Exhibit
10.1
AGREEMENT
AND PLAN OF MERGER
by and
among
CG HOLDINGS
LTD.,
MEDIANET
MERGER SUB
and
MEDIANET
GROUP TECHNOLOGIES, INC.
Dated as of
August 10, 2009
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AGREEMENT
AND PLAN OF MERGER, dated as of August 10, 2009 (the “
Agreement ”), among MediaNet Group Technologies, Inc.,
a Nevada corporation (“ Parent ”), MediaNet
Merger Sub, a Nevada corporation and a direct wholly-owned
subsidiary of Parent (“ Merger Sub ”) and CG
Holdings Ltd., a Cyprus limited company (the “ Company
”).
WHEREAS, the parties intend that Merger Sub be merged with and into
the Company (the “ Merger ”), with the Company
surviving the Merger as a wholly-owned subsidiary of Parent;
WHEREAS, the Board of Directors of the Company (the “
Company Board ”) has (a) determined that it is in
the best interests of the Company and its stockholders (which term,
as used herein, shall include members or partners, as the case may
be), and declared it advisable, to enter into this Agreement,
(b) adopted this Agreement and approved the consummation of
the transactions contemplated hereby, including the Merger, upon
the terms and subject to the conditions set forth herein and
(c) resolved to recommend approval of this Agreement and the
transactions contemplated hereby by the stockholders of the
Company;
WHEREAS, the Board of Directors of Parent (the “ Parent
Board ”) has (a) determined that it is in the best
interests of Parent and its stockholders, and declared it
advisable, to enter into this Agreement, (b) approved the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including the
Merger, and (c) resolved to recommend to its stockholders
approval of the Certificate of Amendment and the Stock
Issuance;
WHEREAS, Parent, as the sole stockholder of Merger Sub, has
approved this Agreement and the transactions contemplated hereby,
including the Merger;
WHEREAS, as an inducement to the parties entering into this
Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement
certain of the directors and officers of the Company and Parent are
entering into separate Voting Agreements pursuant to which they
have agreed to support the Merger upon the terms and conditions set
forth therein (collectively, the “ Voting Agreements
”);
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a “reorganization” within the
meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the “ Code ”), and that this
Agreement will be, and hereby is, adopted as a plan of
reorganization; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements specified
herein in connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained
herein, and intending to be legally bound hereby, Parent, Merger
Sub and the Company agree as follows:
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ARTICLE
I
THE
MERGER
1.1 The Merger
. At the Effective Time, upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the
applicable provisions of the Nevada Statutes and laws of Cyprus
governing mergers (the “ Merger Statutes ”),
Merger Sub shall be merged with and into the Company, whereupon the
separate corporate existence of Merger Sub shall cease, and the
Company shall continue its corporate existence under Cyprus law as
the surviving corporation in the Merger and a direct wholly-owned
subsidiary of Parent. (When referred to as the surviving
corporation in the Merger, the Company is called the “
Surviving Corporation .”)
1.2 Closing
. The closing of the Merger (the “ Closing
”) shall take place at the offices of Siegel, Lipman, Dunay,
Shepard & Miskel, LLP, 5355 Town Center Road, Suite 801, Boca
Raton, Florida, at 10:00 A.M., local time, on a date to be
specified by the parties (the “ Closing Date ”)
which shall be no later than the second business day after the
satisfaction or waiver (to the extent permitted by applicable Law)
of the conditions set forth in Article VI (other than those
conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of such conditions), or
at such other place, date and time as the Company and Parent may
agree in writing.
1.3 Effective
Time . On the Closing Date, the Company and Merger Sub
shall file the articles of merger (the “ Articles of
Merger ”), executed in accordance with, and containing
such information as is required by, the relevant provisions of the
Merger Statutes with the Secretary of State of the State of Nevada
and the Department of Registrar of Companies and Official Receiver,
Nicosia (the “ Cyprus Registrar ”). The Merger
shall become effective at such time as the Articles of Merger are
duly filed with the Secretary of State of the State of Nevada and
the Cyprus Registrar, or at such later time as is agreed between
the parties and specified in the Articles of Merger in accordance
with the applicable provisions of the Merger Statutes (such date
and time is hereinafter referred to as the “ Effective
Time ”).
1.4 Effects of the
Merger . The effects of the Merger shall be as provided in
this Agreement and in the applicable provisions of the Merger
Statutes. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all of the property,
rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become
the debts, liabilities and duties of the Company as the Surviving
Corporation, all as provided under the Merger Statutes.
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1.5
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Articles of Incorporation and By-laws of the Surviving
Corporation .
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(a) At the Effective Time,
the articles of incorporation of the Company as in effect
immediately prior to the Effective Time, in the form attached
hereto as Exhibit A , shall be the Memorandum of Association
of the Surviving Corporation unless thereafter amended in
accordance with applicable Law.
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(b) At the Effective Time,
the Memorandum and Articles of Association of the Company, in the
form attached hereto as Exhibit B shall be the Memorandum
and Articles of Association of the Surviving Corporation unless
thereafter amended in accordance with the provisions thereof and
hereof and applicable Law.
1.6 Directors
. The directors of the Company immediately prior to the
Effective Time shall remain the directors of the Surviving
Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation
or removal.
1.7 Officers
. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation
and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or
removal.
ARTICLE
II
CONVERSION
OF SHARES; EXCHANGE OF CERTIFICATES
2.1 Effect on
Capital Stock . At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Merger
Sub or the holders of any securities of the Company or Merger
Sub:
(a) Conversion of
Company Common Stock . Subject to Section 2.1(c), the
issued and outstanding interests, par value 2 Euros per interest,
of the Company outstanding immediately prior to the Effective Time
(such shares, collectively, “ Company Common Stock
,” and each, a “ Share ”), other than any
Cancelled Shares, shall thereupon be converted automatically into
and shall thereafter represent the right to receive that number of
fully-paid and non-assessable shares of common stock, par value
$0.001 per share (“ Parent Common Stock ”), of
Parent (the “ Merger Consideration ”), as shall
constitute 90% of the shares of Parent Common Stock then to be
outstanding, determined on a fully-diluted basis. As a result of
the Merger, at the Effective Time, each holder of Shares shall
cease to have any rights with respect thereto, except the right to
receive the Merger Consideration payable in respect of such Shares
which are issued and outstanding immediately prior to the Effective
Time, any cash in lieu of fractional shares of Parent Common Stock
payable pursuant to Section 2.1(c) and any dividends or other
distributions payable pursuant to Section 2.2(b), all to be
issued or paid, without interest, in consideration therefor upon
the surrender of such Shares.
(b) Conversion of
Merger Sub Common Stock . At the Effective Time, by virtue
of the Merger and without any action on the part of the holder
thereof, each share of common stock, par value $0.001 per share, of
Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable Share of the Surviving
Corporation and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation. From and after the
Effective Time, all certificates representing the common stock of
Merger Sub shall be deemed for all purposes to represent the number
of Shares of the Surviving Corporation into which they were
converted in accordance with the immediately preceding
sentence.
