AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

 

EXECUTION COPY

 

 

AGREEMENT AND PLAN OF MERGER

 

between

 

KOCH INDUSTRIES, INC.

 

KOCH FOREST PRODUCTS, INC.

 

and

 

GEORGIA–PACIFIC CORPORATION

 

Dated as of November 13, 2005

TABLE OF CONTENTS

 

 

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AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this “ Agreement ”), dated as of November 13, 2005, between Koch Industries, Inc., a Kansas corporation (“ Parent ”), Koch Forest Products, Inc., a Georgia corporation and an indirect wholly-owned subsidiary of Parent (“ Purchaser ”), and Georgia-Pacific Corporation, a Georgia corporation (the “ Company ”).

 

WHEREAS, the board of directors of each of Parent, Purchaser and the Company has approved, and deems it advisable and in the best interests of their respective shareholders to consummate, the acquisition of the Company by Parent upon the terms and subject to the conditions set forth herein;

 

WHEREAS, in furtherance thereof and pursuant to this Agreement, Purchaser has agreed to commence a tender offer (the “ Offer ”) to purchase all of the Common Stock of the Company (the “ Shares ”), at a price per Share of $48.00 (such amount or any greater amount per Share paid pursuant to the Offer being hereinafter referred to as the “ Offer Price ”), subject to any required withholding of Taxes, net to the seller in cash;

 

WHEREAS, the board of directors of the Company (the “ Company Board of Directors ”) has, on the terms and subject to the conditions set forth herein, approved the Offer and adopted this Agreement, and is recommending that the Company’s shareholders accept the Offer, tender their Shares to Purchaser and approve this Agreement;

 

WHEREAS, the respective Boards of Directors of Parent, Purchaser and the Company have approved the merger of Purchaser with and into the Company with the Company as the survivor, as set forth below (the “ Merger ,” and together with the Offer, the Top-Up Option and the other transactions contemplated by this Agreement, the “ Transactions ”), in accordance with the Georgia Business Corporation Code (the “ GBCC ”), and upon the terms and subject to the conditions set forth in this Agreement, whereby each issued and outstanding Share not owned directly or indirectly by Parent, Purchaser or the Company will be converted into the right to receive the Offer Price in cash; and

 

WHEREAS, Parent, Purchaser and the Company desire to (i) make certain representations and warranties, (ii) enter into certain covenants and agreements in connection with the Offer and the Merger and (iii) prescribe various conditions to the Offer and the Merger.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement agree as follows:

 

ARTICLE I.

 

THE OFFER AND MERGER

 

Section 1.1 The Offer . (a) Provided that this Agreement shall not have been terminated in accordance with Section 8.1, and subject to compliance in all material respects by

the Company with its covenants in this Section 1.1 and Section 1.2, as promptly as practicable, and in any event within ten (10) business days after the date hereof, Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”)) the Offer to purchase for cash all Shares at the Offer Price, subject to (i) there being validly tendered in the Offer (in the aggregate) and not withdrawn prior to the expiration of the Offer that number of Shares which, together with the Shares then beneficially owned by Parent or its Subsidiaries, represents at least a majority of the Shares outstanding on a fully diluted basis and no less than a majority of the voting power of the outstanding shares of capital stock of the Company entitled to vote in the election of directors or upon the approval of this Agreement, in each case on a fully diluted basis (collectively, the “ Minimum Condition ”) and (ii) the satisfaction or waiver of the other conditions and requirements set forth in Annex I. Subject to the prior satisfaction of the Minimum Condition and the prior satisfaction or waiver by Parent or Purchaser of the other conditions and requirements set forth in Annex I, Purchaser shall consummate the Offer in accordance with its terms and accept for payment and pay for all Shares tendered pursuant to the Offer as soon as practicable after Purchaser is legally permitted to do so under applicable law; provided , however , that the initial expiration date of the Offer shall be the date that is twenty (20) business days following the commencement of the Offer. The obligation of Purchaser to accept for payment and pay for any Shares validly tendered on or prior to the expiration of the Offer and not withdrawn shall be subject to the Minimum Condition and the other conditions and requirements set forth in Annex I. The Offer shall be made by means of an offer to purchase (the “ Offer to Purchase ”) that contains the terms set forth in this Agreement, the Minimum Condition and the other conditions and requirements set forth in Annex I. Neither Parent nor Purchaser may waive the Minimum Condition, decrease the Offer Price, change the form of consideration payable in the Offer, reduce the maximum number of Shares to be purchased in the Offer or impose conditions to the Offer in addition to those set forth in Annex I without the prior written consent of the Company. Notwithstanding the foregoing, (A) if, as of any scheduled expiration date of the Offer, all conditions to the Offer shall not have been satisfied or waived, Purchaser may, from time to time, in its sole discretion, extend the expiration date of the Offer for such period (not to exceed ten (10) business days on any single occasion) as Purchaser may determine, to a date that is no later than March 31, 2006, or such later date which is no later than the third (3 ^rd ) business day following the latest of (1) the date on which Parent’s and Purchaser’s rights of negotiation expire under Section 8.1(f), (2) any Recommendation Deadline and (3) the twentieth (20 ^th ) business day following receipt by Parent or Purchaser of a notice pursuant to Section 8.1(b)(ii)(B); provided , that the failure of the Offer to be consummated, at the time of such extension, shall not (other than in circumstances described in clause (3)) be a result of Parent or Purchaser having failed to comply in any material respect with its covenants or agreements contained in this Agreement and (B) if applicable, Purchaser shall extend the Offer after the acceptance of Shares thereunder for a further period of time by means of a subsequent offering period under Rule 14d-11 promulgated under the Exchange Act of not less than three (3) or more than ten (10) business days, if necessary, in order to meet the objective that there be validly tendered, in accordance with the terms of the Offer, prior to the expiration of such subsequent offering period, and not withdrawn a number of Shares which, together with Shares then beneficially owned by Parent, Purchaser and/or any other wholly-owned Subsidiary of Parent represents at least 90% of the then outstanding Shares on a fully diluted basis and (C) if, as of any scheduled expiration date of the Offer, any of the events described in paragraphs (c), (d) or

 

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(e) of Annex I has occurred and is continuing, then, at the request of the Company (received prior to the then scheduled expiration date of the Offer), Purchaser shall extend the Offer, until 5:00 p.m. New York City time on the date that is the later of (1) the date Parent would otherwise be entitled to terminate this Agreement pursuant to Section 8.1(b)(ii) or Section 8.1(b)(iii), as applicable, and (2) the third (3 ^rd ) business day following the date on which the matters which gave rise to the events described in paragraphs (c), (d) or (e) of Annex I have been cured or waived by Purchaser such that the conditions in Annex I are then satisfied or waived (it being understood that Purchaser may effect such extension through a series of extensions of such duration(s) as Purchaser may determine); provided , that the Company shall not be entitled to require Parent to extend the Offer pursuant to this clause (C) on more than one occasion.

 

(b) (i) If (A) the Company has not delivered a Notice of Acquisition Proposal, (B) the failure to achieve the Minimum Condition is not a result of the Company having failed to comply in any material respect with any of its covenants and agreements contained in this Agreement and (C) the conditions and requirements of Annex I (other than the Minimum Condition) have been satisfied or, if not then satisfied, are reasonably capable of being satisfied before March 31, 2006, then, if at any scheduled expiration date of the Offer, the Minimum Condition shall not have been satisfied, at the request of the Company (received from time to time prior to the then scheduled expiration date of the Offer and confirmed in writing), Purchaser shall extend the Offer to a date requested by the Company (but no later than five (5) business days beyond the then scheduled expiration date of the Offer on any single occasion); provided , that in no event shall Purchaser be required to extend the expiration date of the Offer to any date later than March 31, 2006 pursuant to this Section 1.1(b)(i).

 

(ii) If (A) the Company delivers a Notice of Acquisition Proposal to Parent and (B) the Company provides Parent with a written request (a “ Request ”) that Purchaser extend the expiration date of the Offer (which Request may or may not be included in, and may be delivered later than, the Notice of Acquisition Proposal), then Purchaser shall extend the Offer, to such date as is necessary to assure that the Offer does not expire until fifteen (15) business days (such date as it may be extended pursuant to this Section 1.1(b)(ii), the “ Recommendation Deadline ”) from the date the Company gives (or gave) such Notice of Acquisition Proposal; provided , that (1) the Company may not deliver a Request on more than one occasion; and (2) if the Request was delivered on or prior to the twentieth (20 ^th ) business day following the date of this Agreement and, during the four (4) business day period ending on (and including) the date on which the Recommendation Deadline occurs, the Company delivers to Parent a Notice of Acquisition Proposal relating to an Acquisition Proposal from a Person or group that does not include any Person participating (other than solely as a source of debt financing) in the Acquisition Proposal as to which the prior Notice of Acquisition Proposal relates, then Purchaser shall, upon the request of the Company, extend the expiration date of the Offer to such date as is necessary to assure that the Offer does not expire until the fifth (5 ^th ) business day following receipt of such second Notice of Acquisition Proposal and the Recommendation Deadline shall automatically be extended to such fifth (5 ^th ) business day.

