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CST BRANDS, INC. | Alimentation Couche-Tard Inc | CIRCLE K STORES INC | CST Brands, Inc | ULTRA ACQUISITION CORP

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Title: AGREEMENT AND PLAN OF MERGER by and among
Governing Law: Delaware     Date: 8/23/2016
Industry: Retail (Specialty)     Law Firm: Wachtell Lipton;Baker Daniels     Sector: Services

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Exhibit 2.1

EXECUTION VERSION

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

CIRCLE K STORES INC.,

ULTRA ACQUISITION CORP.

and

CST BRANDS, INC.

Dated as of August 21, 2016

 

 

 


Table of Contents

 

 

 

 

  

Page

 

ARTICLE 1

  

THE MERGER

  

Section 1.1

 

The Merger

  

 

2

  

Section 1.2

 

Closing

  

 

2

  

Section 1.3

 

Effective Time

  

 

2

  

Section 1.4

 

Effects of the Merger

  

 

2

  

Section 1.5

 

Organizational Documents of the Surviving Corporation

  

 

2

  

Section 1.6

 

Directors of the Surviving Corporation

  

 

2

  

Section 1.7

 

Officers of the Surviving Corporation

  

 

3

  

Section 1.8

 

Headquarters

  

 

3

  

ARTICLE 2

  

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

  

Section 2.1

 

Effect on Capital Stock

  

 

3

  

Section 2.2

 

Exchange of Certificates

  

 

4

  

Section 2.3

 

Treatment of Company Equity Awards

  

 

6

  

Section 2.4

 

Employee Stock Purchase Plan

  

 

7

  

ARTICLE 3

  

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  

Section 3.1

 

Qualification; Organization; Subsidiaries

  

 

8

  

Section 3.2

 

Capitalization

  

 

8

  

Section 3.3

 

Corporate Authority Relative to This Agreement; No Violation

  

 

9

  

Section 3.4

 

Reports and Financial Statements

  

 

11

  

Section 3.5

 

Internal Controls and Procedures

  

 

12

  

Section 3.6

 

No Undisclosed Liabilities

  

 

12

  

Section 3.7

 

Compliance with Law; Permits

  

 

13

  

Section 3.8

 

Environmental Laws and Regulations

  

 

14

  

Section 3.9

 

Employee Benefit Plans

  

 

15

  

Section 3.10

 

Labor Matters

  

 

16

  

Section 3.11

 

Absence of Certain Changes or Events

  

 

17

  

Section 3.12

 

Investigations; Litigation

  

 

17

  

Section 3.13

 

Proxy Statement; Other Information

  

 

17

  

Section 3.14

 

Tax Matters

  

 

18

  

Section 3.15

 

Intellectual Property

  

 

20

  

Section 3.16

 

Real Property

  

 

20

  

Section 3.17

 

Opinions of Financial Advisors

  

 

21

  

Section 3.18

 

Required Vote of the Company Stockholders

  

 

21

  

 

-i-


Section 3.19

 

Material Contracts

  

 

21

  

Section 3.20

 

Insurance Policies

  

 

23

  

Section 3.21

 

Affiliate Party Transactions

  

 

23

  

Section 3.22

 

Finders or Brokers; Fees

  

 

23

  

Section 3.23

 

Takeover Laws

  

 

24

  

ARTICLE 4

  

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

  

Section 4.1

 

Qualification, Organization, Subsidiaries

  

 

24

  

Section 4.2

 

Corporate Authority Relative to This Agreement; No Violation

  

 

24

  

Section 4.3

 

Investigations; Litigation

  

 

25

  

Section 4.4

 

Proxy Statement; Other Information

  

 

25

  

Section 4.5

 

Financing

  

 

26

  

Section 4.6

 

Capitalization of Merger Sub

  

 

26

  

Section 4.7

 

Ownership of Common Stock

  

 

26

  

Section 4.8

 

No Additional Representations

  

 

26

  

ARTICLE 5

  

COVENANTS AND AGREEMENTS

  

Section 5.1

 

Conduct of Business by the Company

  

 

27

  

Section 5.2

 

Control of Operations

  

 

31

  

Section 5.3

 

Parent Obligations

  

 

31

  

Section 5.4

 

Access

  

 

32

  

Section 5.5

 

No Solicitation

  

 

32

  

Section 5.6

 

Proxy; Company Meeting

  

 

35

  

Section 5.7

 

Takeover Statutes; Stockholder Litigation

  

 

36

  

Section 5.8

 

Stock Exchange De-listing; 1934 Act Deregistration

  

 

37

  

Section 5.9

 

Employee Matters

  

 

37

  

Section 5.10

 

Efforts

  

 

39

  

Section 5.11

 

Indemnification and Insurance

  

 

40

  

Section 5.12

 

Financing

  

 

43

  

Section 5.13

 

Public Announcements

  

 

44

  

Section 5.14

 

Rule 16b-3

  

 

44

  

Section 5.15

 

Further Assurances

  

 

44

  

ARTICLE 6

  

CONDITIONS TO THE MERGER

  

Section 6.1

 

Conditions to Obligation of Each Party to Effect the Merger

  

 

45

  

Section 6.2

 

Conditions to Obligation of the Company to Effect the Merger

  

 

45

  

Section 6.3

 

Conditions to Obligations of Parent and Merger Sub to Effect the Merger

  

 

46

  

Section 6.4

 

Frustration of Closing Conditions

  

 

46

  

 

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ARTICLE 7

  

TERMINATION

  

Section 7.1

 

Termination or Abandonment

  

 

46

  

Section 7.2

 

Effect of Termination

  

 

48

  

Section 7.3

 

Termination Fee

  

 

48

  

ARTICLE 8

  

MISCELLANEOUS

  

Section 8.1

 

No Survival of Representations and Warranties

  

 

49

  

Section 8.2

 

Expenses

  

 

49

  

Section 8.3

 

Counterparts; Effectiveness

  

 

50

  

Section 8.4

 

Governing Law; Jurisdiction

  

 

50

  

Section 8.5

 

Specific Enforcement

  

 

50

  

Section 8.6

 

WAIVER OF JURY TRIAL

  

 

51

  

Section 8.7

 

Notices

  

 

51

  

Section 8.8

 

Assignment; Binding Effect

  

 

52

  

Section 8.9

 

Severability

  

 

52

  

Section 8.10

 

Entire Agreement; No Third-Party Beneficiaries

  

 

52

  

Section 8.11

 

Amendments; Waivers

  

 

53

  

Section 8.12

 

Headings

  

 

53

  

Section 8.13

 

Interpretation

  

 

53

  

Section 8.14

 

Obligations of Merger Sub

  

 

53

  

Section 8.15

 

Definitions

  

 

54

  

 

-iii-


AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of August 21, 2016 (this “ Agreement ”), among Circle K Stores Inc., a Texas corporation (“ Parent ”), Ultra Acquisition Corp., a Delaware corporation and an indirect, wholly owned subsidiary of Parent (“ Merger Sub ”), and CST Brands, Inc., a Delaware corporation (the “ Company ”).

