AGREEMENT OF MERGER DATED AS OF DECEMBER 26, 2006 AMONG CENVEO, INC., MOUSE ACQUISITION CORP. AND CADMUS COMMUNICATIONS CORPORATION
DATED
AS
OF
DECEMBER
26, 2006
AMONG
MOUSE
ACQUISITION CORP.
AND
CADMUS
COMMUNICATIONS CORPORATION
TABLE
OF
CONTENTS
|
Page
|
||
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
6
|
|
|
|
6
|
|
|
|
6
|
|
|
|
6
|
|
|
|
6
|
|
|
|
7
|
|
-i-
TABLE
OF
CONTENTS
(Continued)
|
Page
|
||
|
|
7
|
|
|
|
8
|
|
|
|
9
|
|
|
|
10
|
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
|
13
|
|
|
|
13
|
|
|
|
14
|
|
|
|
15
|
|
|
|
17
|
|
|
|
17
|
|
|
|
21
|
|
|
|
21
|
|
|
|
22
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
|
|
24
|
|
|
|
24
|
|
-ii-
TABLE
OF
CONTENTS
(Continued)
|
Page
|
||
|
|
24
|
|
|
|
24
|
|
|
|
24
|
|
|
|
24
|
|
|
|
25
|
|
|
|
25
|
|
|
|
25
|
|
|
|
26
|
|
|
|
26
|
|
|
|
26
|
|
|
|
26
|
|
|
|
26
|
|
|
|
29
|
|
|
|
30
|
|
|
|
31
|
|
|
|
32
|
|
|
|
35
|
|
|
|
36
|
|
|
|
36
|
|
|
|
36
|
|
|
|
37
|
|
|
|
37
|
|
|
|
37
|
|
-iii-
TABLE
OF
CONTENTS
(Continued)
|
Page
|
||
|
|
37
|
|
|
|
37
|
|
|
|
38
|
|
|
|
39
|
|
|
|
40
|
|
|
|
40
|
|
|
|
40
|
|
|
|
41
|
|
|
|
41
|
|
|
|
41
|
|
|
|
43
|
|
|
|
44
|
|
|
|
44
|
|
|
|
45
|
|
|
|
45
|
|
|
|
45
|
|
|
|
45
|
|
|
|
46
|
|
|
|
46
|
|
|
|
46
|
|
|
|
47
|
|
|
|
47
|
|
|
|
47
|
|
-iv-
TABLE
OF
CONTENTS
(Continued)
|
Page
|
||
|
|
47
|
|
|
|
47
|
|
|
|
48
|
|
|
|
48
|
|
|
|
48
|
|
|
|
48
|
|
|
|
51
|
|
|
INDEX
OF DEFINED TERMS
|
v
|
|
EXHIBIT(S)
|
EXHIBIT
A
|
PLAN
OF MERGER
|
-v-
INDEX
OF
DEFINED TERMS
|
Defined
Term
|
Section
|
|
Acquisition
Proposal
|
8.15(a)
|
|
Affiliates
|
8.15(b)
|
|
Agreement
|
Preamble
|
|
Articles
of Merger
|
1.3
|
|
Business
Day
|
8.15(c)
|
|
Capitalization
Date
|
3.2(a)
|
|
Certificates
|
2.2
|
|
Change
in Company Recommendation
|
5.2(b)
|
|
Closing
|
1.2
|
|
Closing
Date
|
1.2
|
|
Code
|
2.7
|
|
Company
|
Preamble
|
|
Company
Board Approval
|
3.7
|
|
Company
Common Stock
|
Recitals
|
|
Company
Contracts
|
8.15(d)
|
|
Company
Disclosure Schedule
|
8.16(a)
|
|
Company
Intellectual Property
|
3.13(a)
|
|
Company
Permits
|
3.10
|
|
Company
Recommendation
|
5.2(b)
|
|
Company
Requisite Shareholder Vote
|
3.3
|
|
Company
Restricted Shares
|
1.9(a)
|
|
Company
SEC Reports
|
3.5(a)
|
|
Company
Shareholders Meeting
|
5.2(b)
|
|
Company
Stock Options
|
1.9(b)
|
|
Company
Stock Plans
|
8.15(e)
|
|
Company
Voting Debt
|
3.2(a)
|
|
Confidentiality
Agreement
|
5.12
|
|
Consent
Solicitation
|
5.16(a)
|
|
Continuing
Employees
|
5.15(a)
|
|
Contract
|
3.4(a)
|
|
Control
|
8.15(b)
|
|
D&O
Insurance
|
5.6(a)
|
|
DBS
|
3.21
|
|
DOJ
|
5.4(c)
|
|
Effective
Time
|
1.3
|
|
Employee
Benefit Plans
|
3.14(a)
|
|
Environmental
Laws
|
3.12(a)
|
|
ERISA
|
3.14(a)
|
|
ERISA
Affiliate
|
8.15(f)
|
|
Exchange
Act
|
3.4(b)
|
|
Excluded
Shares
|
1.8(a)
|
|
Foreign
Benefit Plan
|
3.14(l)
|
-vi-
INDEX
OF
DEFINED TERMS
(Continued)
|
Defined
Term
|
Section
|
|
FTC
|
5.4(c)
|
|
GAAP
|
3.5(b)
|
|
Governmental
Entity
|
3.4(b)
|
|
Hazardous
Substance
|
8.15(g)
|
|
HSR
Act
|
3.4(b)
|
|
Indemnified
Persons
|
5.6(a)
|
|
Indenture
|
5.16(a)
|
|
Indenture
Amendments
|
5.16(a)
|
|
Intellectual
Property Rights
|
8.15(h)
|
|
knowledge
|
8.15(i)
|
|
Law
|
3.4(a)
|
|
Liens
|
3.2(b)
|
|
LTIP
|
1.9(a)
|
|
Major
Customers
|
3.19
|
|
Major
Suppliers
|
3.19
|
|
Material
Adverse Effect on the Company
|
8.15(j)
|
|
Merger
|
Recitals
|
|
Merger
Consideration
|
1.8(a)
|
|
Merger
Sub
|
Preamble
|
|
Multiemployer
Plan
|
8.15(k)
|
|
Necessary
Consents.
|
3.4(b)
|
|
Offer
to Purchase
|
5.16(a)
|
|
Order
|
3.4(a)
|
|
Parent
|
Preamble
|
|
Parent
Disclosure Schedule
|
8.16(a)
|
|
Parent
Plans
|
5.15(a)
|
|
Parent
Welfare Plans
|
5.15(b)
|
|
Paying
Agent
|
2.1
|
|
PBGC
|
3.14(c)
|
|
Person
|
8.15(l)
|
|
Plan
of Merger
|
1.3
|
|
Preferred
Stock Purchase Rights
|
8.15(m)
|
|
Proxy
Statement
|
5.2(a)
|
|
Recent
Balance Sheet
|
3.11(a)
|
|
Regulatory
Law
|
8.15(n)
|
|
Representatives
|
5.5(a)
|
|
Rights
Agreement
|
8.15(o)
|
|
SCC
|
1.3
|
|
SEC
|
3.5(a)
|
|
Securities
Act
|
3.5(a)
|
|
Senior
Subordinated Notes
|
5.16(a)
|
|
Subsidiaries
|
8.15(p)
|
|
Superior
Proposal
|
8.15(q)
|
|
Surviving
Corporation
|
1.1
|
|
Tax
Return
|
8.15(s)
|
|
Taxes
|
8.15(r)
|
-vii-
INDEX
OF
DEFINED TERMS
(Continued)
|
Defined
Term
|
Section
|
|
Termination
Date
|
7.1(b)
|
|
Termination
Expenses
|
7.2(b)
|
|
Termination
Fee
|
7.2(b)
|
|
Voting
Agreement
|
Recitals
|
|
VSCA
|
1.1
|
This
Agreement of Merger dated as of December 26, 2006 (this “Agreement”)
is
among Cenveo, Inc., a Colorado corporation (“Parent”),
Mouse
Acquisition Corp., a Virginia corporation and an indirect wholly owned
subsidiary of Parent (“Merger
Sub”),
and
Cadmus Communications Corporation, a Virginia corporation (the “Company”).
Capitalized terms used but not defined elsewhere herein have the meanings
assigned to them in Section 8.15.
The
respective Boards of Directors of Parent, Merger Sub and the Company desire
to
enter into a transaction whereby Merger Sub will merge with and into the Company
(the “Merger”),
pursuant to which each issued and outstanding share of the Company’s common
stock, par value $0.50 per share (“Company
Common Stock”),
not
owned directly or indirectly by the Company will be converted into the right
to
receive the Merger Consideration.
In
furtherance thereof, the respective Boards of Directors of Parent, Merger Sub
and the Company have adopted this Agreement and the transactions contemplated
hereby, including, without limitation, the Merger. The Board of Directors of
the
Company has recommended that its shareholders approve this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, the Merger.
Concurrently
with the execution and delivery of this Agreement, and as a condition and
inducement to the willingness of Parent and Merger Sub to enter into this
Agreement, Parent and certain of the Company’s shareholders are entering into a
Voting Agreement (the “Voting
Agreement”)
with
respect to the voting of Company Common Stock in connection with the
Merger.
Parent,
Merger Sub and the Company desire to make certain representations, warranties
and agreements in connection with, and to prescribe certain conditions to,
the
Merger.
In
consideration of the foregoing and the mutual covenants, representations,
warranties and agreements set forth herein, and intending to be legally bound,
the parties agree as follows:
THE
MERGER
Section
1.1. The
Merger.
Upon
the terms and subject to the conditions set forth in this Agreement, and in
accordance with the Virginia Stock Corporation Act (the “VSCA”),
Merger Sub shall be merged with and into Company at the Effective Time and
the
separate corporate existence of Merger Sub shall thereupon cease. The Company
shall be the surviving corporation in the Merger (the “Surviving
Corporation”)
and
shall continue to be governed by the Laws of the Commonwealth of Virginia,
and
the separate corporate existence of the Company, with all of its rights,
privileges, immunities, powers and franchises shall continue unaffected by
the
Merger except as otherwise provided herein.
Section
1.2. Closing.
The
closing of the Merger (the “Closing”)
shall
occur as promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article 6, and in any event no later than 10:00 a.m.,
local time, on the third Business Day after the
satisfaction
or waiver of the conditions set forth in Article 6, other than conditions which
by their nature are to be satisfied at Closing, or such other time and date
as
Parent and the Company shall agree in writing, unless this Agreement has been
theretofore terminated pursuant to its terms (the actual time and date of the
Closing is referred to as the “Closing
Date”).
The
Closing shall be held at the offices of Xxxxxx Xxxxxxx & Xxxx LLP, Xxx
Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, XX 00000 or such other place as Parent and the
Company shall agree in writing.
Section
1.3. Effective
Time.
At the
Closing, the parties hereto shall (a) file articles of merger, in customary
form
(the “Articles
of Merger”),
together with the related plan of merger meeting the requirements of Section
13.1-716 of the VSCA (such plan of merger, the “Plan
of Merger”),
substantially in the form attached hereto to Exhibit
A,
with
the State Corporation Commission of the Commonwealth of Virginia (the
“SCC”)
and
(b) duly make all other filings and recordings required by the VSCA in
order to effectuate the Merger. The Merger shall become effective upon the
issuance of a certificate of merger by the SCC or at such later time as may
be
agreed to by Parent and the Company in writing and specified in the Articles
of
Merger (the date and time that the Merger becomes effective is 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 § 13.1-721 of the
VSCA.
Section
1.5. Articles
of Incorporation.
The
articles of incorporation of Merger Sub, as in effect immediately prior to
the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation (except that the name of the Surviving Corporation shall be “Cadmus
Communications Corporation”), until thereafter amended in accordance with
applicable Law.
Section
1.6. Bylaws.
Merger
Sub’s bylaws, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation (except that the name of the Surviving
Corporation shall be “Cadmus Communications Corporation”), until thereafter
amended in accordance with applicable Law.
Section
1.7. Officers
and Directors.
The
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation
or
removal or until their respective successors are duly elected and qualified,
as
the case may be. The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, until the earlier
of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section
1.8. Effect
on Capital Stock.
At the
Effective Time, pursuant to this Agreement and by virtue of the Merger and
without any action on the part of the holder of any shares of Company Common
Stock or any shares of capital stock of Merger Sub:
(a) Each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares canceled pursuant to Section 1.8(c) below,
the
“Excluded
Shares”)
shall
be cancelled and converted into the right to receive an amount in cash equal
to
$24.75, without interest (the “Merger
Consideration”),
payable to the holder thereof upon surrender of the certificate formerly
representing such shares of Company Common Stock in accordance with Article
2.
-2-
(b) All
shares of Company Common Stock shall cease to be outstanding and shall be
automatically canceled and retired and shall cease to exist, and each holder
of
a certificate that, immediately prior to the Effective Time, represented any
shares of Company Common Stock shall thereafter cease to have any rights with
respect to such shares of Company Common Stock, other than the right to receive
the Merger Consideration.
(c) Each
share of Company Common Stock that is owned directly or indirectly by Parent,
Merger Sub, the Company or any wholly-owned Subsidiary of the Company
immediately prior to the Effective Time shall be automatically canceled and
retired and shall cease to exist, and no consideration shall be made or
delivered in exchange therefor.
(d) Each
share of common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
one
validly issued, fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation, which shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section
1.9. Company
Stock Options and Other Equity-Based Awards.
(a) Awards
of
restricted shares of Company Common Stock from the Company (collectively,
“Company
Restricted Shares”)
granted under the Cadmus Communications Corporation FY 2005-2007 Executive
Long-Term Incentive Plan, as corrected April 18, 2005 (the “LTIP”),
shall
vest, immediately prior to the Effective Time, to the extent provided under
Section 8(b) of the LTIP and, as of the Effective Time, such vested Company
Restricted Shares shall become shares of Company Common Stock that are converted
into the right to receive the Merger Consideration as provided in Section
1.8(a). Any Company Restricted Shares that have not
vested
immediately prior to the Effective Time pursuant to the preceding sentence
shall
be automatically canceled and retired and shall cease to exist as of immediately
prior to the Effective Time, and no consideration shall be made or delivered
in
exchange therefor.
(b) All
outstanding options to acquire shares of Company Common Stock from the Company
(collectively, “Company
Stock Options”)
heretofore granted under any Company Stock Plan shall become exercisable and
vested immediately prior to the Effective Time and cease to represent, as of
the
Effective Time, a right to acquire shares of Company Common Stock and shall
be
converted, in settlement and cancellation thereof, into the right to receive,
at
the Effective Time, a lump sum cash payment by the Surviving Corporation of
an
amount equal to (i) the excess, if any, of (A) the per share Merger
Consideration over (B) the exercise price per share of Company Common Stock
subject to such Company Stock Option, multiplied
by
(ii) the
number of shares of Company Common Stock for which such Company Stock Option
shall not theretofore have been exercised.
(c) No
Person
shall have any right under the Company Stock Plans or under any other plan,
program, agreement or arrangement with respect to equity interests of the
Company or any of its Subsidiaries, or for the issuance or grant of any right
of
any kind, contingent or accrued, to receive benefits measured by the value
of a
number of shares of Company Common Stock (including restricted stock units,
deferred stock units and dividend
-3-
equivalents),
at and after the Effective Time (except as otherwise expressly set forth in
this
Section 1.9 or Article 2).
(d) Promptly
after the Effective Time and not later than three Business Days after the
Closing Date (unless additional time is required to process payments under
the
Company’s payroll systems), the Surviving Corporation shall pay to each holder
of Company Stock Options the cash payments specified in this Section 1.9. The
Company’s payroll processor shall be instructed to promptly pay the holders of
Company Stock Options the amounts they are entitled to receive hereunder. No
interest shall be paid or accrue on the cash payments contemplated by this
Section 1.9. The Surviving Corporation and Parent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Company Stock Options any Taxes that either of them is required
or permitted to deduct and withhold under applicable Law. To the extent that
amounts are so deducted and withheld by the Surviving Corporation or Parent
and
paid over to the appropriate taxing authority, the amounts so deducted and
withheld shall be treated for all purposes of this Agreement as having been
paid
to the holder of the Company Stock Options in respect of which such deduction
and withholding was made by the Surviving Corporation or Parent, as the case
may
be, and the Paying Agent, the Surviving Corporation or Parent shall provide
to
the holders of such securities written notice of the amounts so deducted or
withheld.
(e) Prior
to
the Effective Time, the Company shall use its commercially reasonable efforts
to
effectuate the provisions of this Section 1.9, including the conversion of
each
Company Stock Option into the right to receive an amount in cash as described
in
Section 1.9(b). Notwithstanding any other provision of this Section 1.9, payment
may be withheld in respect of any employee stock option until such necessary
consents are obtained.
Section
1.10. Certain
Adjustments.
If,
between the date of this Agreement and the Effective Time: (a) the outstanding
shares of Company Common Stock shall have been increased, decreased, changed
into or exchanged for a different number of shares or different class, in each
case, by reason of any reclassification, recapitalization, stock split,
split-up, combination or exchange of shares; (b) a stock dividend or dividend
payable in any other securities of the Company shall be declared with a record
date within such period; or (c) any similar event shall have occurred, then
in
each instance referred to in the preceding clauses (a) through (c) the Merger
Consideration shall be appropriately adjusted to provide the holders of shares
of Company Common Stock (and Company Stock Options) the same economic effect
as
contemplated by this Agreement prior to such event.
CONVERSION
OF SHARES
Section
2.1. Paying
Agent.
At or
prior to the Effective Time, Parent shall designate, and enter into an agreement
with, a bank or trust company reasonably acceptable to the Company to act as
paying agent in the Merger (the “Paying
Agent”).
Parent shall deposit with the Paying Agent as of the Effective Time, for the
benefit of the holders of shares of Company Common Stock, cash sufficient to
effect the payment of the Merger Consideration to which such holders are
entitled pursuant to Section 1.8(a) and this Article 2.
-4-
Section
2.2. Payment
Procedures.