 

(iii) Parent and Purchaser further agree that (A) if at any one or more scheduled expiration dates of the Offer, any of the Regulatory Conditions have not been

 

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satisfied (or such conditions have been satisfied and the date of such satisfaction is after the third (3 ^rd ) business day preceding the date of expiration of the Offer (an “ Abbreviated Expiration ”)), but at such scheduled expiration date all of the other conditions to the Offer set forth in Annex I (other than the Minimum Condition) shall then be satisfied, or if not then satisfied, are either (1) reasonably capable of being satisfied or (2) unsatisfied (or not reasonably capable of being satisfied), as a result of a breach of this Agreement by Parent or Purchaser, then, so long as the failure of the Regulatory Conditions to be satisfied shall not be a result of a breach by the Company of its obligations under this Agreement, at the request of the Company (received prior to the then-scheduled expiration date of the Offer and confirmed in writing), Purchaser shall extend the expiration date from time to time, to a date that is no later than March 31, 2006 and (B) if at any one or more scheduled expiration dates of the Offer after March 31, 2006, any of the Antitrust Conditions has not been satisfied (or there has been an Abbreviated Expiration with respect to the Antitrust Conditions), but at such scheduled expiration date all of the other conditions to the Offer set forth in Annex I (other than the Minimum Condition) shall then be satisfied, or if not then satisfied, are either (1) reasonably capable of being satisfied or (2) unsatisfied (or not reasonably capable of being satisfied), as a result of a breach of this Agreement by Parent or Purchaser, then, so long as the failure of the Antitrust Conditions to be satisfied shall not be a result of a breach by the Company of its obligations under this Agreement, at the request of the Company (received prior to the then-scheduled expiration date of the Offer and confirmed in writing), Purchaser shall extend the expiration date from time to time, to a date that is no later than September 14, 2006; provided , that in the case of clause (A) and (B) of this sentence, Purchaser shall not be required to extend the Offer by more than ten (10) business days on any single occasion or, in the case of an extension due to an Abbreviated Expiration, three (3) business days following the Abbreviated Expiration.

 

(iv) Without limiting the right of Parent and Purchaser to extend the Offer pursuant to Section 1.1(a), if at any one or more scheduled expiration dates of the Offer on or after March 31, 2006, any of the Antitrust Conditions has not been satisfied or waived (or there has been an Abbreviated Expiration with respect to the Antitrust Conditions), but on such date all of the other conditions to the Offer set forth in Annex I (other than the Minimum Condition) shall then be satisfied or waived, or if not then satisfied, are either (A) reasonably capable of being satisfied or (B) unsatisfied (or not reasonably capable of being satisfied) as a result of a breach of this Agreement by the Company or a failure of the condition set forth in clause (d) of Annex I, then, so long as the failure of the Antitrust Conditions to be satisfied shall not be a result of a breach by Parent or Purchaser of its obligations under this Agreement, Parent and Purchaser may, on one or more occasions, extend the expiration date of the Offer to a date that is no later than September 14, 2006; provided that Purchaser shall not extend the expiration date by more than ten (10) business days on any single occasion (or, in the case of an extension due to an Abbreviated Expiration, three (3) business days following the Abbreviated Expiration).

 

(v) Purchaser may (A) increase the Offer Price and extend the Offer to the extent required by applicable law in connection with such price increase and (B) subject to prior consultation with the Company, extend the expiration date of the Offer to the

 

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extent otherwise required by applicable law, in each case in their reasonable discretion and without the Company’s consent. Purchaser shall not terminate the Offer prior to any scheduled expiration date (as the same may be extended or required to be extended) without the written consent of the Company except in the event that this Agreement is terminated pursuant to Section 8.1.

 

(c) As soon as practicable on the date the Offer is commenced, Parent and Purchaser shall file with the Securities and Exchange Commission (the “ SEC ”), pursuant to Regulation M-A under the Exchange Act (“ Regulation M-A ”), a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”). The Schedule TO shall include the summary term sheet required under Regulation M-A and, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement (collectively, together with any amendments and supplements thereto, the “ Offer Documents ”). Parent and Purchaser agree to take all steps necessary to cause the Offer Documents to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Parent and Purchaser, on the one hand, and the Company, on the other hand, agree to promptly correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by applicable law. Parent and Purchaser further agree to take all steps necessary to cause the Offer Documents, as so corrected (if applicable), to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review the Schedule TO and the Offer Documents before they are filed with the SEC, and Parent and Purchaser shall give due consideration to all the reasonable additions, deletions or changes suggested thereto by the Company and its counsel. In addition, Parent and Purchaser shall provide the Company and its counsel with copies of any written comments, and shall inform them of any oral comments, that Parent, Purchaser or their counsel may receive from time to time from the SEC or its staff with respect to the Schedule TO or the Offer Documents promptly after receipt of such comments, and any written or oral responses thereto. The Company and its counsel shall be given a reasonable opportunity to review any such written responses and Parent and Purchaser shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel. If the Offer is terminated or withdrawn by Purchaser, or this Agreement is terminated prior to the purchase of Shares in the Offer, Parent and Purchaser shall promptly return, and shall cause any depository or paying agent, including the Paying Agent, acting on behalf of Parent and Purchaser, to return all tendered Shares to the registered holders thereof.

 

Section 1.2 Company Actions . (a) As soon as practicable following the filing of the Schedule TO, the Company shall, in a manner that complies with Rule 14d-9 under the Exchange Act, file with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) that shall, subject to the provisions of Section 5.2 and Section 5.3, contain the recommendation referred to in clause (iii) of Section 3.4; provided , that the Company shall use its reasonable best efforts to file the Schedule 14D-9 with the SEC contemporaneously with the filing of the Schedule TO. The Company further agrees to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws.

 

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The Company, on the one hand, and Parent and Purchaser, on the other hand, agree to promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by applicable law. The Company further agrees to take all steps necessary to cause the Schedule 14D-9, as so corrected (if applicable), to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review the Schedule 14D-9 before it is filed with the SEC and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel. In addition, the Company shall provide Parent, Purchaser and their counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after the Company’s receipt of such comments, and any written or oral responses thereto. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review any such written responses and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel.

 

(b) In connection with the Offer, the Company shall promptly furnish or cause to be furnished to Purchaser mailing labels, security position listings and any available listing or computer files containing the names and addresses of the record holders of the Shares as of the most recent practicable date, and shall promptly furnish Purchaser with such information and assistance (including, but not limited to, lists of holders of the Shares, updated promptly from time to time upon Purchaser’s request, and their addresses, mailing labels and lists of security positions) as Purchaser or its agent may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of the Shares. Except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer, the Merger and the other Transactions contemplated by this Agreement, Purchaser shall hold in confidence the information contained in any such labels, listings and files, shall use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated, shall promptly deliver to the Company all copies of such information.

 

Section 1.3 Directors . (a) Promptly upon the purchase of and payment for any Shares by Purchaser pursuant to the Offer which represent at least a majority of the Shares outstanding on a fully diluted basis and at all times thereafter, Purchaser shall be entitled to elect or designate such number of directors, rounded up to the next whole number, on the Company Board of Directors as is equal to the product of the total number of directors on the Company Board of Directors (giving effect to the directors elected or designated by Purchaser pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Purchaser and any of its affiliates bears to the total number of Shares then outstanding. The Company shall, upon Purchaser’s request at any time following the purchase of and payment for Shares pursuant to the Offer, use its best efforts to take such actions, including but not limited to promptly filling vacancies or newly created directorships on the Company Board of Directors, promptly increasing the size of the Company Board of Directors (including by amending the Bylaws of the Company if necessary so as to increase the size of the Company Board of Directors) and/or promptly securing the resignations of such number of its incumbent directors as are necessary to enable Purchaser’s designees to be so elected or designated to the Company

 

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Board of Directors, and shall use its best efforts to cause Purchaser’s designees to be so elected or designated at such time. The Company shall, upon Purchaser’s request following the purchase of and payment for Shares pursuant to the Offer, also use its best efforts to cause Persons elected or designated by Purchaser to constitute the same percentage (rounded up to the next whole number) as is on the Company Board of Directors of each committee of the Company Board of Directors to the extent permitted by applicable law and the rules of the New York Stock Exchange (the “ NYSE ”). The Company’s obligations under this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly upon execution of this Agreement take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.3(a), including mailing to shareholders (together with the Schedule 14D-9) the information required by Section 14(f) and Rule 14f-1 as is necessary to enable Purchaser’s designees to be elected or designated to the Company Board of Directors. Purchaser shall supply the Company with, and be solely responsible for, information with respect to Purchaser’s designees and Parent’s and Purchaser’s respective officers, directors and affiliates to the extent required by Section 14(f) and Rule 14f-1. The provisions of this Section 1.3(a) are in addition to and shall not limit any rights that any of Purchaser, Parent or any of their respective affiliates may have as a holder or beneficial owner of Shares as a matter of applicable law with respect to the election of directors or otherwise.