W I T N E S S E T H :

WHEREAS, Parent desires to acquire the Company on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in furtherance of such acquisition of the Company by Parent, and on the terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), Merger Sub shall be merged with and into the Company (the “ Merger ”), with the Company surviving the Merger as a wholly owned subsidiary of Parent;

WHEREAS, concurrently herewith, the Company and Alimentation Couche-Tard Inc., which beneficially owns all of the outstanding shares of Parent (“ Guarantor ”), are entering into an Unconditional Guaranty (the “ Guaranty ”), pursuant to which Guarantor is guaranteeing the full and timely performance and payment of Parent’s obligations pursuant to the Merger Agreement;

WHEREAS, the Board of Directors of the Company (the “ Board of Directors ”) unanimously has (a) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement, (b) approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (c) resolved to recommend adoption of this Agreement by the stockholders of the Company;

WHEREAS, the boards of directors of Parent and Merger Sub have approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and declared it advisable for Parent and Merger Sub, respectively, to enter into this Agreement; and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements specified herein in connection with this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent, Merger Sub and the Company agree as follows:


ARTICLE 1

THE MERGER

Section 1.1 The Merger . On the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub shall merge with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue its corporate existence under Delaware law as the surviving corporation in the Merger (the “ Surviving Corporation ”).

Section 1.2 Closing . The closing of the Merger (the “ Closing ”) shall take place (a) at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019, at 10:00 a.m., local time, on the second Business Day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Article 6 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) or (b) at such other place, time and date as the Company and Parent may agree in writing. The date on which the Closing actually occurs is referred to as the “ Closing Date .”

Section 1.3 Effective Time . Subject to the provisions of this Agreement, at the Closing, the Company shall cause a certificate of merger (the “ Certificate of Merger ”) to be executed, acknowledged and filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the DGCL. The Merger shall become effective at such time as the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later date or time as may be agreed by the Company and Merger Sub and specified in the Certificate of Merger in accordance with the DGCL (the effective time of the Merger being hereinafter referred to as the “ Effective Time ”).

Section 1.4 Effects of the Merger . The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL.

Section 1.5 Organizational Documents of the Surviving Corporation . At the Effective Time, subject to Section 5.11: (a) the certificate of incorporation of the Company as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the DGCL and such certificate of incorporation; provided that at the Effective Time, such certificate of incorporation shall be amended as set forth in Annex I to this Agreement; and (b) the bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the DGCL and such bylaws.

Section 1.6 Directors of the Surviving Corporation . Subject to applicable Law, the directors of Merger Sub as of immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, incapacitation, retirement, resignation or removal.

 

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Section 1.7 Officers of the Surviving Corporation . The officers of the Company as of immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, incapacitation, retirement, resignation or removal.

Section 1.8 Headquarters . Upon the Effective Time, Parent shall cause a new Circle K division and shared service center to be based in San Antonio, Texas.

ARTICLE 2

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

Section 2.1 Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Merger Sub or the holders of any securities of the Company or Merger Sub:

(a) Conversion of Company Common Stock . Each share of common stock, par value $0.01 per share, of the Company (such shares, collectively, the “ Common Stock ,” and each, a “ Share ”) outstanding immediately prior to the Effective Time, but excluding Cancelled Shares and Dissenting Shares, shall be converted automatically into the right to receive $48.53 per Share in cash (the “ Merger Consideration ”), without interest. All Shares that have been converted into the right to receive the Merger Consideration as provided in this Section 2.1(a) shall be automatically cancelled upon the conversion thereof and shall cease to exist, and the holders of certificates that immediately prior to the Effective Time represented such Shares shall cease to have any rights with respect to such Shares other than the right to receive the Merger Consideration, without interest.

(b) Cancellation of Shares . Each Share that is owned by the Company as treasury stock or otherwise, or by Parent or Merger Sub, or by any Subsidiary of the Company, Parent or Merger Sub, immediately prior to the Effective Time (the “ Cancelled Shares ”) shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

(c) Conversion of Merger Sub Common Stock . Each share of common stock, par value $0.01 per share, of Merger Sub outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time, all certificates representing the common stock of Merger Sub shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.

(d) Dissenters’ Rights . Any provision of this Agreement to the contrary notwithstanding, if required by the DGCL (but only to the extent required thereby), Shares that are issued and outstanding immediately prior to the Effective Time (other than the Cancelled Shares) and that are held by holders of such Shares who have not voted in favor of the adoption of this Agreement or consented thereto in writing and who have properly exercised appraisal

 

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rights with respect thereto in accordance with, and who have complied with, Section 262 of the DGCL with respect to any such Shares held by any such holder (the “ Dissenting Shares ”) shall not be converted into the right to receive the Merger Consideration, and holders of such Dissenting Shares shall be entitled to receive payment of the fair value of such Dissenting Shares in accordance with the provisions of such Section 262 unless and until any such holder fails to perfect or effectively withdraws or loses its rights to appraisal and payment under the DGCL. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such rights, such Dissenting Shares will thereupon be treated as if they had been converted into, at the Effective Time, the right to receive the Merger Consideration, without any interest thereon, and the Surviving Corporation shall remain liable for payment of the Merger Consideration for such Shares. At the Effective Time, any holder of Dissenting Shares shall cease to have any rights with respect thereto, except the rights provided in Section 262 of the DGCL and as provided in the previous sentence. The Company shall give Parent (i) prompt notice of any demands received by the Company for appraisals of Shares and (ii) the opportunity to participate in all negotiations and proceedings with respect to such notices and demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal or settle any such demands.

(e) Adjustments . If, between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of the Company shall occur, including by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon with a record date during such period (but excluding the effect of any exercise of Company Options that are outstanding as of the date of this Agreement), the Merger Consideration and any other amounts payable pursuant to this Agreement shall be equitably adjusted, without duplication, to proportionally reflect such change.

Section 2.2 Exchange of Certificates .

(a) Paying Agent . At or prior to the Effective Time, Parent shall deposit, or shall cause to be deposited, with a U.S. bank or trust company that shall be appointed by Parent (and reasonably satisfactory to the Company) to act as a paying agent hereunder (the “ Paying Agent ”), in trust for the benefit of holders of the Shares, cash in U.S. dollars sufficient to pay the aggregate Merger Consideration in exchange for all of the Shares outstanding immediately prior to the Effective Time (other than the Cancelled Shares), payable upon due surrender of the certificates that immediately prior to the Effective Time represented Shares (“ Certificates ”) (or effective affidavits of loss in lieu thereof) or non-certificated Shares represented by book-entry (“ Book-Entry Shares ”) pursuant to the provisions of this Article 2 (such cash being hereinafter referred to as the “ Exchange Fund ”).

(b) Payment Procedures .

(i) As soon as reasonably practicable after the Effective Time and in any event not later than the second Business Day following the Closing Date, Parent shall instruct the Paying Agent to mail to each holder of record of Shares whose Shares were converted into the right to receive the Merger Consideration pursuant to Section 2.1, (A) a letter of transmittal, which shall specify that delivery shall be effected, and risk of loss and title to

 

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Certificates shall pass, only upon delivery of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares to the Paying Agent and shall be in such form and have such other provisions as is customary, and (B) instructions for use in effecting the surrender of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares in exchange for the Merger Consideration.

(ii) Upon surrender of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares to the Paying Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Paying Agent, the holder of such Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares shall be entitled to receive from the Exchange Fund in exchange therefor an amount in cash equal to the product of (x) the number of Shares represented by such holder’s properly surrendered Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares and (y) the Merger Consideration (less any applicable withholding Taxes). No interest shall be paid or accrued on any amount payable upon due surrender of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares. In the event of a transfer of ownership of Shares that is not registered in the transfer records of the Company, payment upon due surrender of the Certificate may be paid to such a transferee if the Certificate formerly representing such Shares is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer Taxes have been paid or are not applicable.