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(c) Fractional
Shares . No fractional shares of Parent Common Stock shall
be issued in the Merger, but in lieu thereof each holder of Shares
otherwise entitled to a fractional share of Parent Common Stock
will be entitled to receive, from the Parent in accordance with the
provisions of this Section 2.1(c), a cash payment in lieu of
such fractional share of Parent Common Stock equal to the product
obtained by multiplying (A) such fractional share interest to
which such holder (after taking into account all fractional share
interests then held by such holder, and rounding such fractional
share interest to four decimal places) would otherwise be entitled
by (B) the per share value calculated as the average of the
closing sale prices of one share of Parent Common Stock for the
five most recent days that the Parent Common Stock has traded
ending on the last full trading day immediately prior to the
Effective Time. The parties acknowledge that payment of cash in
lieu of fractional shares of Parent Common Stock is solely for the
purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately
bargained-for consideration. As promptly as practicable after the
determination of the aggregate amount of cash, if any, to be paid
to holders of Shares that would otherwise receive fractional shares
of Parent Common Stock, Parent shall forward payments to such
holders without interest, subject to and in accordance with the
terms of Section 2.2.
(d) Adjustments to
the Exchange Ratio . If at any time during the period
between the date of this Agreement and the Effective Time, any
change in the outstanding shares of capital stock of the Company or
Parent shall occur as a result of any reclassification, stock split
(including a reverse stock split) or combination, exchange or
readjustment of shares, or any stock dividend or stock distribution
with a record date during such period, the Exchange Ratio, the
Merger Consideration and any other similarly dependent items shall
be equitably adjusted to reflect such change.
(a) Exchange
Agent . The Parent shall act as the exchange agent (the
“ Exchange Agent ”) for the purpose of
exchanging Shares for the Merger Consideration. At the Effective
Time, Parent shall direct the Parent’s transfer agent to
issue Parent Common Stock to the Company’s shareholders in
accordance with instructions provided by the Company to the Parent
at Closing. Following the Effective Time, Parent agrees to make
available, from time-to-time as needed, cash sufficient to pay any
dividends and other distributions pursuant to Section 2.2(c).
All certificates representing shares of Parent Common Stock
(including the amount of any dividends or other distributions
payable with respect thereto pursuant to Section 2.2(c) and
cash in lieu of fractional shares of Parent Common Stock to be paid
pursuant to Section 2.1(c)) are hereinafter referred to as the
“ Exchange Fund .”
(b) Exchange
Procedures . As soon as reasonably practicable after the
Effective Time and in any event not later than the third business
day following the Effective Time, Parent shall cause its transfer
agent to mail to each holder of Shares, which at the Effective Time
were converted into the right to receive the Merger Consideration
pursuant to Section 2.1, (i) a letter of transmittal
(which shall specify that delivery shall be effected, only upon
delivery of the Shares to the Parent and which shall be in form and
substance reasonably satisfactory to Parent and the Company) and
(ii) instructions for use in effecting the surrender of the
Shares in
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exchange for certificates representing whole shares of Parent
Common Stock (or appropriate alternative arrangements shall be made
by Parent if uncertificated shares of Parent Common Stock will be
issued), cash in lieu of any fractional shares of Parent Common
Stock pursuant to Section 2.1(c) and any dividends or other
distributions payable pursuant to Section 2.2(c). Upon
surrender of Shares for cancellation to the transfer agent,
together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Parent or
its transfer agent, the holder of such Shares shall be entitled to
receive in exchange therefor that number of whole shares of Parent
Common Stock (after taking into account all Shares surrendered by
such holder) to which such holder is entitled pursuant to
Section 2.1 (which shall be in uncertificated book entry form
unless a physical certificate is requested), payment by cash or
check in lieu of fractional shares of Parent Common Stock which
such holder is entitled to receive pursuant to Section 2.1(c)
and any dividends or distributions payable pursuant to
Section 2.2(b), and the Shares so surrendered shall forthwith
be cancelled. If any portion of the Merger Consideration is to be
registered in the name of a person other than the person in whose
name the applicable surrendered Share is registered, it shall be a
condition to the registration thereof that the surrendered Share be
in proper form for transfer and that the person requesting such
delivery of the Merger Consideration pay any transfer or other
similar Taxes required as a result of such registration in the name
of a person other than the registered holder of such Share or
establish to the satisfaction of the Exchange Agent that such Tax
has been paid or is not payable. Until surrendered as contemplated
by this Section 2.2(b), each Share shall be deemed at any time
after the Effective Time to represent only the right to receive the
Merger Consideration (and any amounts to be paid pursuant to
Section 2.1(c) or Section 2.2(c)) upon such surrender. No
interest shall be paid or shall accrue on any amount payable
pursuant to Section 2.1(b) or Section 2.2(c). If any
certificate representing any Share(s) shall have been lost, stolen
or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate or evidence of shares
in book-entry form representing Parent Common Stock, require the
owner of such lost, stolen or destroyed certificate
representing any Share(s) to provide a customary affidavit and to
deliver a bond in a reasonable amount as Parent may reasonably
direct as indemnity against any claim that may be made against the
Exchange Agent, Parent or the Surviving Corporation with respect to
such certificate representing such Share(s).
(c) Distributions
with Respect to Unexchanged Shares . No dividends or other
distributions with respect to shares of Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of
any unsurrendered Share with respect to the shares of Parent Common
Stock represented thereby, and no cash payment in lieu of
fractional shares of Parent Common Stock shall be paid to any such
holder pursuant to Section 2.1(c), until in either case, such
Share has been surrendered in accordance with this Article II.
Following surrender of any such Share, there shall be paid to the
recordholder thereof, without interest, (i) promptly after
such surrender, the number of whole shares of Parent Common Stock
issuable in exchange therefor pursuant to this Article II,
together with any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to
Section 2.1(c) and the amount of dividends or other
distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common
Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the
Effective Time and a payment date subsequent to such surrender
payable with respect to such whole shares of
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Parent Common Stock. The Parent or the Surviving Corporation, as
applicable, shall be entitled to deduct and withhold from the
consideration otherwise payable under this Agreement to any holder
of Shares or holder of Restricted Shares, such amounts as are
required to be withheld or deducted under the Code or any provision
of U.S. state or local Tax Law with respect to the making of
such payment. To the extent that amounts are so withheld or
deducted and paid over to the applicable Governmental Entity, such
withheld or deducted amounts shall be treated for all purposes of
this Agreement as having been paid to the person in respect of
which such deduction and withholding were made.
(d) No Further
Ownership Rights in Company Common Stock; Closing of Transfer
Books . All shares of Parent Common Stock issued upon the
surrender for exchange of Shares in accordance with the terms of
this Article II and any cash paid pursuant to
Section 2.1(c) or Section 2.2(c) shall be deemed to have
been issued (or paid) in full satisfaction of all rights pertaining
to the Shares previously represented by such Shares. After the
Effective Time, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Shares are presented to the Company or
the Parent for any reason, they shall be cancelled and exchanged as
provided in this Article II.
