval and (B) in the case of the terms, conditions or provisions
described in
clause (iii) above, to obtaining (prior to the Effective Time)
consents from
lessors or other third parties that are listed in the Company
Disclosure
Schedule.
(c) Except for Company Required Statutory Approvals, and except as
would
not, individually or in the aggregate, reasonably be expected to
have a Material
Adverse Effect on the Company, no declaration, filing or
registration with, or
notice to, or authorization, consent or approval of, any
governmental or
regulatory body or authority is necessary for the execution and
delivery of this
Agreement by the Company or the consummation by the Company of the
transactions
contemplated thereby. No declaration, filing or registration with,
or notice to,
or authorization, consent or approval of any governmental or
regulatory body or
authority (including any probation officer of the Company or its
Subsidiaries)
is necessary for the consummation of the transactions contemplated
by this
Agreement under the Amended Judgment in Case No. 05CR0314-BEN and
the Company's
conditions of supervision set forth therein or any similar
conditions of
probation applicable to the Company or its Subsidiaries.
(d) The affirmative vote of the holders of a majority of the
outstanding
shares of Company Common Stock (the "Stockholders' Approval") is
the only vote
of the holders of any class or series of the Company's Capital
Stock necessary
to approve the Merger and the consummation of the transactions
contemplated
hereby.
5.5. SEC DOCUMENTS.
(a) The Company has previously delivered (except to the extent such
filings
are publicly available on the EDGAR system) to Parent each
registration
statement, report, proxy statement or information statement (other
than
preliminary materials) filed by the Company with the SEC since
January 1, 2004,
each in the form (including exhibits and any amendments thereto)
filed with the
SEC prior to the date hereof, and the Company has timely filed all
forms,
reports and documents required to be filed by it with the SEC
pursuant to
relevant securities statutes, regulations and rules since January
1, 2001
(collectively, the "Company Reports"). As of their respective dates
(or, if
amended, supplemented or superseded by a filing prior to the date
of this
12
Merger Agreement
Agreement, as of the date so amended, supplemented or superseded)
and except as
set forth in Section 5.5 of the Company Disclosure Schedule, the
Company Reports
(i) were prepared in accordance with the applicable requirements of
the
Securities Act, the Exchange Act, and the rules and regulations
thereunder and
complied with the requirements thereof including all of the then
applicable
accounting requirements and (ii) did not contain any untrue
statement of a
material fact or omit to state a material fact required to be
stated therein or
necessary to make the statements made therein, in the light of the
circumstances
under which they were made, not misleading. Each of the
consolidated balance
sheets included in the Company Reports (including the related notes
and
schedules) fairly presents in all material respects the
consolidated financial
position of the Company and its Subsidiaries as of its date and
each of the
consolidated statements of operations, cash flows and stockholders'
equity
included in the Company Reports (including any related notes and
schedules)
fairly presents in all material respects the results of operations,
cash flows
or changes in stockholders' equity, as the case may be, of the
Company and its
Subsidiaries for the periods set forth therein, in each case in
accordance with
generally accepted accounting principles consistently applied
during the periods
involved, except, in the case of unaudited statements, for normal
year-end audit
adjustments and as otherwise may be noted therein. The principal
executive
officer of the Company and the principal financial officer of the
Company (and
each former principal executive officer or principal financial
officer of the
Company) have made the certifications required by Sections 302 and
906 of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), and the
rules and
regulations of the SEC promulgated thereunder with respect to the
Company
Reports filed since such certifications have been required. For
purposes of the
preceding sentence, "principal executive officer" and "principal
financial
officer" shall have the meanings given to such terms in the
Sarbanes-Oxley Act.
(b) The Company maintains disclosure controls and procedures and
internal
controls over financial reporting required by Rule 13a-15 or 15d-15
under the
Exchange Act; such controls and procedures are effective to ensure
that all
material information concerning the Company and its Subsidiaries is
made known
on a timely basis to the individuals responsible for the
preparation of the
Company's filings with the SEC and other public disclosure
documents and such
internal controls over financial reporting are effective to provide
reasonable
assurance to the Company's management and the Board of Directors of
the Company
regarding the reliability of financial reporting and the
preparation of
financial statements for external purposes in accordance with GAAP.