As
promptly as practicable, but in no event later than three Business Days after
the Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record of one or more certificates that, prior to the Effective Time,
represented shares of Company Common Stock that were converted into the right
to
receive the Merger Consideration pursuant to Section 1.8(a) (the “Certificates”):
(a) a
letter of transmittal (which shall specify that delivery shall be effected,
and
risk of loss and title to the Certificates shall pass, only upon delivery of
the
Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent may reasonably specify); and (b) instructions for
use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as Parent may appoint, together with
such
letter of transmittal, duly executed and completed, and such other documents
as
the Paying Agent may reasonably require, the holder of such Certificate shall
be
entitled to receive the Merger Consideration in exchange for each share of
Company Common Stock formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be canceled. No interest shall be
paid or accrue on the Merger Consideration. If any portion of the Merger
Consideration is to be made to a Person other than the Person in whose name
the
applicable surrendered Certificate is registered, then it shall be a condition
to the payment of such Merger Consideration that (i) the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form
for
transfer and (ii) the Person requesting such payment shall have (A) paid any
transfer and other Taxes required by reason of such payment in a name other
than
that of the registered holder of the Certificate surrendered or (B) established
to the reasonable satisfaction of Parent that any such Taxes either have been
paid or are not payable.
Section
2.3. Undistributed
Merger Consideration.
Any
portion of the funds made available to the Paying Agent pursuant to Section
2.1
that remains undistributed to holders of Certificates on the date that is one
year after the Effective Time shall be delivered to Parent or its designee,
and
any holders of Certificates who have not theretofore complied with this Article
2 shall thereafter look only to Parent for the Merger Consideration to which
such holders are entitled pursuant to Section 1.8(a) and this Article 2. Any
portion of the funds made available to the Paying Agent pursuant to Section
2.1
that remains unclaimed by holders of Certificates on the date that is five
years
after the Effective Time or such earlier date immediately prior to such time
as
such amounts would otherwise escheat to or become property of any Governmental
Entity shall, to the extent permitted by Law, become the property of the
Surviving Corporation, free and clear of all claims or interests of any Person
previously entitled thereto.
Section
2.4. No
Liability.
None of
Parent, Merger Sub, the Company, the Surviving Corporation, the Paying Agent
or
their respective directors, officers, employees and representatives shall be
liable to any Person in respect of any Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar Law.
Section
2.5. Investment
of Merger Consideration.
The
Paying Agent shall invest the funds made available to the Paying Agent pursuant
to Section 2.1 as directed by Parent on a daily basis in obligations of or
guaranteed by the United States of America and backed by the full faith and
credit of the United States of America or in commercial paper obligations rated
A-2/P-2 or better by Xxxxx’x Investors Services, Inc. and Standard & Poor’s
Corporation, respectively (or money market funds rated Aaa or better by Xxxxx’x
Investors Services, Inc. or AAA or better by Standard & Poor’s Corporation);
provided,
however,
that no
such gain or loss thereon shall affect
-5-
the
amounts payable to holders of Certificates pursuant to Section 1.8(a) and this
Article 2. Any interest and other income resulting from such investments shall
be the property of, and shall promptly be paid to, Parent.
Section
2.6. Lost
Certificates.
If any
Certificate shall have been lost, stolen or destroyed, then, 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 Surviving Corporation, the posting
by such Person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall deliver in exchange for
such
lost, stolen or destroyed Certificate the applicable Merger Consideration with
respect to the shares of Company Common Stock formerly represented
thereby.
Section
2.7. Withholding
Rights.
The
Paying Agent, the Surviving Corporation and Parent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of shares of Company Common Stock with respect to the making
of
such payment that either of them is required or entitled to deduct and withhold
under the Internal Revenue Code of 1986, as amended (the “Code”),
or
any provision of any other Tax law. To the extent that amounts are so deducted
and withheld by the Surviving Corporation or Parent and paid over to the
appropriate taxing authority, the amounts so deducted and withheld shall be
treated for all purposes of this Agreement as having been paid to the holder
of
such shares of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may
be,
and the Paying Agent, the Surviving Corporation or Parent shall provide to
the
holders of such securities written notice of the amounts so deducted or
withheld.
Section
2.8. Further
Assurances.
At and
after the Effective Time, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the name and on behalf
of the Company or Merger Sub, all deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of the Company or
Merger Sub, all other actions and things to vest, perfect or confirm of record
or otherwise in the Surviving Corporation all right, title and interest in,
to
and under all of the rights, properties or assets acquired or to be acquired
by
the Surviving Corporation as a result of, or in connection with, the
Merger.
Section
2.9. Stock
Transfer Books.
The
stock transfer books of the Company shall be closed immediately upon the
Effective Time, and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the Company. At
or
after the Effective Time, any Certificates presented to the Paying Agent, Parent
or the Surviving Corporation for any reason shall, subject to compliance with
the provisions of this Article 2 by the holder thereof, be converted into the
right to receive the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Parent and Merger Sub as
follows:
-6-
Section
3.1. Organization
and Qualification.
Each of
the Company and its Subsidiaries is a corporation or other entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization and has full corporate or
other power and authority to own, operate and lease the properties owned or
used
by it and to carry on its business as and where such is now being conducted,
except where the failure to be so standing, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company. Each of the Company and its Subsidiaries is duly licensed
or qualified to do business as a foreign corporation, and is in good standing,
in each jurisdiction wherein the character of the properties owned or leased
by
it, or the nature of its business, makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified, individually
or in the aggregate, has not had and would not reasonably be expected to have
a
Material Adverse Effect on the Company. The copies of the articles of
incorporation and bylaws of the Company, including any amendments thereto,
that
have been made available by the Company to Parent prior to the date of this
Agreement are correct and complete copies of such instruments as presently
in
effect.
Section
3.2. Capitalization.
(a) As
of
December 22, 2006 (the “Capitalization
Date”),
the
authorized capital stock of the Company consisted entirely of:
(i) 16,000,000 shares of Company Common Stock, of which 9,532,029 shares of
Company Common Stock were issued and outstanding; and (ii) 1,000,000 shares
of
Serial Preferred Stock, par value $1.00 per share, none of which were issued
and
outstanding or held in the treasury of the Company. All issued and outstanding
shares of capital stock of the Company and its Subsidiaries are validly issued,
fully paid and nonassessable. As of the Capitalization Date, there were
(x) Company Stock Options representing in the aggregate the right to
acquire 439,520 shares of Company Common Stock and (y) Company Restricted
Shares relating to in the aggregate 320,318 shares of Company Common Stock
under
the Company Stock Plans. Schedule
3.2(a)
to the
Company Disclosure Schedule sets forth a correct and complete list, as of the
Capitalization Date, of the number of shares of Company Common Stock subject
to
Company Stock Options, the number of unvested Company Restricted Shares or
other
rights to purchase or receive Company Common Stock, or benefits based on the
value of Company Common Stock, granted under the Company Stock Plans, the
Employee Benefit Plans or otherwise, and the holders who are executive officers
of the Company (including breakdowns by individuals for holders who are
directors or executive officers of the Company), the dates of grant and the
exercise prices thereof. No bonds, debentures, notes or other indebtedness
of
the Company having the right to vote (or convertible into, or exchangeable
for,
securities having the right to vote) on any matters on which holders of capital
stock of the Company may vote (“Company
Voting Debt”)
are
issued or outstanding. There are no outstanding obligations of the Company
or
its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock or other equity interests of the Company or any of its
Subsidiaries. Except as set forth above, no shares of capital stock or other
voting securities of the Company have been issued or reserved for issuance
or
are outstanding, other than the shares of Company Common Stock reserved for
issuance under the Company Stock Plans. Except as set forth above, there are
no
options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which the
Company or any of its Subsidiaries is a party or by which any of them is bound:
(A) obligating the Company or any of
-7-
its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity interests in, or any
security convertible or exercisable for or exchangeable into any capital stock
of or other equity interest in, the Company or any of its Subsidiaries or any
Company Voting Debt; (B) obligating the Company or any of its Subsidiaries
to
issue, grant, extend or enter into any such option, warrant, call, right,
security, unit, commitment, Contract, arrangement or undertaking; or (C) giving
any Person the right to receive any economic benefit or right similar to or
derived from the economic benefits and rights accruing to holders of
capital stock of the Company or any of its Subsidiaries.
(b) Except
as
set forth on Schedule
3.2(b)
to the
Company Disclosure Schedule, the Company owns, directly or indirectly, all
of
the issued and outstanding shares of capital stock and other equity interests
of
its Subsidiaries, free and clear of all liens, pledges, charges, encumbrances
and other security interests of any nature whatsoever (collectively,
“Liens”).
A
correct and complete list of all of the Company’s Subsidiaries, together with
the jurisdiction of incorporation or organization of each Subsidiary and the
percentage of each Subsidiary’s outstanding capital stock or other equity
interests owned by the Company or another of its Subsidiaries, is set forth
in
Schedule
3.2(b)-1
to the
Company Disclosure Schedule. A correct and complete list of all corporations,
partnerships, limited liability companies, associations and other entities
(excluding the Company’s Subsidiaries) in which the Company or any Subsidiary of
the Company owns any joint venture, partnership, strategic alliance or similar
interest, together with the jurisdiction of incorporation or organization of
each such entity and the percentage of each such entity’s outstanding capital
stock or other equity interests owned by the Company or any of its Subsidiaries,
is set forth in Schedule
3.2(b)-2
to the
Company Disclosure Schedule. Except for its interest in the Subsidiaries, joint
venture or similar entities as set forth in Schedule
3.2(b)-2
to the
Company Disclosure Schedule, the Company does not own, directly or indirectly,
any capital stock interest, equity membership interest, partnership interest,
joint venture interest or other equity interest in any Person. Neither the
Company nor any of its Subsidiaries is obligated to make any contribution to
the
capital of, make any loan to or guarantee the debts of any joint venture or
similar entity (excluding the Company’s wholly-owned Subsidiaries).
(c) Parent
has prior to the date of this Agreement received a correct and complete copy
of
each Company Stock Plan.
Section
3.3. Authorization.
The
Company has full corporate power and authority to execute and deliver this
Agreement and the related Plan of Merger and to consummate the transactions
contemplated hereby and thereby, subject, in the case of the consummation of
the
Merger, to the approval and adoption of this Agreement and the related Plan
of
Merger by the affirmative vote of the holders of at least a majority of the
shares of Company Common Stock entitled to vote on the Merger (the “Company
Requisite Shareholder Vote”).
The
execution and delivery of this Agreement by the Company and the consummation
by
the Company of the transactions contemplated hereby have been duly authorized
by
all necessary corporate action on the part of the Company, and no other
corporate proceedings on the part of the Company or its shareholders are
necessary to authorize this Agreement and to consummate the transactions
contemplated hereby, other than the approval of this Agreement and the Merger
by
the Company Requisite Shareholder Vote. This Agreement has been duly executed
and delivered by the Company and constitutes a valid and legally binding
obligation of the Company enforceable
-8-
against
the Company in accordance with its terms, subject (as to enforceability) to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles. Article 15 of the VSCA is not applicable
to
the Merger, and none of the Company’s shareholders will have any appraisal,
dissenters’ or similar rights by reason of this Agreement or the related Plan of
Merger or the transactions contemplated hereby or thereby, including, without
limitation, the Merger.
Section
3.4. No
Violation.
(a) The
execution and delivery of this Agreement by the Company do not, and the
consummation by the Company of the Merger and the other transactions
contemplated hereby will not, conflict with, or result in any violation of,
or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of, or result by its terms in the, termination,
amendment, cancellation or acceleration of any obligation under, or to
increased, additional, accelerated or guaranteed rights or entitlements of
any
Person under, or create any obligation to make a payment to any other Person
under, or result in the creation of a Lien on, or the loss of, any assets,
including Company Intellectual Property, of the Company or any of its
Subsidiaries pursuant to: (i) any provision of the articles of incorporation,
bylaws or similar organizational document of the Company or any of its
Subsidiaries; or (ii) any written or oral agreement, contract, loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan, permit,
franchise, license or other instrument or arrangement (each, a “Contract”)
to
which the Company or any of its Subsidiaries is a party or by which any of
their
respective properties or assets is bound, or any judgment, injunction, ruling,
order or decree (each, an “Order”)
or any
constitution, treaty, statute, law, principle of common law, ordinance, rule
or
regulation of any Governmental Entity (each, a “Law”)
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, except, in the case of this clause (ii), as: (A)
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company; (B) would not prevent
or materially delay the consummation of the transactions contemplated hereby;
or
(C) set forth on Schedule
3.4(a)
to the
Company Disclosure Schedule.
(b) No
consent, approval, Order or authorization of, or registration, declaration
or
filing with, any supranational, national, state, provincial, municipal, local
or
foreign government, any instrumentality, subdivision, court, administrative
agency or commission or other authority thereof, or any quasi-governmental
body
exercising any regulatory, judicial, administrative, taxing, importing or other
governmental or quasi-governmental authority (each, a “Governmental
Entity”)
or any
other Person (including, without limitation, any labor union, labor
organization, works council or group of employees of the Company or any of
its
Subsidiaries) is required to be obtained or made by or with respect to the
Company or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by the Company or the consummation of the Merger and the
other
transactions contemplated hereby, except as set forth on Schedule
3.4(b)
to the
Company Disclosure Schedule and for those required under or in relation to:
(i)
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
“HSR
Act”)
and
other Regulatory Laws; (ii) the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”);
(iii)
the VSCA with respect to the filing of the Articles of Merger; and (iv) such
consents, approvals, Orders,
-9-
authorizations,
registrations, declarations and filings the failure of which to make or obtain,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company. Consents, approvals,
Orders, authorizations, registrations, declarations and filings required under
or in relation to any of clauses (i) through (iii) above are referred to as
the
“Necessary
Consents.”
Section
3.5. Filings
with the SEC; Financial Statements; Xxxxxxxx-Xxxxx Act.
(a) The
Company has filed all required registration statements, prospectuses, reports,
forms and other documents (if any) required to be filed by it with the
Securities and Exchange Commission (the “SEC”)
since
July 1, 2004 (collectively, including all exhibits thereto, the
“Company
SEC Reports”).
No
Subsidiary of the Company is required to file any registration statement,
prospectus, report, schedule, form, statement or other document with the SEC.
Except as set forth on Schedule
3.5(a)
to the
Company Disclosure Schedule, none of the Company SEC Reports, as of their
respective dates (and, if amended or superseded by a filing prior to the date
of
this Agreement, then on the date of such filing), contained any untrue statement
of a material fact or omitted to state a 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. All of the Company
SEC
Reports, as of their respective dates (and as of the date of any amendment
to
the respective Company SEC Report), complied as to form in all material respects
with the applicable requirements of the Securities Act of 1933, as amended
(the
“Securities
Act”),
and
the Exchange Act.
(b) Each
of
the financial statements (including the related notes and schedules thereto)
of
the Company included in the Company SEC Reports, as of their respective dates
(and as of the date of any amendment to the respective Company SEC Report),
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”)
(except, in the case of unaudited statements, as permitted by Form 10-Q of
the
SEC) applied on a consistent basis during the periods and the dates involved
(except as may be indicated in the notes thereto) and fairly present, in all
material respects, the consolidated financial position and consolidated results
of operations and cash flows of the Company and its consolidated Subsidiaries
as
of the respective dates or for the respective periods set forth therein,
subject, in the case of the unaudited interim financial statements, to the
absence of notes and normal year-end adjustments that have not been and are
not
expected to be material in amount.
(c) Except
for liabilities reserved or reflected in a balance sheet included in the Company
SEC Reports filed prior to the date of this Agreement or as set forth on
Schedule
3.5(c)
to the
Company Disclosure Schedule, the Company and its Subsidiaries have no
liabilities, absolute or contingent, other than: (i) current liabilities
incurred in the ordinary course of business consistent with past practice after
September 30, 2006; or (ii) liabilities that, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect on the Company.
(d) Each
of
the principal executive officer and the principal financial officer of the
Company (or each former principal executive officer and former principal
financial officer
-10-
of
the
Company, as applicable) has made all certifications required under Sections
302
and 906 of the Xxxxxxxx-Xxxxx Act of 2002 with respect to the Company SEC
Reports, and the Company has made available to Parent a summary of any
disclosure made by the Company’s management to the Company’s auditors and the
audit committee of the Company’s Board of Directors referred to in such
certifications. (For purposes of the preceding sentence, “principal executive
officer” and “principal financial officer” shall have the meanings ascribed to
such terms in the Xxxxxxxx-Xxxxx Act of 2002.)
(e) The
Company maintains a system of internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to
provide reasonable assurance to the Company and its Board of Directors (i)
that
the Company maintains records that in reasonable detail accurately and fairly
reflect their respective transactions and dispositions of assets, (ii) that
transactions of the Company and its Subsidiaries are recorded as necessary
to
permit preparation of financial statements in conformity with GAAP, (iii) that
receipts and expenditures of the Company and its Subsidiaries are executed
only
in accordance with authorizations of management and the Board of Directors
of
the Company and (iv) regarding prevention or timely detection of the
unauthorized acquisition, use or disposition of the Company’s assets that could
have a material effect on the Company’s financial statements. The Company has
evaluated the effectiveness of the Company’s internal control over financial
reporting and, to the extent required by applicable Law, presented in any
applicable Company SEC Report that is a report on Form 10-K or Form 10-Q or
any
amendment thereto its conclusions about the effectiveness of the internal
control over financial reporting as of the end of the period covered by such
report or amendment based on such evaluation. To the extent required by
applicable Law, the Company has disclosed, in any applicable Company SEC Report
that is a report on Form 10-K or Form 10-Q or any amendment thereto, any change
in the Company’s internal control over financial reporting that occurred during
the period covered by such report or amendment that has materially affected,
or
is reasonably likely to materially affect, the Company’s internal control over
financial reporting. The Company has disclosed, based on the most recent
evaluation of internal control over financial reporting, to the Company’s
auditors and the audit committee of the Company’s Board of Directors (A) all
significant deficiencies and material weaknesses in the design or operation
of
internal control over financial reporting that are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting.
(f) The
Company has designed disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that material
information relating to the Company, including its consolidated Subsidiaries,
is
made known to its principal executive officer and principal financial officer.
The Company has evaluated the effectiveness of the Company’s disclosure controls
and procedures and, to the extent required by applicable Law, presented in
any
applicable Company SEC Report that is a report on Form 10-K or Form 10-Q or
any
amendment thereto its conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by such report
or
amendment based on such evaluation.