(e) Termination of
Exchange Fund . Any portion of the Exchange Fund (including
the proceeds of any investments thereof) that remains undistributed
to the former holders of Shares for one year after the Effective
Time shall be delivered to the Company upon demand, and any holders
of Shares who have not theretofore complied with this
Article II shall thereafter look only to Parent for payment of
their claim for the Merger Consideration, any cash in lieu of
fractional shares of Parent Common Stock pursuant to
Section 2.1(c) and any dividends or distributions pursuant to
Section 2.2(c), subject to applicable abandoned property,
escheat or similar Law. If any certificate representing any Share
shall not have been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which
any shares of Parent Common Stock or any dividends or other
distributions payable to the holder of such certificate
representing any Share would otherwise escheat to or become the
property of any Governmental Entity), any such shares of Parent
Common Stock, dividends or other distributions in respect of such
certificate representing any Share shall, to the extent permitted
by applicable Law, become the property of Parent, free and clear of
all claims or interest of any person previously entitled
thereto.
(f) No
Liability . Notwithstanding anything in this Agreement to
the contrary, none of the Company, Parent or Merger Sub, or any
other person shall be liable to any former holder of Shares for any
amount properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the disclosure schedule delivered by the
Company to Parent immediately prior to the execution of this
Agreement (the “ Company Disclosure Schedule ”),
the
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Company represents and warrants to Parent and Merger Sub as
follows:
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3.1
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Qualification; Organization, Subsidiaries, etc .
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(a) Each of the Company
and its Subsidiaries is a legal entity duly organized, validly
existing and in good standing under the Laws of its respective
jurisdiction of organization and has all requisite corporate or
similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing
as a foreign legal entity in each jurisdiction where the ownership,
leasing or operation of its assets or properties or conduct of its
business requires such qualification, except where the failure to
be so organized, validly existing, qualified or in good standing,
or to have such power or authority, is not having or would not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. As used in this Agreement, a
“ Company Material Adverse Effect ” means an
event, change, effect, development, state of facts, condition,
circumstance or occurrence that is materially adverse to the
business, financial condition or continuing results of operations
of the Company and its Subsidiaries, taken as a whole, but shall
not be deemed to include any event, change, effect, development,
state of facts, condition, circumstance or occurrence: (i) in
or affecting economic conditions generally (including changes in
interest rates) or the financial, mortgage or securities markets in
the United States or elsewhere in the world, (ii) in or
affecting the industries in which the Company or its Subsidiaries
operate generally or in any specific jurisdiction or geographical
area or (iii) resulting from or arising out of (A) the
announcement or the existence of, or compliance with, or taking any
action required or permitted by this Agreement or the transactions
contemplated hereby, (B) any taking of any action at the
written request of Parent or Merger Sub, (C) any litigation
arising from allegations of a breach of fiduciary duty or other
violation of applicable Law relating to this Agreement or the
transactions contemplated hereby, (D) any adoption,
implementation, promulgation, repeal, modification,
reinterpretation or proposal of any rule, regulation, ordinance,
order, protocol or any other Law of or by any national, regional,
state or local Governmental Entity, (E) any changes in
accounting standards or interpretations thereof, (F) any
weather-related or other force majeure event or outbreak or
escalation of hostilities or acts of war or terrorism, except to
the extent that the Company and its Subsidiaries are adversely
affected in a disproportionate manner relative to other
participants in the industries in which the Company or its
Subsidiaries operate, or (G) any changes in the share price or
trading volume of the Shares, in the Company’s credit rating
or in any analyst’s recommendations, or the failure of the
Company to meet projections or forecasts (including any
analyst’s projections) (provided that the event, change,
effect, development, condition or occurrence underlying such change
shall not be excluded to the extent such event, change, effect,
development, condition or occurrence would otherwise constitute a
Company Material Adverse Effect).
(b) The Company has made
available to Parent prior to the date of this Agreement a true and
complete copy of the Company’s amended and restated articles
of incorporation and by-laws, each as amended through the date
hereof (collectively, the “ Company Organizational
Documents ”).
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(a) The authorized capital
stock of the Company consists of 1,000 interests in the Company,
with a stated value of two (2) Euros each. As of the close of
business on August 10, 2009 (the “ Company Capitalization
Date ”), (i) 1,000 Shares were issued and
outstanding, (ii) no Shares were held in treasury,
(iii) no Shares were issuable pursuant to the Company Stock
Plans in respect of Company Stock Options, and
(iv) no Shares were issuable pursuant to the Company
Stock Plans. All outstanding shares of Company Common Stock are,
and all Shares of Company Common Stock reserved for issuance as
noted in clauses (iii) and (iv), when issued in accordance
with the respective terms thereof, will be duly authorized, validly
issued, fully paid and nonassessable and free of pre-emptive
rights.
(b) From the close of
business on the Company Capitalization Date through the date of
this Agreement, there have been no issuances of Shares of the
capital stock or equity securities of the Company or any other
securities of the Company other than issuances of Shares pursuant
to the exercise of Company Stock Options or the settlement of
Restricted Stock Units outstanding as of the Company Capitalization
Date under the Company Stock Plans. Except as set forth in
Section 3.2(a), as of the date hereof, there are no
outstanding subscriptions, options, warrants, calls, convertible
securities or other similar rights, agreements or commitments
relating to the issuance of capital stock to which the Company or
any of its Subsidiaries is a party obligating the Company or any of
its Subsidiaries to (i) issue, transfer or sell any Shares or
other equity interests of the Company or any Subsidiary of the
Company or securities convertible into or exchangeable or
exercisable for such shares or equity interests, (ii) grant,
extend or enter into any such subscription, option, warrant, call,
convertible securities or other similar right, agreement or
commitment, (iii) redeem or otherwise acquire any such Shares
or other equity interests or (iv) provide a material amount of
funds to, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary.
(c) Except for awards to
acquire Shares under the Company Stock Plans, neither the Company
nor any of its Subsidiaries has outstanding bonds, debentures,
notes or other obligations, the holders of which have the right to
vote (or which are convertible into or exchangeable or exercisable
for securities having the right to vote) with the stockholders of
the Company on any matter.
(d) There are no
outstanding obligations of the Company or any of its Subsidiaries
restricting the transfer of, containing any right of first refusal
or granting any antidilution rights with respect to, any Shares or
other ownership interests of the Company or any of its
Subsidiaries. There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a
party with respect to the voting of the capital stock or other
equity interest of the Company or any of its Subsidiaries. No
Subsidiary of the Company owns any Shares.
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3.3
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Corporate Authority Relative to This Agreement; No
Violation .