 

(b) In the event that Purchaser’s designees are elected or designated to the Company Board of Directors pursuant to Section 1.3(a), then, until the Effective Time, the Company and Parent shall use reasonable best efforts to cause the Company Board of Directors to maintain as directors the Company’s current chief executive officer and three (3) other directors who are members of the Company Board of Directors on the date hereof, each of whom, other than the Company’s chief executive officer, shall be an “independent director” as defined by Rule 303A.02 of the NYSE rules and eligible to serve on the Company’s audit committee under the Exchange Act and NYSE rules, at least one of whom shall be an “audit committee financial expert” as defined in Item 401(h) of Regulation S-K and the instructions thereto and at least two (2) of whom shall be eligible to serve on the Company’s Management Development and Compensation Committee under the terms of the Company Stock Plans and under the Exchange Act and NYSE rules (the “ Continuing Directors ”); provided , however , that if any Continuing Director is unable to serve due to death, disability or resignation, the remaining Continuing Director(s) shall be entitled to elect or designate another Person (or Persons) to fill such vacancy in conformity with the requirements of this sentence, and such Person (or Persons) shall be deemed to be a Continuing Director for purposes of this Agreement. If no Continuing Director then remains, the other directors shall designate three (3) Persons to fill such vacancies (all of whom shall meet the “independence” requirements of the preceding sentence and at least one of whom shall meet the other requirements of the preceding sentence) and such Persons shall be deemed Continuing Directors for all purposes of this Agreement. Notwithstanding anything in this Agreement to the contrary, if Purchaser’s designees constitute a majority of the Company Board of Directors after the acceptance for payment of Shares pursuant to the Offer and prior to the Effective Time, then the affirmative vote of a majority of the Continuing Directors shall (in addition to the approval rights of the Company Board of Directors or the shareholders of the Company as may be required by the Restated Articles of Incorporation of the Company (as amended, the “ Company Articles ”), the bylaws of the Company (as amended, the “ Company Bylaws ”, and together with the Company Articles, the “ Company

 

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Governing Documents ”) or applicable law) be required (i) for the Company to amend or terminate this Agreement, (ii) to exercise or waive any of the Company’s rights, benefits or remedies hereunder, if such action would materially and adversely affect the holders of Shares (other than Parent or Purchaser), (iii) to amend the Company Governing Documents if such action would materially and adversely affect the holders of Shares (other than Parent or Purchaser) or (iv) to take any other action of the Company Board of Directors under or in connection with this Agreement if such action would materially and adversely affect the holders of Shares (other than Parent or Purchaser); provided , however , that if there shall be no Continuing Directors as a result of such Persons’ deaths, disabilities or refusal to serve, then such actions may be effected by majority vote of the entire Company Board of Directors (or, to the extent permitted by the GBCC, by a committee duly constituted by the Company Board of Directors). Notwithstanding any provision of this Agreement, nothing in this Agreement shall be deemed to prevent Purchaser, its designees to the Company Board of Directors or the Company from taking any action necessary to elect to be treated as a “controlled company” as defined by NYSE Rule 303A and making all necessary filings and disclosures associated with such status. Notwithstanding any provision of this Agreement to the contrary, after the acceptance of Shares pursuant to the Offer until the Effective Time, the members of the Management Development and Compensation Committee of the Company Board of Directors who are Continuing Directors shall have the sole power and authority to interpret the Company Stock Plans.

 

Section 1.4 The Merger . (a) Subject to the terms and conditions of this Agreement, and in accordance with the GBCC, at the Effective Time, the Company and Purchaser shall consummate the Merger pursuant to which (i) Purchaser shall be merged with and into the Company and the separate corporate existence of Purchaser shall thereupon cease, (ii) the Company shall be the surviving corporation in the Merger under the name “Georgia-Pacific Corporation” and shall continue to be governed by the applicable laws of the State of Georgia and (iii) the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger. The corporation surviving the Merger is sometimes hereinafter referred to as the “ Surviving Corporation ”. The Merger shall have the effects set forth in Section 14-2-1106 of the GBCC.

 

(b) The Company Articles as in effect immediately prior to the Effective Time shall be the articles of incorporation of the Surviving Corporation until, subject to Section 6.6(c), thereafter changed or amended as provided therein or by applicable law. The Company Bylaws as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law.

 

Section 1.5 Effective Time . Parent, Purchaser and the Company shall cause appropriate articles of merger or other appropriate documents which may include a Certificate of Merger (the “ Articles of Merger ”) to be executed and filed on the Closing Date (or on such other date as Parent and the Company may agree) with the Secretary of State of the State of Georgia in accordance with the relevant provisions of the GBCC and shall make all other filings or recordings required under the GBCC, including publication of the notice of merger contemplated by Section 14-2-1105.1 of the GBCC. The Merger shall become effective at the time such Articles of Merger have been duly filed with the Secretary of State of the State of Georgia or such date and time as is agreed upon by the parties and specified in the Articles of Merger, such date and time hereinafter referred to as the “ Effective Time .”

 

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Section 1.6 Closing . The closing of the Merger (the “ Closing ”) will take place at 9:00 a.m., New York City time, on a date to be specified by the parties, such date to be no later than (i) the second business day after satisfaction or waiver of all of the conditions set forth in Article VII or (ii) if later, the date provided in Section 1.10 (the “ Closing Date ”), at the offices of Latham & Watkins LLP, 885 Third Avenue, Suite 1000, New York, New York 10022 unless another date or place is agreed to in writing by the parties hereto.

 

Section 1.7 Directors and Officers of the Surviving Corporation . The directors of Purchaser immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s articles of incorporation and bylaws.

 

Section 1.8 Subsequent Actions . If at any time after the Effective Time the Surviving Corporation shall determine, in its sole discretion, or shall be advised, that any deeds, bills of sale, instruments of conveyance, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or Purchaser acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either the Company or Purchaser, all such deeds, bills of sale, instruments of conveyance, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

 

Section 1.9 Shareholders’ Meeting . (a) As promptly as practicable following (and in any event within ten (10) business days of) the date hereof, the Company shall prepare a proxy statement relating to the Special Meeting (together with any amendments thereof or supplements thereto and any other required proxy materials, the “ Proxy Statement ”) relating to the Merger and this Agreement. As promptly as practicable following the consummation of the Offer, or if requested by Parent, as promptly as practicable following (and in any event within ten (10) business days of) the commencement of the Offer, the Company shall file the Proxy Statement with the SEC; provided, that Purchaser and its counsel shall be given a reasonable opportunity to review the Proxy Statement before it is filed with the SEC and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel with the intention, to the extent practicable, that the Proxy Statement be in a form ready to print and mail to the shareholders of the Company immediately following the acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer. Except as may otherwise be required by the fiduciary duties of the Company Board of Directors under applicable law, the Company shall include in the Proxy Statement the recommendation of the Company Board of Directors that shareholders of the Company vote in favor of the approval of the Merger and this Agreement; provided, that if such recommendation is not included therein, the Company Board of Directors shall, in accordance with Section 14-2-1103 of the GBCC,

 

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make no recommendation. The Company shall use its reasonable best efforts to obtain and furnish the information required to be included by the SEC in the Proxy Statement and, after consultation with Purchaser, respond promptly to any comments made by the SEC and its staff with respect to the Proxy Statement. The Company shall provide Purchaser and its counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement promptly after the Company’s receipt of such comments, and any written or oral responses thereto. Purchaser and its counsel shall be given a reasonable opportunity to review any such written responses and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Purchaser and its counsel. The Company, on the one hand, and Purchaser, on the other hand, agree to promptly correct any information provided by it for use in the Proxy Statement if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by law and, the Company further agrees to take all steps necessary to cause the Proxy Statement, as so corrected (if applicable), to be filed with the SEC and, if any such correction is made following the mailing of the Proxy Statement as provided in Section 1.9(b)(ii), mailed to holders of Shares, in each case as and to the extent required by applicable federal securities laws.

