EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 20, 2004
AMONG
OUTDOOR CHANNEL HOLDINGS, INC.,
GOLD PROSPECTOR'S ASSOCIATION OF AMERICA, INC.
AND
THE OUTDOOR CHANNEL, INC.
AS AMENDED AND RESTATED AS OF MAY 12, 2004
ARTICLE I THE MERGER; CERTAIN RELATED MATTERS........................................................1
SECTION 1.1 THE MERGER........................................................................1
SECTION 1.2 CLOSING...........................................................................1
SECTION 1.3 EFFECTIVE TIME....................................................................2
SECTION 1.4 EFFECTS OF THE MERGER.............................................................2
SECTION 1.5 ARTICLES OF INCORPORATION.........................................................2
SECTION 1.6 BYLAWS............................................................................2
SECTION 1.7 OFFICERS AND DIRECTORS............................................................2
SECTION 1.8 EFFECT ON CAPITAL STOCK...........................................................2
SECTION 1.9 COMPANY STOCK OPTIONS AND OTHER EQUITY-BASED AWARDS...............................3
SECTION 1.10 CERTAIN ADJUSTMENTS...............................................................4
SECTION 1.11 APPRAISAL/DISSENTERS' RIGHTS......................................................4
ARTICLE II EXCHANGE OF CERTIFICATES...................................................................5
SECTION 2.1 EXCHANGE PROCEDURES...............................................................5
SECTION 2.2 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING..........................5
SECTION 2.3 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK...............................6
SECTION 2.4 NO FRACTIONAL SHARES OF PARENT COMMON STOCK.......................................6
SECTION 2.5 UNCLAIMED AMOUNTS.................................................................7
SECTION 2.6 NO LIABILITY......................................................................7
SECTION 2.7 LOST CERTIFICATES.................................................................7
SECTION 2.8 WITHHOLDING RIGHTS................................................................7
SECTION 2.9 FURTHER ASSURANCES................................................................7
SECTION 2.10 STOCK TRANSFER BOOKS..............................................................7
SECTION 2.11 RESTRICTED STOCK..................................................................7
SECTION 2.12 LEGEND REQUIREMENTS...............................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES.............................................................8
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF PARENT..........................................8
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................15
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF GPAA...........................................19
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS.................................................22
SECTION 4.1 COVENANTS OF PARENT AND GPAA.....................................................22
SECTION 4.2 COVENANTS OF THE COMPANY.........................................................22
ARTICLE V ADDITIONAL AGREEMENTS.....................................................................23
SECTION 5.1 INFORMATION STATEMENT; FAIRNESS HEARING AND PERMIT; CONSENT SOLICITATION;
INVESTMENT REPRESENTATION LETTER.................................................23
SECTION 5.2 ACCESS TO INFORMATION/EMPLOYEES..................................................25
SECTION 5.3 COMMERCIALLY REASONABLE EFFORTS..................................................25
SECTION 5.4 ACQUISITION PROPOSALS............................................................25
SECTION 5.5 EMPLOYEE BENEFITS MATTERS........................................................26
SECTION 5.6 FEES AND EXPENSES................................................................27
SECTION 5.7 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE...........................27
SECTION 5.8 PUBLIC ANNOUNCEMENTS.............................................................27
SECTION 5.9 TAX TREATMENT....................................................................28
SECTION 5.10 APPOINTMENT TO PARENT'S BOARD OF DIRECTORS.......................................28
SECTION 5.11 VOTING AGREEMENT.................................................................28
SECTION 5.12 GPAA LLC FORMATION...............................................................28
SECTION 5.13 [INTENTIONALLY OMITTED.].........................................................28
SECTION 5.14 REGISTRATION RIGHTS..............................................................28
SECTION 5.15 SECTION 16b-3....................................................................30
ARTICLE VI CONDITIONS PRECEDENT......................................................................30
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.......................30
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND GPAA..........................31
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY..............................32
ARTICLE VII TERMINATION AND AMENDMENT.................................................................33
SECTION 7.1 GENERAL..........................................................................33
SECTION 7.2 OBLIGATIONS IN EVENT OF TERMINATION..............................................35
SECTION 7.3 AMENDMENT........................................................................37
SECTION 7.4 EXTENSION; WAIVER................................................................37