(iii) The Paying Agent, the Company, Parent, Merger Sub and their respective agents, as applicable, shall be entitled to deduct and withhold from any amounts otherwise payable under this Agreement such amounts as are required to be withheld or deducted under the Internal Revenue Code of 1986, as amended (the “ Code ”), and the regulations promulgated thereunder, or under any provision of state, local or foreign Tax Law with respect to the making of such payment. To the extent that amounts are so deducted or withheld, such deducted or withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction or withholding was made.

(c) Closing of Transfer Books . At the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation or the Paying Agent for transfer or any other reason, the holder of any such Certificates or Book-Entry Shares shall be given a copy of the letter of transmittal referred to in Section 2.2(b) and instructed to comply with the instructions in that letter of transmittal in order to receive the cash to which such holder is entitled pursuant to this Article 2.

(d) Termination of Exchange Fund . Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to the former holders of Shares on the six month anniversary of the Effective Time shall thereafter be delivered to the Surviving Corporation upon demand, and any former holders of Shares who have not surrendered their Shares in accordance with this Article 2 shall thereafter look only to the Surviving Corporation for payment of their claim for the Merger Consideration, without any interest thereon, upon due surrender of their Shares.

 

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(e) No Liability . Anything herein to the contrary notwithstanding, none of the Company, Parent, Merger Sub, the Surviving Corporation, the Paying Agent or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(f) Investment of Exchange Fund . The Paying Agent shall invest all cash included in the Exchange Fund as reasonably directed by Parent; provided , however , that any investment of such cash shall be limited to direct short-term obligations of, or short-term obligations fully guaranteed as to principal and interest by, the U.S. government, or any U.S. registered open end investment company holding itself out as a U.S. government money market fund. Any interest and other income resulting from such investments shall be paid to the Surviving Corporation pursuant to Section 2.2(d).

(g) Lost Certificates . In the case of any Certificate that has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Paying Agent or Parent, the posting by such Person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall issue in exchange for such lost, stolen or destroyed Certificate a check in the amount of the number of Shares represented by such lost, stolen or destroyed Certificate multiplied by the Merger Consideration (less any applicable withholding Taxes), without any interest thereon.

Section 2.3 Treatment of Company Equity Awards .

(a) Each option to purchase Shares that was granted pursuant to any Company Benefit Plan (each, a “ Company Option ”), whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, at the Effective Time, become fully vested and be converted into the right to receive an amount in cash equal to the product of (i) the excess, if any, of the Merger Consideration over the exercise price per Share of such Company Option and (ii) the total number of Shares subject to such Company Option. Parent shall cause the Surviving Corporation or one of its Subsidiaries, as applicable, to pay to the holders of Company Options the cash amounts described in the immediately preceding sentence, less such amounts as are required to be withheld or deducted under the Code or any provision of state, local or foreign Tax Law with respect to the making of such payment, within five calendar days following the Effective Time. If the applicable exercise price per Share equals or exceeds the Merger Consideration, such Company Option shall be cancelled without payment of additional consideration, and all rights with respect to such Company Option shall terminate as of the Effective Time.

(b) Each award of restricted stock units granted pursuant to any Company Benefit Plan (each, an “ RSU ”), whether vested or unvested, that is outstanding immediately prior to the Effective Time, shall as of the Effective Time, become fully vested (in the case of Company RSUs that are Market Share Unit Awards (“ MSUs ”), in respect of a number of Shares determined pursuant to the terms of the applicable award agreement with respect to performance

 

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determination in connection with a “change in control”) and be cancelled and of no further force or effect as of the Effective Time and automatically converted into the right to receive an amount in cash equal to the product of (i) the total number of Shares subject to such RSU and (ii) the Merger Consideration. Parent shall cause the Surviving Corporation or one of its Subsidiaries, as applicable, to pay to the holders of RSUs the cash amounts described in the immediately preceding sentence, less such amounts as are required to be withheld or deducted under the Code or any provision of state, local or foreign Tax Law with respect to the making of such payment, within five calendar days following the Effective Time (or such later date as is required by Section 409A of the Code).

(c) Each Share granted subject to any vesting or other lapse restrictions pursuant to any Company Benefit Plan (each, a “ Restricted Share ”), whether vested or unvested, that is outstanding immediately prior to the Effective Time, shall, at the Effective Time, become fully vested (without regard to the satisfaction of any performance condition, vesting or other lapse condition) and be converted into the right to receive an amount in cash equal to the Merger Consideration. Parent shall cause the Surviving Corporation or one of its Subsidiaries, as applicable, to pay to the holders of Restricted Shares the cash amounts described in the immediately preceding sentence, less such amounts as are required to be withheld or deducted under the Code or any provision of state, local or foreign Tax Law with respect to the making of such payment, within five calendar days following the Effective Time.

(d) Prior to the Effective Time, the Company, through its Board of Directors or an appropriate committee thereof, will adopt such resolutions as may reasonably be required to effectuate the actions contemplated by this Section 2.3.

Section 2.4 Employee Stock Purchase Plan . The Company shall take all necessary action to ensure that no new offering periods under the Company’s Employee Stock Purchase Plan (the “ ESPP ”) will commence during the period from the date of this Agreement through the Effective Time. The accumulated contributions of the participants in the current offering period shall be used to purchase Shares as of no later than ten Business Days prior to the Effective Time, and the participants’ purchase rights under such offerings shall terminate immediately after such purchase. As of no later than the Business Day immediately prior to the Effective Time, the Company shall terminate the ESPP.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in (a) the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 or CAPL’s Annual Report on Form 10-K for the year ended December 31, 2015, or any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by the Company or CAPL since December 31, 2015, in each case as filed with the SEC (other than disclosures contained therein under the captions “Risk Factors” or “Forward-Looking Statements” and any other disclosures contained therein relating to information, factors or risks that are predictive, cautionary or forward looking in nature) or (b) in the disclosure letter delivered by the Company to Parent concurrently with the execution of this Agreement (the “ Company Disclosure Letter ”) (it being agreed that disclosure of any item in any section or

 

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subsection of the Company Disclosure Letter shall be deemed disclosed with respect to any other section or subsection of the Company Disclosure Letter only to the extent the applicability of such disclosure is reasonably apparent on its face), the Company represents and warrants to Parent and Merger Sub as follows:

Section 3.1 Qualification; Organization; Subsidiaries .

(a) Each of the Company and its Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except, in each case, as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.

(b) The Company has made available to Parent true, complete and correct copies of the certificate of incorporation and bylaws of the Company in effect as of the date of this Agreement. Section 3.1(b) of the Company Disclosure Letter sets forth a true and complete list of each Non-CAPL Subsidiary of the Company, each such Non-CAPL Subsidiary’s jurisdiction of incorporation and its authorized, issued and outstanding shares of capital stock, if any, that are not owned by the Company or its Subsidiaries, in each case, as of the date hereof. All of the outstanding equity interests of each Subsidiary of the Company are duly authorized, validly issued, fully paid and nonassessable, and are owned by the Company or its Subsidiaries, free and clear of all Liens (other than Liens pursuant to the credit facilities existing on the date hereof and any restrictions imposed by applicable securities Laws or the organizational documents of any such Subsidiary). No Subsidiary of the Company owns any equity interests of the Company or securities convertible into or exchangeable for such equity interests.

Section 3.2 Capitalization .