-11-
(g) Except
as
set forth on Schedule
3.5(g)
to the
Company Disclosure Schedule, the date of each Company Stock Option that is
reflected in the Company’s books and records is the actual date of grant thereof
(as determined under GAAP). All Company Stock Options were granted with an
exercise price at least equal to the fair market value of Company Stock on
the
date of grant of such Company Stock Option and no Company Stock Option has
been
amended to reduce the exercise price from that in effect on the date of grant
(except pursuant to non-discretionary antidilution provisions governing such
Company Stock Option). The financial statements of the Company included in
the
Company SEC Reports fairly reflect in all material respects amounts required
to
be shown as expense in connection with the grant and/or amendment of any Company
Stock Option.
Section
3.6. Proxy
Statement.
None of
the information contained or incorporated by reference in the Proxy Statement
will, on the date on which it is first mailed to the Company’s shareholders or
at the time of the Company Shareholders Meeting, contain any untrue statement
of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
Company makes no representation regarding information provided in writing by
Parent or its Subsidiaries for inclusion in the Proxy Statement. The Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act.
Section
3.7. Board
Approval.
The
Board of Directors of the Company, by resolutions duly adopted by the unanimous
vote at a meeting duly called and held and not subsequently rescinded or
modified in any way (the “Company
Board Approval”),
has
duly (a) determined that (i) this Agreement and the related Plan of Merger
and
the transactions contemplated hereby and thereby, including, without limitation,
the Merger, are advisable and in the best interests of the Company and its
shareholders and (ii) the cash consideration for outstanding shares of Company
Common Stock in the Merger is fair to the shareholders of the Company, (b)
adopted this Agreement and the related Plan of Merger and the transactions
contemplated hereby and thereby, including, without limitation, the Merger,
and
(c) recommended that the shareholders of the Company approve this Agreement
and
the related Plan of Merger and the transactions contemplated hereby and thereby,
including, without limitation, the Merger, and directed that such matter be
submitted to a vote by the Company’s shareholders at the Company Shareholders
Meeting.
Section
3.8. Absence
of Certain Changes.
Except
as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, since September 30, 2006:
(a) except
as
set forth on Schedule
3.8(a)
to the
Company Disclosure Schedule, the Company and its Subsidiaries have conducted
their respective businesses only in the ordinary course of business consistent
with past practice;
(b) except
as
set forth on Schedule
3.8(b)
to the
Company Disclosure Schedule, there has not been any action taken by the Company
or any of its Subsidiaries that would have required the consent of Parent under
clause (b), (c) (in respect of the Company and any Subsidiary that is not a
wholly-owned Subsidiary only), (d), (g), (h), (i), (j), (k) or (o) of Section
5.1 if such action was taken after the date of this Agreement;
-12-
(c) there
has
not been any change, event, development, condition, occurrence or combination
of
changes, events, developments, conditions or occurrences that, individually
or
in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on the Company; and
(d) except
as
set forth on Schedule
3.8(d)
to the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has
increased the compensation or benefits of, or granted or paid any benefits
to,
any director or officer, or taken any similar action, except, in the case of
this clause (d): (i) to the extent required under the terms of any agreements,
trusts, plans, funds or other arrangements disclosed in the Company SEC Reports
filed prior to the date of this Agreement; (ii) to the extent required by
applicable Law; or (iii) for increases (other than in equity-based compensation)
in the ordinary course of business consistent with past practice. Without
limitation, except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, since December 31, 2005, neither the Company nor any
of
its Subsidiaries has adopted or entered into any arrangement that is a material
Foreign Benefit Plan.
Section
3.9. Litigation;
Orders.
Except
as disclosed in the Company SEC Reports filed prior to the date of this
Agreement or as set forth on Schedule
3.9
to the
Company Disclosure Schedule, there is no claim, action, suit, arbitration,
proceeding, investigation or inquiry, whether civil, criminal or administrative,
pending or, to the knowledge of the Company, threatened against the Company
or
any of its Subsidiaries or any of their respective officers or directors (in
such capacity) or any of their respective businesses or assets, at law or in
equity, before or by any Governmental Entity or arbitrator, except as,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company or to prevent or
materially delay the consummation of the transactions contemplated hereby.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, none of the Company, any of its Subsidiaries or any of their
respective businesses or assets is subject to any Order of any Governmental
Entity that, individually or in the aggregate, has had or would reasonably
be
expected to have a Material Adverse Effect on the Company or to prevent or
delay
the consummation of the transactions contemplated hereby.
Section
3.10. Permits;
Compliance with Laws.
Except
as disclosed in the Company SEC Reports filed prior to the date of this
Agreement and except as, individually or in the aggregate, has not had and
would
not reasonably be expected to have a Material Adverse Effect on the Company,
the
Company and its Subsidiaries hold all permits, licenses, franchises, variances,
exemptions, Orders and approvals of all Governmental Entities that are necessary
for the operation of their respective businesses as now being conducted
(collectively, the “Company
Permits”),
and
no suspension or cancellation of any of the Company Permits is pending or,
to
the knowledge of the Company, threatened. The Company and its Subsidiaries
are
in compliance with, and the Company and its Subsidiaries have not received
any
notices of noncompliance with respect to, the Company Permits and any Laws,
except for instances of noncompliance where neither the costs to comply nor
the
failure to comply, individually or in the aggregate, has or would reasonably
be
expected to have a Material Adverse Effect on the Company. Without limitation,
during the three years prior to the date of this Agreement, none of the Company,
any of its Subsidiaries or any director, officer, or employee of, or, to the
knowledge of the Company, any agent or other Person associated with or acting
on
behalf of the Company or any of its Subsidiaries has, directly or indirectly:
(a) used any funds of the
-13-
Company
or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful
entertainment or other unlawful expenses relating to political activity; (b)
made any unlawful payment to foreign or domestic governmental officials or
employees or to foreign or domestic political parties or campaigns from funds
of
the Company or any of its Subsidiaries; (c) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or any similar Law; (d)
established or maintained any unlawful fund of monies or other assets of the
Company or any of its Subsidiaries; (e) made any fraudulent entry on the books
or records of the Company or any of its Subsidiaries; or (f) made any unlawful
bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful
kickback or other unlawful payment to any Person, private or public, regardless
of form, whether in money, property or services, to obtain favorable treatment
in securing business, to obtain special concessions for the Company or any
of
its Subsidiaries, to pay for favorable treatment for business secured or to
pay
for special concessions already obtained for the Company or any of its
Subsidiaries, except, in each case referred to in clauses (a) through (f),
where
such acts, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect on the
Company.
Section
3.11. Tax
Matters.
Except
as set forth on Schedule
3.11
to the
Company Disclosure Schedule:
(a) All
material Taxes of the Company and its Subsidiaries attributable to periods
or
portions thereof ending on or before the date of the consolidated balance sheet
of the Company and its Subsidiaries for the fiscal year ended June 30, 2006
included in the Company SEC Reports (the “Recent
Balance Sheet”)
were
paid prior to the date of the Recent Balance Sheet or have been included in
a
liability accrual for Taxes on the Recent Balance Sheet. Since the date of
the
Recent Balance Sheet, neither the Company nor any of its Subsidiaries has
incurred any material Taxes other than Taxes incurred in the ordinary course
of
business consistent with past practice.
(b) Each
of
the Company and its Subsidiaries has timely filed all material Tax Returns
required to be filed (taking into account any extension of time within which
to
file), and all such Tax Returns were and are correct and complete in all
material respects. The Company has provided Parent with access to complete
and
accurate copies of all such Tax Returns for which the statute of limitations
is
still open.
(c) Each
of
the Company and its Subsidiaries has duly withheld, collected and timely paid
all material Taxes that it was required to withhold, collect and pay relating
to
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other Person.
(d) No
Tax
audit or other administrative proceeding or court proceedings are presently
pending or threatened in writing with regard to any material Taxes of the
Company or any of its Subsidiaries. No claim has been made in writing by any
taxing authority in a jurisdiction where the Company or any of its Subsidiaries
does not file Tax Returns that the Company or any of its Subsidiaries is or
may
be subject to Tax or required to file a Tax Return in such jurisdiction, except
for those instances where neither the imposition of any such Tax nor the filing
of any such Tax Return (and the obligation to pay the Taxes reflected thereon),
individually or in the aggregate, has had or would reasonably be expected to
have a Material
-14-
Adverse
Effect on the Company. There are no outstanding waivers or comparable consents
that have been given by the Company or any of its Subsidiaries regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns. There are no Liens on any of the assets of the Company and its
Subsidiaries that arose in connection with any failure to pay Taxes, other
than
Liens for Taxes that are not yet due and payable.
(e) Neither
the Company nor any of its Subsidiaries has requested or received any material
Tax ruling, private letter ruling, technical advice memorandum, competent
authority relief or similar agreement or entered into a material closing
agreement or contract with any taxing authority that, in each case, was
requested or received in a year, or dictates the Tax treatment of any item
in a
year, with respect to which the applicable statute of limitations is open.
Neither the Company nor any of its Subsidiaries is subject to a Tax sharing,
allocation, indemnification or similar agreement (except such agreements as
are
solely between or among the Company and its Subsidiaries) pursuant to which
it
could have an obligation to make a material payment to any Person in respect
of
Taxes.
(f) The
Company has not during the last five years been a member of an Affiliated group
of corporations that filed a consolidated tax return except for groups for
which
it was the parent corporation. For any year with respect to which the statute
of
limitations is open, none of the Company’s Subsidiaries has ever been a member
of an Affiliated group of corporations that filed a consolidated tax return
except for groups of which the Company was the parent corporation.
(g) Neither
the Company nor any of its Subsidiaries is participating or has participated
in
a reportable or listed transaction within the meaning of Treas. Reg. Section
1.6011-4 or Section 6707A(c) of the Code. The Company and each of its
Subsidiaries have disclosed on their federal income Tax Returns all positions
taken therein that could reasonably be expected to give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of
the
Code.
(h) Neither
the Company nor any of its Subsidiaries has been the “distributing corporation”
or a “controlled corporation” (within the meaning of Section 355 of the Code)
with respect to a transaction described in Section 355 of the Code within the
two-year period ending on the date of this Agreement.
(i) Neither
the Company nor any of its Subsidiaries has received any dividend intended
to
qualify for the deduction described in Section 965 or any predecessor thereto
of
the Code.
Section
3.12. Environmental
Matters.
(a) The
Company and each of its Subsidiaries are in compliance with all applicable
Laws
and Orders relating to pollution, protection of the environment or human health,
occupational safety and health or sanitation, including the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and all
other applicable Laws and Orders relating to emissions, spills, discharges,
generation, storage, leaks, injection, leaching, seepage, releases or threatened
releases of Hazardous Substances into the environment (including
-15-
ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances, together
with
any plan, notice or demand letter issued, entered, promulgated or approved
thereunder (collectively, “Environmental
Laws”),
except for instances of noncompliance where neither the costs to comply nor
the
failure to comply, individually or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor any of its Subsidiaries has received any written notice of
(i) any material violation of an Environmental Law or (ii) the institution
of any claim, action, suit, proceeding, investigation or inquiry by any
Governmental Entity or other Person alleging that the Company or any of its
Subsidiaries may be in material violation of or materially liable under any
Environmental Law.
(b) Neither
the Company nor any of its Subsidiaries has (i) placed, held, located, released,
transported or disposed of any Hazardous Substances on, under, from or at any
of
the properties currently or previously owned or operated by the Company or
any
of its Subsidiaries, except in a manner that, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company, (ii) any liability for any Hazardous Substance disposal
or contamination on any of the Company’s or any of its Subsidiaries’ properties
or any other properties that, individually or in the aggregate, has or would
reasonably be expected to have a Material Adverse Effect on the Company, (iii)
reason to know of the presence of any Hazardous Substances on, under or at
any
of the Company’s or any of its Subsidiaries’ properties or any other properties
but arising from the conduct of operations on the Company’s or any of its
Subsidiaries’ properties, except in a manner that, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect on the Company, or (iv) received any written notice of (A) any
actual or potential liability for the response to or remediation of Hazardous
Substances at or arising from any of the Company’s or any of its Subsidiaries’
properties or any other properties or (B) any actual or potential liability
for
the costs of response to or remediation of Hazardous Substances at or arising
from any of the Company’s or any of its Subsidiaries’ properties or any other
properties, in the case of both subclause (A) and (B), that, individually or
in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on the Company.
(c) Except
as
set forth on Schedule
3.12(c)
to the
Company Disclosure Schedule, there are no underground storage tanks, asbestos,
asbestos-containing materials, polychlorinated biphenyls (PCBs) or PCB wastes
located, contained, used or stored at or on any of the Company’s or any of its
Subsidiaries’ properties that, individually or in the aggregate, are material.
To the knowledge of the Company, no underground storage tanks, asbestos,
asbestos-containing materials, polychlorinated biphenyls (PCBs) or PCB wastes
were previously located, contained, used or stored at or on any of the Company’s
or any of its Subsidiaries’ properties that, individually or in the aggregate,
are material.
(d) The
Company has prior to the date of this Agreement provided to Parent: (i) all
copies of all material reports, studies, analyses or tests, and any results
of
monitoring programs, in the possession or control of the Company within the
last
two years pertaining to the generation, storage, use, handling, transportation,
treatment, emission, spillage, disposal, release or removal of Hazardous
Materials at, in, on or under any of the Company’s or any of its Subsidiaries’
properties; and (ii) a copy of any environmental investigation or
assessment
-16-
conducted
by the Company or any of its Subsidiaries within the past three years or any
environmental consultant engaged by any of them.
Section
3.13. Intellectual
Property.
(a) Except
as
set forth on Schedule
3.13(a)
to the
Company Disclosure Schedule, the Company and its Subsidiaries have good title
to
or, with respect to items not owned by the Company or its Subsidiaries,
sufficient rights to use all material Intellectual Property Rights that are
owned or licensed by the Company or any of its Subsidiaries or utilized by
the
Company or any of its Subsidiaries in the conduct of their respective businesses
(all of the foregoing items are hereinafter referred to as the “Company
Intellectual Property”).
To
conduct the business of the Company and its Subsidiaries as presently conducted,
neither the Company nor any of its Subsidiaries requires any material
Intellectual Property Rights that the Company and its Subsidiaries do not
already own or license. The Company has no knowledge of any infringement or
misappropriation by others of Intellectual Property Rights owned by the Company
or any of its Subsidiaries. The conduct of the businesses of the Company and
its
Subsidiaries does not infringe on or misappropriate any Intellectual Property
Rights of others, except where such infringement or misappropriation,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company.
(b) Except
as
set forth on Schedule
3.13(b)
to the
Company Disclosure Schedule, no claims with respect to Company Intellectual
Property are pending or, to the knowledge of the Company, threatened by any
Person (i) to the effect that the manufacture, sale or use of any product,
process or service as now used or offered or proposed for use or sale by the
Company or any of its Subsidiaries infringes on any Intellectual Property Rights
of any Person, (ii) against the use by the Company or any of its Subsidiaries
of
any Company Intellectual Property or (iii) challenging the ownership, validity,
enforceability or effectiveness of any Company Intellectual Property, except
in
the case of clause (i) through (iii) where such claims, individually or in
the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect on the Company.
Section
3.14. Employee
Benefits.
(a) Schedule
3.14(a)
to the
Company Disclosure Schedule sets forth a correct and complete list of all
“employee benefit plans,” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”),
other
than any Multiemployer Plan, and all other material employee benefits,
arrangements, perquisite programs, payroll practices or (without regard to
materiality) executive compensation Contracts that are maintained by the Company
or any of its Subsidiaries or to which the Company or any of its Subsidiaries
is
obligated to contribute, for current or former employees or directors (or
dependents or beneficiaries thereof) of the Company or any of its Subsidiaries
(collectively, the “Employee
Benefit Plans”).
(b) Schedule
3.14(b)
to the
Company Disclosure Schedule sets forth a correct and complete list of all
Multiemployer
Plans. With respect to each Multiemployer Plan: (i) if the Company, any of
its Subsidiaries or any ERISA Affiliate was to experience a withdrawal or
partial withdrawal from such plan, no withdrawal liability under Title IV of
ERISA would be
-17-
incurred,
except as set forth on such schedule; and (ii) none of the Company, any of
its
Subsidiaries or any ERISA Affiliate has received any notification, nor has
any
reason to believe, that any Multiemployer Plan is in reorganization, has been
terminated, is insolvent or may reasonably be expected to be in reorganization,
to be insolvent or to be terminated. During the last five years, none of the
Company, its current or former Subsidiaries or any current or former ERISA
Affiliate has (i) withdrawn from any Multiemployer Plan in a complete or partial
withdrawal under circumstances in which any withdrawal liability was not
satisfied in full or (ii) engaged in a transaction that is subject to Section
4069 of ERISA. During the last five years, none of the Company, any of its
Subsidiaries or any ERISA Affiliate is or has ever been a party to any multiple
employer plan, as that term is defined in Section 413(c) of the Code, or a
multiple employer welfare arrangement, as that term is defined in Section 3(40)
of ERISA.
(c) Except
as
set forth in Schedule
3.14(c)
to the
Company Disclosure Schedule, with respect to each Employee Benefit Plan subject
to Title IV of ERISA: (i) the
present value of all accrued benefits under each such single employer plan
(based on the assumptions used to fund the plan) did not as of the last annual
actuarial valuation date exceed the value of the assets of such single employer
plan allocable to such accrued benefits, and no event has occurred since
valuation date, and no condition exists, which is reasonably likely to
materially increase the funding or accounting costs for such single employer
plans; (ii) no
proceeding has been initiated or, to the knowledge of the Company, threatened
by
any Person (including the PBGC) to terminate any such plan; (iii) no “reportable
event” (as defined in Section 4043 of ERISA) has occurred with respect to any
such plan, and no such reportable event will occur as a result of the
transactions contemplated hereby; and (iv) no such plan that is subject to
Section 302 of ERISA or Section 412 of the Code has incurred an “accumulated
funding deficiency” (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not such deficiency has been waived.
None
of
the Company, any of its Subsidiaries or any ERISA Affiliate has incurred any
outstanding liability under Section 4062, 4063 or 4064 of ERISA to the Pension
Benefit Guaranty Corporation (“PBGC”)
or to
a trustee appointed under Section 4042 of ERISA. None of the Employee Benefit
Plans or any other plan, fund or program ever maintained or contributed to
by
the Company, any of its Subsidiaries or any ERISA Affiliate that is subject
to
Title IV of ERISA has been terminated so as to subject, directly or indirectly,
any assets of the Company or any of its Subsidiaries to any liability,
contingent or otherwise, or the imposition of any Lien under Title IV of ERISA.