 

(b) The Company, acting through the Company Board of Directors, shall, in accordance with applicable law:

 

(i) (A) promptly following the commencement of the Offer, duly set a record date for, call and give notice of a special meeting of its shareholders (the “ Special Meeting ”) for the purpose of considering and taking action upon this Agreement (with the record date and meeting date set in consultation with Purchaser and it being acknowledged that (x) the record date shall be set for a time subsequent to the time that the Purchaser becomes the record holder of the Shares purchased pursuant to the Offer and the Top-Up Option, if applicable, and (y) the Company may set the record date prior to the date it calls and gives notice to its shareholders of the Special Meeting) and (B) amend the record date and/or meeting date in consultation with Purchaser to the extent necessary or desirable in connection with any extension of the Offer and to assure that the terms of clause (i)(A)(x) of this Section 1.9(b) are satisfied; and

 

(ii) if approval of the Company’s shareholders is required by applicable law in order to consummate the Merger, the Company, shall, as soon as reasonably practicable following the acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer, (A) cause the definitive Proxy Statement to be mailed to its shareholders, (B) use its reasonable best efforts to solicit from its shareholders proxies in favor of the Merger and (C) convene and hold the Special Meeting and take all other action reasonably necessary or advisable to secure the approval of stockholders required by the GBCC and any other applicable law to effect the Merger.

 

(c) Parent agrees to vote, or cause to be voted, all of the Shares then owned by it, Purchaser or any of its other wholly-owned Subsidiaries and affiliates in favor of the approval of the Merger and the adoption of this Agreement.

 

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Section 1.10 Merger Without Meeting of Shareholders . Notwithstanding Section 1.9, in the event that Parent, Purchaser and/or any other Subsidiary of Parent shall in the aggregate acquire at least ninety percent (90%) of the outstanding shares of each class of capital stock of the Company entitled to vote on the Merger, pursuant to the Offer or otherwise in accordance with the provisions hereof (including Section 2.4), the parties hereto agree, subject to Article VII, to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition (but in no event later than ten (10) business days following the date on which Purchaser becomes eligible to effect a short-form merger in accordance with Section 14-2-1104 of the GBCC), without a meeting of shareholders of the Company, in accordance with Section 14-2-1104 of the GBCC.

 

ARTICLE II.

 

CONVERSION OF SECURITIES

 

Section 2.1 Conversion of Capital Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any securities of the Company or common stock, par value $1.00 per share, of Purchaser (the “ Purchaser Common Stock ”):

 

(a) Purchaser Common Stock . Each issued and outstanding share of Purchaser Common Stock shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.80 per share, of the Surviving Corporation.

 

(b) Cancellation of Treasury Stock and Parent-Owned Stock . All Shares that are owned by the Company as treasury stock and any Shares owned by Parent, Purchaser or any other direct or indirect wholly-owned Subsidiary of Parent shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

 

(c) Conversion of Common Stock . Each issued and outstanding Share (other than Shares to be cancelled in accordance with Section 2.1(b) and other than Dissenting Shares) shall be converted into the right to receive the Offer Price, payable to the holder thereof in cash, without interest (the “ Merger Consideration ”). From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.2, without interest thereon.

 

Section 2.2 Exchange of Certificates . (a)  Paying Agent . Prior to the Effective Time, Purchaser shall designate a bank or trust company to act as agent for the holders of Shares in connection with the Merger (the “ Paying Agent ”) and to receive the funds to which holders of Shares shall become entitled pursuant to Section 2.1. Prior to the Effective Time, Parent or Purchaser shall deposit, or cause to be deposited, with the Paying Agent the aggregate Merger Consideration. Such funds shall be invested by the Paying Agent as directed by Purchaser or the Surviving Corporation pending payment thereof by the Paying Agent to the holders of the Shares; provided that such investments shall be in obligations of or guaranteed by the United States of America or of any agency thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by

 

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Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in deposit accounts, certificates of deposit or banker’s acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks with capital, surplus and undivided profits aggregating in excess of $500 million (based on the most recent financial statements of such bank which are then publicly available at the SEC or otherwise). Earnings from such investments shall be the sole and exclusive property of the Surviving Corporation, and no part of such earnings shall accrue to the benefit of holders of Shares.

 

(b) Exchange Procedures . Promptly after the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (the “ Certificates ”) and whose Shares were converted pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for effecting the surrender of the Certificates in exchange for payment of the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate and the Certificate so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition precedent of payment that (x) the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and (y) the Person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not required to be paid. Until surrendered as contemplated by this Section 2.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration in cash as contemplated by this Section 2.2, without interest thereon.

 

(c) Transfer Books; No Further Ownership Rights in Shares . At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Certificates outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II.

 

(d) Termination of Fund; No Liability . At any time following one year after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent and not disbursed (or for which disbursement is pending subject only to the Paying Agent’s routine administrative procedures) to holders of Certificates, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger

 

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Consideration payable upon due surrender of their Certificates, without any interest thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

(e) Withholding Rights . Parent, Purchaser, the Surviving Corporation and the Paying Agent, as the case may be, shall be entitled to deduct and withhold from the relevant Merger Consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts that Parent, Purchaser, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), the rules and regulations promulgated thereunder or any provision of applicable state, local or foreign law. To the extent that amounts are so withheld by Parent, Purchaser, the Surviving Corporation or the Paying Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Shares in respect of which such deduction and withholding was made by Parent, Purchaser, the Surviving Corporation or the Paying Agent and such amounts shall be remitted to the appropriate Governmental Entity in accordance with applicable law by Parent, Purchaser, the Surviving Corporation or the Paying Agent, as the case may be.

 

Section 2.3 Dissenting Shares . (a) Notwithstanding anything in this Agreement to the contrary, Shares outstanding immediately prior to the Effective Time and held by a holder who is entitled to demand and properly demands appraisal of such Shares (“ Dissenting Shares ”) pursuant to, and who complies in all respects with, Article 13 of the GBCC (the “ Dissenters Provisions ”) shall be entitled to payment of the fair value of such Dissenting Shares in accordance with the Dissenters Provisions; provided , however , that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to dissent under the Dissenters Provisions, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive the Merger Consideration.

 

(b) The Company shall serve prompt notice to Purchaser of any demands received by the Company for dissenter’s rights of any Shares, and Purchaser shall have the right to participate in all negotiations and proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Purchaser, make any payment with respect to, or settle or compromise or offer to settle or compromise, any such demand, or agree to do any of the foregoing.

 

Section 2.4 Top-Up Option . (a) The Company hereby grants to Purchaser an irrevocable option, for so long as this Agreement has not been terminated pursuant to the provisions hereof (the “ Top-Up Option ”), to purchase that number of shares of Common Stock (the “ Top-Up Option Shares ”) equal to the lowest number of shares of Common Stock that, when added to the number of shares of Common Stock owned by Parent, Purchaser and/or any other Subsidiary of Parent at the time of such exercise, shall constitute one (1) share more than 90% of the shares of Common Stock then outstanding, on a fully diluted basis, at a price per share payable in cash equal to the Offer Price; provided , however , that the Top-Up Option shall not be exercisable, unless immediately after such exercise the Purchaser would own more than ninety percent (90%) of the Common Stock then outstanding.

 

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(b) Subject to no statute, rule or regulation having been enacted or promulgated by any Governmental Entity which prohibits the consummation of the Merger and there being no order or injunction of a court of competent jurisdiction in effect preventing consummation of the Top-Up Option or the Merger, the Purchaser may exercise the Top-Up Option, in whole but not in part, at any one time after the occurrence of a Top-Up Exercise Event and prior to the earlier to occur of (x) the Effective Time and (y) the date which is fifteen (15) business days after the occurrence of a Top-Up Exercise Event. For purposes of this Agreement, a “ Top-Up Exercise Event ” shall occur if (i) Purchaser shall have accepted Shares for payment pursuant to the Offer and (ii) the issuance of Shares pursuant the Top-Up Option would not require shareholder approval under NYSE Rule 312.03.