SECTION 7.5 NO EFFECT ON EXISTING AGREEMENTS.................................................37
ARTICLE VIII GENERAL PROVISIONS........................................................................37
SECTION 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.......................37
SECTION 8.2 NOTICES..........................................................................37
SECTION 8.3 INTERPRETATION...................................................................38
SECTION 8.4 COUNTERPARTS.....................................................................38
SECTION 8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES...................................39
SECTION 8.6 GOVERNING LAW....................................................................39
SECTION 8.7 SEVERABILITY.....................................................................39
SECTION 8.8 ASSIGNMENT.......................................................................39
SECTION 8.9 SUBMISSION TO JURISDICTION.......................................................39
SECTION 8.10 ENFORCEMENT......................................................................39
SECTION 8.11 DEFINITIONS......................................................................40
Parent Disclosure Schedule
Company Disclosure Schedule
Schedule 5.11 - Voting Agreement Parties
Schedule 6.2(h) - List of Affiliates of the Company
Exhibit A - Form of Voting Agreement
Exhibit B - Form of Affiliate Agreement
AGREEMENT AND PLAN OF MERGER, dated as of April 20, 2004, as
amended and restated as of May 12, 2004 (this "Agreement"), among OUTDOOR
CHANNEL HOLDINGS, INC., an Alaska corporation ("Parent"), GOLD PROSPECTOR'S
ASSOCIATION OF AMERICA, INC., a California corporation and a direct wholly-owned
subsidiary of Parent ("GPAA"), and THE OUTDOOR CHANNEL, INC., a Nevada
corporation (the "Company" and collectively with Parent and GPAA, the
"parties").
W I T N E S S E T H:
WHEREAS, the respective Board of Directors of each of the
parties deems it advisable and in the best interests of each corporation and its
respective stockholders that the Company and Merger Sub (as defined in Section
8.1) engage in a business combination in order to advance the long-term
strategic business interests of the Company and Parent;
WHEREAS, the combination of the Company and Merger Sub shall
be effected by the terms of this Agreement through a merger as outlined below
(the "Merger");
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, pursuant to the Merger each share of common stock, par
value $0.001 per share, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time (as defined in Section 1.3)
will be converted into the right to receive shares of common stock, par value
$0.02 per share, of Parent ("Parent Common Stock") as set forth in Section 1.8;
WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder; and
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Nevada Revised Statutes
Chapters 78 and 92A (the "NGCL") Merger Sub shall be merged with and into the
Company at the Effective Time. Following the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation").
Section 1.2 CLOSING. Upon the terms and subject to the conditions set
forth in this Agreement, the closing of the Merger (the "Closing") will take
place as soon as possible following the satisfaction or waiver (subject to
applicable law) of the conditions set forth herein (excluding conditions that,
by their nature, cannot be satisfied until the Closing Date, but subject to the
fulfillment or waiver of those conditions), unless this Agreement has been
previously terminated pursuant to its terms or unless another time or date is
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agreed to by Parent and the Company (the actual time and date of the Closing
being referred to herein as the "Closing Date"). The Closing shall be held at
the offices of the Company at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to by the parties.
Section 1.3 EFFECTIVE TIME. As soon as practicable following the
satisfaction or waiver (subject to applicable law) of the conditions set forth
in this Agreement, at the Closing the parties shall: (i) file articles of merger
(the "Articles of Merger") in such form as is required by, and executed in
accordance with, the relevant provisions of the NGCL; and (ii) make all other
filings or recordings required by law. The Merger shall become effective at such
time as the Articles of Merger are duly filed with the Nevada Secretary of State
or at such subsequent time as Parent and the Company shall agree and as shall be
specified in the Articles of Merger (the date and time the Merger becomes
effective being the "Effective Time").
Section 1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger will have the effects set forth in the NGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 1.5 ARTICLES OF INCORPORATION. The Amended and Restated
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law.
Section 1.6 BYLAWS. The bylaws of the Company, as in effect immediately
prior to the Effective Time, shall be the bylaws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
Section 1.7 OFFICERS AND DIRECTORS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of the Company at the Effective Time shall be
the directors of the Surviving Corporation and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
Section 1.8 EFFECT ON CAPITAL STOCK.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time shall be
converted into 0.65 validly issued, fully paid and non-assessable shares of
Parent Common Stock (the "Exchange Ratio") (together with any cash in lieu of
fractional shares of Parent Common Stock to be paid pursuant to Section 2.4, the
"Merger Consideration").