(d) The
Company and each of its Subsidiaries have reserved the right to amend, terminate
or modify at any time all Employee Benefit Plans, except as limited by the
terms
of a collective bargaining agreement or contract with an individual or to the
extent applicable Law would prohibit the Company or any Subsidiary from so
reserving or exercising such right.
(e) Except
as
set forth on Schedule
3.14(e)
to the
Company Disclosure Schedule, the Internal Revenue Service has issued a currently
effective favorable determination letter with respect to each Employee Benefit
Plan that is intended to be a “qualified plan” within the meaning of Section 401
of the Code, and each trust maintained pursuant thereto has been determined
to
be exempt from federal income taxation under Section 501 of the Code by the
IRS.
Each such Employee Benefit Plan has been timely amended since the date of the
latest favorable determination letter in accordance with all applicable Laws.
Nothing has occurred
-18-
with
respect to the operation of any such Employee Benefit Plan that is reasonably
likely to cause the loss of such qualification or exemption or the imposition
of
any liability, penalty or tax under ERISA or the Code or the assertion of claims
by “participants” (as that term is defined in Section 3(7) of ERISA) other than
routine benefit claims.
(f) None
of
the Company, its Subsidiaries, the officers or directors of the Company or
any
of its Subsidiaries or the Employee Benefit Plans that are subject to ERISA,
any
trusts created thereunder or any trustee or administrator thereof has engaged
in
a “prohibited transaction” (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could subject the Company, any of its Subsidiaries or any officer or director
of
the Company or any of its Subsidiaries to any tax or penalty on prohibited
transactions imposed by such Section 4975 or to any liability under Section
502
of ERISA.
(g) Except
as, individually or in the aggregate, have not had and would not reasonably
be
expected to have a Material Adverse Effect on the Company, there are no claims
(except claims for benefits payable in the ordinary course of business
consistent with past practice and proceedings with respect to qualified domestic
relations orders), suits or proceedings pending or, to the knowledge of the
Company, threatened against or involving any Employee Benefit Plan, asserting
any rights or claims to benefits under any Employee Benefit Plan or asserting
any claims against any administrator, fiduciary or sponsor thereof. Except
as,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect on the Company, there are no pending
or, to the knowledge of the Company, threatened investigations by any
Governmental Entity involving any Employee Benefit Plans.
(h) All
Employee Benefit Plans have been established, maintained and administered in
accordance with their terms and with all provisions of applicable Laws,
including ERISA and the Code, except for instances of noncompliance where
neither the costs to comply nor the failure to comply, individually or in the
aggregate, have had or would reasonably be expected to have a Material Adverse
Effect on the Company. All contributions or premiums required to be made with
respect to an Employee Benefit Plan, whether by law or pursuant to the terms
of
the plan or any contract that funds the benefits due thereunder, have been
made
when due. With respect to any Employee Benefit Plan the liabilities of which
have been disclosed on the Company’s financial statements as included in the
Company SEC Reports filed prior to the date of this Agreement, no event has
occurred since the date of such disclosure that has resulted in a material
increase in such liabilities.
(i) Except
as
set forth on Schedule
3.14(i)
to the
Company Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby (either
alone or in conjunction with any other event) will: (i) increase any benefits
otherwise payable under any Employee Benefit Plan; (ii) result in any
acceleration of the time of payment or vesting of any such benefits; (iii)
limit
or prohibit the ability to amend or terminate any Employee Benefit Plan; (iv)
require the funding of any trust or other funding vehicle; or (v) renew or
extend the term of any agreement in respect of compensation for an employee
of
the Company or any of its Subsidiaries that would create any
-19-
liability
to the Company, any of its Subsidiaries, Parent or the Surviving Corporation
or
their respective Affiliates after consummation of the Merger.
(j) Except
as
set forth in Schedule
3.14(j)
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is
a party to a Contract (including this Agreement) that under any circumstances
could obligate it to make payments (either before or after the Closing Date)
that will not be deductible because of Section 162(m) or Section 280G of the
Code. Schedule
3.14(j)
to the
Company Disclosure Schedule sets forth each Employee Benefit Plan that provides
for a payment upon a change in control and/or any subsequent employment
termination (including any agreement that provides for the cash-out or
acceleration of options or restricted stock and any “gross-up” payments with
respect to any of the foregoing), but excluding severance plans that are
generally applicable to employees of the Company and its Subsidiaries.
(k) Neither
the Company nor any of its Subsidiaries has provided written communications
to
any group of its current or former employees or any of its directors of any
intention or commitment to establish or implement any additional material
Employee Benefit Plan or other employee benefit arrangement or to amend or
modify, in any material respect, any existing Employee Benefit
Plan.
(l) With
respect to each Employee Benefit Plan that is subject to the Law of any
jurisdiction other than the United States (a “Foreign
Benefit Plan”),
except as, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect on the Company: (i)
all
employer and employee contributions to each Foreign Benefit Plan required by
Law
or by the terms of such Foreign Benefit Plan have been made or, if applicable,
accrued in accordance with normal accounting practices; (ii) the fair market
value of the assets of each funded Foreign Benefit Plan, the liability of each
insurer for any Foreign Benefit Plan funded through insurance or the book
reserve established for any Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations with respect to all current and former participants in such plan
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to such Foreign Benefit Plan, and no
transaction contemplated by this Agreement will cause such assets, insurance
obligations or book reserve to be less than such benefit obligations; (iii)
all
Foreign Benefit Plans have been maintained in accordance with their terms and
all requirements of applicable Law; (iv) each Foreign Benefit Plan required
to
be registered has been registered and has been maintained in good standing
with
the appropriate Governmental Entities; and (v) to the extent any Foreign Benefit
Plan is intended to qualify for special tax treatment, such Foreign Benefit
Plan
meets all requirements for such treatment. There is no Foreign Benefit Plan
with
respect to which the Company is obligated to make disclosure in the Company
SEC
Reports where the Company has not made the disclosure so required. The Company
has prior to the date of this Agreement provided Parent with a correct and
complete list of all Foreign Benefit Plans.
(m) Each
“nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of
the Code) of
the Company has been operated since January 1, 2005 in good faith compliance
with Section
409A of
the Code, IRS Notice 2005-1 and Proposed Treasury Regulations promulgated under
Section 409A of the Code.
-20-
Section
3.15. Labor
Matters.
(a) Except
as
set forth in Schedule
3.15(a)
to the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is
party to, or bound by, any labor agreement, collective bargaining agreement,
work rules or practices, or any other labor-related Contract with any labor
union, labor organization or works council. Except as set forth in Schedule
3.15(a)
to the
Company Disclosure Schedule, there are no labor agreements, collective
bargaining agreements, work rules or any other labor-related Contracts that
pertain to any of the employees of the Company or any of its Subsidiaries.
(b) No
labor
union, labor organization, works council or group of employees of the Company
or
any of its Subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings
or
petitions seeking a representation proceeding pending or, to the knowledge
of
the Company, threatened to be brought or filed with the National Labor Relations
Board or any other Governmental Entity. To the knowledge of the Company, there
are no material organizational attempts relating to labor unions, labor
organizations or works councils occurring with respect to any employees of
the
Company or any of its Subsidiaries.
(c) Except
as, individually or in the aggregate, have not had and would not reasonably
be
expected to have a Material Adverse Effect on the Company or as set forth on
Schedule
3.15(c)
to the
Company Disclosure Schedule: (i) there are no unfair labor practice charges
or
complaints against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any other Governmental Entity; (ii) there are no labor strikes, slowdowns,
stoppages, walkouts, lockouts or disputes pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries;
(iii) there are no pending or, to the knowledge of the Company, threatened
grievances or arbitration proceedings against the Company or any of its
Subsidiaries arising out of or under any labor agreement, collective bargaining
agreement, work rules or practices, or any other labor-related Contract with
any
labor union, labor organization or works council; and (iv) the Company and
its
Subsidiaries have complied with all hiring and employment obligations under
the
Office of Federal Contract Compliance Programs rules and regulations.
Section
3.16. Certain
Contracts.
(a) Except
as
set forth on Schedule
3.16(a)
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is
a party to or bound by any Contract as of the date of this Agreement that:
(i) is
a loan
or credit agreement, indenture, note, debenture, mortgage, pledge, security
agreement, capital lease or guarantee;
(ii) involves
or would reasonably be expected to involve aggregate annual payments by the
Company and/or its Subsidiaries in excess of $500,000 or its foreign currency
equivalent as of the date of this Agreement or payments to the Company and/or
its Subsidiaries in excess of $500,000 or its foreign currency equivalent as
of
the
-21-
date
of
this Agreement (excluding purchase orders and other supplier or customer
contracts received and accepted by the Company and/or its Subsidiaries in the
ordinary course of business);
(iii) is
with a
Major Supplier or a Major Customer;
(iv) is
required to be filed with the SEC under Item 601 of Regulation S-K of the
Exchange Act and has not been so filed;
(v) by
its
terms restricts the conduct of any line of business by the Company or any of
its
Subsidiaries or, after the Effective Time, would by its terms materially
restrict the conduct of any line of business by Parent or any of its
Subsidiaries;
(vi) provides
for or otherwise relate to a joint venture, partnership, strategic alliance
or
similar arrangement; or
(vii) is
an
option, forward purchase, hedge or similar Contract.
The
Company has made available to Parent a true and complete copy each Contract
listed on Schedule
3.16(a)
of the
Company Disclosure Schedule.
(b) Except
as
set forth on Schedule
3.16(b)
to the
Company Disclosure Schedule and with such exceptions as, individually or in
the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect on the Company: (i) each Contract to which the Company or
any of its Subsidiaries is a party is in full force and effect and
is valid and binding on and enforceable against the Company and/or its
Subsidiaries, as applicable, in accordance with its terms and, to the knowledge
of the Company,
on and against the other parties thereto;
(ii)
neither
the Company nor any of its Subsidiaries nor, to the knowledge of the
Company,
any other party to any such Contract, is in breach thereof, or default
thereunder, and no event has occurred that, with the giving of notice or the
lapse of time or both, would constitute a breach thereof, or default thereunder;
and (iii) each
of the Company and its Subsidiaries and, to the knowledge of the Company, the
other Person or Persons thereto has performed all of its obligations required
to
be performed by it under each Contract to which the Company or any of its
Subsidiaries is a party.
Section
3.17. Properties
and Assets.
Except
as set forth on Schedule
3.17
to the
Company Disclosure Schedule, each of the Company and its Subsidiaries has good
and marketable title to or valid leasehold or license interests in the
properties and assets that are material to its business, free and clear of
all
Liens, except those Liens for Taxes not yet due and payable and such other
Liens
or minor imperfections of title, if any, that do not materially detract from
the
value or interfere with the present use of the affected property or asset as
it
is currently being used. Such properties and assets, together with all
properties and assets held by the Company and its Subsidiaries under leases
or
licenses, include all tangible and intangible property, assets, Contracts and
rights necessary or required for the operation of the business of the Company
and its Subsidiaries as presently conducted. With such exceptions as,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect on the Company, the tangible personal
property of the Company and its
-22-
Subsidiaries
is in good working condition and repair, reasonable wear and tear and loss
due
to normal operations excepted.
Section
3.18. Insurance.
Except
as set forth on Schedule
3.18
of the
Company Disclosure Schedule, all material insurance policies maintained by
the
Company or any of its Subsidiaries, including policies with respect to fire,
casualty, general liability, business interruption and product liability, are
with reputable insurance carriers, provide adequate coverage for all normal
risks incident to the respective businesses, properties and assets of the
Company and its Subsidiaries, except for failures to maintain such insurance
policies that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and each of its Subsidiaries have made all payments required to maintain
such policies in full force and effect. Neither the Company nor any of its
Subsidiaries has received notice of default under any such policy or notice
of
any pending or threatened termination or cancellation, coverage limitation
or
reduction with respect to any such policy. The aggregate annual premiums that
the Company is paying with respect to the Company’s directors and officers
insurance policy for the current policy period that includes the date of this
Agreement is set forth in Schedule
3.18
to the
Company Disclosure Schedule.
Section
3.19. Suppliers
and Customers. Schedule
3.19-1
to the Company Disclosure Schedule lists the top 20 suppliers (by volume of
purchases from such suppliers) of the Company and its Subsidiaries for the
fiscal year ended June 30, 2006 (the “Major
Suppliers”).
Schedule
3.19-2
to the Company Disclosure Schedule lists the top 20 customers (by volume of
sales to such customers) of the Company and its Subsidiaries for the fiscal
year
ended June 30, 2006 (the “Major
Customers”).
Neither the Company nor any of its Subsidiaries has received any
written
or, to the knowledge of the Company, oral
notice from any of the suppliers on Schedule
3.19-1
to the Company Disclosure Schedule or the customers on Schedule
3.19-2
to the Company Disclosure Schedule to the effect that
any such supplier or customer will stop, materially and adversely decrease
the
rate of, or materially change the terms (whether related to payment, price
or
otherwise) with respect to, supplying materials, products
or services to, or purchasing products from, the Company and its
Subsidiaries.
Section
3.20. Affiliate
Transactions.
Except
as set forth in the Company SEC Reports, there are no transactions, agreements,
arrangements or understandings between the Company or any of its Subsidiaries,
on the one hand, and any Affiliate of the Company (other than its Subsidiaries),
on the other hand, of the type that would be required to be disclosed under
Item
404 of Regulation S-K under the Securities Act.
Section
3.21. Opinion
of Financial Advisor.
The
Company has received an oral opinion of Deutsche Bank Securities Inc.
(“DBS”)
to the
effect that, as of the date of this Agreement, the Merger Consideration is
fair,
from a financial point of view, to the holders of shares of Company Common
Stock. A copy of such opinion will be delivered to Parent promptly after the
date of this Agreement. DBS has authorized the Company to include such written
opinion in its entirety in the Proxy Statement.
Section
3.22. No
Brokers or Finders.
With
the exception of the engagement of DBS by the Company, none of the Company
and
its Subsidiaries has any liability or obligation to pay any fees or commissions
to any financial advisor, broker, finder or agent with respect to the
-23-
transactions
contemplated hereby. The Company has prior to the date of this Agreement
provided Parent with a correct and complete copy of any engagement letter or
other Contract between the Company and DBS relating to the Merger and the other
transactions contemplated hereby.
Section
3.23. Other
Advisors.
Other
than the engagement letter or other Contract with DBS referred to in Section
3.22 (as to which no representation is made in this Section 3.23), each
engagement letter or other Contract between the Company or one of its
Subsidiaries, on the one hand, and each of its legal, accounting or other
advisors, on the other hand, in connection with the transactions contemplated
by
this Agreement entitles the legal, accounting or other advisor party thereto
to
receive compensation only at its usual hourly rates, without any premium, bonus,
or similar payment, in connection with the transactions contemplated by this
Agreement.
Section
3.24. Antitakeover
Statutes and Rights Agreement.
(a) The
Company and the Board of Directors of the Company have taken all action required
to be taken by them to exempt this Agreement, Merger, the Voting Agreements
and
the transactions contemplated hereby and thereby from the requirements of any
“moratorium”,
“control share”, “fair price”, “affiliate transaction”, “business combination”
or other antitakeover laws and regulations of any state, including, without
limitation, the provisions of Article 14 and Article 14.1 of the
VSCA.
(b) The
Company has taken all action necessary to render the Preferred Stock Purchase
Rights issued pursuant to the terms of the Rights Agreement inapplicable to
this
Agreement, the Merger, the Voting Agreement and the transactions contemplated
hereby and thereby.
Section
3.25. No
Other Representations or Warranties.
Except
for the representations and warranties made by the Company in this Article
3,
the Company makes no representations or warranties, and the Company hereby
disclaims any other representations or warranties, with respect to the Company
and its Subsidiaries.
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent
and Merger Sub jointly and severally represent and warrant to the Company as
follows:
Section
4.1. Organization
and Qualification.
Each of
Parent and Merger Sub is a corporation duly organized, validly existing and
in
good standing under the Laws of the jurisdiction of its incorporation and has
full corporate power and authority to own, operate and lease the properties
owned or used by it and to carry on its business as and where such is now being
conducted.
Section
4.2. Authorization.
Each of
Parent and Merger Sub has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have
-24-
been
duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent, Merger Sub or
their respective shareholders are necessary to authorize this Agreement and
to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Merger Sub and constitutes a valid and
legally binding obligation of Parent and Merger Sub enforceable against Parent
and Merger Sub in accordance with its terms, subject (as to enforceability)
to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.
Section
4.3. No
Violation.
(a) The
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby will not, conflict with, or result in any
violation of, or constitute a default (with or without notice or lapse of time,
or both) under, or give rise to a right of, or result by its terms in the,
termination, amendment, cancellation or acceleration of any obligation under,
or
to increased, additional, accelerated or guaranteed rights or entitlements
of
any Person under, or create any obligation to make a payment to any other Person
under, or result in the creation of a Lien on, or the loss of, any assets of
Parent or any of its Subsidiaries pursuant to: (i) any provision of the articles
of incorporation, by-laws or similar organizational document of Parent or any
of
its Subsidiaries; or (ii) subject to obtaining or making the consents,
approvals, Orders, authorizations, registrations, declarations and filings
referred to in Section 4.3(b), any Contract to which Parent or any of its
Subsidiaries is a party or by which any of their respective properties or assets
is bound or any Order or Law applicable to Parent or any of its Subsidiaries
or
their respective properties or assets, except, in the case of this clause (ii),
as would not prevent or delay the consummation of the transactions contemplated
hereby.
(b) Except
as
set forth on Schedule
4.3(b)
of the
Parent Disclosure Schedule, no consent, approval, Order or authorization of,
or
registration, declaration or filing with, any Governmental Entity or any other
Person (including, without limitation, any labor union, labor organization,
works council or group of employees of Parent or any of its Subsidiaries) is
required to be obtained or made by or with respect to Parent or any of its
Subsidiaries in connection with the execution and delivery of this Agreement
by
Parent or the consummation of the Merger and the other transactions contemplated
hereby, except for the Necessary Consents and with such other exceptions as
would not be reasonably expected to have a material adverse effect on the
ability of Parent or Merger Sub to perform its obligations
hereunder.
Section
4.4. Available
Funds.