(a) The authorized share capital of the Company consists of 250,000,000 shares of Common Stock and 20,000,000 shares of preferred stock, par value $0.01 per share (the “ Preferred Stock ”). As of August 18, 2016 (the “ Capitalization Date ”), there were: (i) 77,850,130 Shares of Common Stock issued (including Shares held by the Company in treasury), 75,684,881 Shares of Common Stock outstanding (including 1,080 unvested Restricted Shares) and no shares of Preferred Stock issued and outstanding; (ii) Company Options to purchase an aggregate of 1,698,146 Shares issued and outstanding; and (iii) 287,378 Shares of Common Stock underlying outstanding RSUs other than MSUs and (iv) 93,249 Shares of Common Stock underlying outstanding MSUs if performance conditions are satisfied at the target level or 186,498 Shares of Common Stock underlying outstanding MSUs if performance conditions are satisfied at the maximum level. All outstanding Shares are duly authorized, validly issued, fully paid and nonassessable, and are not subject to and were not issued in violation of any preemptive or similar right, purchase option, call or right of first refusal or similar right.

 

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(b) Except as set forth in Section 3.2(a) or as permitted by Section 5.1, (i) the Company does not have any shares of its capital stock issued or outstanding other than Shares of Common Stock that have become outstanding after the Capitalization Date that were reserved for issuance as of that date as set forth in Section 3.2(a), and (ii) there are no outstanding subscriptions, options, warrants, calls, rights, profits interests, stock appreciation rights, phantom stock, convertible securities or other similar rights, agreements, arrangements, undertakings or commitments of any kind to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries to (A) issue, transfer or sell any shares of capital stock or other equity interests of the Company or any Subsidiary of the Company or securities convertible into or exchangeable for such shares or equity interests, (B) grant, extend or enter into any such subscriptions, options, warrants, calls, rights, profits interests, stock appreciation rights, phantom stock, convertible securities or other similar rights, agreements, arrangements, undertakings or commitments, (C) redeem, repurchase or otherwise acquire any such shares of capital stock or other equity interests, or (D) provide a material amount of funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary. Except for the issuance of shares as set forth in clause (i) of this subsection (b) above, since the Capitalization Date to the date hereof, the Company has not declared or paid any dividend or distribution in respect of the Common Stock, and has not issued, sold, repurchased, redeemed or otherwise acquired any Common Stock, and its Board of Directors has not authorized any of the foregoing or otherwise taken any action or agreed to take any action that would have been prohibited by Section 5.1(b)(vii).

(c) Except for Equity Awards, neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote or which are convertible into, or exercisable for or exchangeable for securities having the right to vote with the stockholders of the Company on any matter.

(d) Except for the Voting Agreement entered into on October 1, 2014 with Joseph V. Topper, Jr. and certain of his affiliates, there are no voting agreements, voting trusts, stockholders agreements, proxies or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock or other equity interest of the Company or any of its Subsidiaries.

(e) Section 3.2(e) of the Company Disclosure Letter includes a complete list, as of the close of business on the Capitalization Date, of (i) (A) each outstanding Company Option, (B) each outstanding Restricted Share, and (C) each outstanding RSU (each, an “ Equity Award ”), (ii) the number of Shares of Common Stock underlying each Equity Award and (A) the target and maximum number of Shares of Common Stock underlying each such Equity Award with respect to which the performance or vesting period has not ended as of the Capitalization Date and (B) the actual number of Shares of Common Stock underlying each such Equity Award with respect to which the performance or vesting period has ended as of the Capitalization Date, (iii) the Company Benefit Plan under which each Equity Award was granted, and (iv) the exercise price, in the case of each Company Option.

Section 3.3 Corporate Authority Relative to This Agreement; No Violation .

(a) The Company has the requisite corporate power and authority to enter into and deliver this Agreement and, subject to receipt of the Company Stockholder Approval, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The

 

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Board of Directors of the Company at a duly held meeting unanimously has (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger and (iii) resolved to recommend that the stockholders of the Company adopt this Agreement (the “ Recommendation ”) and directed that such matter be submitted for consideration of the stockholders of the Company at the Company Meeting. Except for the Company Stockholder Approval and the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming this Agreement constitutes the valid and binding agreement of Parent and Merger Sub, constitutes the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.

(b) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to any Governmental Entity, other than (i) the filing of the Certificate of Merger, (ii) the filing of the pre-merger notification reports under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and the Canadian Competition Act, as amended (the “ Competition Act ”), (iii) compliance with the applicable requirements of the Exchange Act, including the filing of the Proxy Statement with the SEC, (iv) compliance with the rules and regulations of the NYSE, (v) compliance with any applicable foreign or state securities or blue sky laws and (vi) the other consents and/or notices set forth on Section 3.3(b) of the Company Disclosure Letter (collectively, clauses (i) through (vi), the “ Specified Approvals ”), and other than any consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.

(c) Assuming compliance with the matters referenced in Section 3.3(b), receipt of the Specified Approvals and the receipt of the Company Stockholder Approval, the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby do not and will not (i) contravene or conflict with, or violate or breach any provision of, the organizational or governing documents of the Company or any of its Subsidiaries, (ii) contravene or conflict with, or violate or breach any provision of, any Law binding upon or applicable to the Company or any of its Subsidiaries or any of their respective properties or assets or (iii) result in any violation of, or default (with or without notice, lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under any legally binding loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement or contract (collectively, “ Contracts ”) or Permit binding upon the Company or any of its Subsidiaries or result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company or any of its Subsidiaries, other than, in the case of clauses (ii) and (iii), any such violation, conflict, default, termination, cancellation, acceleration, right, loss or Lien that would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.

 

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Section 3.4 Reports and Financial Statements .

(a) The Company has filed or furnished all forms, documents and reports required to be filed or furnished prior to the date hereof by it with the SEC on a timely basis since December 31, 2013 (together with any documents so filed or furnished during such period on a voluntary basis, in each case as may have been amended since their filing, the “ Company SEC Documents ”). CAPL has filed or furnished all forms, documents and reports required to be filed or furnished prior to the date hereof by it with the SEC on a timely basis since December 31, 2013 (together with any documents so filed or furnished during such period on a voluntary basis, in each case as may have been amended since their filing, the “ CAPL SEC Documents ”). Each of the Company SEC Documents and CAPL SEC Documents, including all forms, documents and reports filed by the Company or CAPL with the SEC after the date hereof, as of its date, or, if amended, as finally amended prior to the date of this Agreement, complied as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the applicable rules and regulations promulgated thereunder. As of the date filed with the SEC, none of the Company SEC Documents or CAPL SEC Documents, including all forms, documents and reports filed by the Company or CAPL with the SEC after the date hereof, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each Company SEC Document or CAPL SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the Securities Act, as of the date such registration statement or amendment became effective, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. As of the date hereof, there are no material outstanding or unresolved comments received from the SEC with respect to any of the Company SEC Documents or CAPL SEC Documents.

(b) The consolidated financial statements (including all related notes and schedules) of (i) the Company included in the Company SEC Documents (if amended, as of the date of the last such amendment), and (ii) CAPL included in the CAPL SEC Documents (if amended, as of the date of the last such amendment), in each case fairly presented in all material respects the consolidated financial position of the Company or CAPL, as applicable and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto) in conformity with GAAP (except, in the case of the unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto). Except for CAPL, none of the Subsidiaries of the Company is required to file periodic reports with the SEC.

(c) No securitization transactions or other off-balance sheet arrangements (as defined in Item 303 of Regulation S-K under the Securities Act) existed or were effected by the Company, CAPL or any other Subsidiaries since December 31, 2013 and prior to the date hereof.

 

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Section 3.5 Internal Controls and Procedures .