Since the
date of the last audit of the Company's internal controls over
financial
reporting, any material change in internal controls over financial
reporting
required to be disclosed in any Company Report has been so
disclosed. Except to
the extent disclosed in the Company Reports filed with the SEC and
publicly
available on the EDGAR system prior to the date hereof, since
January 1, 2001,
the Company has not received notice from the SEC or any other
Governmental
Entity that any of its accounting policies or practices are the
subject of any
review, inquiry, investigation or challenge other than comments
from the SEC on
the Company's filings which comments have either been satisfied or
withdrawn by
the SEC.
(c) The Company has not filed any report with the SEC or any other
securities regulatory authority or any securities exchange or other
self
regulatory authority that, as of the date of this Agreement,
remains
confidential.
5.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Section 5.6
of the Company Disclosure Schedule, the Company did not have at
December 31,
2004, nor, to the
13
Merger Agreement
knowledge of the Company, has it incurred since that date, any
liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of
any nature,
except (a) to the extent such liabilities or obligations are
disclosed in the
Company Reports filed with the SEC and publicly available on the
EDGAR system
prior to the date hereof, (b) such liabilities or obligations that
were incurred
after December 31, 2004 in the ordinary course of business and
consistent with
past practices, (c) such liabilities or obligations that would not,
individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect on
the Company or (d) such liabilities that have been discharged or
paid in full
prior to the date hereof. The Company has not been a party to any
securitization
transactions or "off-balance sheet arrangements" (as defined in
Item 303 of
Regulation S-K of the Exchange Act) at any time since January 1,
2001.
5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
or
contemplated by this Agreement or the Company Disclosure Schedule,
since
December 31, 2004, the Company has not suffered or experienced any
Material
Adverse Effect. Since December 31, 2004, the Company has not
engaged in any
material transaction of a kind or taken any action that would be
prohibited (or
otherwise would require the consent of Parent) pursuant to Section
6.1(a),
Section 6.1(b), Section 6.1(c), Section 6.1(d)(ii), Section
6.1(d)(iii), Section
6.1(d)(iv), Section 6.1(d)(v), Section 6.1(f), Section 6.1(g),
Section 6.1(h),
Section 6.1(i), Section 6.1(k), Section 6.1(l), Section 6.1(o) and
Section
6.1(p) with respect to the foregoing subsections of Section 6.1 if
such
transaction occurred after the date hereof and prior to the
Closing, except (a)
as set forth in Section 5.7 of the Company Disclosure Schedule, or
(b) to the
extent disclosed in the Company Reports filed with the SEC and
publicly
available on the EDGAR system prior to the date hereof.
5.8. LITIGATION.
(a) Except as set forth in Section 5.8 of the Company Disclosure
Schedule
or to the extent set forth in the Company Reports filed with the
SEC and
publicly available on the EDGAR system prior to the date hereof and
other than
matters existing or arising under Regulatory Laws in connection
with the
transactions contemplated by this Agreement which are to be dealt
with as
provided in Section 6.5, there are no claims, suits, actions or
proceedings
pending or, to the knowledge of the Company, threatened against,
relating to or
affecting the Company before any court, governmental department,
commission,
agency, instrumentality or authority or any arbitrator that seek to
restrain or
enjoin the consummation of the Merger or seek other relief or
remedy and which
would reasonably be expected, either alone or in the aggregate with
all such
claims, actions or proceedings not otherwise disclosed in Section
5.8 of the
Company Disclosure Schedule or in the Company Reports filed with
the SEC and
publicly available on the EDGAR system prior to the date hereof, to
have a
Material Adverse Effect on the Company. Except as set forth in the
initial
clause of the preceding sentence, neither the Company nor any of
its
Subsidiaries is subject to any judgment, decree, injunction, rule
or order of
any court, governmental department, commission, agency,
instrumentality or
authority, or any arbitrator, including any judgment, decree,
injunction, rule
or order of any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator which prohibits or
restricts the
consummation of the transactions contemplated by this Agreement or
which would
reasonably be expected, either alone or in the aggregate with all
other
judgments, decrees, injunctions, rules or orders, to have a
Material Adverse
Effect on the Company, or which materially restricts the conduct of
the business
of the Company or any of its Subsidiaries or the ability of the
Company or any
of its Subsidiaries to compete freely with any other Person.