Parent
and Merger Sub will as of the Effective Time have available to them, all funds
necessary to consummate the Merger and the other transactions contemplated
hereby and to pay all associated fees, costs and expenses. Parent has provided
to the Company a correct and complete copy of the commitment letter it has
received to obtain such
funds (it is understood and agreed that Parent has not
provided and will not
provide the Company with a copy of the “fee letter” or the “engagement letter”
relating thereto).
Section
4.5. No
Brokers or Finders.
Neither
Parent nor Merger Sub has any liability or obligation to pay any fees or
commissions to any financial advisor, broker, finder or agent with respect
to
the transactions contemplated hereby.
-25-
Section
4.6. No
Prior Activities.
Except
for obligations or liabilities incurred in connection with its incorporation
or
organization or the negotiation and consummation of this Agreement and the
transactions contemplated hereby (including any financing), Merger Sub has
not
incurred any obligations or liabilities, and has not engaged in any business
or
activities of any type or kind whatsoever, or entered into any agreements or
arrangements with any Person or entity. As of the Effective Time, Merger Sub’s
common stock will be the only class or series of its capital stock that is
issued and outstanding. All of such stock shall be owned directly by Parent
or
by one or more direct or indirect wholly-owned Subsidiaries of
Parent.
Section
4.7. Proxy
Statement.
None of
the information provided in writing by Parent or its Subsidiaries for inclusion
in the Proxy Statement will, on the date on which it is first mailed to the
Company’s shareholders or at the time of the Company Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section
4.8. No
Other Representations or Warranties.
Except
for the representations and warranties made by Parent and Merger Sub in this
Article 4, Parent and Merger Sub make no representations or warranties, and
Parent and Merger Sub hereby disclaim any other representations or
warranties.
COVENANTS
RELATING TO CONDUCT OF BUSINESS
Section
5.1. Covenants
of the Company.
During
the period commencing on the date of this Agreement and continuing until the
Effective Time, except as specifically contemplated or permitted by this
Agreement or Schedule 5.1 to the Company Disclosure Schedule or as otherwise
approved in advance by Parent in writing:
(a) Ordinary
Course.
The
Company shall, and shall cause each of its Subsidiaries to, conduct its
respective business in, and not take any action except in, the ordinary and
usual course of business consistent with past practice. The Company shall,
and
shall cause each of its Subsidiaries to, use their respective commercially
reasonable efforts to preserve intact the business organization of the Company
and its Subsidiaries, to keep available the services of their respective present
officers and key employees and to preserve the goodwill of those having business
relationships with the Company and its Subsidiaries.
(b) Governing
Documents.
The
Company shall not, and shall not permit any of its Subsidiaries to, make any
change or amendment to their respective articles of incorporation, bylaws or
similar organizational documents.
(c) Dividends.
The
Company shall not, and shall not permit any of its Subsidiaries to, declare,
set
aside, pay or make any dividend or other distribution or payment (whether in
cash, stock or other property) with respect to any shares of the capital stock
or any other voting securities of any of them, other than dividends and
distributions by (i) a direct or indirect wholly owned Subsidiary of the Company
to its parent, provided
that
such Subsidiary and its parent are both domestic corporations as defined in
Section 7701(a)(3) and (4) of the
-26-
Code,
or
(ii) a Subsidiary that is partially owned by the Company or any of its
Subsidiaries, provided that the Company or any such Subsidiary receives or
will
receive its proportionate share thereof and provided further
that
such Subsidiary and its parent are both domestic corporations as defined in
Section 7701(a)(3) and (4) of the Code.
(d) Changes
in Share Capital.
The
Company shall not, and shall not permit any of its Subsidiaries to, purchase
or
redeem any shares of the capital stock or any other securities of any of them
or
any rights, warrants or options to acquire any such shares or other securities,
or adjust, split, combine or reclassify any of the capital stock or any other
securities of any of them or make any other changes in any of their capital
structures (except pursuant to the exercise of Company Stock Options outstanding
on the date of this Agreement or pursuant to the surrender of shares of Company
Common Stock to the Company or withholding of shares of Company Common Stock
by
the Company to cover withholding obligations).
(e) Employee
Benefit Plans.
The
Company shall not, and shall not permit any of its Subsidiaries to, (i) amend
any provision of any Employee Benefit Plan, (ii) adopt or enter into any
arrangement that would be an Employee Benefit Plan or (iii) increase the
compensation or benefits of, or grant or pay any benefits to, any director,
officer or employee, or take any similar action, except, in the case of this
clause (iii), (A) to the extent required under the terms of any agreements,
trusts, plans, funds or other arrangements existing as of the date of this
Agreement, (B) to the extent required by applicable Law or (C) for increases
in
annual base salary in the ordinary course of business consistent with past
practice, but in no event in excess of (x) for each employee who is listed
on
Appendix 5.1(a)(6) of Schedule
5.1(a)
to the
Company Disclosure Schedule, the amount set forth for such employee on such
schedule and (y) 5% per annum for any director or officer or in excess of $
10,000 per annum for any employee who is not an officer or director and is
not
listed on such schedule of “merit increases”.
(f) Issuance
of Securities.
Except
for the issuance of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement in accordance with their
current terms, the Company shall not, and shall not permit any of its
Subsidiaries to: (i) grant, issue or sell any shares of capital stock or any
other securities, including Company Voting Debt, or any benefit of any of them;
(ii) issue any securities convertible into or exchangeable for, or options,
warrants to purchase, scrip, rights to subscribe for, calls or commitments
of
any character whatsoever relating to, or enter into any Contract with respect
to
the issuance of, any shares of capital stock or any other securities, including
Company Voting Debt, of any of them; (iii) take any action to accelerate the
vesting of any Company Stock Options or Company Restricted Shares; or (iv)
take
any action under the terms of the Company Stock Plans, Employee Benefit Plans
or
otherwise with respect to Company Stock Options or Company Restricted Shares
that is inconsistent with the treatment contemplated by Section 1.9.
(g) Indebtedness.
The
Company shall not, and shall not permit any of its Subsidiaries to: (i) assume
any indebtedness or enter into any capitalized lease obligation or, except
in
the ordinary course of business consistent with past practice under facilities
existing on the date of this Agreement and listed on Schedule
5.1(g)
of the
Company Disclosure Schedule, incur any indebtedness for borrowed money; or
(ii)
except in the ordinary course of business consistent with past practice, make
any loans, advances or capital contributions to, or investments in, any other
Person. The Company shall not, and shall not permit any of its
-27-
Subsidiaries
to, enter into any new credit agreements or enter into any amendments or
modifications of any existing credit agreements.
(h) No
Acquisitions.
The
Company shall not, and shall not permit any of its Subsidiaries to, acquire:
(i)
by merging or consolidating with, or by purchasing a substantial portion of
the
stock or assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof;
or
(ii) any assets, except for purchases of inventory items or supplies in the
ordinary course of business consistent with past practice and capital
expenditures in compliance with Section 5.1(l).
(i) No
Dispositions.
The
Company shall not, and shall not permit any of its Subsidiaries to, lease,
mortgage or otherwise encumber, or sell, transfer or otherwise dispose of,
any
of its properties or assets (including capital stock of Subsidiaries of the
Company), except for any such dispositions in the ordinary course of business
consistent with past practice.
(j) Taxes.
The
Company shall not, and shall not permit any of its Subsidiaries to:
(i) make any Tax election which results in a material change in a Tax
liability or Tax refund, waive any restriction on any assessment period relating
to a material amount of Taxes or settle or compromise any material amount of
income Tax or other material Tax liability or refund; or (ii) change any
material aspect of the Company’s or any of its Subsidiaries’ method of
accounting for Tax purposes.
(k) Discharge
of Liabilities.
The
Company shall not, and shall not permit any of its Subsidiaries to: (i) pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted, unasserted, contingent or otherwise) except in the ordinary
course of business consistent with past practice or in accordance with their
terms as in existence on the date of this Agreement; or (ii) settle any (A)
material claim except in the ordinary course of business consistent with past
practice or (B) action, proceeding or investigation except, with respect to
actions, proceedings and investigations that are not, individually or in the
aggregate, material, in the ordinary course of business consistent with past
practice.
(l) Capital
Expenditures.
The
Company shall not, and shall not permit any of its Subsidiaries to, make or
commit to make any capital expenditures in respect of any capital expenditure
project other than (i) those capital expenditures that are set forth in the
capital expenditure budget provided to Parent by the Company prior to the date
of this Agreement and (ii) capital expenditures not exceeding $500,000 in the
aggregate.
(m) Company
Contracts.
The
Company shall not, and shall not permit any of its Subsidiaries to, enter into
or terminate any Company Contract, or make any amendment to: (i) any Company
Contract, other than renewals of Contracts without changes in terms that are
materially adverse to the Company and/or its Subsidiaries; (ii) any Contract
(other than a Contract with a customer or supplier) providing for aggregate
payments to or by the Company or any of its Subsidiaries in excess of $250,000
(or its foreign currency equivalent as of the date of this Agreement) or
$2,500,000 (or its foreign currency equivalent as of the date of this Agreement)
for all such Contracts; (iii) any Contract with a customer, other than a
Contract with a customer in the ordinary course of business consistent with
past
practice providing for aggregate payments to the Company or any of its
Subsidiaries of $1,500,000 (or its foreign
-28-
currency
equivalent as of the date of this Agreement) or less per year; or (iv) any
Contract with a supplier, other than purchase orders in the ordinary course
of
business consistent with past practice or any other Contract with a supplier
providing for aggregate payments by the Company or any of its Subsidiaries
of
$1,500,000 (or its foreign currency equivalent as of the date of this Agreement)
or less per year.
(n) Insurance.
The
Company shall use commercially reasonable efforts, and shall cause its
Subsidiaries to use commercially reasonable efforts, not to permit any material
insurance policy or arrangement naming or providing for the Company or any
of
its Subsidiaries as a beneficiary or a loss payee to be canceled or terminated
(unless such policy or arrangement is canceled or terminated in the ordinary
course of business consistent with past practice and concurrently replaced
with
a policy or arrangement with substantially similar coverage) or materially
impaired.
(o) Accounting
Methods.
The
Company shall not, and shall not permit any of its Subsidiaries to, implement
or
adopt any change in its material accounting principles, practices or methods
except to the extent required by GAAP or the rules or policies of the Public
Company Accounting Oversight Board.
(p) No
Related Actions.
The
Company shall not, and shall not permit any of its Subsidiaries to, authorize
or
enter into any agreement, commitment or arrangement to do any of the
foregoing.
Section
5.2. Proxy
Statement; Company Shareholders Meeting.
(a) As
soon
as practicable after the date of this Agreement (but in any event no later
than
15 Business Days after the date of this Agreement) the Company shall prepare
and
file with the SEC a proxy statement and proxy card with respect to the Merger
and the other transactions contemplated hereby (collectively, including all
amendments or supplements thereto, the “Proxy
Statement”).
Parent shall cooperate in the preparation of the Proxy Statement and shall
promptly provide to the Company any information regarding Parent or Merger
Sub
that is necessary to include in the Proxy Statement. The Company shall ensure
that the Proxy Statement complies as to form in all material respects with
the
applicable provisions of the Exchange Act. The Company shall use its reasonable
best efforts to have the Proxy Statement cleared by the SEC and mailed to its
shareholders as promptly as practicable after its filing with the SEC. The
Company shall, as promptly as practicable after receipt thereof, provide Parent
with copies of all written comments, and advise Parent of all oral comments,
with respect to the Proxy Statement received from the SEC. If, at any time
prior
to the Effective Time, any information relating to the Company, or any of its
Subsidiaries, officers or directors, should be discovered by Parent or the
Company that should be set forth in an amendment or supplement to the Proxy
Statement so that such document would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, then the party that discovers such information shall promptly notify
the other party hereto and, to the extent required by Law, the Company shall
promptly file with the SEC and disseminate to its shareholders an appropriate
amendment or supplement describing such information. Notwithstanding the
foregoing, prior to filing or mailing the Proxy Statement (or any amendment
or
supplement thereto) or responding
-29-
to
any
comments of the SEC with respect thereto, the Company (i) shall provide Parent
with a reasonable opportunity to review and comment on such document or response
and (ii) will not unreasonably reject any reasonable comments of a substantive
nature that Parent proposes promptly after the Company provides Parent with
a
copy of such document or response. On the date of their filing or delivery,
the
Company shall provide Parent with a copy of all such filings with, and all
such
responses delivered to, the SEC.
(b) The
Company shall, as soon as reasonably practicable, duly take all lawful action
to
call, give written notice of, convene and hold a meeting of its shareholders
(the “Company
Shareholders Meeting”)
for
the purpose of obtaining the Company Requisite Shareholder Vote with respect
to
the transactions contemplated hereby and shall take all lawful action to solicit
the approval and adoption of this Agreement by the Company Requisite Shareholder
Vote. The Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the related Plan of Merger by the shareholders
of
the Company to the effect set forth in Section 3.7 (the “Company
Recommendation”),
and
the Board of Directors of the Company shall not withdraw, modify or qualify
(or
propose to withdraw, modify or qualify or publicly announce that it is
considering withdrawing, modifying or qualifying) in any manner adverse to
Parent such recommendation or take any action or make any statement in
connection with the Company Shareholders Meeting inconsistent with such
recommendation, including a recommendation by the Company’s Board of Directors
of an Acquisition Proposal (collectively, a “Change
in Company Recommendation”);
provided,
however,
that
the Board of Directors of the Company may make a Change in the Company
Recommendation in accordance with, and subject to the limitations set forth
in,
Section 5.5. The Company shall adjourn the Company Shareholders Meeting (x)
from
time to time at the written request of Parent for up to 10 days upon each such
request in the event there shall not be a quorum at the Company Shareholders
Meeting and (y) on one occasion at the written request of Parent for up to
10
days in the event Parent reasonably believes based on information from the
Company and its proxy solicitor that less than a majority of the shares of
Company Common Stock entitled to vote on the Merger intend to or have voted
“against”, and less than a majority of such shares intend to or have voted
“for”, approval and adoption of this Agreement and the related Plan of
Merger.
Section
5.3. Access
and Information.
(a) Prior
to
the Effective Time, the Company shall, and shall cause its Subsidiaries to,
upon
reasonable notice, afford Parent and its counsel, accountants, consultants
and
other authorized representatives reasonable access, during normal business
hours, to the employees, properties, books and records of the Company and its
Subsidiaries; provided,
however,
that
such access shall not affect the representations and warranties made by the
Company in this Agreement. Without limitation of the foregoing, the Company
shall cause its officers and employees to (x) furnish such financial and
operating data and other information as may be reasonably requested by Parent
from time to time and (y) respond to such reasonable inquiries as may be made
by
Parent from time to time. Prior to their filing, the Company shall furnish
as
promptly as practicable to Parent a copy of each registration statement,
prospectus, report, form and other document (if any) that will be filed by
it or
any of its Subsidiaries after the date of this Agreement pursuant to the
requirements of federal or state securities Laws, The NASDAQ Global Market
or
the VSCA. All of the requirements of this Section 5.3 shall be
-30-
subject
to any prohibitions or limitations of applicable law and shall be subject to
the
Confidentiality Agreement.
(b) Prior
to
the Effective Time, the Company shall promptly provide Parent with copies of
all
monthly and other interim financial statements as the same become available.
The
Company shall provide Parent with prompt written notice of any investigations
by
Governmental Entities, or the institution of material litigation (including
all
litigation relating to the transactions contemplated hereby), and the Company
shall keep Parent informed of such events. Parent shall provide the Company
with
prompt written notice of the institution or, to its knowledge, the threat of
litigation relating to the transactions contemplated hereby.
Section
5.4. Reasonable
Best Efforts.
(a) Each
of
the Company and Parent shall cooperate with and assist the other party, and
shall use its reasonable best efforts, to promptly (i) take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable Law to consummate the transactions contemplated
hereby as soon as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information, applications
and other documents, and (ii) obtain and maintain all approvals, consents,
registrations, permits, authorizations and other confirmations required to
be
obtained from any other Person, including any Governmental Entity, that are
necessary, proper or advisable to consummate the Merger and other transactions
contemplated hereby in the most expeditious manner practicable, but in any
event
before the Termination Date. Except as otherwise expressly contemplated hereby,
each of the Company and Parent shall not, and shall cause its Subsidiaries
not
to, take any action or knowingly omit to take any action within its reasonable
control where such action or omission would, or would reasonably be expected
to,
result in (A) any of the conditions to the Merger set forth in Article 6 not
being satisfied prior to the Termination Date or (B) a material delay in the
satisfaction of such conditions. Neither Parent nor the Company will directly
or
indirectly extend any waiting period under the HSR Act or other Regulatory
Laws
or enter into any agreement with a Governmental Entity to delay or not to
consummate the transactions contemplated by this Agreement except with the
prior
written consent of the other, which consent shall not be unreasonably withheld
in light of closing the transactions contemplated by this Agreement on or before
the Termination Date.
(b) In
furtherance and not in limitation of the foregoing, each party hereto shall
(i) make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act, apply for early termination thereunder and make appropriate
filings under all other applicable Regulatory Laws with respect to the
transactions contemplated hereby as promptly as practicable after the date
of
this Agreement (but in no event shall such Notification and Report Form be
filed
more than 10 days after the date of this Agreement), (ii) supply as promptly
as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and any other applicable Regulatory Laws
and
(iii) take all other actions necessary to cause the expiration or termination
of
the applicable waiting periods under the HSR Act and any other applicable
Regulatory Laws as soon as practicable.