 

(c) In the event Purchaser wishes to exercise the Top-Up Option, Purchaser shall send to the Company a written notice (a “ Top-Up Exercise Notice ,” the date of which notice is referred to herein as the “ Top-Up Notice Date ”) specifying the denominations of the certificate or certificates evidencing the Top-Up Option Shares which the Purchaser wishes to receive, and the place, time and date for the closing of the purchase and sale pursuant to the Top-Up Option (the “ Top-Up Closing ”), which date may not be more than five (5) business days, after the Top-Up Notice Date. The Company shall, promptly after receipt of the Top-Up Exercise Notice, deliver a written notice to the Purchaser confirming the number of Top-Up Option Shares and the aggregate purchase price therefor (the “ Top-Up Notice Receipt ”). At the Top-Up Closing, Purchaser shall pay the Company the aggregate price required to be paid for the Top-Up Option Shares, (i) by wire transfer of same day funds to a bank account designated by the Company in the Top-Up Notice Receipt in the amount equal to that specified in the Top-Up Notice Receipt or (ii) by delivery of a promissory note on market terms in form and substance reasonably satisfactory to the Continuing Directors and guaranteed by Parent, in the principal amount equal to the amount specified in the Top-Up Notice Receipt, and the Company shall cause to be issued to Purchaser a certificate or certificates representing the Top-Up Option Shares.

 

(d) Subject to the terms and conditions hereof, and for so long as this Agreement has not been terminated pursuant to the provisions hereof, the Company agrees that it shall at all times maintain, free from preemptive rights, sufficient authorized but unissued or treasury shares of Common Stock issuable pursuant to this Agreement so that the Top-Up Option may be exercised without additional authorization of shares of Common Stock, after giving effect to all other options, warrants, convertible securities and other rights to purchase shares of Common Stock.

 

Section 2.5 Treatment of Options, Restricted Stock and other Equity Awards . (a) Upon the consummation of the Offer each option to purchase Shares (“ Company Options ”), stock appreciation right (“ SAR ”) whether settled in cash or Shares, and Shares subject to restrictions and forfeiture (“ Restricted Stock ”) granted pursuant to the Company Stock Plans will by its terms and with no action of the Company, be fully vested. In addition, upon consummation of the Offer each performance award or unit (“ Performance Award ”), and each other deferred right to receive in the future Shares or cash measured in reference to Shares

 

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(“ Deferred Stock ”) granted pursuant to the Company Stock Plans (collectively, the “ Company Stock Rights ”), will by its terms and with no action of the Company, vest and the maximum amount of Shares or cash deliverable thereunder will be delivered as provided in the Company Stock Plans pertaining thereto.

 

(b) Any payments made pursuant to this Section 2.5 and the vesting of Restricted Stock shall be net of all applicable withholding taxes.

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the Company’s disclosure schedule delivered to Parent immediately prior to the execution of this Agreement (the “ Company Disclosure Schedule ”), the Company represents and warrants to Parent and Purchaser as set forth below. Each disclosure set forth in the Company Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual section of this Agreement and disclosure made pursuant to any section thereof shall be deemed to be disclosed on each of the other sections of the Company Disclosure Schedule to the extent the applicability of the disclosure to such other section is reasonably apparent.

 

Section 3.1 Organization . (a) The Company and each of the Company Subsidiaries is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions which recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power, as the case may be, and authority to carry on its business as now being conducted, except for those jurisdictions where the failure to be so organized, existing or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and each of the Company Subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions which recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified or licensed or to be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has delivered to or made available to Parent and Purchaser prior to the execution of this Agreement true and complete copies of any amendments to the Company Governing Documents not filed as of the date hereof with the SEC. The Company is in compliance with the terms of the Company Governing Documents.

 

(b) Subsidiaries . Exhibit 21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, includes all the Company Subsidiaries that, as of the date of this Agreement, are “ Significant Subsidiaries ” (as defined in Rule 1-02 of Regulation S-X of the SEC). All outstanding shares of capital stock of, or other Equity Interests in, each such Significant Subsidiary have been validly issued and are fully paid and nonassessable and are owned directly or indirectly by the Company, free and clear of any Liens. Other than the Company Subsidiaries, the Company does not directly or indirectly beneficially own any Equity Interests in any other Person except for non-controlling investments made in the ordinary course of business in entities which are not individually or in the aggregate material to the Company and Company Subsidiaries as a whole.

 

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Section 3.2 Capitalization . (a) The authorized capital stock of the Company consists of (i) 400,000,000 shares of common stock, $0.80 par value per share (the “ Common Stock ”), (ii) 250,000,000 shares of common stock designated as “Georgia-Pacific Corporation Timber Group Common Stock”, $0.80 par value per share (the “ Timber Group Common Stock ”); (iii) 10,000,000 shares of preferred stock, without par value per share (the “ Preferred Stock ”) and (iv) 25,000,000 shares of junior preferred stock, without par value per share (the “ Junior Preferred Stock ”). As of November 5, 2005 (the “ Measurement Date ”), (i) 260,337,551 shares of Common Stock were issued and outstanding, (ii) no shares of Timber Group Common Stock were issued and outstanding, (iii) no shares of Preferred Stock were issued and outstanding, (iv) no shares of Junior Preferred Stock were issued and outstanding, (v) 51 shares of Common Stock were issued and held in the treasury of the Company or otherwise owned by the Company, and (vi) a total of 49,819,401 shares of Common Stock were reserved for issuance pursuant to the Company Stock Plans of which 13,372,390 shares of Common Stock were subject to outstanding Company Options, SARs, Performance Awards, Deferred Stock and Restricted Stock. All of the outstanding shares of the Company’s capital stock are, and all Shares which may be issued pursuant to the exercise of outstanding Company Stock Rights will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and non-assessable. Except for issuances of Shares pursuant to Company Stock Rights described in the first sentence of Section 5.3(b), since the Measurement Date the Company has not issued any Shares or shares of Timber Group Common Stock or designated or issued any shares of Preferred Stock or Junior Preferred Stock. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) (“ Voting Debt” ) of the Company or any Company Subsidiary issued and outstanding. Except for Company Stock Rights described in the first sentence of Section 3.2(b) and the Top-Up Option, there are no (x) options, warrants, calls, pre-emptive rights, subscriptions or other rights, agreements, arrangements or commitments of any kind, including any shareholder rights plan, relating to, or the value of which is determined in reference to, the issued or unissued capital stock of the Company or any Company Subsidiary, obligating the Company or any Company Subsidiary to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any Company Subsidiary or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any Company Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment (excluding the Top-Up Option, collectively, “ Equity Interests ”) or (y) outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital stock of, or other Equity Interests in, the Company or any Company Subsidiary or any affiliate of the Company or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in the Company or any Company Subsidiary. No Company Subsidiary owns any Shares.

 

(b) As of the Measurement Date, the Company had outstanding Company Options to purchase 6,342,322 shares of Common Stock, 3,187,046 SARs, 2,508,740 Performance Awards for which a maximum of 5,017,480 shares of Common Stock may be issued, 0 shares of Common Stock deliverable as Deferred Stock and 1,334,282 shares of

 

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Restricted Stock granted under Company Stock Plans. All of such Company Stock Rights and Restricted Stock have been granted to employees or directors of the Company and the Company Subsidiaries pursuant to the Company Stock Plans. Since the Measurement Date, the Company has not granted any Company Stock Rights or shares of Restricted Stock.

 

(c) Section 3.2(c) of the Company Disclosure Schedule sets forth a listing of all outstanding Company Stock Rights and shares of Restricted Stock as of the Measurement Date and (i) the date of their grant and the portion of which that is vested as of the Measurement Date and if applicable, the exercise price therefor, (ii) the date upon which each Company Stock Right would normally be expected to expire absent termination of employment or other acceleration, and (iii) whether or not such Company Option is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

 

(d) There are no voting trusts or other agreements or understandings to which the Company or any Company Subsidiary is a party with respect to the voting of the Company’s Common Stock or any capital stock of, or other equity interest of the Company or any of the Company Subsidiaries.

 

Section 3.3 Authorization; Validity of Agreement; Company Action . The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions subject, in the case of the Merger, to the approval of this Agreement by the holders of a majority of the outstanding Shares, if required by applicable law. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Transactions, have been duly and validly authorized by the Company Board of Directors, and no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consummation by it of the Transactions, subject, in the case of the Merger, to the approval of this Agreement by the holders of a majority of the outstanding Shares, if required by applicable law. This Agreement has been duly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery hereof by Parent and Purchaser, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors’ rights generally and (ii) the remedy 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.