14
Merger Agreement
Except as set forth in Section 5.8 of the Company Disclosure
Schedule or to the
extent set forth in the Company Reports filed with the SEC and
publicly
available on the EDGAR system prior to the date hereof, there are
no (i)
material claims, suits, actions or proceedings pending against the
Company or
any of its Subsidiaries, or (ii) to the knowledge of the Company,
material
investigations or threatened material claims, suits, actions or
proceedings
against the Company or any of its Subsidiaries.
(b) Section 5.8 of the Company Disclosure Schedule sets forth each
action,
suit, proceeding, or, to the knowledge of the Company,
investigation pending as
of the date of this Agreement against the Company or any Subsidiary
of the
Company, or any director, officer or employee of Company or any
Subsidiary of
Company alleging any violation of federal or state securities laws,
the DGCL or
the rules or regulations of the NYSE.
5.9. NO VIOLATION OF LAW. Except as set forth in Section 5.9 of the
Company
Disclosure Schedule or to the extent set forth in the Company
Reports filed with
the SEC and publicly available on the EDGAR system prior to the
date hereof,
neither the Company nor any of its Subsidiaries is in violation of,
or has been
given notice or been charged with any violation of, any law,
statute, order,
rule, regulation, ordinance or judgment of any Governmental Entity,
except for
violations which, individually or in the aggregate, would not
reasonably be
expected to have a Material Adverse Effect on the Company. The
Company and its
Subsidiaries have all permits, licenses, approvals, authorizations
of and
registrations with and under all laws, and from all Governmental
Entities,
required by the Company and its Subsidiaries to carry on their
respective
businesses as currently conducted, except (i) to the extent
otherwise disclosed
in the Company Reports filed with the SEC and publicly available on
the EDGAR
system prior to the date hereof or (ii) where the failure to have
such permits,
licenses, approvals, authorizations and registrations, individually
or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on
the Company.
5.10. COMPLIANCE WITH AGREEMENTS. Except as set forth in Section
5.10 of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries
is in breach or violation of or in default in the performance or
observance of
any term or provision of, and no event has occurred which, with
lapse of time or
action by a third party, could result in a default under, (a) the
charter or
by-laws of the Company or (b) the contracts, commitments,
agreements, leases,
licenses, and other instruments of the Company or its Subsidiaries,
except, in
the case of clause (b) above, for breaches, violations and defaults
which, alone
or in the aggregate, would not reasonably be expected to have a
Material Adverse
Effect on the Company.
5.11. TAXES. Except as set forth in Section 5.11 of the Company
Disclosure
Schedule or as described in any Company Report filed with the SEC
and publicly
available on the EDGAR system prior to the date hereof:
(a) The Company and its Subsidiaries have (i) duly filed with the
appropriate Governmental Entities all Tax Returns required to be
filed, and such
filed Tax Returns are correct and complete in all material
respects, (ii) duly
paid in full or made adequate provision for the payment of all
Taxes and (iii)
duly withheld and paid all Taxes required by applicable law to have
been
withheld and paid in connection with amounts paid or owing to any
employee,
independent contractor, creditor, or other third party. No claim
has been made
in the past three
15
Merger Agreement
(3) years by an authority in a jurisdiction where Company or its
Subsidiaries
does not file Tax Returns that it is or may be subject to taxation
by that
jurisdiction. The liabilities and reserves for Taxes reflected in
the balance
sheet included in the Company Reports are adequate to cover all
Taxes of the
Company and its Subsidiaries for all periods ending at or prior to
the date of
such balance sheet and there are no material Liens for Taxes upon
any property
or asset of either of the Company or any of its Subsidiaries,
except for Liens
for Taxes not yet due. Neither the Company nor any of its
Subsidiaries has
incurred a liability for Taxes since the date of the most recent
balance sheet
that is not in the ordinary course of business or is not consistent
with past
practice. No audit or administrative or judicial Tax proceeding is
pending or
being conducted with respect to Taxes of the Company or any of its
Subsidiaries.