(a) The Company has established and maintains “disclosure controls and procedures” and “internal controls over financial reporting” (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Company’s disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. The principal executive officer and principal financial officer of the Company have made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act and Rule 13a-15 under the Exchange Act. The Company’s management has completed an assessment of the effectiveness of the Company’s internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended December 31, 2015, and such assessment concluded that such controls were effective. To the Knowledge of the Company, from December 31, 2013 to the date hereof, the Company has not failed to disclose to the Company’s auditors and the audit committee of the Board of Directors (i) 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 (ii) 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.

(b) Since December 31, 2013 through the date of this Agreement, except as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect, none of the Company, any of its Subsidiaries or, to the Knowledge of the Company, any director or officer of the Company or any of its Subsidiaries has received any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices.

Section 3.6 No Undisclosed Liabilities . Except (a) as disclosed, reflected or reserved against in the audited consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2015 (or the notes thereto), (b) as incurred in connection with this Agreement, (c) for liabilities and obligations that have been incurred in the ordinary course of business consistent with past practice since December 31, 2015 and (d) for liabilities or obligations that have been discharged or paid in full, neither the Company nor any Subsidiary of the Company has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that have had or would reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.

 

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Section 3.7 Compliance with Law; Permits .

(a) The Company and each of the Company’s Subsidiaries are, and since December 31, 2013 have been, in compliance with, and are not, and since December 31, 2013 have not been, in default under or in violation of, any applicable federal, state, local, municipal, international or foreign law, statute, treaty, ordinance, rule, regulation, judgment, order, injunction, mandatory policy, binding directive, decree or agency requirement of any Governmental Entity (collectively, “ Laws ” and each, a “ Law ”) or with the applicable listing and corporate governance rules of the NYSE, except where such noncompliance, default or violation would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. The Company and each of the Company’s Subsidiaries are not, and since December 31, 2013 have not been, under investigation with respect to and, to the Knowledge of the Company, have not been threatened in writing to be charged with or given written notice of any violation of, any applicable Law or with the applicable listing and corporate governance rules of the NYSE, in each case, except as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.

(b) The Company and each of its Subsidiaries are in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, registrations, approvals and orders of any Governmental Entity (“ Permits ”) necessary for the Company and the Company’s Subsidiaries to own, lease and operate their properties and assets and to carry on their businesses as they are now being conducted (such Permits, the “ Company Permits ”), except where the failure to have any of the Company Permits would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. All Company Permits are in full force and effect, no default (with or without notice, lapse of time, or both) has occurred under any such Company Permit, and none of the Company or its Subsidiaries has received any written notice from any Governmental Entity threatening to suspend, revoke, withdraw or materially and adversely modify any such Company Permit, in each case, except as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.

(c) Neither the Company nor any of its Subsidiaries, nor to the Knowledge of the Company, any of their respective directors, officers, agents, employees or any other Persons acting on their behalf has, at any time since January 1, 2013 in the case of the Company and its Non-CAPL Subsidiaries, and since October 1, 2014 in the case of the Company’s CAPL Subsidiaries, in connection with the operation of their respective businesses, (i) used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful or unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices Act or any other similar applicable foreign, federal or state law, (ii) paid, accepted or received any unlawful contributions, payments, expenditures or gifts or (iii) violated any applicable U.S. Export and Import Laws, or made a voluntary disclosure with respect to any violation thereof, in each case other than immaterial violations of applicable Laws that are not Known to the Company.

(d) The foregoing notwithstanding, the representations and warranties in this Section 3.7 shall not be deemed to be made with respect to the Company’s compliance with, or Company Permits with respect to: (i) Environmental Laws, Hazardous Substances and any other environmental matter or (ii) Tax matters.

 

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Section 3.8 Environmental Laws and Regulations .

(a) Except as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect, since January 1, 2013 in the case of the Company and its Non-CAPL Subsidiaries, and since October 1, 2014 in the case of the Company’s CAPL Subsidiaries: (i) each of the Company and its Subsidiaries is and has been in compliance with all applicable Environmental Laws, which compliance includes obtaining, maintaining and complying with all Company Permits required under Environmental Laws (“ Environmental Permits ”) and all such Environmental Permits are in full force and effect; (ii) there has been no disposal or release of any Hazardous Substance by the Company or any of its Subsidiaries, or to the Knowledge of the Company, any other Person in any manner that would reasonably be expected to give rise to the Company or any of its Subsidiaries incurring any remedial obligation, corrective action requirement or other liability or obligation under applicable Environmental Laws or Environmental Permits; (iii) there are no investigations, actions, suits, proceedings, reviews, or inquiries pending or, to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries involving any real property currently or formerly owned, operated or leased by or for the Company or any of its Subsidiaries alleging noncompliance with or liability under any Environmental Law or Environmental Permit; and (iv) as of the date hereof, the Company’s and its Subsidiaries’ underground storage tank systems (“ UST Systems ”) comply with all applicable requirements relating to the registration, reporting, licensing, use and maintenance of UST Systems such that its UST Systems (and the Company or its Subsidiary as the owner and/or operator thereof) qualify for inclusion in all applicable government funds for the reimbursement of corrective action costs relating to UST Systems (“ UST Funds ”) and for all applicable reimbursement pursuant to such UST Funds.

(b) As used herein, “ Environmental Law ” means any Law relating to (i) the protection, preservation or restoration of the indoor or outdoor environment (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (ii) any pollutant, contaminant, waste, or toxic or otherwise hazardous substance, including the exposure thereto, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or threatened release or disposal thereof.

(c) As used herein, “ Hazardous Substance ” means any substance presently listed, defined, designated, classified or otherwise regulated as hazardous, toxic, radioactive or dangerous or for which liability may arise under any Environmental Law. Hazardous Substance includes any substance to which exposure is regulated by any Governmental Entity or any Environmental Law and includes any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or byproduct thereof, radon, radioactive material, asbestos, or asbestos-containing material, urea formaldehyde, foam insulation or polychlorinated biphenyls.

 

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Section 3.9 Employee Benefit Plans .

(a) Section 3.9(a) of the Company Disclosure Letter lists all material Company Benefit Plans. “ Company Benefit Plans ” means all employee or director compensation and/or benefit plans, programs, policies, agreements or other arrangements, including any employee welfare plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA), and any bonus, incentive, deferred compensation, vacation, stock purchase, stock option, severance, employment, change of control or fringe benefit plan, program or agreement (other than any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA (a “ Multiemployer Plan ”)), in each case that are sponsored, maintained or contributed to by the Company or any of its Subsidiaries for the benefit of current or former employees, directors or consultants of the Company or its Subsidiaries.

(b) The Company has heretofore made available to Parent true and complete copies of each of the material Company Benefit Plans and with respect to each such plan: (i) each writing constituting a part of such Company Benefit Plan, including all amendments thereto; (ii) the most recent Annual Report (Form 5500 Series) and accompanying schedules, if any; and (iii) the most recent determination letter from the Internal Revenue Service (if applicable) for such Company Benefit Plan.