 

Section 3.4 Board Approvals . The Company Board of Directors, at a meeting duly called and held, has unanimously (i) determined that this Agreement, the Offer, the Merger and the other Transactions are advisable, fair to, and in the best interests of the shareholders of the Company, (ii) duly and validly approved and taken all corporate action required to be taken by the Company Board of Directors to authorize and approve the consummation of the Transactions and (iii) recommended that the shareholders of the Company accept the Offer, tender their Shares to Purchaser pursuant to the Offer, and approve and adopt this Agreement and the Merger. No further corporate action is required by the Company Board of Directors, pursuant to the GBCC or otherwise, in order for the Company to approve this Agreement or the Transactions, including the Merger, subject to the approval of this Agreement by the holders of a

 

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majority of the outstanding Shares, if required by applicable law, as contemplated by Section 1.9, which is the only shareholder vote that is required for approval of this Agreement and the consummation of the Merger by the Company.

 

Section 3.5 Consents and Approvals; No Violations . Except as set forth in Section 3.5 of the Company Disclosure Schedule, and except as may result from any facts or circumstances relating solely to Parent or Purchaser, none of the execution, delivery or performance of this Agreement by the Company or the consummation by the Company of the Transactions or the compliance by the Company with any of the provisions of this Agreement will (i) assuming the approval of this Agreement by the holders of a majority of the outstanding Shares, if required by applicable law, conflict with or result in any breach of any provision of the Company Governing Documents or the organizational documents of any Company Subsidiary, (ii) assuming the accuracy of all information regarding Parent and Purchaser heretofore provided to the Company, require any filing by the Company or any Company Subsidiary with, or the permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, foreign, federal, state, local or supernational (a “ Governmental Entity ”) (except for (A) compliance with any applicable requirements of the Exchange Act, (B) any filings as may be required under the GBCC in connection with the Merger, (C) filings, permits, authorizations, consents and approvals as may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) the EC Merger Regulation and the antitrust, merger control, competition, foreign investment or similar laws or regulations of Canada, Turkey and other non-U.S. jurisdictions, or (D) any filings required under the rules and regulations of the NYSE, (iii) result in a modification, violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, lien, indenture, lease, license, contract or agreement, or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which any of them or any of their respective properties or assets is bound (the “ Company Agreements ”) or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any Company Subsidiary or any of their respective properties or assets; except in the case of clauses (ii), (iii) and (iv) where (x) any failure to obtain such permits, authorizations, consents or approvals, (y) any failure to make such filings or (z) any such violations, rights, breaches or defaults have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 3.6 Company SEC Documents and Financial Statements . (a) The Company has filed in a timely manner with the SEC all forms, reports, schedules, statements and other documents required by it to be filed since and including December 31, 2003 under the Exchange Act or the Securities Act of 1933, as amended (the “ Securities Act ”), together with all certifications required pursuant to the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) (such documents and any other documents filed by the Company with the SEC, as have been amended since the time of their filing, collectively, the “ Company SEC Documents ”). Except as set forth in Section 3.6(a) of the Company Disclosure Schedule, no Company Subsidiary was required to, or did, make any filing with the SEC during such period. As of their respective dates the Company SEC Documents (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements

 

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made therein, in light of the circumstances under which they were made, not misleading and (b)(i) complied in all material respects with the applicable requirements of the Sarbanes-Oxley Act and (ii) complied as to form in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. None of the Company Subsidiaries is currently required to file any forms, reports or other documents with the SEC. All of the audited consolidated financial statements and unaudited consolidated interim financial statements of the Company and its consolidated Subsidiaries included in the Company SEC Documents, as amended or supplemented prior to the date hereof (collectively, the “ Financial Statements ”), (i) have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and (ii) fairly present, in all material respects, the consolidated financial position and the consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries as of the times and for the periods referred to therein (subject, in the case of unaudited statements, to normal or recurring year-end adjustments which will not be material in amount).

 

(b) Without limiting the generality of Section 3.6(a), (i) Ernst & Young LLP has not resigned or been dismissed as independent public accountant of the Company as a result of or in connection with any disagreement with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure and (ii) no executive officer of the Company has failed in any respect to make, without qualification, the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any form, report or schedule filed by the Company with the SEC since the enactment of the Sarbanes-Oxley Act.

 

Section 3.7 Internal Controls . To the knowledge of the Company, the Company and the Company Subsidiaries have designed and maintained a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient, in all material respects, to provide reasonable assurances regarding the reliability of financial reporting. To the knowledge of the Company, the Company (i) has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files, furnishes or submits under the Exchange Act is, in all material respects, recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is, in all material respects, accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and (ii) has disclosed to the Company’s auditors and the audit committee of the Company Board of Directors (and made summaries of such disclosures available to Parent) (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

 

Section 3.8 Absence of Certain Changes . (a) Except as contemplated by this Agreement and except as set forth in Section 3.8 of the Company Disclosure Schedule or in the

 

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Company SEC Documents filed or furnished (and publicly available) prior to the date hereof, since September 30, 2005 (the “ Balance Sheet Date ”), each of the Company and each Company Subsidiary has conducted its respective business in all material respects in the ordinary course of business.

 

(b) From the Balance Sheet Date through the date of this Agreement (i) no fact(s), change(s), event(s), development(s) or circumstance(s) have occurred, arisen, come into existence or become known to the Company, which have had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, and (ii) no action has been taken by the Company or any Company Subsidiary that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of Section 5.1.

 

Section 3.9 No Undisclosed Liabilities . Except (a) as disclosed in the Company SEC Documents filed or furnished (and publicly available) prior to the date hereof or the Financial Statements included therein, (b) for liabilities and obligations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (c) for liabilities and obligations incurred under this Agreement or in connection with the Transactions, (d) for liabilities and obligations for Taxes incurred in the ordinary course of business which have been paid, are not yet due and payable or are being contested in good faith and for which adequate reserves have been established in accordance with GAAP and (e) for liabilities and obligations incurred under any Company Agreement other than liabilities or obligations due to breaches thereunder, neither the Company nor any Company Subsidiary has incurred any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise required by GAAP to be recognized or disclosed on a consolidated balance sheet of the Company or any Company Subsidiary or in the notes thereto.

 

Section 3.10 Litigation . Except as set forth on Section 3.10 of the Company Disclosure Schedule, there is no claim, action, suit, arbitration, alternative dispute resolution action or any other judicial or administrative proceeding, in law or equity, pending against (or, to the Company’s knowledge, threatened against or naming as a party thereto), the Company or any Company Subsidiary or any executive officer or director of the Company or any Company Subsidiary (in their capacity as such), nor to the Company’s knowledge, is there any investigation pending or threatened against the Company or any of the Company Subsidiaries, which have had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. None of the Company or any Company Subsidiary is subject to any outstanding order, writ, injunction, decree or arbitration ruling, judgment, award or other finding, which have had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 3.11 Employee Benefit Plans; ERISA . (a) Section 3.11(a) of the Company Disclosure Schedule sets forth a correct and complete list of all material employee benefit plans, programs, agreements or arrangements, including pension, retirement, profit sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock ownership, severance pay, vacation, bonus or other incentive plans, all medical, vision, dental or other health plans, all life insurance plans, and all other employee benefit plans or fringe benefit plans, including “employee benefit plans” as that term is defined in Section 3(3) of ERISA, in each case, whether oral or written, funded or

 

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unfunded, or insured or self-insured, maintained by the Company or any Company Subsidiary, or to which the Company or any Company Subsidiary contributed or is obligated to contribute thereunder, or with respect to which the Company or any Company Subsidiary has or may have any liability (contingent or otherwise), in each case, for or to (i) any current or former employees, directors, officers or consultants of the Company or any Company Subsidiary located primarily in the United States and/or their dependents (collectively, the “ Benefit Plans ”), or (ii) any current or former employees, directors, officers or consultants of the Company or any Company Subsidiary not located primarily in the United States and/or their dependents (collectively, the “ Foreign Plans ”). For purposes of this Agreement, the term “plan,” when used with respect to Foreign Plans, shall mean a “scheme” or other employee benefit program or arrangement in accordance with specific country usage.

 

(b) All Benefit Plans that are intended to be subject to Code Section 401(a) and any trust agreement that is intended to be tax exempt under Code Section 501(a) have been determined by the Internal Revenue Service to be qualified under Code Section 401(a) and exempt from taxation under Code Section 501(a), and, to the knowledge of the Company, nothing has occurred that would adversely affect the qualification of any such plan. Except has not had and as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) each Benefit Plan and any related trust subject to ERISA complies in all material respects with and has been administered in substantial compliance with, (A) the provisions of ERISA, (B) all provisions of the Code, (C) all other applicable laws, and (D) its terms and the terms of any collective bargaining or collective labor agreements; (ii) neither the Company nor any Company Subsidiary has received any written notice from any Governmental Entity questioning or challenging such compliance; and (iii) there are no unresolved claims or disputes under the terms of, or in connection with, the Benefit Plans other than claims for benefits which are payable in the ordinary course; (iv) there has not been any “prohibited transaction” (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Benefit Plan; (v) no litigation has been commenced with respect to any Benefit Plan and, to the knowledge of the Company, no such litigation is threatened in writing (other than routine claims for benefits in the normal course); and (vi) there are no governmental audits or investigations pending or, to the knowledge of the Company, threatened in writing in connection with any Benefit Plan.