Neither the Company nor any Subsidiary has received any written
notice, stating
the commencement of an audit or other review, a request for
information related
to Tax matters, or notice of deficiency or proposed adjustment for
Taxes
proposed, asserted or assessed with respect to any open Tax year.
The Company
has delivered to Parent correct and complete copies of all federal
income Tax
Returns filed for 2000, 2001, 2002 and 2003 and for all other open
years.
Neither the Company nor any of its Subsidiaries has waived any
statute of
limitations in respect of Taxes or agreed to any extension of time
with respect
to a Tax assessment or deficiency other than waivers and extensions
which are no
longer in effect. Neither the Company nor any of its Subsidiaries
has any
request for a material ruling in respect of Taxes pending before
any
Governmental Entity. Neither the Company nor any of its
Subsidiaries is a party
to any agreement providing for the allocation or sharing of Taxes
with or,
pursuant to Treasury Regulation section 1.1502-6, is liable for the
Taxes of,
any entity that is not, directly or indirectly, the Company or a
wholly owned
Subsidiary of the Company. Neither the Company nor any of its
Subsidiaries has
been either a "distributing corporation" or a "controlled
corporation" in a
distribution occurring during the last five years in which the
parties to such
distribution treated the distribution as one to which Section 355
of the Code is
applicable. Neither the Company nor any of its Subsidiaries will be
required to
include amounts in income, or exclude items of deduction, in a
taxable period
beginning after the Effective Time as a result of a change in
method of
accounting occurring prior to the Effective Time. Neither the
Company nor any
its Subsidiaries has engaged in any "listed transaction" for
purposes of
Treasury Regulation sections 1.6011-4(b)(2) or 301.6111-2(b)(2).
Excluded from
this Section 5.11 are any Taxes, Tax Returns or other matters
pertaining to
Taxes of the Company which, alone or in the aggregate, would not
reasonably be
expected to have a Material Adverse Effect on the Company.
(b) Neither the Company nor any Subsidiary is a party to any
agreement,
contract, arrangement or plan that has resulted or would result,
whether as a
result of the Merger or the other transactions contemplated by this
Agreement,
separately or in the aggregate, in the payment of (i) any "excess
parachute
payment" within the meaning of Code Section 280G, or (ii) any
amount that will
not be fully deductible as a result of Code Section 162(m).
5.12. EMPLOYEE BENEFIT PLANS; ERISA.
(a) (1) Section 5.12 of the Company Disclosure Schedule lists (A)
each
plan, program, arrangement, practice and policy under which one, or
more than
one, current or former officer, employee or director of the Company
or a
Subsidiary of the Company has any right to employment, to purchase
or receive
any stock or other securities of the Company or a Subsidiary of the
Company or
to receive any compensation (whether in the form of cash or stock
or
16
Merger Agreement
otherwise) or benefits of any kind or description whatsoever in any
material
amount or under which the Company or a Subsidiary of the Company
has any
material liability and (B) each employee benefit plan within the
meaning set
forth in Section 3(3) of ERISA under which the Company or a
Subsidiary has any
liability.
(2) Each plan, program, arrangement, practice and policy described
in
Section 5.12(a)(1) shall be referred to individually as a "Union
Plan" and shall
be referred to collectively as the "Union Plans" if described in
Section 414(f)
of the Code, and each other plan, program, arrangement, practice
and policy
described in Section 5.12(a)(1) shall be referred to individually
as a "Company
Plan" and collectively as the "Company Plans".
(b) The Company has delivered or made available to Parent (i) a
current,
complete and accurate copy of each Company Plan which is set forth
in writing
(and any related trust, insurance contract or other funding
arrangement) and a
written summary of each Company Plan which is not set forth in
writing and (ii)
a copy of the most recent Annual Report (Form 5500) and all related
exhibits and
reports) for each Company Plan which is subject to ERISA.
(c) No Company Plan is subject to Title IV of ERISA or Section 412
of the
Code, and no Company Plan is a multiemployer plan within the
meaning of Section
414(f) of the Code or a plan described in Section 413(c) of the
Code. Neither
the Company nor a Subsidiary has any liability for any withdrawal
or partial
withdrawal from any Union Plan and, based on information provided
by each Union
Plan subject to Title IV of ERISA, the Company has no reason to
believe that the
either the Company or any Subsidiary would have any liability under
Title IV of
ERISA to any Union Plan if the Company or a Subsidiary incurred a
withdrawal or
partial withdrawal from such Union Plan.