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(a) The Company has the
requisite corporate power and authority to enter into this
Agreement and, subject to receipt of the Company Stockholder
Approval, to consummate
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the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Company Board, and the Company Board has (i) determined that
it is in the best interests of the Company and its stockholders,
and declared it advisable, to enter into this Agreement and
(ii) adopted this Agreement and approved the consummation of
the transactions contemplated hereby, including the Merger, upon
the terms and subject to the conditions set forth herein. Except
for the Company Stockholder Approval, no other corporate
proceedings on the part of the Company are necessary to authorize
the consummation of the transactions contemplated hereby. As of the
date hereof, the Company Board has resolved to recommend that the
Company’s stockholders approve this Agreement and the
transactions contemplated hereby (the “ Company
Recommendation ”) and directed that this Agreement be
submitted to the holders of Company Common Stock for approval. This
Agreement has been duly and validly executed and delivered by the
Company and, assuming this Agreement constitutes the legal, valid
and binding agreement of Parent and Merger Sub, constitutes the
legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
(b) Other than in
connection with or in compliance with (i) the Merger Statutes,
(ii) the Securities Exchange Act of 1934 (the “
Exchange Act ”), and (iii) the Securities Act of
1933 (the “ Securities Act ”), and, subject to
the accuracy of the representations and warranties of Parent and
Merger Sub in Article IV, no authorization, consent or approval of,
or filing with, any United States, state of the United States or
foreign governmental or regulatory agency, commission, court, body,
entity or authority (each, a “ Governmental Entity
”) is necessary, under applicable Law, for the consummation
by the Company of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings
that, if not obtained or made, would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse
Effect.
(c) The execution and
delivery by the Company of this Agreement do not, and, except as
described in Section 3.3(b), the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof will not (i) result in any violation of, or result in a
default (with or without notice or lapse of time, or both) under,
or require any consent or approval under, or give rise to a right
of termination, cancellation, acceleration or amendment of any
material obligation under, or give rise to (except with respect to
any Company Benefit Plans or other compensatory programs or
arrangements) any vesting, guaranteed payment or loss of a material
benefit under, any loan, guarantee of indebtedness or credit
agreement, note, bond, mortgage, indenture, lease, agreement,
contract, instrument, permit, concession, franchise, right or
license (each, a “ Contract ”) binding upon or
inuring to the benefit of the Company or any of its Subsidiaries or
result in the creation of any liens, claims, mortgages,
encumbrances, pledges, security interests, equities or charges of
any kind (each, a “ Lien ”), other than any such
Lien (A) for Taxes or governmental assessments, charges or
claims of payment not yet due, being contested in good faith or for
which adequate accruals or reserves have been established,
(B) which is a carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s or other
similar lien arising in the ordinary course of business or
(C) which would not reasonably be expected to materially
impair the continued use of a Company Owned Real Property or a
Company Leased Real Property as currently operated, upon any of the
properties or assets of the Company or any of its Subsidiaries,
(ii) conflict with or result in any violation of any
provision
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of
the articles of incorporation or by-laws or other equivalent
organizational document, in each case as amended, of the Company or
any of its Subsidiaries or (iii) conflict with or violate any
applicable Laws, other than, in the case of clauses (i) and
(iii), any such consent, approval, violation, conflict, default,
termination, cancellation, acceleration, amendment, right, loss or
Lien that would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
3.4 Reports and
Financial Statements . The consolidated financial
statements (including all related notes and schedules) of the
Company for the nine months ended June 30, 2009, (i) have been
prepared from, and are based upon the books and records of the
Company and its consolidated subsidiaries and (ii) fairly
present in all material respects the consolidated financial
position of the Company and its consolidated subsidiaries, as at
the respective dates thereof, and the consolidated results of their
operations and their consolidated cash flows for the respective
periods then ended (subject, in the case of the unaudited
statements, to normal year-end audit adjustments and to any other
adjustments described therein, including the notes thereto) in the
case of the unaudited statements, as permitted by the SEC applied
on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto).
To the knowledge of the Company, as of the date of this Agreement,
there are no SEC inquiries or investigations, other governmental
inquiries or investigations or internal investigations pending or
threatened, in each case regarding any accounting practices of the
Company.
3.5 Internal
Controls and Procedures . The Company has established and
maintains disclosure controls and procedures and internal control
over financial reporting. The Company’s disclosure controls
and procedures are reasonably designed to ensure that all material
information reported in its financial statements is recorded,
processed, summarized and reported on a timely basis, and that all
such material information is accumulated and communicated to the
Company’s management as appropriate. Based on the
Company’s management’s most recently completed
evaluation of the Company’s internal control over financial
reporting prior to the date of this Agreement, (i) to the
knowledge of the Company, the Company had no significant
deficiencies or material weaknesses in the design or operation of
its internal control over financial reporting that would reasonably
be expected to adversely affect the Company’s ability to
record, process, summarize and report financial information and
(ii) the Company does not have knowledge of any fraud, whether
or not material, that involves management or other employees who
have a significant role in the Company’s internal control
over financial reporting.
3.6 No Undisclosed
Liabilities . Except (a) as reflected or reserved
against in the Company’s consolidated balance sheets (or the
notes thereto) included in the Company’s financial
statements, (b) as permitted or contemplated by this
Agreement, (c) for liabilities and obligations incurred in the
ordinary course of business since October 1, 2008 and (d) for
liabilities or obligations which have been discharged or paid in
full in the ordinary course of business, as of the date hereof,
neither the Company nor any Subsidiary of the Company has any
liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required to be reflected on
a consolidated balance sheet of the Company and its
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consolidated Subsidiaries (or in the notes thereto), other than
those which are not having or would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse
Effect.
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3.7
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Compliance with Law; Permits .
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(a) The Company and each
of its Subsidiaries are in compliance with and are not in default
under or in violation of any applicable federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree or agency requirement of any Governmental Entity
(collectively, “ Laws ” and each, a “
Law ”), except where such non-compliance, default or
violation is not having or would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) The Company and its
Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Entity necessary for the Company and its Subsidiaries
to own, lease and operate their properties and assets or to carry
on their businesses as they are now being conducted (the “
Company Permits ”), except for any of the foregoing
franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders
related to the residential construction activities of the Company
and its Subsidiaries that the Company or such Subsidiaries have
applied for or are endeavoring to obtain in the ordinary course of
business and except where the failure to have any of the Company
Permits is not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect. All Company Permits are in full force and effect, except
where the failure to be in full force and effect is not having or
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) Notwithstanding
anything contained in this Section 3.7, no representation or
warranty shall be deemed to be made in this Section 3.7 in
respect of the matters referenced in Section 3.4 or 3.5, or in
respect of environmental, Tax, employee benefits or labor Law
matters.
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3.8
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Environmental Laws and Regulations .
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(a) Except as is not
having or would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect: (i) since
January 1, 2006, no notice, notification, demand, request for
information, citation, summons, complaint or order has been
received, no penalty has been assessed, no action, claim, suit or
proceeding is pending, and, to the knowledge of the Company, no
action, claim, suit or proceeding is threatened nor is any
investigation or review pending or threatened, in each case, by any
Governmental Entity or other person relating to the Company or any
of its Subsidiaries and relating to or arising out of any
Environmental Law; (ii) the Company and its Subsidiaries are
in compliance with all Environmental Laws with respect to their
properties and operations, and are in compliance with all permits
required under Environmental Laws for the conduct of their
respective businesses (“ Environmental Permits
”); (iii) neither the Company nor any of its
Subsidiaries is obligated to conduct or pay for, and is not
conducting or paying for, any response or corrective action
under
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any
Environmental Law at any location; and (iv) neither the
Company nor any of its Subsidiaries is party to any order, judgment
or decree that imposes any obligations under any Environmental
Law.