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(b) As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of Company Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate or certificates which immediately prior
to the Effective Time represented any such shares of Company Common Stock
("Common Certificates" or "Certificate") shall thereafter cease to have any
rights with respect to such shares of Company Common Stock, except as provided
herein or by law.
(c) Each share of Company Preferred Stock (as defined in Section 5.13)
owned by GPAA at the Effective Time shall remain issued and outstanding and
shall represent one share of Series A Preferred Stock of the Surviving
Corporation.
(d) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall cease
to be outstanding and shall be canceled and retired and no consideration shall
be delivered in exchange therefore.
Section 1.9 COMPANY STOCK OPTIONS AND OTHER EQUITY-BASED AWARDS.
(a) Each Company Stock Option (as defined in Section 3.2(b)) that was
granted pursuant to the Company Stock Option Plan (as defined in Section 3.2(b))
prior to the Effective Time and which remains outstanding immediately prior to
the Effective Time shall cease to represent a right to acquire shares of Company
Common Stock and shall be converted, at the Effective Time, into an option to
acquire, on the same terms and conditions as were applicable under the Company
Stock Option (but taking into account any changes thereto provided for in the
Company Stock Option Plan or in such option by reason of this Agreement or the
transactions contemplated hereby), that number of shares of Parent Common Stock
determined by multiplying the number of shares of Company Common Stock subject
to such Company Stock Option by the Exchange Ratio, rounded, if necessary, to
the nearest whole share of Parent Common Stock, at a price per share (rounded to
the nearest one-hundredth of a cent) equal to the per share exercise price
specified in such Company Stock Option divided by the Exchange Ratio; PROVIDED,
HOWEVER, that in the case of any Company Stock Option to which Section 421 of
the Code applies by reason of its qualification under Section 422 of the Code,
the option price, the number of shares subject to such option and the terms and
conditions of exercise of such option shall be determined in a manner consistent
with the requirements of Section 424(a) of the Code. On or prior to the
Effective Time, the Company will take all actions necessary such that all
Company Stock Options outstanding prior to the Effective Time are treated in
accordance with the immediately preceding sentence.
(b) At the Effective Time, Parent shall assume each Company Stock
Option in accordance with the terms of the Company Stock Option Plan under which
it was issued and the stock option agreement by which it is evidenced. As soon
as practicable after the Effective Time, Parent shall deliver to the holders of
Company Stock Options appropriate notices setting forth such holders' rights
pursuant to the Company Stock Option Plan and the agreements evidencing the
grants of such Company Stock Options as adjusted pursuant to this Section 1.9.
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(c) Prior to the Closing, Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of Company Stock Options in accordance with
this Section 1.9. After the Effective Time, no additional options will be
granted pursuant to the Company Stock Option Plan.
(d) Prior to the Closing, the Company shall take all actions reasonably
requested by Parent or otherwise necessary to supplement the Company Stock
Option Plan to clarify the treatment of the Company Stock Options in the Merger
and allow the assumption of the Company Stock Options by Parent in the Merger
without the acceleration of vesting.
Section 1.10 CERTAIN ADJUSTMENTS. If, between the date of this
Agreement and the Effective Time, the outstanding Parent Common Stock or Company
Common Stock shall have been changed into a different number of shares or
different class by reason of the Reincorporation (as defined in Section 8.11) or
any reclassification, recapitalization, stock split, split-up, combination or
exchange of shares or a stock dividend or dividend payable in any other
securities shall be declared with a record date within such period, or any
similar event shall have occurred, the Exchange Ratio shall be appropriately
adjusted to provide to the holders of Company Common Stock the same economic
effect as contemplated by this Agreement prior to such event.
Section 1.11 APPRAISAL/DISSENTERS' RIGHTS.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Company Common Stock held by a holder who has exercised and
perfected appraisal or dissenters' rights for such shares in accordance with the
NGCL and/or the California General Corporation Law (the "CGCL"), and who, as of
the Effective Time, has not effectively withdrawn or lost such appraisal or
dissenters' rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive the Merger Consideration, but the holder thereof
shall only be entitled to such rights as are granted by the NGCL or the CGCL, as
applicable.