 

(c) Except as set forth in Section 3.11(c) of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate of the Company (as defined below) (i) sponsors or contributes to a Benefit Plan that is a “defined benefit plan” (as defined in ERISA Section 3(35)); (ii) has an “obligation to contribute” (as defined in ERISA Section 4212) to a Benefit Plan that is a “multiemployer plan” (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)); (iii) has any material liability, contingent or otherwise, under Title IV of ERISA with respect to a Benefit Plan, either directly or through any ERISA Affiliate; (iv) sponsors, maintains or contributes to any Benefit Plan that provides for post-retirement or other post-employment welfare benefits (other than health care continuation coverage as required by applicable law); and (v) sponsors a Foreign Plan that is or is intended to be a pension plan subject to any Canadian federal or provincial pension standards legislation or to the Income Tax Act (Canada) or, sponsors a Foreign Plan that is a defined benefit pension plan intended to be registered or approved by any Governmental Entity.

 

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(d) Except as set forth in Section 3.11(d) of the Company Disclosure Schedule, with respect of each of the Benefit Plans which is a “single-employer plan” (as defined in Section 3(41) of ERISA) subject to Title IV of ERISA, the present value of accrued benefits under such plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such plan’s actuary with respect to such plan, did not, as of its latest valuation date, exceed the then current value of the assets of such plan allocable to such accrued benefits. No Benefit Plan nor any trust established under a Benefit Plan has incurred any “accumulated funding deficiency” (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each of the Benefit Plans ended prior to the date of this Agreement.

 

(e) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) each Foreign Plan complies in all material respects with and has been administered in substantial compliance with the laws of the applicable foreign country, (ii) each Foreign Plan which, under the laws of the applicable foreign country, is required to be registered or approved by any Governmental Entity, has been so registered or approved, (iii) all contributions to each Foreign Plan required to be made by the Company or the Company Subsidiaries through the Closing Date have been or shall be made or, if applicable, shall be accrued in accordance with country-specific accounting practices, (iv) no litigation has been commenced with respect to any Foreign Plan and, to the knowledge of the Company, no such litigation is threatened in writing (other than routine claims for benefits in the normal course), and (v) there are no governmental audits or investigations pending or, to the knowledge of the Company, threatened in writing in connection with any Foreign Plan.

 

(f) Section 3.11(f) of the Company Disclosure Schedule discloses whether each Benefit Plan that is an employee welfare benefit plan is (i) unfunded or self-insured, (ii) funded through a “welfare benefit fund”, as such term is defined in Code Section 419(e) or other funding mechanism, (iii) insured or (iv) any combination of the foregoing methods. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each such employee welfare benefit plan may be amended or terminated (including with respect to benefits provided to retirees and other former employees) without liability (other than benefits then payable under such plan without regard to such amendment or termination) to the Company or any Company Subsidiary at any time. Each of the Company and the Company Subsidiaries complies in all material respects with the applicable requirements of Section 4980B(f) of the Code or any similar state statute with respect to each Benefit Plan that is a group health plan within the meaning of Section 5000(b)(1) of the Code or such state statute. Except as set forth in Section 3.11(f) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary has any material obligations for retiree health or life insurance benefits under any Benefit Plan (other than for continuation coverage under Section 4980B(f) of the Code).

 

(g) Except as may be required by applicable law, or as contemplated under this Agreement, neither the Company nor any Company Subsidiary has any plan or commitment to create any additional Benefit Plans or Foreign Plans, or to amend or modify any existing Benefit Plan or Foreign Plan in such a manner as to materially increase the cost of such Benefit Plan or Foreign Plan to the Company or any Company Subsidiary.

 

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(h) Section 3.11(h) of the Company Disclosure Schedule discloses: (i) each material payment (including any bonus, severance, unemployment compensation, deferred compensation, forgiveness of indebtedness or golden parachute payment) becoming due to any current or former employee under any Benefit Plan or Foreign Plan; (ii) any increase in any material respect any benefit otherwise payable under any Benefit Plan or Foreign Plan; (iii) any acceleration in any material respect of the time of payment or vesting of any such benefits under any Benefit Plan or Foreign Plan; or (iv) any material obligation to fund any trust or other arrangement with respect to compensation or benefits under a Benefit Plan or Foreign Plan in each case caused or triggered by the execution and delivery of this Agreement or the consummation of the Offer or the Merger or the other Transactions contemplated hereby.

 

(i) Correct and complete copies of all material Benefit Plans and material Foreign Plans (including all amendments and attachments thereto) have been delivered or made available to Parent by the Company; written summaries of any material Benefit Plan not in writing, all related trust documents; all material insurance contracts or other material funding arrangements to the degree applicable; the two (2) most recent annual information filings (Form 5500) and annual financial reports for those Benefit Plans (where required); the most recent determination letter from the Internal Revenue Service (where required); and the most recent summary plan descriptions for the material Benefit Plans and in respect of material Benefit Plans that constitute single-employer defined benefit plans of all Benefit Plans and Foreign Plans (including all amendments and attachments thereto), the most recent actuarial valuation and any subsequent valuation or funding advice (including draft valuations).

 

(j) None of the Company or any Company Subsidiary has entered into any contract, agreement or arrangement with any officer or director of the Company or any Company Subsidiary in connection with or in contemplation of the Transactions.

 

Section 3.12 Taxes . Except as would not have, individually or in the aggregate, a Company Material Adverse Effect:

 

(a) The Company and each Company Subsidiary has timely filed with the appropriate Governmental Entity all income Tax Returns and other material Tax Returns required to be filed by them, and all such Tax Returns are complete and correct in all material respects. All Taxes due by the Company and each Company Subsidiary have been paid or are being contested in good faith by appropriate proceedings, and the Company and each Company Subsidiary have provided adequate reserves in accordance with GAAP (or, in the case of foreign entities, in accordance with generally applicable accounting principles in the relevant jurisdiction) in their financial statements for any material Taxes that have not been paid. Except as set forth in Section 3.12 of the Company Disclosure Schedule, the Company has delivered or made available and will continue to make available to Purchaser or Parent complete and accurate copies of all material Tax Returns relating to any Tax periods of the Company or any Company Subsidiary that are still subject to audit by a Governmental Entity.

 

(b) There are currently no deficiencies for material Taxes that have been claimed, proposed or assessed, in each case, in writing, by any Governmental Entity against the Company or any Company Subsidiary for which adequate reserves have not been provided in the appropriate financial statements, in accordance with GAAP or the generally applicable

 

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accounting principles in the relevant jurisdiction, as the case may be. There are no pending, or, to the knowledge of the Company any threatened audits or other administrative proceedings or court proceedings with regard to any Taxes or Tax Returns of the Company or any Company Subsidiary involving a material amount of Taxes.

 

(c) The Company and each Company Subsidiary has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, partner, independent contractor, creditor, stockholder or with respect to any payments of royalties.

 

(d) None of the Company or any Company Subsidiary has engaged in any “reportable transaction” within the meaning of Treasury Regulation §1.6011-4 (other than one described in Treasury Regulation §1.6011-4(b)(6)) or any confidential corporate tax shelter within the meaning of Treasury Regulation §301.6111-2 during any open tax periods that have not been disclosed in the relevant Tax Returns of the Company or any Company Subsidiary, as the case may be, or for which adequate reserves have not been provided in the financial statements of the Company or relevant Company Subsidiary, in accordance with GAAP or the generally applicable accounting principles in the relevant jurisdiction, as the case may be.

 

(e) Each of the Company Subsidiaries organized in a foreign jurisdiction (i) has not been a passive foreign investment company within the meaning of the Code with assets in excess of $100 million; and (ii) has not participated in or cooperated with an international boycott within the meaning of Section 999(b)(3) of the Code nor has been requested to do so in connection with any transaction or proposed transaction.