-31-
(c) In
connection with this Section 5.4, the parties hereto shall (i) cooperate in
all
respects with each other in connection with any filing, submission,
investigation or inquiry, (ii) promptly inform the other party of any
communication received by such party from, or given by such party to, the
Antitrust Division of the Department of Justice (the “DOJ”),
the
Federal Trade Commission (the “FTC”)
or any
other Governmental Entity and of any material communication received or given
in
connection with any proceeding by a private party, in each case, regarding
any
of the transactions contemplated hereby, (iii) have the right to review in
advance, and to the extent practicable each shall consult the other on, any
filing made with, or written materials to be submitted to, the DOJ, the FTC
or
any other Governmental Entity or, in connection with any proceeding by a private
party, any other Person, in connection with any of the transactions contemplated
hereby, and (iv) consult with each other in advance of any meeting, discussion,
telephone call or conference with the DOJ, the FTC or any other Governmental
Entity or, in connection with any proceeding by a private party, with any other
Person, and to the extent not expressly prohibited by the DOJ, the FTC or any
other Governmental Entity or Person, give the other party the opportunity to
attend and participate in such meetings and conferences, in each case, regarding
any of the transactions contemplated hereby. The parties hereto may, as each
deems advisable and necessary, reasonably designate any competitively sensitive
material provided to the other under this Section 5.4 as “Outside Counsel
Only”. Such materials and the information contained therein shall be given
only to the outside legal counsel of the recipient and will not be disclosed
by
such outside counsel to employees, officers or directors of the recipient unless
express permission is obtained in advance from the source of the materials
(the
Company or Parent, as the case may be) or its legal counsel. Notwithstanding
anything to the contrary in this Section 5.4, materials provided to the other
party or its counsel may be redacted to remove references concerning the
valuation of the Company and its Subsidiaries. Notwithstanding anything to
the
contrary contained in this Agreement, nothing in this Agreement will require
or
obligate Parent or any of its Affiliates to (and in no event shall any
representation, warranty or covenant of Parent contained in this Agreement
be
breached or deemed breached as a result of the failure of Parent to take any
of
the following actions) (i) agree to or otherwise become subject to any
limitations on (A) the right of Parent effectively to control or operate its
business (including the business of the Company
and its
Subsidiaries) or assets (including, except as and to the extent provided in
the
last parenthetical in clause (ii), the assets of the Company
and its
Subsidiaries), (B) the right of Parent to consummate the Merger, or (C) the
right of Parent to exercise full rights of ownership of its business (including
the business of the Company
and its
Subsidiaries) or assets (including, except as and to the extent provided in
the
last parenthetical in clause (ii), the assets of the Company
and its
Subsidiaries), or (ii) agree or be required to sell, license or otherwise
dispose of, hold (through the establishment of a trust or otherwise), or divest
itself of, or limit its rights in, all or any portion of the business, assets
or
operations of Parent or any of its Affiliates or the business of the Company
and
its Subsidiaries or any of the assets of the Company
and its
Subsidiaries (other than a portion of the business or assets of the Company
and
its Subsidiaries that is not, in the aggregate, material to the Company and
its
Subsidiaries, taken as a whole).
Section
5.5. Acquisition
Proposals.
(a) Until
this Agreement has been terminated in accordance with Section 7.1, the Company
shall not, and shall not authorize or permit any of its Affiliates to, and
shall
cause its officers, directors, employees, consultants, representatives and
other
agents, including
-32-
investment
bankers, attorneys, accountants and other advisors (collectively, the
“Representatives”),
not
to, directly or indirectly, (1) solicit or initiate the making of, or take
any
other action to knowingly facilitate any inquiries or the making of any proposal
that constitutes or may reasonably be expected to lead to, any Acquisition
Proposal (including, without limitation, taking any action to make the
provisions of any “moratorium”, “control share”, “fair price”, “affiliate
transaction”, “business combination” or other antitakeover laws and regulations
of any state, including, without limitation, the provisions of Article 14 and
Article 14.1 of the VSCA inapplicable to any transactions contemplated by an
Acquisition Proposal), (2) participate in any way in discussions or negotiations
with, or furnish or disclose any nonpublic information to, any Person (other
than Parent or any of its Representatives) in connection with any Acquisition
Proposal, (3) effect a Change in the Company Recommendation, (4) approve or
recommend, or publicly announce it is considering approving or recommending,
any
Acquisition Proposal or (5) enter into any agreement, letter of intent,
agreement-in-principle or acquisition agreement relating to any Acquisition
Proposal. Notwithstanding the foregoing, at any time prior to the time that
the
Company Requisite Shareholder Vote is obtained, the Company and its
Representatives may:
(i) participate
in discussions or negotiations with, or furnish or disclose nonpublic
information to, any Person or any Person’s Representatives in response to an
unsolicited, bona fide
and
written Acquisition Proposal that is submitted to the Company by such Person
after the date of this Agreement and prior to the time that the Company
Requisite Shareholder Vote is obtained if and so long as (A) none of the
Company, any of its Affiliates or any of the Representatives of the Company
or
any of its Affiliates has solicited such Acquisition Proposal or otherwise
violated any of the provisions of Section 5.5(a)(1) through (5) with respect
to
such Acquisition Proposal, (B) a majority of the members of the Board of
Directors of the Company determines in good faith, after consultation with
a
nationally recognized financial advisor, that such Acquisition Proposal
constitutes or is reasonably likely to constitute a Superior Proposal, (C)
a
majority of the members of the Board of Directors of the Company determines
in
good faith, after consultation with its outside legal counsel, that failing
to
take such action would be inconsistent with their fiduciary duties to the
Company and the Company’s shareholders under applicable Law (including, without
limitation, their obligations under VSCA §13.1-690A), (D) prior to participating
in discussions or negotiations with, or furnishing or disclosing any nonpublic
information to, such Person, the Company provides Parent with written notice
of
the identity of such Person and of the Company’s intention to participate in
discussions or negotiations with, or to furnish or disclose nonpublic
information to, such Person, (E) prior to participating in discussions or
negotiations with, or furnishing or disclosing any nonpublic information to,
such Person, the Company receives from such Person an executed confidentiality
agreement containing terms no less restrictive upon such Person, in any respect,
than the terms applicable to Parent under the Confidentiality Agreement, which
confidentiality agreement shall not provide such Person with any exclusive
right
to negotiate with the Company or have the effect of prohibiting the Company
from
satisfying its obligations under this Agreement, and (F) prior to furnishing
or
disclosing any nonpublic information to such Person, the Company furnishes
such
information to Parent (to the extent such information has not been previously
delivered or made available by the Company to Parent);
-33-
(ii) approve
or recommend, or enter into (and, in connection therewith, effect a Change
in
the Company Recommendation), a definitive agreement with respect to an
unsolicited, bona fide
written
Acquisition Proposal that is submitted to the Company after the date of this
Agreement and prior to the time that the Company Requisite Shareholder Vote
is
obtained if and so long as (A) none of the Company, any of its Affiliates or
any
of the Representatives of the Company or any of its Affiliates has solicited
such Acquisition Proposal or otherwise violated any of the provisions of this
Section 5.5, (B) the Company provides Parent with written notice indicating
that
the Company, acting in good faith, believes that the Acquisition Proposal is
reasonably likely to constitute a Superior Proposal, (C) during the three
Business Day period after the Company provides Parent with the written notice
described in clause (B) above, the Company shall cause its financial and legal
advisors to negotiate in good faith with Parent (to the extent Parent wishes
to
negotiate) in an effort to make such adjustments to the terms and conditions
of
this Agreement such that the Acquisition Proposal would not constitute a
Superior Proposal (it is understood and agreed that, in the event such
Acquisition Proposal does not constitute a Superior Proposal after taking into
account such negotiations and adjustments, the Company would then proceed with
the transactions contemplated hereby on such adjusted terms), (D)
notwithstanding the negotiations and adjustments pursuant to clause (C) above
but after taking into account the results of such negotiations and adjustments,
the Board of Directors of the Company makes the determination necessary for
such
Acquisition Proposal to constitute a Superior Proposal at least three Business
Days after the Company provides Parent with the written notice referred to
in
clause (B) above, (E) notwithstanding the negotiations and adjustments pursuant
to clause (C) above but after taking into account the results of such
negotiations and adjustments, at least three Business Days after the Company
provides Parent with the written notice referred to in clause (B) above, a
majority of the members of the Board of Directors of the Company determine
in
good faith, after consultation with its outside legal counsel, that failing
to
approve or recommend or enter into a definitive agreement with respect to such
Acquisition Proposal would be inconsistent with their fiduciary duties to the
Company and the Company’s shareholders under applicable Law (including, without
limitation, their obligations under VSCA §13.1-690A) and that such Acquisition
Proposal remains a Superior Proposal and (F) not later than the earlier of
the
approval or recommendation of, or the execution and delivery of a definitive
agreement with respect to, any such Superior Proposal, the Company (I)
terminates this Agreement pursuant to Section 7.1(h) and (II) makes the payment
of the Termination Fee and the Termination Expenses required to be made pursuant
to Section 7.2(b); and
(iii) effect
a
change in the Company Recommendation (other than in connection with an
Acquisition Proposal) prior to the time that the Company Requisite Shareholder
Vote is obtained if a majority of the members of the Board of Directors of
the
Company determines in good faith, after consultation with its outside legal
counsel, that failure to do so would constitute a breach of their fiduciary
duties to the Company and the Company’s shareholders under applicable Law
(including, without limitation, their obligations under VSCA
§13.1-690A).
(b) In
addition to the obligations of the Company set forth in Section 5.5(a), within
one Business Day of the receipt thereof, the Company shall provide Parent with
written
-34-
notice
of
(i) any request for information, any Acquisition Proposal or any inquiry,
proposal, discussions or negotiations with respect to any Acquisition Proposal,
(ii) the material terms and conditions of such request, Acquisition Proposal,
inquiry, proposal, discussions or negotiations and (iii) the identity of the
Person making any such Acquisition Proposal or such request, inquiry or proposal
or with whom such discussions or negotiations are taking place, and the Company
shall promptly provide Parent with copies of any material written materials
received by the Company in connection with any of the foregoing. The Company
shall keep Parent informed of the status and general progress (including
amendments or proposed amendments to any material terms) of any such request
or
Acquisition Proposal and keep Parent informed as to the material details of
any
information requested of or provided by the Company and as to the material
details of all discussions or negotiations. Without limiting the Company’s
obligations under Section 5.5(a), the Company shall provide Parent with notice
prior to any meeting of the Board of Directors of the Company at which the
Board
of Directors is reasonably expected to consider any material action with respect
to an Acquisition Proposal that is on the agenda for such meeting.
(c) The
Company shall, and shall cause its Affiliates and the Representatives of the
Company and its Affiliates to, immediately cease all discussions or
negotiations, if any, with any Person other than Parent and its Subsidiaries
that may be ongoing as of the date of this Agreement with respect to any
Acquisition Proposal. The Company shall promptly request each Person who has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any portion thereof (including any
of
its Subsidiaries) to return or destroy all nonpublic information heretofore
furnished to such Person by or on behalf of the Company.
(d) Nothing
contained in this Section 5.5 shall prohibit the Company from complying with
Rule 14e-2 and Rule 14d-9 promulgated under the Exchange Act with respect to
an
Acquisition Proposal, provided that such Rules shall in no way eliminate or
modify the effect that any action pursuant to such Rules would otherwise have
under this Agreement.
(e) Any
violation of this Section 5.5 by the Company’s Affiliates or the Representatives
of the Company shall be deemed to be a breach of this Agreement by the Company,
whether or not such Affiliate or Representative is authorized to act and whether
or not such Affiliate or Representative is purporting to act on behalf of the
Company.
Section
5.6. Indemnification;
Directors and Officers Insurance.
(a) Parent
shall cause all rights to indemnification and exculpation from liabilities
for
acts or omissions occurring at or prior to the Effective Time (including, but
not limited to, any acts or omissions in connection with this Agreement and
the
consummation of the transactions contemplated hereby) now existing in favor
of
any current and former officers, directors and employees of the Company or
any
of its Subsidiaries, and any Person prior to the Effective Time serving at
the
request of any such party as a director, officer, employee fiduciary or agent
of
another corporation, partnership, trust or other enterprise, as provided in
the
respective certificates or articles of incorporation or bylaws (or comparable
organizational documents) of the Company or any of its Subsidiaries (the
“Indemnified
Persons”),
to
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of six years after the Effective Time. Parent
shall provide, or shall cause the Surviving
-35-
Corporation
to provide, for an aggregate period of not less than six years from the
Effective Time, the Indemnified Persons an insurance policy that provides
coverage for events occurring at or prior to the Effective Time (including,
but
not limited to, any acts or omissions in connection with this Agreement and
the
consummation of the transactions contemplated hereby) (the “D&O
Insurance”)
on the
same terms as the Company’s existing policy or, if such insurance coverage is
unavailable, coverage that is on terms no less favorable to such directors
and
officers; provided,
however,
that
neither Parent nor the Surviving Corporation shall be required to pay an annual
premium for the D&O Insurance in excess of 200% of the last annual premium
that the Company paid prior to the date of this Agreement. In lieu of Parent
causing the Surviving Corporation to maintain the policies as described above,
Parent may elect to cause the Company to purchase immediately prior to the
Effective Time a six-year “tail” pre-paid policy on terms and conditions not
materially less favorable than the current directors’ and officers’ liability
insurance policies (but not, in any event, to exceed in cost the present value
of the aggregate amount required to be paid for the D&O Insurance pursuant
to the proviso in the immediately preceding sentence), such policy to be
effective as of the Effective Time.
(b) The
provisions of this Section 5.6 shall survive the consummation of the Merger
for
a period of six years and are expressly intended to benefit each of the
Indemnified Persons and their respective heirs and representatives; provided,
however,
that in
the event that any claim or claims for indemnification set forth in this Section
5.6 are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims. If Parent and/or Surviving Corporation,
or any of their respective successors or assigns, (i) consolidates with or
merges into any other Person, or (ii) transfers or conveys all or substantially
all of their businesses or assets to any other Person, then, in each such case,
to the extent necessary, a proper provision shall be made so that the successors
and assigns of Parent and/or Surviving Corporation, as the case may be, shall
assume the obligations of Parent and Surviving Corporation set forth in this
Section 5.6.
Section
5.7. Public
Announcements.
Neither
Parent nor the Company, other than on a conference call with analysts and other
investors, shall issue
any press release or otherwise make any public statement with respect to the
transactions contemplated hereby without the prior written consent of the other,
unless Parent or the Company (as the case may be) determines that the issuance
of such press release or the making of such other public statement be
required by applicable Law or by obligations pursuant to any applicable listing
agreement with any national securities exchange.
Section
5.8. Section
16 Matters.
Prior
to the Effective Time, the Company shall take all actions that are required
to
cause any dispositions of Company Common Stock (and derivative securities with
respect to Company Common Stock) resulting from the transactions contemplated
by
Article 1 by each individual who is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to the Company to be exempt
under
Rule 16b-3 promulgated under the Exchange Act.
Section
5.9. State
Takeover Laws.
If any
“moratorium”, “control share”, “fair price”, “affiliate transaction”, “business
combination” or similar Law shall become applicable to the transactions
contemplated hereby, then the Company and the Board of Directors of the Company
shall use their respective reasonable best efforts to grant such approvals
and
take such actions as
-36-
are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act
to
minimize the effects of any such statute or similar Law on the transactions
contemplated hereby.
Section
5.10. Notification
of Certain Matters.
Parent
shall use its reasonable best efforts to give prompt written notice to the
Company, and the Company shall use its reasonable best efforts to give prompt
written notice to Parent, of: (a) any
representation or warranty made by such party in this Agreement that is
inaccurate in any material respect as of the date of this Agreement (or any
representation or warranty made by such party in this Agreement that is
qualified by materiality or refers to Material Adverse Effect that is inaccurate
in any respect as of the date of this Agreement),
the
occurrence or non-occurrence of any event of which the Company is aware that
would be reasonably likely to cause the condition precedent in Section 6.2(a)
not to be satisfied or the occurrence or non-occurrence of any event of which
Parent is aware that would be reasonably likely to cause the condition precedent
in Section 6.3(a) not to be satisfied; or (b) any failure in any material
respect of such party to comply in a timely manner with or satisfy any covenant
or agreement to be complied with or satisfied by it under this Agreement;
provided,
however,
that
the delivery of any notice pursuant to this Section 5.10 shall not limit or
otherwise affect the remedies available under this Agreement to the party
receiving such notice; and provided further that no party shall have the right
not to close the Merger or the right to terminate this Agreement as a result
of
the delivery of such a notice if the underlying breach would not result in
such
party having such rights under the terms of Articles 6 and 7
hereof.
Section
5.11. Certain
Litigation.
The
Company shall give Parent the opportunity to participate in the defense or
settlement of any litigation against the Company or its officers or directors
relating to the transactions contemplated hereby. The Company shall not agree
to
any compromise or settlement of such litigation without Parent’s
consent.
Section
5.12. Confidentiality.
Each of
the Company and Parent acknowledges and confirms that (a) the Company and Parent
have entered into a Confidentiality Agreement, dated November 15, 2006 (the
“Confidentiality
Agreement”),
(b)
all information provided by each party hereto to the other party hereto pursuant
to this Agreement is subject to the terms of the Confidentiality Agreement
and
(c) the Confidentiality Agreement shall remain in full force and effect in
accordance with its terms and conditions.
Section
5.13. Resignations.
Prior
to the Effective Time, the Company shall cause each member of the Board of
Directors of the Company to execute and deliver a letter, which shall not be
revoked or amended prior to the Effective Time, effectuating his or her
resignation as a director of the Company effective immediately prior to the
Effective Time. Prior to the Effective Time, the Company shall obtain the
resignations of such directors of its Subsidiaries as Parent shall request
with
reasonable advance notice.
Section
5.14. Financing.
During
the period commencing on the date of this Agreement and continuing until the
Effective Time, the Company shall provide, and shall cause its Subsidiaries
to
provide, all cooperation reasonably requested by Parent in connection with
the
arrangement of the Financing (or any replacements thereof), including: (a)
participation in due diligence sessions, meetings, drafting sessions,
management presentation sessions, “road
-37-
shows”,
and sessions with rating agencies by the Company’s officers and employees; (b)
assisting Parent in obtaining any title insurance lien waivers, estoppels,
affidavits, non-disturbance agreements, memoranda of leases, legal opinions,
surveys or other documents or deliveries; and (c) using commercially reasonable
efforts to prepare business projections, financial statements, pro forma
statements and other financial data of the type and form consistently included
in offering memoranda, private placement memoranda, prospectuses and similar
documents, all as may be reasonably requested by Parent. Notwithstanding the
foregoing, (i) the Company and its Subsidiaries shall not be required to execute
any agreements prior to the Closing unless such agreements shall only be
effective upon the Closing, (ii) counsel for the Company shall not be required
to deliver any legal opinions, (iii) none of the Company or its Subsidiaries
shall be required to pay any commitment or other similar fee or incur any other
liability in connection with any debt financing by Parent prior to the Closing
and (iv) all obligations in this Section 5.14 shall be subject to applicable
laws relating to exchange of information and attorney-client communication
and
privileges.
Section
5.15. Employee
Matters.