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(b)
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For
purposes of this Agreement:
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(i) “
Environment ” means any ambient air, surface
water, drinking water, groundwater, land surface (whether below or
above water), wetlands, subsurface strata, sediment, plant or
animal life and natural resources.
(ii) “
Environmental Law ” means any Law, any
common law theory of liability or any binding agreement issued or
entered by or with any Governmental Entity relating to:
(A) the Environment, including pollution, contamination,
cleanup, preservation, protection, mitigation and reclamation of
the Environment; (B) any discharge, emission, release or
threatened release of any Hazardous Materials, including
investigation, assessment, testing, monitoring, mitigation,
containment, removal, remediation and cleanup of any such emission,
discharge, release or threatened release or the protection of human
health from exposure to Hazardous Materials; (C) the
management of any Hazardous Materials, including the use, labeling,
processing, disposal, storage, treatment, transport or recycling of
any Hazardous Materials; or (D) the presence of Hazardous
Materials in any building, physical structure, product or
fixture.
(iii) “ Hazardous
Materials ” means any pollutant or contaminant
(including any constituent, raw material, product or by-product
thereof), petroleum, asbestos or asbestos-containing material,
polychlorinated biphenyls, lead paint, any hazardous, industrial or
solid waste, any toxic, radioactive, infectious or hazardous
substance, material or agent, or any other substance or waste
regulated under or for which liability or standards of care are
imposed by any Environmental Law.
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3.9
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Employee Benefit Plans .
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(a) Section 3.9(a) of
the Company Disclosure Schedule lists all material Company Benefit
Plans. For purposes of this Agreement, “ Company Benefit
Plans ” means all compensation or employee benefit plans,
programs, policies, agreements or other arrangements, whether or
not “employee benefit plans” (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974 (“ ERISA ”), whether or not subject to
ERISA), providing cash- or equity-based incentives, including
bonus, profit-sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock options,
phantom stock, restricted stock, restricted stock units,
performance stock, performance stock units, stock appreciation
rights, health, medical, dental, vision, disability, accident or
life insurance benefits or vacation, sick leave, holiday pay,
fringe benefit, severance, retirement, pension or savings benefits,
that are sponsored, maintained or contributed to by the Company or
any of its Subsidiaries for the benefit of current or former
employees or directors of the Company or its Subsidiaries and all
employee agreements providing compensation, vacation, holiday pay,
severance or other benefits to any current or former officer or
employee of the Company or its Subsidiaries.
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(b) Each Company Benefit
Plan has been maintained and administered in compliance with its
terms and with applicable Law, including ERISA and the Code to the
extent applicable thereto, except for such non-compliance which is
not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect. Any Company Benefit Plan intended to be qualified under
Section 401(a) or 401(k) of the Code has received a
determination letter from the Internal Revenue Service (the “
IRS ”) and, to the knowledge of the Company, after
consultation with employees of the Company who are responsible for
the day-to-day administration of such Company Benefit Plans,
(i) there are no circumstances likely to result in the
revocation of any such favorable determination letter and
(ii) there are no circumstances indicating that any such plan
is not so qualified in operation. To the knowledge of the Company,
no prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code has occurred, except as is not having
or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Neither the Company
nor any of its Subsidiaries maintains or contributes to any plan or
arrangement which provides retiree medical or welfare benefits nor
has any liability or obligation to provide such benefits, except as
required by applicable Law. There is no pending, or to the
knowledge of the Company, threatened litigation or claims (other
than routine claims for benefits) relating to the Company Benefit
Plans which are having or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
(c) None of the Company,
any of its Subsidiaries or any other person or entity that together
with any other person or entity is treated as a single employer
under Section 414 of the Code or Section 4001 of ERISA
(each, an “ ERISA Affiliate ”) contributes to or
maintains an “employee benefit plan” (within the
meaning of Section 3(3) of ERISA) (an “ ERISA
Plan ”) subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code or have contributed
to or maintained any such plan at any time during the past six
years and no liability has been or is expected to be incurred by
the Company or any of its Subsidiaries with respect to any such
plan. None of the Company, any of its Subsidiaries or any ERISA
Affiliate of the Company or its Subsidiaries has contributed, or
been obligated to contribute, to any “multiemployer
plan” (within the meaning of Section 3(37) of ERISA) at
any time during the past six years and no liability has been or is
expected to be incurred by the Company or any Subsidiary with
respect to any such plan.
(d) The consummation of
the transactions contemplated by this Agreement will not, either
alone or in combination with another event, (i) entitle any
current or former employee, consultant or officer of the Company or
any of its Subsidiaries to severance pay, unemployment compensation
or any other payment, except as expressly provided in this
Agreement or as required by applicable Law or (ii) accelerate
the time of payment or vesting, or increase the amount of
compensation due any such employee, consultant or officer, except
as expressly provided in this Agreement.
3.10 Absence of Certain Changes
or Events . From June 30, 2009, through the date of this
Agreement, (i) the businesses of the Company and its
Subsidiaries have been conducted, in all material respects, in the
ordinary course of business, and (ii) there has not been any
event, change, effect, development, state of facts, condition,
circumstance or occurrence that has had, individually or in the
aggregate, a Company Material Adverse Effect.
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3.11 Investigations;
Litigation . Except as set forth in Company Disclosure
Schedule 3.11 (a) there is no investigation or review pending
(or, to the knowledge of the Company, threatened) by any
Governmental Entity with respect to the Company or any of its
Subsidiaries, and (b) there are no actions, suits, inquiries,
investigations or proceedings pending (or, to the knowledge of the
Company, threatened) against or affecting the Company or any of its
Subsidiaries, or any of their respective properties at law or in
equity before, and there are no orders, judgments or decrees of, or
before, any Governmental Entity which, in the case of
clause (a) or (b), are having or would reasonably be expected
to have, individually or in the aggregate, a Company Material
Adverse Effect.
3.12 Information Supplied
. None of the information provided by the Company to the Parent
contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading or (b) the proxy
statement relating to the Parent Stockholders’ Meeting will,
at the date it is first mailed to the Parent’s stockholders
or at the time the Parent Stockholders’ Meeting, 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 were made, not misleading.
(a) Except as would not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, (i) other than with respect
to matters contested in good faith or for which adequate reserves
have been established (A) the Company and each of its
Subsidiaries have prepared and timely filed (taking into account
any extension of time within which to file) all Tax Returns
required to be filed by any of them and all such filed Tax Returns
are complete and accurate, and (B) the Company and each of its
Subsidiaries have paid all Taxes that are required to be paid by
any of them, (ii) all deficiencies asserted or assessed by a
taxing authority against the Company or any of its Subsidiaries
have been paid in full or are adequately reserved, (iii) as of
the date of this Agreement, there are not pending or, to the
knowledge of the Company, threatened in writing any audits,
examinations, investigations or other proceedings in respect of
income or franchise Taxes and there are no currently effective
waivers (or requests for waivers) of the time to assess any Taxes,
(iv) there are no Liens for income or franchise Taxes on any
of the assets of the Company or any of its Subsidiaries other than
Company Permitted Liens, and (v) neither the Company nor any
of its Subsidiaries (A) is a party to or is bound by any Tax
sharing, allocation or indemnification agreement with persons other
than wholly owned Subsidiaries of the Company or (B) has any
liability for Taxes of any other person (other than the Company and
its Subsidiaries), as a transferee or successor, by contract or
otherwise.