(d) There have been no prohibited transactions within the meaning
of
Section 406 or Section 407 of ERISA or Section 4975 of the Code
with respect to
any of the Company Plans that could result in penalties, taxes,
liabilities or
indemnification obligations which, individually or in the
aggregate, would
reasonably be expected to have a Material Adverse Effect on the
Company, and
there has been no other event, or more than one other event, with
respect to any
Company Plan that could result in any liability for the Company or
any
Subsidiary related to any excise Taxes under the Code or to any
liabilities
under ERISA which would reasonably be expected to have a Material
Adverse Effect
on the Company.
(e) Each Company Plan which is intended to be qualified under
Section
401(a) of the Code has received a favorable determination letter
from the
Internal Revenue Service on the plan as currently in effect or has
pending an
application for such a determination letter from the Internal
Revenue Service on
the plan as currently in effect, and the Company is not aware of
any reason
likely to result in the revocation of any favorable determination
letter which
has been received or in the Internal Revenue Service declining to
issue a
favorable determination letter on a pending application. The
Company has
provided or made available to Parent a copy of the most recent
Internal Revenue
Service favorable determination letter with respect to each such
Company Plan
and, if such letter does not cover a Company Plan as currently in
effect, a copy
of the application to the Internal Revenue Service for such a
letter.
17
Merger Agreement
(f) Each Company Plan has been maintained and administered in
substantial
compliance with its terms and with the requirements prescribed by
any and all
statutes, orders, rules and regulations, including but not limited
to ERISA and
the Code, which are applicable to such Company Plan or to the
Company or any
Subsidiary as a sponsor, a plan administrator or a fiduciary of
such Company
Plan. If a former Company Plan has been terminated by or all or any
part of the
liabilities of the Company or any Subsidiary for any current or
former Company
Plan or Union Plan have been transferred to another employer, such
termination
or transfer was properly effected and neither the Company nor any
of its
Subsidiaries has any further liability with respect to such
termination or
transfer.
(g) Except as set forth in Section 5.12 of the Company Disclosure
Schedule,
neither the requisite corporate or stockholder approval of, nor the
consummation
of, the transactions contemplated by this Agreement will (either
alone or
together with any other event, including, any termination of
employment) entitle
any current or former officer, employee, director or other
independent
contractor of the Company or a Subsidiary to any change in control
payment or
benefit, transaction bonus or similar benefit or severance pay or
accelerate the
time of payment or vesting or trigger any payment or funding
(through a grantor
trust or otherwise) of compensation or benefits under, increase the
amount
payable or trigger any other material obligation pursuant to, any
Company Plan.
(h) Except as set forth in Section 5.12 of the Company Disclosure
Schedule,
neither the Company nor any Subsidiary has any material liability
in respect of
post-retirement health, medical or life insurance benefits for any
current or
former officer, employee, director or independent contractor except
as required
to avoid excise Tax under Section 4980B of the Code.
(i) All contributions and other payment due from the Company or any
Subsidiary with respect to each Company Plan and each Union Plan
have been made
or paid in full or are shown in the Company Reports filed with the
SEC and
publicly available on the EDGAR system prior to the date hereof,
and all of the
assets which have been set aside in a trust, escrow account or
insurance company
separate account to satisfy any obligations under any Company Plan
are shown on
the books and records of each such trust or account at their
current fair market
value as of the most recent valuation date for such trust or
account, and the
fair market value of all such assets as of each such valuation date
equals or
exceeds the present value of any obligation under any Company Plan.
(j) There are no pending or threatened claims with respect to a
Company
Plan (other than routine and reasonable claims for benefits made in
the ordinary
course of the plan's operations) or with respect to the terms and
conditions of
employment or termination of employment of any current or former
officer,
employee or independent contractor of the Company or a Subsidiary,
which claims
could reasonably be expected to result in any material liability to
the Company
or a Subsidiary, and no audit or investigation by any domestic or
foreign
governmental or other law enforcement agency is pending or, to the
knowledge of
the Company or a Subsidiary, has been proposed with respect to any
Company Plan.