(a) Parent
agrees that, until the end of any applicable plan year in which the Closing
Date
occurs, non-union employees of the Company who continue their employment with
the Surviving Corporation or other Affiliate of Parent (the “Continuing
Employees”)
shall,
at the sole discretion of Parent, either continue to be eligible to participate
in Employee Benefit Plans (other than equity award plans and any unwritten
severance policies or agreements), with such changes to any such Employee
Benefit Plan as Parent in its sole discretion may determine, provided
that
following any such change the benefits under any such Employee Benefit Plan
shall be the same benefits provided under a Parent Plan, or alternatively shall
be eligible to participate, in the same manner as similarly situated employees
employed by Parent or its Affiliates, in corresponding employee benefit plans
sponsored or maintained by Parent or its Affiliates, as applicable (the
“Parent
Plans”),
it
being understood and agreed that Parent may make the foregoing determination
in
its sole discretion and on a plan-by-plan basis.
(b) For
purposes of vesting
and eligibility but not for purposes of benefit accrual (other than determining
the amount of vacation and severance benefits) under
each Parent Plan in which Continuing Employees become eligible to participate
after the Closing Date, such participating Continuing Employee will be credited
with his or her years of service with the Company and its Subsidiaries (and
their respective predecessors) to
the
same extent as such Continuing Employee was entitled, before the Closing Date,
to credit for such service under any similar Employee Benefit Plan, except
to the extent such credit would result in a duplication of benefits
or is
prohibited under applicable Law.
With respect to Parent Plans that are welfare plans (the “Parent
Welfare Plans”)
in which Continuing Employees participate after the Closing Date, Parent shall,
except
to
the extent prohibited under applicable law, (1)
waive all limitations under such plans as to preexisting conditions and
exclusions with respect to participation and coverage requirements applicable
to
such employees to the extent such conditions and exclusions were satisfied
or
did not apply to such employees under Employee Benefit Plans prior to the
Closing Date, and (2) provide each Continuing Employee who participates in
such
Parent Welfare Plans with credit for any co-payments and deductibles paid prior
to the Closing Date and during the plan year of the Parent Welfare Plan in
which
the
-38-
Closing
Date occurs in satisfying any analogous deductible or out-of-pocket requirements
to the extent applicable under any such plan.
(c) Nothing
contained herein, express or implied: (i) shall be construed to establish,
amend or modify any benefit plan, program, agreement or arrangement; (ii) shall
alter or limit the ability of the Company, its Subsidiaries, Parent, the
Surviving Corporation or any of their respective Affiliates to amend, modify
or
terminate any benefit plan, program, agreement or arrangement at any time
assumed, established, sponsored or maintained by any of them; (iii) is intended
to confer upon any current or former employee any right to employment or
continued employment for any period of time by reason of this Agreement, or
any
right to a particular term or condition of employment; or (iv) is intended
to
confer upon any Person (including employees, retirees, or dependents or
beneficiaries of employees or retirees) any right as a third-party beneficiary
of this Agreement.
(d) Upon
the
Effective Time, Parent shall assume and perform, or shall cause the Surviving
Corporation to assume and perform, the obligations under the Retention
Agreements listed in Schedule
3.14(a)(7)(a)-(f) of the Company Disclosure Schedule,
in the
same manner and to the same extent the Company would be required to perform
if
the succession contemplated by this Agreement had not taken place.
Section
5.16. Consent
Solicitation.
(a) In
the
event that, following the date of this Agreement, Parent or any of its
Subsidiaries shall, in its sole discretion, (x) solicit (at its expense) the
consent (the “Consent
Solicitation”)
of the
holders of the Company’s 8 3/8%
Senior Subordinated Notes due 2014 (the
“Senior
Subordinated Notes”)
in
order to effect one or more amendments determined by Parent, in its sole
discretion (the “Indenture
Amendments”),
to the
Indenture dated as of June 15, 2004, among the Company, each of the Guarantors
(as defined therein) and Wachovia Bank, National Association, as trustee, as
amended to date (the “Indenture”),
to be
effective immediately prior to, at or after the Effective Time, as determined
by
Parent in its sole discretion, and/or (y) offer (at its expense) to purchase
(the “Offer
to Purchase”)
the
Senior Subordinated Notes, Parent and the Company shall cooperate with each
other with respect to the Consent Solicitation or the Offer to Purchase (as
applicable) and the preparation, form and content of the solicitation and offer
materials (as applicable) to be distributed to the holders of the Senior
Subordinated Notes.
(b) Promptly
upon receipt of the consent of the holders of a majority in aggregate principal
amount of the then outstanding Senior Subordinated Notes, the Company shall,
and
shall use its commercially reasonable efforts to cause the trustee under the
Indenture to, execute a supplemental indenture incorporating the Indenture
Amendments; provided,
however,
that
such supplemental indenture shall only become effective immediately prior to,
at
or after the Effective Time.
(c) Notwithstanding
anything to the contrary contained in this Section 5.16, prior to the Effective
Time, neither the Company nor any of its Subsidiaries will be required to pay
any fees or out-of-pocket expenses or otherwise give any consideration to a
third party in connection with the Consent Solicitation or the Offer to
Purchase.
-39-
CONDITIONS
TO THE MERGER
Section
6.1. Conditions
to Each Party’s Obligation to Effect the Merger.
The
respective obligations of Parent, Merger Sub and the Company to effect the
Merger shall be subject to the satisfaction on or prior to the Closing Date
of
the following conditions:
(a) Shareholder
Approval.
The
Merger and this Agreement shall have been approved and adopted by the Company
Requisite Shareholder Vote in accordance with applicable Law.
(b) Legality.
No Law
or Order (whether temporary, preliminary or permanent) shall have been enacted,
entered, promulgated, adopted, issued or enforced by any Governmental Entity
that is then in effect and has the effect of making the Merger illegal or
otherwise prohibiting the consummation of the Merger.
(c) HSR
Act.
The
waiting period applicable to the Merger under the HSR Act shall have expired
or
been terminated.
Section
6.2. Additional
Conditions to Obligations of Parent and Merger Sub.
The
respective obligations of Parent and Merger Sub to effect the Merger shall
be
further subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) Representations
and Warranties.
Each of
the representations and warranties of the Company set forth in Section 3.2(a)
with respect to the Company (as opposed to its Subsidiaries) shall be true
and
correct (other than de minimis
inaccuracies) as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except to the extent representations
and warranties by their terms speak only as of a certain date, in which case
such representations and warranties shall be true and correct as of such date;
and each of the other representations and warranties of the Company set forth
in
this Agreement (but, other than with respect to Sections 3.5(c) and 3.8(c),
without regard to any materiality qualifications or references to Material
Adverse Effect contained in any representation or warranty) shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except (A) for changes specifically
permitted by this Agreement, (B) to the extent representations and warranties
by
their terms speak only as of a certain date, in which case such representations
and warranties shall be true and correct as of such date, and (C) where such
failures of the representations and warranties to be true and correct,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect on the Company.
(b) Covenants.
The
Company shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this Agreement
to be performed or complied with by it at or prior to the Closing
Date.
(c) Material
Adverse Change.
No
event, change, effect, condition, fact or circumstance shall have occurred
after
the date of this Agreement, including any event, change, effect, condition,
fact
or circumstance that reflects a material adverse change in the matters disclosed
to Parent in the Company Disclosure Schedule of a nature that would not
reasonably be
-40-
expected
based on the content of such disclosure, that, individually or in the aggregate,
has had or would reasonably be expected to have a Material Adverse Effect on
the
Company.
(d) Officer’s
Certificate.
The
Company shall have delivered to Parent a certification of the Chief Executive
Officer, the Chief Financial Officer or another executive officer of the Company
to the effect that each of the conditions specified in Sections 6.2(a), (b)
and
(c) is satisfied in all respects.
(e) Consents
from Option Holders.
The
Company shall have delivered to Parent true and correct copies of consents
of
holders of not less than 70% of the outstanding Company Stock Options that
are
necessary to effect the treatment contemplated by Section 1.9.
Section
6.3. Additional
Conditions to Obligation of the Company.
The
obligation of the Company to effect the Merger shall be further subject to
the
satisfaction on or prior to the Closing Date of the following
conditions:
(a) Representations
and Warranties.
Each of
the representations and warranties of Parent set forth in this Agreement shall
be true and correct (but without regard to any materiality qualifications or
references to Material Adverse Effect contained in any representation or
warranty) as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except (i) for changes specifically
permitted by this Agreement, (ii) to the extent representations and warranties
by their terms speak only as of a certain date, in which case such
representations and warranties shall be true and correct as of such date, and
(iii) where such failures of the representations and warranties to be true
and
correct, individually or in the aggregate, have not had and would not reasonably
be expected to have a material adverse effect on the ability of Parent or Merger
Sub to perform their obligations hereunder.
(b) Covenants.
Parent
shall have performed in all material respects all obligations and complied
in
all material respects with all covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.
(c) Officer’s
Certificate.
Parent
shall have delivered to the Company a certification of the Chief Executive
Officer, the Chief Financial Officer or another executive officer of Parent
to
the effect that each of the conditions specified above in Sections 6.3(a) and
(b) is satisfied in all respects.
TERMINATION,
AMENDMENT AND WAIVER
Section
7.1. Termination.
This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time, whether before or after receipt of the Company Requisite
Shareholder Vote:
(a) By
mutual
written consent of the Company and Parent;
(b) By
either
Parent or the Company, if the Merger shall not have been consummated on or
prior
to July 26, 2007 or such other date as Parent and the Company shall
-41-
agree
in
writing (the “Termination
Date”);
provided,
however,
that
the right to terminate this Agreement pursuant this Section 7.1(b) shall not
be
available to any party that has breached its obligations under this Agreement
in
any manner that shall have caused the failure of the Merger to be consummated
on
or before the Termination Date;
(c) By
either
Parent or the Company, if (i) a Law shall have been enacted, entered or
promulgated prohibiting the consummation of the Merger on the terms contemplated
hereby, (ii) an Order shall have been enacted, entered, promulgated or issued
by
a Governmental Entity of competent jurisdiction permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger on the terms
contemplated hereby, or (iii) a Governmental Entity shall have failed to issue
an Order or take any other action, and such denial of a request to issue such
Order or take such other action shall have become final and non-appealable,
that
is necessary to fulfill the condition set forth in Section 6.1(c); provided,
however,
that
the right to terminate this Agreement pursuant to this clause (iii) shall not
be
available to any party whose failure to comply with Section 5.4 has been the
cause of such inaction; providedfurther,
however,
that
the right to terminate this Agreement pursuant to this Section 7.1(c) shall
apply only if the Law, Order or act or omission of the Governmental Entity,
as
the case may be, shall have caused the failure of any condition set forth in
Article 6 to be satisfied and the party hereto entitled to rely on such
condition shall not elect to waive such condition;
(d) By
either
Parent or the Company, if the approval of the shareholders of the Company by
the
Company Requisite Shareholder Vote shall not have been obtained by reason of
the
failure to obtain the required vote at a duly held meeting of shareholders
or of
any adjournment thereof at which a vote on such approval was taken;
(e) By
Parent, if all of the following shall have occurred: (i) the Company shall
have breached or failed to perform any of its representations, warranties,
covenants or other agreements contained in this Agreement, (ii) such breach
or
failure to perform would entitle Parent not to consummate the Merger under
Section 6.2(a) or 6.2(b) and (iii) such breach or failure to perform is
incapable of being cured by the Company prior to the Termination Date or, if
such breach or failure to perform is capable of being cured by the Company
prior
to the Termination Date, the Company shall not have cured such breach or failure
to perform within 30 Business Days after receipt of written notice thereof
(but
no later than the Termination Date);
(f) By
the
Company, if all of the following shall have occurred: (i) Parent shall
have breached or failed to perform any of its representations, warranties,
covenants or other agreements contained in this Agreement, (ii) such breach
or
failure to perform would entitle the Company not to consummate the Merger under
Section 6.3(a) or 6.3(b) and (iii) such breach or failure to perform is
incapable of being cured by Parent prior to the Termination Date or, if such
breach or failure to perform is capable of being cured by Parent prior to the
Termination Date, Parent shall not have cured such breach or failure to perform
within 30 Business Days after receipt of written notice thereof (but no later
than the Termination Date);
(g) By
Parent, if the Company shall have (i) failed to make the Company Recommendation
or effected a Change in the Company Recommendation (or resolved or publicly
proposed to take any such action), whether or not permitted by the terms of
this
Agreement or (ii) materially breached its obligations under this Agreement
by
reason of a failure
-42-
to
call
the Company Shareholders Meeting in accordance with Section 5.2(b) or a failure
to prepare and mail to its shareholders the Proxy Statement in accordance with
Section 5.2(a) and such breach (either the failure to call the Company
Shareholders Meeting in accordance with Section 5.2(b) or the failure to prepare
and mail to its shareholders the Proxy Statement in accordance with Section
5.2(a)) shall remain uncured for 10 Business Days after the Company’s receipt of
written notice thereof from Parent;
(h) By
the
Company, if the Board of Directors of the Company shall have approved or
recommended, or the Company shall have executed or entered into a definitive
agreement with respect to, a Superior Proposal in compliance with Section
5.5(a)(ii); provided,
however,
that
such termination under this Section 7.1(h) shall not be effective until the
Company has made the payment required by Section 7.2(b); or
(i) By
Parent, if any of the following have occurred: (i) the Board of Directors
of the Company shall have recommended (or resolved or publicly proposed to
recommend) to the Company’s shareholders any Acquisition Proposal or Superior
Proposal; or (ii) the Company enters into any agreement, letter of intent,
agreement-in-principle or acquisition agreement (other than a confidentiality
agreement as contemplated by and in accordance with Section 5.5(a)(i)) relating
to any Acquisition Proposal or Superior Proposal.
Section
7.2. Effect
of Termination.
(a) If
this
Agreement is terminated pursuant to Section 7.1, then this Agreement (other
than
as set forth in Section 5.12, this Section 7.2, Section 7.3, Section 7.4 and
Article 8, which provisions shall survive such termination) shall become void
and of no effect with no liability on the part of any party hereto (or of any
of
its directors, officers, employees, agents, legal or financial advisors or
other
representatives); provided,
however,
that
neither the Company nor Parent shall be relieved or released from any
liabilities arising out of its material breach of this Agreement.
(b) If
(i)
Parent terminates this Agreement pursuant to Section 7.1(g)(i) or 7.1(i),
(ii) the Company terminates this Agreement pursuant to Section 7.1(h) or
(iii) Parent or the Company terminates this Agreement pursuant to Section 7.1(b)
without the Company Shareholders Meeting having occurred (unless such
termination pursuant to Section 7.1(b) shall have occurred prior to the time
the
condition precedent in Section 6.1(c) has been satisfied), Parent or the Company
terminates this Agreement pursuant to Section 7.1(d) or Parent terminates this
Agreement pursuant to Section 7.1(g)(ii), or (iv) this Agreement is (except
as
otherwise provided in the preceding clauses (i), (ii) or (iii)) terminated
by
Parent or the Company following a material breach by the Company, any of its
Affiliates or any Representatives of the Company of any of the material
provisions of Section 5.5 (other than a termination (x) by the Company pursuant
to Section 7.1(f) or (y) by Parent or the Company pursuant to Section 7.1(b)
prior to the time the condition precedent pursuant to Section 6.1(c) has been
satisfied or 7.1(c)) and in the case of any such termination pursuant to Section
7.1(b), 7.1(d) or 7.1(g)(ii) or any termination described in the preceding
clause (iv) (A) at any time after the date of this Agreement and prior to such
termination an Acquisition Proposal shall have been publicly announced or
otherwise communicated in any manner to the senior management or Board of
Directors of the Company or publicly announced or otherwise publicly
communicated to the
-43-
shareholders
of the Company generally and (B) prior to the date that is 12 months after
the
effective date of such termination, the Company shall enter into a definitive
agreement with respect to an Acquisition Proposal or an Acquisition Proposal
is
consummated, then the Company shall pay to Parent a termination fee equal to
$8.375 million (the “Termination
Fee”)
and
shall reimburse Parent for its reasonable, documented out-of-pocket fees and
expenses incurred in connection with the transactions contemplated by this
Agreement up to a maximum of $500,000 (the “Termination
Expenses”).
The
Company shall satisfy its obligation under the preceding sentence by the wire
transfer of immediately available funds to an account that Parent designates
(x)
in the case of termination pursuant to clause (i) or (ii) above, not later
than
the time of such termination and (y) in the case of clauses (iii) or (iv) above,
not later than the second Business Day after the date on which the Company
consummates an Acquisition Proposal (as that term is defined for purposes of
Section 7.2(b)(iii)(B)) (whether or not, in the event the Company has entered
into such a definitive agreement, the Company consummates such Acquisition
Proposal during the foregoing 12-month period).
(c) The
Company acknowledges that the agreements contained in Section 7.2(b) are an
integral part of the transactions contemplated hereby and that, without these
agreements, Parent and Merger Sub would not enter into this Agreement.
Accordingly, in the event the Parent and Merger Sub prevail in any action,
suit,
arbitration or other proceeding brought to enforce the payment by the Company
of
the amounts payable under Section 7.2(b), then Parent and Merger Sub shall
also
be entitled to receive from the Company all costs and expenses (including
reasonable attorneys’ fees and expenses) incurred by them in connection with the
enforcement of their right to collect such overdue amounts and the enforcement
by Parent and Merger Sub of their rights under Section 7.2(b), together with
interest on such overdue amounts at a rate per annum equal to the “prime rate”
(as announced by JPMorgan Chase & Co. or any successor thereto) in effect on
the date on which such payment was required to be made.
Section
7.3. Amendment.
This
Agreement may be amended by Parent and the Company, by action taken or
authorized by their respective Boards of Directors, at any time before or after
the Company Requisite Shareholder Vote is obtained; provided,
however,
that
the Plan of Merger will provide that after the Company Requisite Shareholder
Approval is obtained, this Agreement may not be amended to effect any of the
changes listed in VSCA § 13.1-716E without further shareholder approval.
This Agreement may not be amended except by a written instrument signed on
behalf of each of the parties hereto.
Section
7.4. Waiver.
At any
time before the Effective Time, any party hereto may (a) extend the time for
the
performance of any of the obligations or other acts of the other parties hereto
under or pursuant to this Agreement, (b) waive any inaccuracies in the
representations and warranties made by the other parties hereto in this
Agreement or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements made by the other parties hereto, or any of the
conditions benefiting such waiving party contained, in this Agreement. Any
agreement on the part of any party hereto to any such extension or waiver shall
be valid only as against such party and only if set forth in a written
instrument signed on behalf of such party.