(c) (i) Each Company Benefit Plan has been maintained and administered in all material respects in compliance with its terms and with applicable Law, including ERISA and the Code to the extent applicable thereto; (ii) each of the Company Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service or is entitled to rely upon a favorable opinion issued by the Internal Revenue Service, and, to the Knowledge of the Company, there are no existing circumstances or any events that have occurred that could reasonably be expected to adversely affect the qualified status of any such plan; (iii) no Company Benefit Plan is subject to Title IV of ERISA, and no employee benefit plan sponsored, maintained or contributed to by the Company or any of its Subsidiaries since May 1, 2013 has been subject to Title IV of ERISA; (iv) no Company Benefit Plan provides medical or other welfare benefits with respect to current or former employees or directors of the Company or its Subsidiaries beyond their retirement or other termination of service, other than (A) coverage mandated by applicable Law or (B) benefits under any “employee pension plan” (as such term is defined in Section 3(2) of ERISA) or benefits not in excess of three years under severance arrangements; (v) no material liability under Title IV of ERISA has been incurred by the Company, its Subsidiaries or any ERISA Affiliate of the Company that has not been satisfied in full (other than with respect to amounts not yet due), and no condition exists that presents a risk to the Company, its Subsidiaries or any ERISA Affiliate of the Company of incurring a liability thereunder; (vi) all material contributions or other amounts payable by the Company or its Subsidiaries as of the date hereof with respect to each Company Benefit Plan in respect of current or prior plan years have been paid or accrued in accordance with GAAP (other than with respect to amounts not yet due); (vii) no employee benefit plan of the Company or its Subsidiaries is a Multiemployer Plan or a plan that has two or more contributing sponsors, at least two of whom are not under common control, within the meaning of Section 4063 of ERISA; and (viii) there are no material pending, threatened or, to the

 

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Knowledge of the Company, anticipated claims (other than claims for benefits in accordance with the terms of the Company Benefit Plans) by, on behalf of or against any of the Company Benefit Plans or any trusts related thereto that could reasonably be expected to result in any material liability of the Company or any of its Subsidiaries. “ ERISA Affiliate ” means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.

(d) The Company is not in default in performing any of its material contractual obligations under any Company Benefit Plan or any related trust agreement or insurance contract. All material contributions and other material payments required to be made by the Company and its Subsidiaries to any Company Benefit Plan have been made, or reserves adequate for such contributions or other payments have been set aside therefor. The Company has paid all material liabilities for insurance premiums for benefits provided under the insured Company Benefit Plans and has paid all material amounts due. There are no material outstanding liabilities under any Company Benefit Plan other than liabilities for benefits to be paid in the ordinary course of business to participants in such Plans and their beneficiaries.

(e) Except as set forth in Section 3.9(a) or Section 3.9(e) of the Company Disclosure Letter, there are no written employment Contracts for a specified duration, or Contracts providing for severance or other benefits in the event of termination, between the Company or its Subsidiaries and any of their current management employees. The Company has made available to Parent complete copies of the Company’s severance plans and policies applicable to its employees.

(f) The consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event: (i) entitle any current or former employee, consultant or officer of the Company or any of its Subsidiaries to severance pay or any other payment or benefits, except as provided in this Agreement or as required by applicable Law; or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due to any such employee, consultant or officer, except as provided in this Agreement (including Section 2.3 hereof).

(g) There is no contract, plan or arrangement (written or otherwise) that, individually or collectively, would reasonably be expected to (i) entitle any current or former employee or other service provider to any Tax gross-up from the Company or any of its Subsidiaries in respect of Taxes under Section 409A of the Code or Section 4999 of the Code or (ii) give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code.

Section 3.10 Labor Matters .

(a) Neither the Company nor any of its Subsidiaries is party to any collective bargaining, labor or similar agreement (a “ Collective Bargaining Agreement ”).

 

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(b) Except as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect, there are (i) no strikes or lockouts with respect to any employees of the Company or any of its Subsidiaries, (ii) to the Knowledge of the Company, no union organizing effort pending or threatened against the Company or any of its Subsidiaries (for the avoidance of doubt, other than any matters set forth in any Collective Bargaining Agreement), (iii) no unfair labor practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries, and (iv) no slowdown, or work stoppage in effect or, to the Knowledge of the Company, threatened with respect to employees of the Company or any of its Subsidiaries.

(c) The Company and its Subsidiaries are not delinquent in in any material respect in the payments to any employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees.

(d) The Company and its Subsidiaries are in compliance in all material respects with all applicable Laws respecting (i) employment and employment practices, (ii) terms and conditions of employment and wages and hours, and (iii) unfair labor practices.

Section 3.11 Absence of Certain Changes or Events . Since December 31, 2015, there has not been any event or effect that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect. From December 31, 2015 through the date of this Agreement, (a) the Company and its Subsidiaries have conducted their respective businesses, in all material respects, in the ordinary course of business consistent with past practice; and (b) except as disclosed in Section 3.11 of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has taken any actions, or has agreed to take any actions, that would have been prohibited by Section 5.1(b)(i), (ii), (v), (vi)(A), (x), (xii), (xiv), (xv), (xvi) or (xvii) if such actions were taken on or after the date of this Agreement.

Section 3.12 Investigations; Litigation . There is no investigation or review pending (or, to the Knowledge of the Company, threatened in writing) by any Governmental Entity with respect to the Company, any of the Company’s Subsidiaries (or any of the Company’s and its Subsidiaries’ respective properties) or, to the Knowledge of the Company, any present officer, director or employee of the Company or any of its Subsidiaries, in each case, that is material to the business of the Company and its Subsidiaries, taken as a whole, and there are no actions, suits, inquiries, investigations or proceedings pending (or, to the Knowledge of the Company, threatened in writing) against or affecting the Company, any of the Company’s Subsidiaries (or any of the Company’s and its Subsidiaries’ respective properties) or, to the Knowledge of the Company, any present officer, director or employee of the Company or any of its Subsidiaries, and there are no orders, judgments or decrees of, or before, any Governmental Entity or arbitrator, in each case, that that are material to the business of the Company and its Subsidiaries, taken as a whole.

Section 3.13 Proxy Statement; Other Information . The proxy statement to be filed by the Company with the SEC in connection with seeking the Company Stockholder Approval (including the letter to stockholders, notice of meeting and form of proxy, as each may

 

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be amended or supplemented, the “ Proxy Statement ”) will not, at the time it is filed with the SEC, or at the time it is first mailed to the stockholders of the Company and at the time of the Company Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Company will cause the Proxy Statement to comply as to form in all material respects with the requirements of the Exchange Act applicable thereto. No representation is made by the Company with respect to statements made in the Proxy Statement based on information supplied in writing, or required to be supplied (but that was not supplied), by or on behalf of Parent, Merger Sub or any of their Affiliates for inclusion or incorporation by reference therein.

Section 3.14 Tax Matters .

(a) As used in this Agreement, (i) “ Taxes ” means any and all federal, state, local or foreign taxes, governmental fees or other like assessments or charges of any kind (including withholding on amounts paid to or by any Person), and any and all interest, penalties, additions to tax and additional amounts relating thereto, imposed by any Governmental Entity, including income, franchise, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, unemployment, social security, workers’ compensation, net worth, excise, withholding, ad valorem and value added taxes, and any liability for any of the foregoing as transferee and (ii) “ Tax Return ” means any return, report, document, election, declaration or similar filing (including the attached schedules) required to be filed with respect to Taxes, including any information return, claim for refund, amended return or declaration of estimated Taxes.