 

Section 3.13 Contracts . (a) Except as filed as exhibits to the Company SEC Documents filed or furnished (and publicly available) prior to the date hereof, or as disclosed in Section 3.13 of the Company Disclosure Schedule, there is no Company Agreement which, as of the date hereof, (i) is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) that involves aggregate expenditures in excess of $100 million or (iii) that contains any non-compete or exclusivity provisions with respect to any line of business or geographic area with respect to the Company or any Company Subsidiary, or which materially restricts the conduct of any line of business by the Company or any Company Subsidiary or any geographic area in which the Company or any Company Subsidiary conducts business, in each case in any material respect. Each contract of the type described in Section 3.13, whether or not set forth in Section 3.13 of the Company Disclosure Schedule, is referred to herein as a “ Company Material Contract .” Each Company Material Contract is valid and binding on the Company and each Company Subsidiary party thereto and, to the Company’s knowledge, each other party thereto, as applicable, and in full force and effect, and the Company and each Company Subsidiary has performed in all material respects all obligations required to be performed by it under each Company Agreement and, to the Company’s knowledge, each other party to each Company Material Contract has performed in all material respects all obligations required to be performed by it under such Company Material Contract, except, in each case, as do not have and would not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect. None of the Company or any Company Subsidiary knows of, or has received notice of, any violation or default under (or any condition which with the passage of time or the giving of notice would cause such a violation of or default

 

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under) any Company Agreement except for violations or defaults that do not have and would not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(b) The Company has delivered to Parent or made available to Parent for review, prior to the execution of this Agreement, true and complete copies of all of the Company Material Contracts required to be disclosed in Section 3.13 of the Company Disclosure Schedule, which are not filed as exhibits to the Company SEC Documents and the Company Material Contracts or other Company Agreements required to be disclosed in Section 3.13 of the Company Disclosure Schedule filed as exhibits to the Company SEC Documents as true and complete copies of such contracts.

 

Section 3.14 Title to Properties; Encumbrances . The Company and each of the Company Subsidiaries has good and, in the case of real property, valid and marketable title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its real property, tangible property and other assets except where the failure to have such title has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; in each case subject to no Liens, except for (a) Liens reflected in the consolidated balance sheet of the Company as of the Balance Sheet Date, (b) Liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto, which do not materially impair the value of such properties or the use of such property by the Company or any of the Company Subsidiaries in the operation of its respective business, (c) Liens for current Taxes, assessments or governmental charges or levies on property not yet delinquent and Liens for Taxes that are being contested in good faith by appropriate proceedings and for which an adequate reserve has been provided on the appropriate financial statements, (d) inchoate mechanics’ and materialmen’s Liens for construction in progress, (e) workmen’s repairmen’s warehousemen’s and carrier’s Liens arising in the ordinary course of business and (f) Liens which have not and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries has received a notice of default under any material leases of tangible properties to which they are a party, except for (i) defaults that are not material, (ii) defaults for which the grace or cure period has not expired and which are reasonably capable of cure during the cure period, (iii) defaults which have been cured or (iv) defaults listed on Schedule 3.14 of the Company Disclosure Schedule. Except as disclosed on Schedule 3.14 or as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, all such material leases are in full force and effect, and the Company and each of the Company Subsidiaries enjoys peaceful and undisturbed possession under all such material leases.

 

Section 3.15 Intellectual Property . Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company or a Company Subsidiary owns free and clear of all Liens or has the defensible right to use, whether through ownership, licensing or otherwise, all Intellectual Property used in the businesses of the Company or any Company Subsidiary (“ Company Intellectual Property ”) in each case in substantially the same manner as such Company Intellectual Property is used in connection with such businesses as conducted on the date hereof. Except as set forth in Section 3.15 of the Company Disclosure Schedule and except as has not

 

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had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (a) no written claim of invalidity or conflicting ownership rights has been made or, to the Company’s knowledge, threatened in writing by a third party with respect to any Company Intellectual Property owned by the Company or any Company Subsidiary and no Company Intellectual Property owned by the Company or any Company Subsidiary is the subject of any pending or, to the Company’s knowledge, threatened action, suit, claim, investigation, arbitration or other proceeding alleging the foregoing, (b) no registration for any Company Intellectual Property owned by the Company or any Company Subsidiary has been adjudicated invalid, (c) other than matters that have been settled or otherwise resolved, no Person or entity has given written notice to the Company or any Company Subsidiary that the use of any Company Intellectual Property by the Company, any Company Subsidiary or any licensee of Company or any Company Subsidiary is infringing or has infringed any third party’s domestic or foreign rights in or to any Intellectual Property, or that the Company, any Company Subsidiary or any licensee of Company or any Company Subsidiary has misappropriated or improperly used or disclosed any trade secret, confidential or proprietary information or know-how, (d) to the Company’s knowledge, none of the Company Intellectual Property owned by the Company or any Company Subsidiary has been or is currently being infringed, misappropriated or otherwise violated by any third party, (e) to the Company’s knowledge, the making, using, selling, manufacturing, marketing, licensing, reproduction, distribution, or publishing of any process, machine or product in the course of Company’s business as currently conducted, does not and will not infringe any domestic or foreign rights in or to any Intellectual Property of any third party, and does not and will not involve the misappropriation or improper use or disclosure of any trade secrets, confidential or proprietary information or know-how of any third party, (f) to the Company’s knowledge, the Company Intellectual Property owned by the Company or any Company Subsidiary which is in the form of registered Intellectual Property is valid, (g) the Company and each Company Subsidiary has taken reasonable measures consistent with industry standards to safeguard the confidentiality of (1) all Company Intellectual Property comprising trade secrets or other confidential information that is owned by the Company or any Company Subsidiary and (2) all other Company Intellectual Property in their possession comprising trade secrets or other confidential information, (h) no third party has any joint ownership interest in or to any Company Intellectual Property in which Company or any Company Subsidiary claims an ownership right, (i) the execution, delivery and performance of this Agreement and each ancillary agreement by the Company and the consummation of the Transactions will not breach, violate, conflict with or impair the Company’s or any Company Subsidiary’s rights under any instrument or agreement concerning any Company Intellectual Property to which the Company or any Company Subsidiary is a party and (j) the execution, delivery and performance of this Agreement and each ancillary agreement by the Company and the consummation of the Transactions, will not cause the forfeiture or termination or give rise to a right of forfeiture or termination of any rights in or to the Company Intellectual Property owned by the Company or any Company Subsidiary or impair the right of Parent or the Surviving Corporation to make, use, sell, license or dispose of, or to bring any action for the infringement of, any Company Intellectual Property owned by the Company or any Company Subsidiary to the same extent such rights existed prior to the date hereof.

 

Section 3.16 Labor Matters . (a) The Company has previously provided to Parent a copy of each material collective bargaining or other labor union contract applicable to Persons employed by the Company or any of the Company Subsidiaries to which the Company

 

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or any of the Company Subsidiaries is a party (each a “ Company Collective Bargaining Agreement ”). As of the date of this Agreement, except as set forth on Section 3.16 of the Company Disclosure Schedules, no Company Collective Bargaining Agreement is being negotiated or renegotiated by the Company or any of the Company Subsidiaries. As of the date of this Agreement, there is no labor dispute, strike or work stoppage against the Company or any of the Company Subsidiaries pending or, to the knowledge of the Company, threatened in writing that may interfere materially with the respective business activities of the Company or any Company Subsidiary. As of the date of this Agreement, and except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the knowledge of the Company, none of the Company, any Company Subsidiary or any of their respective representatives or employees has committed any material unfair labor practice in connection with the operation of the respective businesses of the Company and the Company Subsidiaries.

 

(b) The Company and each Company Subsidiary is in compliance in all material respects with all notice and other requirements under the Workers’ Adjustment and Retraining Notification Act.

 

Section 3.17 Compliance with Laws; Permits . (a) (i) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and each Company Subsidiary have complied and are in compliance with all laws, rules and regulations, ordinances, judgments, decrees, orders, writs and injunctions of all federal, state, local and foreign governments and agencies thereof, which affect the business, properties or assets of the Company and each Company Subsidiary, and (ii) no notice, charge or assertion has been received by the Company or any Company Subsidiary or, to the Company’s knowledge, threatened in writing against the Company or any Company Subsidiary alleging any violation of any of the foregoing.

 

(b) The Company and each Company Subsidiary is in possession of all authorizations, licenses, permits, certificates, approvals and clearances of any Governmental Entity necessary for the Company and each Company Subsidiary to own, lease and operate its properties or to carry on their respective businesses substantially in the manner described in the Company SEC Documents filed or furnished (and publicly available) prior to the date hereof and substantially as it is being conducted as of the date hereof (the “ Company Permits ”), and all such Company Permits are valid, and in full force and effect, except, in each case, where the failure to have, or