-44-
MISCELLANEOUS
Section
8.1. Non-Survival
of Representations, Warranties and Agreements.
None of
the representations, warranties, covenants and agreements contained in this
Agreement or in any document delivered pursuant hereto shall survive the
Effective Time, except that the agreements of Parent, Merger Sub or the Company
that are contained in Section 5.6 (Indemnification; Directors and Officers
Insurance), 5.15 (Employee Matters), 8.3 (Notices), 8.4 (Entire Agreement;
No
Third Party Beneficiaries), 8.5 (Assignment; Binding Effect), 8.6 (Governing
Law; Consent to Jurisdiction), 8.7 (Severability), 8.9 (Waiver of Jury Trial),
8.10 (Counterparts), 8.11 (Headings), 8.12 (Interpretation), 8.13 (No
Presumption) and 8.15 (Definitions) that by their terms apply or are to
performed in whole or in part after the Effective Time shall survive the
Effective Time.
Section
8.2. Expenses.
Whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement, the Merger and the other transactions contemplated hereby
shall be paid by the party incurring such expenses, except as otherwise provided
in Sections 7.2(b) and 7.2(c).
Section
8.3. Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed duly given or made as of the date of receipt if delivered personally,
sent by telecopier or facsimile (and sender shall bear the burden of proof
of
delivery), sent by overnight courier (providing proof of delivery) or sent
by
registered or certified mail (return receipt requested, postage prepaid), in
each case, to the parties at the following addresses or facsimile numbers (or
at
such other address or facsimile number for a party as shall be specified by
like
notice):
If
to the
Company:
Cadmus
Communications Corporation
0000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attention: Xxxxx
X.
Xxxxxx
Facsimile: (000)
000-0000
with
a
copy to:
Xxxxxxx
Xxxx & Xxxxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Attention: Xxxxx
X.
Boston
Facsimile: (000)
000-0000
and
-00-
Xxxxxxxx
Xxxxxxx XXX
Xxxxxxxx
Xxxxxxx Building
0000
Xxxxxx Xxxxx
Xxxxxxxx,
XX 00000
Attention: Xxxxxxx
X. Xxxx
Facsimile: (000)
000-0000
If
to
Parent or Merger Sub:
000
Xxxxx
Xxxxxx, 0xx Xxxxx
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxx,
XX 00000
Attention:
General
Counsel
Facsimile:
(000)
000-0000
with
a
copy to:
Xxxxxx
Xxxxxxx & Xxxx LLP
Xxx
Xxxxxxx Xxxx Xxxxx
Xxx
Xxxx,
XX 00000
Attention: Xxxxxxx
X. Xxxxxxxxx
Facsimile: (000)
000-0000
Section
8.4. Entire
Agreement; No Third Party Beneficiaries.
(a) This
Agreement and the Confidentiality Agreement constitute the entire agreement,
and
supersede all prior understandings, agreements or representations, by or among
the parties hereto with respect to the subject matter hereof.
(b) Except
for the rights of the Company’s shareholders to receive the Merger Consideration
on or after the Effective Time and the right of the Company, on behalf of its
shareholders, to pursue damages in the event the Company shall terminate this
Agreement pursuant to Section 7.1(f) following Parent’s and Merger Sub’s breach
of any covenant or agreement contained in this Agreement and except for the
provisions of Section 5.6 (Indemnification; Directors and Officers Insurance),
this Agreement is not intended to and shall not confer upon any Person other
than the parties hereto any rights or remedies hereunder.
Section
8.5. Assignment;
Binding Effect.
No
party hereto may assign this Agreement or any of its rights, interests or
obligations hereunder (whether by operation of Law or otherwise) without the
prior written approval of the other parties hereto, and any attempted assignment
without such prior written approval shall be void and without legal effect;
provided,
however,
that
Merger Sub may assign its rights hereunder to a direct or indirect wholly-owned
Subsidiary of Parent. Subject to the preceding sentence, this Agreement shall
be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and permitted assigns.
Section
8.6. Governing
Law; Consent to Jurisdiction.
This
Agreement and the transactions contemplated hereby, this Agreement shall be
governed by and construed in
-46-
accordance
with the laws of the Commonwealth of Virginia that apply to Contracts made
and
performed entirely within such State. Each party hereto agrees that any
dispute or disagreement between or among any of the parties hereto as to the
interpretation of any provision of, or the performance of obligations under,
this Agreement shall be commenced and prosecuted in its entirety solely
in the United States District Court for the Southern District of New York
and any reviewing appellate court thereof. If the United States District Court
for the Southern District of New York, or any reviewing appellate court
thereof, finds that it does not have jurisdiction over the dispute or
disagreement, then and only then can the parties proceed in state court and
the parties hereby agree that any such dispute will only be brought in state
court in New York County, New York. Each party hereto consents to personal
and
subject matter jurisdiction and venue in such New York federal or state courts
(as the case may be) and waives and relinquishes all right to attack the
suitability or convenience of such venue or forum by reason of their present
or
future domiciles, or by any other reason. The parties hereto acknowledge that
all directions issued by the forum court, including all injunctions and other
decrees, will be binding and enforceable in all jurisdictions and
countries.
Section
8.7. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any Law or public policy, then all other terms and provisions
of this Agreement shall nevertheless remain in full force and effect so long
as
the economic or legal substance of the transactions contemplated hereby is
not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible in an acceptable manner so that the transactions contemplated hereby
are consummated as originally contemplated to the greatest extent
possible.
Section
8.8. Enforcement
of Agreement.
The
parties agree that money damages or any other remedy at law would not be a
sufficient or adequate remedy for any breach or violation of, or default under,
this Agreement by them and that, in addition to all other available remedies,
each party shall be entitled, to the fullest extent permitted by Law, to an
injunction restraining such actual or threatened breach, violation or default
and to any other equitable relief, including specific performance, without
bond
or other security being required.
Section
8.9. WAIVER
OF JURY TRIAL.
PARENT,
MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
Section
8.10. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the same
instrument.
Section
8.11. Headings.
The
Article and Section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
-47-
Section
8.12. Interpretation.
Any
reference to any supranational, national, state, provincial, municipal, local
or
foreign Law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context otherwise requires. When a reference
is made in this Agreement to Sections, Schedules or Exhibits, such reference
shall be to a Section of or Schedule or Exhibit to this Agreement unless
otherwise indicated. Whenever the words “include,” “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words
“without limitation.”
Section
8.13. No
Presumption.
With
regard to each and every term and condition of this Agreement, the parties
hereto understand and agree that the same have or has been mutually negotiated,
prepared and drafted, and if at any time the parties hereto desire or are
required to interpret or construe any such term or condition or any agreement
or
instrument subject hereto, no consideration shall be given to the issue of
which
party hereto actually prepared, drafted or requested any term or condition
of
this Agreement or any agreement or instrument subject hereto.
Section
8.14. Undertaking
by Parent.
Parent
shall cause Merger Sub to perform when due all of Merger Sub’s obligations under
this Agreement.
Section
8.15. Definitions.
For
purposes of this Agreement,
(a) “Acquisition
Proposal”
means
any proposal or offer from any Person other than Parent or any of its
Subsidiaries (in each case, whether or not in writing and whether or not
delivered to the shareholders of the Company generally) relating to: (i) any
direct or indirect acquisition or purchase of a business of the Company or
any
of its Subsidiaries that constitute 20% or more of the consolidated revenues,
net income or assets of the Company or of 20% or more of any class of equity
securities of the Company or any of its Subsidiaries; (ii) any tender offer
or
exchange offer that, if consummated, would result in any Person beneficially
owning 20% or more of any class of equity securities of the Company; (iii)
any
merger, reorganization, share exchange, consolidation, business combination,
sale of substantially all or substantially all of the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
of
its Subsidiaries; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing; provided,
however,
that,
for purposes of Section 7.2(b)(iii)(B), (A) references to “20%” in clauses (i)
or (ii) above shall be deemed to be references to “50%” and (B) clause (iii)
above shall be limited to a transaction involving the Company, and in the case
of a merger, reorganization, share exchange or consolidation shall be limited
to
a transaction as a result of which the Company’s shareholders immediately prior
to the transaction do not hold at least a majority of the outstanding equity
interests of the surviving or resulting company immediately after the
transaction.
(b) “Affiliates”
means,
as to any Person, any other Person that, directly or indirectly, controls,
or is
controlled by, or is under common control with, such Person. As used in this
definition, “Control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the powers to
direct or cause the direction of management or policies of a Person, through
the
ownership of securities or partnership or other ownership interests, by contract
or otherwise.
-48-
(c) “Business
Day”
means
any day on which banks are not required or authorized to close in the City
of
New York, New York.
(d) “Company
Contracts”
means
each of the following, whether or not set forth in the Company Disclosure
Schedule: (i) each Contract of the type described in Section 3.16(a)
hereof; (ii) each Contract that constitutes an Employee Benefit Plan; and (iii)
each Contract that the Company has filed, or is required to file, as an exhibit
to a report with the SEC under Item 601 of Regulation S-K of the SEC and that
remains in effect.
(e) “Company
Stock Plans”
means
the Company’s 2005 Equity Incentive Plan, 1995 Equity Incentive Plan and 1991
Stock Option Plan.
(f) “ERISA
Affiliate” means
any entity required to be aggregated with the Company under Section 414(b),
(c),
(m) or (o) of the Code.
(g) “Hazardous
Substance”
means:
(i) any petroleum, hazardous or toxic petroleum-derived substance or petroleum
product, flammable or explosive material, radioactive materials, asbestos in
any
form that is or could become friable, urea formaldehyde foam insulation, foundry
sand or polychlorinated biphenyls (PCBs); (ii) any chemical or other material
or
substance that is regulated, classified or defined as or included in the
definition of “hazardous substance,” “hazardous waste,” “hazardous material,”
“extremely hazardous substance,” “restricted hazardous waste,” “toxic
substance,” “toxic pollutant,” “pollutant” or “contaminant” under any applicable
Law, or any similar denomination intended to classify substance by reason of
toxicity, carcinogenicity, ignitability, corrosivity or reactivity under any
applicable Law; or (iii) any other chemical or other material, waste or
substance, exposure to which is prohibited, limited or regulated by or under
any
applicable Law.
(h) “Intellectual
Property Rights”
means
rights in the following: (i) all trademark rights, business
identifiers, trade dress, service marks, trade names and brand names; (ii)
all
copyrights and all other rights associated therewith and the underlying works
of
authorship; (iii) all patents and all proprietary rights associated therewith;
(iv) all inventions, mask works and mask work registrations, know how,
discoveries, improvements, designs, computer source codes, programs and other
software (including all machine readable code, printed listings of code,
documentation and related property and information), trade secrets, websites,
domain names, shop and royalty rights and all other types of intellectual
property; and (v) all registrations of any of the foregoing and all applications
therefor.
(i) “knowledge”
means,
with respect to the Company, the actual knowledge of the officers of the Company
listed on Schedule
8.15(i)
of the
Company Disclosure Schedule.
(j) “Material
Adverse Effect on the Company”
means
any change, effect, condition, factor or circumstance that is materially adverse
to the business, results of operations, properties, financial condition, assets
or liabilities of the Company and its Subsidiaries taken as a whole;
provided,
however,
that a
“Material Adverse Effect on the Company” shall not be deemed to mean or include
any such change, effect, condition, factor or circumstance to the extent arising
as a result of: (i) general changes or developments in the industries in which
the Company and its Subsidiaries operate, except, in each case, to the extent
those changes or
-49-
developments
disproportionately impact (relative to similarly situated businesses) the
business, results of operations, properties, financial condition, assets or
liabilities of the Company and its Subsidiaries taken as a whole; (ii) changes,
after the date of this Agreement, in Laws of general applicability or
interpretations thereof by courts or other Governmental Entities, or changes
in
GAAP or the rules or policies of the Public Company Accounting Oversight Board;
(iii) any act or omission by the Company taken with the prior written consent
of
Parent in contemplation of the Merger; (iv) any costs or expenses reasonably
incurred or accrued in connection with the Merger (and not otherwise in breach
of this Agreement); (v) the announcement, execution, delivery or performance
of
this Agreement or the identity of Parent, including, without limitation, in
any
such case, the impact thereof on relationships with customers, suppliers or
employees; or (vi) a change to the United States economy in general or global
economic conditions that do not disproportionately affect the Company and its
Subsidiaries.
(k) “Multiemployer
Plan”
means
any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA that
the Company or any ERISA Affiliate contributes, has an obligation to contribute
or has any liability.
(l) “Person”
means
an individual, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity or organization, including a
Governmental Entity.
(m) “Preferred
Stock Purchase Rights”
means
the rights issued by the Company pursuant to the Rights Agreement, as adjusted
pursuant to the terms thereof.
(n) “Regulatory
Law”
means
the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other supranational, national,
state, provincial, municipal, local or foreign Laws, Orders and administrative
and judicial doctrines that are designed or intended to prohibit, restrict
or
regulate (i) foreign investment or (ii) actions having the purpose or effect
of
monopolization or restraint of trade or lessening of competition.
(o) “Rights
Agreement”
means
the Rights Agreement dated as of February 15, 1999, as amended, between the
Company and First Union National Bank, as rights agent.
(p) “Subsidiaries”
of
any
Person means any corporation or other form of legal entity (i) with respect
to
which such Person owns or controls, directly or indirectly through one or more
of its Subsidiaries, an amount of the outstanding voting securities that is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are not such voting securities, 50% or more of
its
equity interests) or (ii) with respect to which such Person or one or more
of
its Subsidiaries is the general partner or the managing member or has similar
authority, including any corporation or other legal entity with respect to
which
such ownership, control, membership or authority is acquired after the date
of
this Agreement, but only with respect to such periods in which such ownership,
control, membership or authority is in effect.
(q) “Superior
Proposal”
means
an unsolicited (by the Company, any of its Subsidiaries or any of the
Representatives of the Company or any of its Affiliates), bona fide,
-50-
written,
fully financed or reasonably capable of being fully financed (which, for the
purposes of this Agreement, means the receipt of a commitment letter from a
reputable Person capable of financing the transaction, subject only to normal
and customary exceptions) proposal made by any Person other than Parent or
any
of its Subsidiaries to acquire all of the issued and outstanding shares of
Company Common Stock pursuant to a tender offer or a merger or to acquire all
of
the properties and assets of the Company on terms and conditions that a majority
of the members of the Board of Directors of the Company determines in good
faith, after consultation with a nationally recognized financial advisor and
taking into account all of the terms and conditions of such proposal (including
all legal, financial, regulatory, and other aspects of such proposal, the form
of consideration, the uncertainties associated with the valuation of any
consideration other than cash and the risks associated with the form of
consideration, any expense reimbursement provisions, any termination fees and
the conditions associated with such proposal), is more favorable to the
Company’s shareholders from a financial point of view than the transactions
contemplated hereby (including, to the extent applicable, any proposal or offer
by Parent for an adjustment to the terms and conditions of this Agreement
pursuant to Section 5.5(a)) and is reasonably likely to be
consummated.
(r) “Taxes”
means
supranational, national, state, provincial, municipal, local or foreign taxes,
charges, fees, levies, or other assessments, including all net income, gross
income, sales and use, ad valorem,
transfer, gains, profits, excise, franchise, real and personal property, gross
receipts, single business, unincorporated business, value added, capital stock,
production, business and occupation, disability, FICA, employment, payroll,
license, estimated, stamp, custom duties, environmental, severance or
withholding taxes, or any other tax, governmental fee or other like assessment
or charge of any kind whatsoever, imposed by any Governmental Entity, including
any interest and penalties (civil or criminal) on or additions to any such
taxes, whether disputed or not, and shall include any transferee liability
in
respect of taxes, any liability in respect of taxes imposed by contract, tax
sharing agreement, tax indemnity agreement or any similar
agreement.
(s) “Tax
Return”
means
a
return, report, estimate, claim for refund or other information, form or
statement relating to, or required to be filed or supplied in connection with,
any Taxes, including, where permitted or required, combined or consolidated
returns for a group of entities and including any amendment thereof, including
any schedule or attachment thereto.
Section
8.16. Disclosure
Schedules.
(a) The
disclosure schedule delivered by the Company to Parent prior to the execution
and delivery of this Agreement (the “Company
Disclosure Schedule”)
and the
disclosure schedule delivered by Parent to the Company prior to the execution
and delivery of this Agreement (the “Parent
Disclosure Schedule”)
shall
be arranged in sections and subsections corresponding to the numbered section
and lettered subsections of this Agreement, and the exceptions and disclosures
in each such section and subsection of the Company
Disclosure Schedule or the Parent Disclosure Schedule, as the case may be,
shall, except as provided in the next sentence, apply only to the
correspondingly numbered section and lettered subsection of this Agreement.
The
information contained in any section or subsection of the Company Disclosure
Schedule or the Parent Disclosure Schedule, as the case may be, shall be deemed
to be incorporated by reference in other applicable sections and subsections
only if and
-51-
to
the
extent the applicability of such information to such other sections and
subsections is reasonably apparent on its face.
(b) The
inclusion of any information in the Company Disclosure Schedule or the Parent
Disclosure Schedule accompanying this Agreement will not be deemed an admission
or acknowledgment, in and of itself, solely by virtue of the inclusion of such
information in such schedules, that such information is required to be listed
in
such schedules or that such information is material to any party or the conduct
of the business of any party.
[The
next
page is the signature page.]
-52-
The
parties hereto have executed this Agreement of Merger as of the date first
written above.
|
By:
|
/s/Xxxxxx
X. Xxxxxx, Xx.
|
|
|
Xxxxxx
X. Xxxxxx, Xx.
|
||
|
Chairman
and Chief Executive Officer
|
||
|
MOUSE
ACQUISITION CORP.
|
||
|
By:
|
/s/Xxxxxx
X. Xxxxxx, Xx.
|
|
|
Xxxxxx
X. Xxxxxx, Xx.
|
||
|
Chairman
and Chief Executive Officer
|
||
|
CADMUS
COMMUNICATIONS CORPORATION
|
||
|
By:
|
/s/Xxxxx
X. Xxxxxx
|
|
|
Xxxxx
X. Xxxxxx
|
||
|
President
and Chief Executive Officer
|
||