(b) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the Company represents and warrants to Parent and Merger Sub as follows:

(i) the Company and each of its Subsidiaries have prepared and timely filed (taking into account any extension of time within which to file) all Tax Returns required to be filed by any of them and all such filed Tax Returns are complete and accurate;

(ii) the Company and each of its Subsidiaries have paid all Taxes that are due and payable;

(iii) the Company and its Subsidiaries have established in accordance with GAAP an adequate accrual for all Taxes on the most recent financial statements included in the Company SEC Documents;

(iv) the federal income Tax Returns of the Company and its Subsidiaries through the Tax year ended December 31, 2007 have been examined and closed or are Tax Returns with respect to which the applicable period for assessment under applicable law, after giving effect to extensions or waivers, has expired;

 

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(v) as of the date of this Agreement, there are not pending or threatened in writing any audits, examinations, suits, investigations or other proceedings in respect of Taxes of the Company or any of its Subsidiaries;

(vi) there are no liens for Taxes upon any property of the Company or any of its Subsidiaries, except for Permitted Liens;

(vii) neither the Company nor any of its Subsidiaries has been a “controlled corporation” or a “distributing corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in any distribution occurring during the two-year period ending on the date hereof that was intended to be governed by Section 355 of the Code;

(viii) neither the Company nor any of its Subsidiaries is a party to any understanding or arrangement described in Section 6662(d)(2)(C)(ii) of the Code, or has participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4;

(ix) neither the Company nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or (B) has any liability for the Taxes of any Person (other than the Company, or any subsidiary of the Company) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law);

(x) neither the Company nor any of its Subsidiaries is a party to any Tax sharing or Tax allocation agreement, or has any liability for the Taxes of another Person pursuant to any agreement, in each case, other than any such agreement (1) solely between or among any of the Company and any of its Subsidiaries or (2) not primarily relating to Taxes and entered into in the ordinary course of business (a “ Tax Sharing Agreement ”);

(xi) neither the Company nor any of its Subsidiaries is a party to any currently effective waiver or other agreement extending the statute of limitation or period of assessment or collection of any material Taxes;

(xii) each of the Company and its Subsidiaries, within the time and in the manner prescribed by Law, has withheld and paid over to the proper Governmental Entity all material amounts required to be withheld and paid over under applicable Law (including Sections 1441, 1442, 3102 and 3402 of the Code or any other applicable provision of state, local or foreign Law); and

(xiii) there has been no change in any method of accounting utilized by the Company or its Subsidiaries that would require any material adjustment to taxable income pursuant to the Code (or any similar or corresponding provision of state, local or foreign Law).

 

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Section 3.15 Intellectual Property .

(a) For purposes of this Agreement, (i) “ Intellectual Property ” means any trademark, service mark, trade name, invention, patent, trade secret, copyright, know how, Internet domain names, trade dress (together with goodwill), software and databases (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right, and (ii) “ Company Intellectual Property ” means all material Intellectual Property owned or licensed and used or held for use by the Company or any of its Subsidiaries.

(b) Section 3.15 of the Company Disclosure Letter sets forth a true, correct and complete list as of the date hereof of all patented or registered Company Intellectual Property and any outstanding applications therefor, in each case issued by, filed with, or recorded by, any Governmental Entity and the owner of record, date of application, registration or issuance, and relevant jurisdiction as to each.

(c) The Company and its Subsidiaries own, or are licensed or otherwise have the right to use, all Intellectual Property used in the conduct of their businesses, except where the failure to own, license or possess the right to use such Intellectual Property would not, individually or in the aggregate, have or reasonably be expected to have a Company Material Adverse Effect. To the Knowledge of the Company, no third party is infringing any material Company Intellectual Property and the Company and its Subsidiaries are not infringing, misappropriating or violating any material Intellectual Property right of any third party, in each case, except as would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect.

Section 3.16 Real Property .

(a) The Company and its Subsidiaries have good and valid fee simple title to all of the material real property owned by the Company and its Subsidiaries (the “ Owned Real Property ”), free and clear of Liens except Permitted Liens, except as would not reasonably be expected to have a Company Material Adverse Effect.

(b) Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) each lease, license, sublease and occupancy agreement, together with any material amendments thereto (each, a “ Lease ”) with respect to all real property leased, licensed, subleased or otherwise used or occupied by the Company or its Subsidiaries as lessee or sublessee (the “ Leased Real Property ” and, collectively with the Owned Real Property, the “ Real Property ”) is in full force and effect and is a legal, valid, binding and enforceable obligation of the Company or its Subsidiary, as the case may be, and, to the Knowledge of the Company, of the other party or parties thereto, (ii) neither the Company nor any of its Subsidiaries is in material breach or material default under any of the Leases and no event has occurred or circumstance exists that, with the delivery of notice, passage of time or both, would constitute such a breach or default or permit the termination, modification or acceleration of rent under such Lease.

 

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(c) To the Knowledge of the Company, all buildings, structures, fixtures, building systems and equipment, and all components that are part of the Real Property are in material compliance with all applicable Laws and are structurally sound and in good operating condition in all material respects and in a state of good and working maintenance and repair in all material respects, and are reasonably adequate and reasonably suitable for the operation of the Company’s business except as would not reasonably be expected to have a Company Material Adverse Effect. To the Knowledge of the Company, each Real Property is in compliance in all material respects with all applicable zoning requirements and the current use of such Real Property is a permitted or legally established use under applicable zoning requirements, except as would not reasonably be expected to have a Company Material Adverse Effect. To the Knowledge of the Company, there is no pending or written or oral threat of condemnation or similar action affecting any of the Real Property.

Section 3.17 Opinions of Financial Advisors . The Board of Directors has received the opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated as of the date of this Agreement, substantially to the effect that, as of such date and subject to the assumptions, limitations, qualifications and other matters stated therein, the Merger Consideration to be received by the holders of Common Stock in the Merger pursuant to this Agreement is fair, from a financial point of view, to such holders. A copy of such opinion has been provided to Parent or, if a written opinion is not available as of the date of this Agreement, will be provided to Parent promptly after the date of this Agreement.

Section 3.18 Required Vote of the Company Stockholders . The affirmative vote of the holders of a majority of the outstanding shares of Common Stock is the only vote of holders of securities of the Company that is required to adopt this Agreement and approve the consummation of the Merger and the other transactions contemplated hereby (the “ Company Stockholder Approval ”).

Section 3.19 Material Contracts .

(a) Except for this Agreement, agreements filed as exhibits to the Company SEC Documents or the CAPL SEC Documents or as set forth in Section 3.19 of the Company Disclosure Letter, as of the date of this Agreement, neither the Company nor any of its Subsidiaries is a party to or expressly bound by any Contract (excluding any Company Benefit Plan) that:

(i) is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act);

(ii) is (A) a fuel supply agreement or other agreement (including any related incentive agreements) by which any Person has the right or obligation to purchase or sell any brand of motor fuel at any of the Real Property or (B) a material dealer or branded retailer contract with respect to the operation of any of the Real Property;

(iii) is an agreement that by its terms provides for the purchase or sale of merchandise, supplies, services, equipment or other assets providing for annual payments by the Company and its Subsidiaries or to the Company and its Subsidiaries, of $25 million or more, other than those that (A) can be terminated by the Company or its Subsidiaries on 6 months’ or less notice without payment by the Company or its Subsidiaries of any material penalty or (B) have a remaining term left of 12 months or less;

 

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(iv) is a material franchise agreement related to the operation by the Company and its Subsidiaries of food and beverage franchises (including quick service restaurants) at any of the Real Property;

(v) creates or grants a Lien (including Liens upon properties acquired under conditional sales, capital leases or other title retention or security devices) that is material to the Company and its Subsidiaries, taken as a whole, other than any Permitted Lien;

(vi) relates to any joint venture, partnership, limited liability or other similar Contract relating to the formation, creation, operation, management or control of any joint venture or partnership that is material to the business of the Company and its Subsidiaries, taken as a whole;

(vii) is an indenture, credit agreement, loan agreement, security agreement, guarantee (other than any guarantee provided with respect to a wholly owned Subsidiary of the Company), note, mortgage or other Contract providing for or securing indebtedness for borrowed money or deferred payment (in each case, whether incurred, assumed, guaranteed or secured by any asset) in excess of $25 million;

(viii) is a settlement, conciliation or similar Contract (x) with any Governmental Entity or (y) which would require the Company or any of its Subsidiaries to pay consideration of more than $25 million after the date of this Agreement;

(ix) relates to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise) or any real property having an aggregate purchase price in excess of $25 million;

(x) pursuant to which the Company or any of its Subsidiaries is obligated, directly or indirectly, to make any loan, capital contribution to, or other investment in, any Person; or

(xi) contains any covenant that materially limits the ability of the Company or any of its Subsidiaries to engage in any line of business, or to compete with any Person or operate at any geographic location.