(b) As used in this
Agreement, “ Taxes ” means any and all domestic
or foreign, federal, state, local or other taxes of any kind
(together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any
Governmental Entity, including taxes on or with respect to income,
franchises, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, unemployment,
social security, workers’ compensation, margin or net worth,
and taxes in the nature of excise, withholding, ad valorem or value
added.
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(c) As used in this
Agreement, “ Tax Return ” means any return,
report or similar document (including any attached schedules) filed
or required to be filed with respect to Taxes, including any
information return, claim for refund, amended return or declaration
of estimated Taxes.
3.14 Employment and Labor
Matters . Except for such matters which are not having or
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, (a) (i) there
are no strikes or lockouts with respect to any employees of the
Company or any of its Subsidiaries (“ Company
Employees ”), (ii) the Company and its Subsidiaries
are not parties to any collective bargaining agreement and, to the
knowledge of the Company, there is no union organizing effort
pending or threatened against the Company or any of its
Subsidiaries, (iii) there is no labor dispute (other than
routine individual grievances) or labor arbitration proceeding
pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, (iv) there is no slowdown
or work stoppage in effect or, to the knowledge of the Company,
threatened with respect to Company Employees, and (v) to the
knowledge of the Company, there is no charge, complaint, or
investigation pending or threatened by any Governmental Entity
against the Company or any of its Subsidiaries concerning any
alleged violation of any applicable Law respecting employment or
employment practices, workplace health and safety, terms and
conditions of employment, wages and hours, or unfair labor
practices, and (b) the Company and its Subsidiaries are in
compliance with all applicable Laws respecting (i) employment
and employment practices, (ii) workplace health and safety,
(iii) terms and conditions of employment and wages and hours,
and (iv) unfair labor practices.
3.15 Intellectual Property
. Except as is not having or would not reasonably be expected
to have, individually or in the aggregate, a Company Material
Adverse Effect, either the Company or a Subsidiary of the Company
owns, or is licensed or otherwise possesses legally enforceable
rights to use, all material trademarks, trade names, service marks,
service names, mark registrations, logos, assumed names, registered
and unregistered copyrights, patents or applications and
registrations used in their respective businesses as currently
conducted (collectively, the “ Intellectual Property
”). Except as is not having or would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (a) there are no pending or, to the
knowledge of the Company, threatened claims by any person alleging
infringement by the Company or any of its Subsidiaries for their
use of the Intellectual Property of the Company or any of its
Subsidiaries, (b) to the knowledge of the Company, the conduct
of the business of the Company and its Subsidiaries does not
infringe any intellectual property rights of any person,
(c) neither the Company nor any of its Subsidiaries has any
claim pending of a violation or infringement by others of its
rights to or in connection with the Intellectual Property of the
Company or any of its Subsidiaries and (d) to the knowledge of
the Company, no person is infringing any Intellectual Property of
the Company or any of its Subsidiaries.
(a) The Company or its
Subsidiaries owns of record or beneficially the real property set
forth in Section 3.16 of the Company Disclosure Schedule. With
respect to the real property owned of record or beneficially by the
Company or any Subsidiary (such property
Page 16 of
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collectively, the “ Company Owned Real Property
”), except as is not having or would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) either the Company or a
Subsidiary of the Company has good and valid title to such Company
Owned Real Property, free and clear of all Liens other than any
such Lien (A) for Taxes or governmental assessments, charges
or claims of payment not yet due, being contested in good faith or
for which adequate accruals or reserves have been established,
(B) which is a carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s, or other
similar lien arising in the ordinary course of business,
(C) which is disclosed on the most recent consolidated balance
sheet of the Company or notes thereto included in the Company SEC
Documents filed prior to the date hereof or securing liabilities
reflected on such balance sheet, (D) which was incurred in the
ordinary course of business since the date of such recent
consolidated balance sheet of the Company or (E) which would
not reasonably be expected to materially impair the continued use
of a Company Owned Real Property or a Company Leased Real Property
as currently operated (each of the foregoing, a “ Company
Permitted Lien ”) (and conditions, covenants,
encroachments, easements, restrictions and other encumbrances that
do not materially adversely affect the use of the Company Owned
Real Property by the Company for residential home building),
(ii) there are no reversion rights, outstanding options or
rights of first refusal in favor of any other party to purchase,
lease, occupy or otherwise utilize such Company Owned Real Property
or any portion thereof or interest therein that would reasonably be
expected to materially adversely affect the use by the Company for
residential home building of the Company Owned Real Property
affected thereby and (iii) neither the Company nor its
Subsidiaries have collaterally assigned or granted a security
interest in the Company Owned Real Property except for Company
Permitted Liens. Neither the Company nor any of its Subsidiaries
has received notice of any pending, and to the knowledge of the
Company there is no pending or threatened condemnation or eminent
domain proceeding with respect to any Company Owned Real Property,
except proceedings which are not having or would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Except as is not
having or would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect, (i) each
material lease, sublease, license, easement and other agreement
under which the Company or any of its Subsidiaries uses or occupies
or has the right to use or occupy any material real property at
which the material operations of the Company and its Subsidiaries
are conducted (the “ Company Leased Real Property
”), is valid, binding and in full force and effect and
(ii) no uncured default of a material nature on the part of
the Company or, if applicable, its Subsidiary or, to the knowledge
of the Company, the landlord or other parties to such lease or
other agreement thereunder exists with respect to any Company
Leased Real Property. Except as is not having or would not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, the Company and each of its
Subsidiaries has a good and valid leasehold interest, subject to
the terms of any lease, sublease or other agreement applicable
thereto, in each parcel of Company Leased Real Property, free and
clear of all Liens, except for Company Permitted Liens (and
conditions, covenants, encroachments, easements, restrictions and
other encumbrances that do not adversely affect the use of the
Company Leased Real Property by the Company for residential home
building). Except as is not having or would not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect, neither the Company nor any of its
Subsidiaries has (x) received notice of any pending, and, to
the
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knowledge of the Company, there is no threatened, condemnation
proceeding with respect to any Company Leased Real Property,
(y) collaterally assigned or granted a security interest in
the Company Leased Real Property except for Company Permitted
Liens, or (z) received any written notice of any default under
lease or other agreement for a Company Leased Real Property and, to
the knowledge of Company, no event has occurred and no condition
exists that, with notice or lapse of time, or both, would
constitute a default by Company or any of its Subsidiaries, as
applicable, under any such leases and agreements.
(c) Except as is not
having or would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect, no judgment,
injunction, order, decree, statute, ordinance, rule, regulation,
moratorium, or other action by or before a Governmental Entity
exists or is pending or threatened that restricts the development
or sale of Company Owned Real Property currently under development
or all or a portion of which is being held for sale by the Company
or any of its Subsidiaries.