(k) Section 5.12 of the Company Disclosure Schedule sets forth the
approximate number of individuals who were performing services for
the Company
as of May 30, 2005 who were classified by the Company as
independent
contractors. Each individual who performs, or has
18
Merger Agreement
performed, services for the Company or a Subsidiary as an employee
or as an
independent contractor is, or has been, properly classified as an
employee or as
an independent contractor, except where failure to properly
classify such
individual(s) would not, individually or in the aggregate,
reasonably be
expected to have a Material Adverse Effect on the Company.
(l) Vesting for options which are outstanding under Company Stock
Option
Plans, including accelerated vesting which will occur at the
Effective Time, has
been effected in accordance with the terms of the plans and with
the rules of
the New York Stock Exchange.
(m) No current or former officer or employee of the Company or a
Subsidiary
of the Company is entitled to receive severance payments or
severance benefits
under more than one Company Plan. Section 5.12(m) of the Company
Disclosure
Schedule sets forth a list of all severance plans or policies
maintained by the
Company or any Subsidiary of the Company.
5.13. LABOR. Except as set forth in Section 5.13 of the Company
Disclosure
Schedule or as would not, individually or in the aggregate,
reasonably be
expected to have a Material Adverse Effect on the Company: (i)
there are no
controversies pending or, to the knowledge of the Company,
threatened between
the Company or any of its Subsidiaries and any representatives of
any of their
employees; (ii) to the knowledge of the Company, there are no
organizational
efforts presently being made involving any of the presently
unorganized
employees of the Company or its Subsidiaries and no executive or
key employee or
group of employees of the Company has any plan to terminate his or
her
employment with Company or has threatened to do so; (iii) the
Company and its
Subsidiaries have complied with all laws relating to employment and
labor,
including, any provisions thereof relating to wages, hours,
collective
bargaining and the payment of social security and similar Taxes;
and (iv) no
person has asserted that the Company or any of its Subsidiaries is
liable for
any arrears of wages or any Taxes or penalties for failure to
comply with any of
such laws.
5.14. REAL ESTATE.
(a) Section 5.14 of the Company Disclosure Schedule sets forth the
address
of all real property owned by the Company or any Subsidiary of the
Company as of
the date hereof (the "Owned Real Property"). The Company or one of
its
Subsidiaries, as applicable, holds good and marketable title to the
Owned Real
Property, free and clear of all Liens except for (i) Liens for
current Taxes or
assessments that are not yet delinquent, (ii) builder, mechanic,
warehousemen,
materialmen, contractor, landlord, workmen, repairmen, carrier or
other similar
Liens arising and continuing in the ordinary course of business for
obligations
that are not yet delinquent, (iii) the rights, if any, of vendors
having
equipment associated with equipment financed by the Company and its
Subsidiaries, (iv) Liens arising from the receipt by the Company
and its
Subsidiaries of progress payments by the United States government,
(v) Liens
securing rental payments under capital lease arrangements and (vi)
other Liens
which would not, individually or in the aggregate, reasonably be
expected to
have a Material Adverse Effect on the Company.
(b) Section 5.14 of the Company Disclosure Schedule sets forth the
address
of all material real property in which the Company or any
Subsidiary of the
Company holds a leasehold or subleasehold estate (the "Leased Real
Property";
the leases or subleases for such Leased Real Property being
referred to as the
"Leases"). With respect to each of the Leases:
19
Merger Agreement
(i) the Company or such Subsidiary, as applicable, holds good and
marketable
title to the leasehold or subleasehold interest thereunder; and
(ii) neither the
Company nor any Subsidiary has assigned, subleased, mortgaged,
deeded in trust
or otherwise transferred or encumbered such Lease, or any interest
therein,
except as set forth in Section 5.14 of the Company Disclosure
Schedule.
5.15. ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 5.15 of the Company Disclosure
Schedule
or as would not, individually or in the aggregate, reasonably be
expected to
have a Material Adverse Effect on the Company: (i) the Company and
its
Subsidiaries have conducted their business in compliance with all
Environmental
Laws, including having all permits, licenses and other approvals
and
authorizations necessary for the operation