Each Contract of the type described in this Section 3.19(a) (including those described in the introductory clause of this subsection (a)) is referred to herein as a “ Company Material Contract .”

(b) Neither the Company nor any Subsidiary of the Company is in breach of or default under the terms of any Company Material Contract where such breach or default would reasonably be expected to have, individually or in the aggregate, a Company Material

 

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Adverse Effect. To the Knowledge of the Company, no other party to any Company Material Contract is in breach of or default under the terms of any Company Material Contract where such breach or default would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, (i) each Company Material Contract is a valid and binding obligation of the Company or the Subsidiary of the Company that is party thereto and, to the Knowledge of the Company, of each other party thereto, and is in full force and effect and (ii) neither the Company nor any of its Subsidiaries has received any written notice or claim of default under any Company Material Contract or any written notice, or, to the Knowledge of the Company, verbal indication of an intention to terminate any Company Material Contract. As of the date of this Agreement, except as would not have a Company Material Adverse Effect, no Person is renegotiating with the Company any material amount paid by the Company under any Company Material Contract or any other material term or provision of any Company Material Contract.

Section 3.20 Insurance Policies . Except as would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect, (a) all insurance policies maintained by the Company and its Subsidiaries are in full force and effect and all premiums due and payable thereon have been paid in accordance with the terms of such policies, (b) neither the Company nor any of its Subsidiaries is in breach or default of any of its insurance policies, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default or permit termination or material and adverse modification of any of such policies and (c) other than in connection with ordinary course renewals, the Company has not received any written notice of termination, cancellation, or non-renewal with respect to any such policy.

Section 3.21 Affiliate Party Transactions . Since December 31, 2013 through the date hereof, there have been no material transactions, agreements, arrangements or understandings between the Company or any of its Subsidiaries on the one hand, and any director or executive officer of the Company or any of its Affiliates on the other hand, that would be required to be disclosed under Item 404 under Regulation S-K under the Securities Act and that have not been so disclosed in the Company SEC Documents or CAPL SEC Documents, other than ordinary course of business employment agreements and similar employee arrangements otherwise set forth on the Company Disclosure Letter.

Section 3.22 Finders or Brokers; Fees .

(a) Except for Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, neither the Company nor any of its Subsidiaries has employed any investment banker, broker or finder in connection with the transactions contemplated by this Agreement who might be entitled to any fee or any commission in connection with or upon consummation of the Merger.

(b) The aggregate fees payable to Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Chase & Co. (and any other brokers) by the Company or its Subsidiaries in connection with the Merger and the other transactions contemplated by this Agreement will not exceed the amount set forth in Section 3.22 of the Company Disclosure Letter.

 

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Section 3.23 Takeover Laws . Assuming the representations and warranties of Parent and Merger Sub set forth in Section 4.7 are true and correct, no “fair price,” “moratorium,” “control share acquisition,” “business combination” or other form of antitakeover statute or regulation or any anti-takeover provision in the certificate of incorporation or bylaws of the Company is, and the Company has no rights plan, “poison pill” or similar agreement that is, or at the Effective Time will be, applicable to this Agreement, the Merger or the other transactions contemplated hereby.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Except as disclosed in the disclosure letter delivered by Parent to the Company concurrently with the execution of this Agreement (the “ Parent Disclosure Letter ”) (it being agreed that disclosure of any item in any section or subsection of the Parent Disclosure Letter shall be deemed disclosed only with respect to any other section or subsection of the Parent Disclosure Letter to the extent the applicability of such disclosure is reasonably apparent on its face), Parent and Merger Sub jointly and severally represent and warrant to the Company as follows:

Section 4.1 Qualification, Organization, Subsidiaries . Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except, in each case, as would not reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse Effect.

Section 4.2 Corporate Authority Relative to This Agreement; No Violation .

(a) No vote of the holders of capital stock of Parent is necessary to approve this Agreement or the consummation of the transactions contemplated hereby. Each of Parent and Merger Sub has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, have been duly and validly authorized by the boards of directors of Parent and Merger Sub and the sole stockholder of Merger Sub, and, except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming this Agreement constitutes the valid and binding agreement of the Company, constitutes the valid and binding agreement of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms.

 

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(b) The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and the other transactions contemplated hereby, do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to any Governmental Entity, other than (i) the filing of the Certificate of Merger, (ii) the filing of pre-merger notification reports under the HSR Act and the Competition Act, (iii) compliance with the applicable requirements of the Exchange Act, (iv) compliance with any applicable foreign or state securities or blue sky laws and (v) the other consents and/or notices set forth on Section 4.2(b) of the Parent Disclosure Letter (collectively, clauses (i) through (v), the “ Parent Approvals ”), and other than any consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse Effect.

(c) The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and the other transactions contemplated hereby do not and will not (i) contravene or conflict with, or violate or breach any provision of, the organizational or governing documents of Parent or any of its Subsidiaries, (ii) assuming compliance with the matters referenced in Section 4.2(b) and receipt of the Parent Approvals, contravene or conflict with, or violate or breach any provision of any Law binding upon or applicable to Parent or any of its Subsidiaries or any of their respective properties or assets or (iii) result in any violation of, or default (with or without notice, lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under any Contract or Permit binding upon Parent or any of its Subsidiaries or result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of Parent or any of its Subsidiaries, other than, in the case of clauses (ii) and (iii), any such violation, conflict, default, termination, cancellation, acceleration, right, loss or Lien that would not reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse Effect.

Section 4.3 Investigations; Litigation . There is no investigation or review pending (or, to the Knowledge of Parent, threatened) by any Governmental Entity with respect to Parent or any of its Subsidiaries that would have, individually or in the aggregate, a Parent Material Adverse Effect, and there are no Actions pending (or, to the Knowledge of Parent, threatened) against or affecting Parent or any of Parent’s Subsidiaries, or any of their respective properties at law or in equity before, and there are no orders, judgments or decrees of, or before, any Governmental Entity, in each case that would have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 4.4 Proxy Statement; Other Information . The information provided by Parent or its Subsidiaries or Affiliates for inclusion or incorporation by reference in the Proxy Statement will not, at the time it is filed with the SEC, or at the time it is first mailed to the stockholders of the Company or at the time of the Company Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. No representation is made by Parent or Merger Sub with respect to statements made in the Proxy Statement based on information supplied by or on behalf of the Company or any of its Affiliates that is contained in the Proxy Statement.

 

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Section 4.5 Financing . On the Closing Date, immediately prior to the Effective Time, Parent will have (or will make available to Merger Sub) sufficient cash,


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