(d) No developer-related
charges or assessments imposed by any Governmental Entity (or any
other person) for public improvements (or otherwise) against any
Company Owned Real Property held for development, are unpaid (other
than those reflected on the most recent financial statements of the
Company, and those incurred since the date of such financial
statements of the Company to the extent in the ordinary course of
the Company’s business and consistent with past practices),
except for such charges and assessments as, in the aggregate, are
not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
3.17 Required Vote of the
Company Stockholders . The affirmative vote of a majority
of the outstanding Shares entitled to vote on this Agreement and
the Merger is the only vote of holders of securities of the Company
which is required to approve this Agreement and the Merger (the
“ Company Stockholder Approval ”).
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3.18
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Material Contracts .
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(a) Section 3.18(a)
of the Company Disclosure Schedule contains a complete list as of
the date hereof of the following types of Contracts, whether
written or oral, that are intended by the Company or any of its
Subsidiaries, as applicable, to be legally binding, and to which
the Company or any of its Subsidiaries is a party (such Contracts,
being the “ Company Material Contracts ”):
(i) each
“material contract” (as such term is defined in
Item 610(b)(10) of Regulation S-K of the SEC) with
respect to the Company and its Subsidiaries (other than
compensatory contracts with, or which include as participants, any
current or former director or officer of the Company or any of its
Subsidiaries);
(ii) all contracts and
agreements evidencing indebtedness for borrowed money in excess of
$250,000 in principal amount; and
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(iii) all non-competition
agreements or any other agreements or arrangements (A) that
materially limit or otherwise materially restrict the Company and
its Subsidiaries from conducting a material portion of the business
of the Company and its Subsidiaries, taken as a whole, or
(B) that would, after the Effective Time, materially limit or
materially restrict Parent or any of its Subsidiaries (other than
the Surviving Corporation and its Subsidiaries) from engaging or
competing in any material line of business or in any material
geographic area, or that would materially limit or materially
restrict a material portion of the business of Parent and its
Subsidiaries, taken as a whole (including for purposes of such
determination, the Surviving Corporation and its Subsidiaries),
after giving effect to the Merger.
(b) Neither the Company
nor any Subsidiary of the Company is in breach of or default under
the terms of any Company Material Contract where such breach or
default is having or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect. To the knowledge of the Company, no other party to any
Company Material Contract is in breach of or default under the
terms of any Company Material Contract where such breach or default
is having or would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. Except as is
not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect, each Company Material Contract is a legal, valid and
binding obligation of the Company or the Subsidiary of the Company
which is party thereto and, to the knowledge of the Company, of
each other party thereto, and is in full force and effect, except
that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
Laws, now or hereafter in effect, relating to creditors’
rights generally and (ii) equitable remedies of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) The Company has made
available to Parent correct and complete copies in all material
respects of all Company Material Contracts, including any material
amendments or material waivers thereto.
3.19 Finders or Brokers
. Neither the Company nor any of its Subsidiaries has employed
any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement who might be entitled
to any fee or any commission in connection with or upon
consummation of the Merger.
3.20 Insurance .
Section 3.20 of the Company Disclosure Schedule sets forth
(i) a true and complete list of the material insurance
policies covering the Company and its Subsidiaries as of the date
hereof and (ii) the last annual premium paid by the Company
for the Company’s directors’ and officers’
insurance policy. Except as is not having or would not reasonably
be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (a) each insurance policy under which
the Company or any of its Subsidiaries is an insured or otherwise
the principal beneficiary of coverage (collectively, the “
Company Insurance Policies ”) is in full force and
effect, all premiums due thereon have been paid in full and the
Company and its Subsidiaries are in compliance with the terms and
conditions of such Company Insurance Policy, (b) neither the
Company nor any of its Subsidiaries is in breach or default under
any Company
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Insurance Policy and (c) no event has occurred which, with
notice or lapse of time, would constitute such breach or default,
or permit termination or modification, under the policy.
3.21 Tax Treatment .
Neither the Company nor any of its Subsidiaries has taken or agreed
to take any action or knows of any fact that would prevent or
impede, or would be reasonably likely to prevent or impede, the
Merger from qualifying as a “reorganization” within the
meaning of Section 368(a) of the Code.
3.22 Anti-Takeover Laws
. No “moratorium,” “control share,”
“fair price,” “business combination,”
“supermajority,” “affiliate transactions”
or other anti-takeover Laws or any similar provisions under the
Company Organizational Documents are applicable to this Agreement
or the transactions contemplated hereby.
3.23 No Additional
Representations . The Company acknowledges that neither
Parent nor Merger Sub makes any representation or warranty as to
any matter whatsoever except as expressly set forth in this
Agreement or in any certificate delivered by Parent or Merger Sub
to the Company in accordance with the terms hereof, and
specifically (but without limiting the generality of the foregoing)
that neither Parent nor Merger Sub makes any representation or
warranty with respect to (a) any projections, estimates or
budgets delivered or made available to the Company (or any of their
respective affiliates or Representatives) of future revenues,
results of operations (or any component thereof), cash flows or
financial condition (or any component thereof) of Parent and its
Subsidiaries or (b) the future business and operations of
Parent and its Subsidiaries.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the Parent SEC Documents filed or furnished
with the SEC, since January 1, 2009, but prior to the date
hereof (but excluding any risk factor disclosures contained under
the heading “Risk Factors,” any disclosure of risks
included in any “forward-looking statements” disclaimer
or any other statements that are similarly predictive or
forward-looking in nature, other than, in the case of any such
disclosures or other statements, any factual or historical
information contained therein) or in the disclosure schedule
delivered by Parent to the Company immediately prior to the
execution of this Agreement (the “ Parent Disclosure
Schedule ”), Parent and Merger Sub represent and warrant
to the Company as follows:
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4.1
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Qualification; Organization, Subsidiaries, etc .
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(a) Each of Parent and
Merger Sub is a legal entity duly organized, validly existing and
in good standing under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and
authority to own, lease and operate its properties and assets and
to carry on its business as presently conducted and is qualified to
do business and is in good standing as a foreign legal entity in
each jurisdiction where the ownership, leasing or operation of its
assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, validly
existing, qualified or in good standing, or to have such power or
authority, is not having or would not reasonably be expected to
have, individually
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or
in the aggregate, a Parent Material Adverse Effect. As used in this
Agreement, a “ Parent Material Adverse Effect ”
means an event, change, effect, development, state of facts,
condition, circumstance or occurrence that is materially adverse to
the business, financial condition or continuing results of
operations of Parent and its Subsidiaries, taken as a whole, but
shall not be deemed to include any event, change, effect,
development, state of facts, condition, circumstance or occurrence:
(i) in or affecting economic conditions generally (including
changes in interest rates) or the financial, mortgage or securities
markets in the United States or elsewhere in the world,
(ii) in or affecting the industries in which Parent or its
Subsidiaries operate generally or in any specific jurisdiction or
geographical area or (iii) resulting from or arising out of
(A) the announcement or the existence of, or compliance with,
or taking any action required or permitted by this Agreement or the
transactions contemplated hereby, (B) any taking of any action
at the written request of the Company, (C) any litigation
arising from allegations of a breach of fiduciary duty or other
violation of applicable Law relating to this Agreement or the
transactions contemplated hereby, (D) any adoption,
implementation, promulgation, repeal, modification,
reinterpretation or proposal of any rule, regulation, ordinance,
order, protocol or any other Law of or by any national, regional,
state or local Governmental Entity, (E) any changes in GAAP or
accounting standards or interpretations thereof, (F) any
weather-related or other force majeure event or outbreak or
escalation of hostilities or acts of war or terrorism, except to
the extent that Parent and its Subsidiaries are adversely affected
in a disproportionate manner relative to other participants in the
industries in which Parent and its Subsidiaries operate or
(G) any changes in the share price or trading volume of the
Parent Common Stock, in Parent’s credit rating or in any
analyst’s recommendations, or the failure of Parent to meet
projections or forecasts (including any analyst’s
projections) (provided that the event, change, effect, development,
condition or occurrence underlying such change shall not be
excluded to the extent such event, change, effect, development,
condition or occurrence would otherwise constitute a Parent
Material Adverse Effect).
(b) Parent has made
available to the Company prior to the date of this Agreement a true
and complete copy of the articles of incorporation and by-laws of
Parent and Merger Sub, each as amended through the date hereof
(collectively, the “ Parent Organizational Documents
”).
(a) The authorized capital
stock of Parent consists of 50,000,000 shares of Parent Common
Stock. As of the close of business on June 30, 2009 (the “
Parent Capitalization Date ”), (i) 27,263,552
shares of Parent Common Stock were issued and outstanding,
(ii) no treasury shares, and (iii) 3,089,000 shares of
Parent Common Stock were reserved for issuance in respect of
outstanding Parent Stock Options. All outstanding shares of Parent
Common Stock are, and all shares of Parent Common Stock reserved
for issuance as noted in clause (iii), when issued in accordance
with the respective terms thereof, will be duly authorized, validly
issued, fully paid and nonassessable and free of pre-emptive
rights. The parent does not have sufficient authorized shares of
Parent Common Stock to pay the merger consideration without an
amendment to its Articles of Incorporation (the “Charter
Amendment”) upon the approving vote of its
shareholders.
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(b) From the close of
business on the Parent Capitalization Date through the date of this
Agreement, there have been no issuances of shares of the capital
stock or equity securities of Parent or any other securities of
Parent other than issuances of shares of Parent Common Stock
pursuant to the exercise of Parent Stock Options under the employee
and director stock plans of Parent. Except as set forth in
Section 4.2(a), as of the date hereof, there are no
outstanding subscriptions, options, warrants, calls, convertible
securities or other similar rights, agreements or commitments
relating to the issuance of capital stock to which Parent or any of
its Subsidiaries is a party obligating Parent or any of its
Subsidiaries to (i) issue, transfer or sell any shares of
capital stock or other equity interests of Parent or any Subsidiary
of Parent or securities convertible into or exchangeable or
exercisable for such shares or equity interests, (ii) grant,
extend or enter into any such subscription, option, warrant, call,
convertible securities or other similar right, agreement or
commitment, (iii) redeem or otherwise acquire any such shares
of capital stock or other equity interests or (iv) provide a
material amount of funds to, or make any material investment (in
the form of a loan, capital contribution or otherwise) in, any
Subsidiary.
(c) Except for awards to
acquire shares of Parent Common Stock under the employee and
director stock plans of Parent, neither Parent nor any of its
Subsidiaries has outstanding bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or which
are convertible or exchangeable into or exercisable for securities
having the right to vote) with the stockholders of Parent on any
matter.
(d) There are no
outstanding obligations of Parent or any of its Subsidiaries
restricting the transfer of, containing any right of first refusal
or granting any antidilution rights with respect to, any shares of
capital stock or other ownership interests of Parent or any of its
Subsidiaries. There are no voting trusts or other agreements or
understandings to which Parent or any of its Subsidiaries is a
party with respect to the voting of the capital stock or other
equity interest of Parent or any of its Subsidiaries.
(e) As of the date of this
Agreement, the authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $0.01 per share, all
of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective
Time all of the issued and outstanding capital stock of the
Surviving Corporation will be, owned by Parent or a direct or
indirect wholly owned Subsidiary of Parent. Merger Sub has
outstanding no option, warrant, right or any other agreement
pursuant to which any person other than Parent may acquire any
equity security of Merger Sub. Merger Sub has not conducted any
business prior to the date hereof and has, and prior to the
Effective Time will have, no assets, liabilities or obligations of
any nature other than those incident to its formation and pursuant
to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
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4.3
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Corporate Authority Relative to This Agreement; No
Violation .
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(a) Each of Parent and
Merger Sub has the requisite corporate power and authority to enter
into this Agreement and, subject to receipt of the Parent
Stockholder Approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by the Boards of Directors of Parent and
Merger Sub and by Parent, as the
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sole
stockholder of Merger Sub, and, except for the Parent Stockholder
Approvals, no other corporate proceedings on the part of Parent or
Merger Sub are necessary to authorize the consummation of the
transactions contemplated hereby. As of the date hereof, the Parent
Board has resolved to recommend that Parent’s stockholders
(A) approve an amendment to Parent’s Articles of
Incorporation to increase the total number of shares of authorized
Parent Common Stock as set forth on Section 4.3(a) of the
Parent Disclosure Schedule (the “ Charter Amendment
”) and (B) approve the issuance of shares of Parent
Common Stock in connection with the Merger (the “ Stock
Issuance ”) (collectively, the “ Parent
Recommendation ”), and has directed that the Charter
Amendment and Stock Issuance be submitted to the holders of Parent
Common Stock for approval. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub, and, assuming this
Agreement constitutes the legal, valid and binding agreement of the
Company, this Agreement constitutes the legal, valid and binding
agreement of each of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms.
(b) Other than in
connection with or in compliance with (i) the Merger Statutes,
and particularly those provisions relating to an increase in the
Parent’s authorized stock, (ii) the Exchange Act, and
(iii) the Securities Act, no authorization, consent or
approval of, or filing with, any Governmental Entity is necessary,
under applicable Law, for the consummation by Parent or Merger Sub
of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals or filings that, if not
obtained or made, would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse
Effect.
(c) The execution and
delivery by Parent and Merger Sub of this Agreement do not, and,
except as described in Section 4.3(b), the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof will not (i) result in any violation of, or result in a
default (with or without notice or lapse of time, or both) under,
or require any consent or approval under, or give rise to a right
of termination, cancellation, acceleration or amendment of any
material obligation under, or give rise to (except with respect to
any Parent Benefit Plans or other compensatory programs or
arrangements) any vesting, guaranteed payment or loss of a material
benefit under, any Contract binding upon or inuring to the benefit
of Parent or any of its Subsidiaries or result in the creation of
any Lien, other than any such Lien (A) for Taxes or
governmental assessments, charges or claims of payment not yet due,
being contested in good faith or for which adequate accruals or
reserves have been es