(b) Notwithstanding the provisions of subsection (a), if any holder of
Dissenting Shares effectively withdraws or loses (through failure to perfect or
otherwise) its appraisal rights, then, as of the later of the Effective Time and
the occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive the Merger Consideration,
without interest thereon, upon surrender of the Certificate representing such
Dissenting Shares.
(c) The Company shall give Parent (i) prompt notice of any written
demand for appraisal received by the Company pursuant to the applicable
provisions of the NGCL and/or the CGCL and (ii) the opportunity to participate
in all negotiations and proceedings with respect to such demands, PROVIDED
HOWEVER, Parent may not make any payment with respect to such demands. The
Company shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to any such demands or offer to settle or settle
any such demands.
(d) Dissenting Shares, if any, after purchased by the payment of fair
value to the holders thereof pursuant to the NGCL and/or the CGCL shall be
canceled.
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ARTICLE II
EXCHANGE OF CERTIFICATES
Section 2.1 EXCHANGE PROCEDURES.
(a) At or prior to the Effective Time, Parent shall deposit with its
transfer agent, who shall act as the "Exchange Agent" for the purpose of
exchanging Certificates for the Merger Consideration, in trust for the benefit
of holders of shares of Company Common Stock, certificates representing the
Parent Common Stock issuable pursuant to Section 1.8 in exchange for outstanding
shares of Company Common Stock. Parent agrees to make available directly or
indirectly to the Exchange Agent from time to time as needed, cash sufficient to
pay cash in lieu of fractional shares pursuant to Section 2.4 and any dividends
and other distributions pursuant to Section 2.2.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of a Certificate (i) a letter of
transmittal, which letter shall be in customary form and have such provisions as
Parent may reasonably specify and (ii) instructions for effecting the surrender
of such Certificates in exchange for the applicable Merger Consideration. Upon
surrender of a Certificate to the Exchange Agent together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefore (A) one or more shares of Parent Common Stock representing, in the
aggregate, the whole number of shares that such holder has the right to receive
pursuant to Section 1.8 (after taking into account all shares of Company Common
Stock then held by such holder) and (B) a check in the amount equal to the cash
that such holder has the right to receive pursuant to the provisions of this
Article II, consisting of cash in lieu of any fractional shares of Parent Common
Stock pursuant to Section 2.4 and dividends and other distributions pursuant to
Section 2.2. No interest will be paid or will accrue on any cash payable
pursuant to Section 2.2 or Section 2.4.
Section 2.2 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING.
All shares of Parent Common Stock to be issued pursuant to the Merger shall be
deemed issued and outstanding as of the Effective Time and whenever a dividend
or other distribution is declared by Parent in respect of the Parent Common
Stock, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
shares issuable pursuant to this Agreement; PROVIDED THAT no dividends or other
distributions declared or made in respect of the Parent Common Stock, with a
record date that is 180 days or more after the Effective Time shall be paid to
the holder of any unsurrendered Certificate until the holder of such Certificate
shall surrender such Certificate in accordance with this Article II. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to such holder of shares of Parent Common Stock issuable in
exchange therefore, without interest, (a) the amount of any cash payable in lieu
of fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4 and the amount of dividends or other distributions with
a record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock, and (b) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of Parent Common Stock.
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Section 2.3 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued and cash paid upon conversion of shares of
Company Common Stock in accordance with the terms of Article I and this Article
II (including any cash paid pursuant to Section 2.2 or Section 2.4) shall be
deemed to have been issued or paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock.
Section 2.4 NO FRACTIONAL SHARES OF PARENT COMMON STOCK.
(a) No certificates or scrip or shares of Parent Common Stock
representing fractional shares of Parent Common Stock or book-entry credit of
the same shall be issued upon the surrender for exchange of Certificates and
such fractional share interests will not entitle the owner thereof to vote or to
have any rights of a stockholder of Parent or a holder of shares of Parent
Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of Parent Common Stock
multiplied by (ii) the average bid and ask price for a share of Parent Common
Stock on the OTC Bulletin Board ("OTCBB") on the date of the Effective Time or,
if such date is not a Business Day, the Business Day immediately prior to the
date on which the Effective Time occurs. Such payment of cash consideration in
lieu of fractional shares of Parent Common Stock is not expected to exceed, in
the aggregate, 1% of the total Merger Consideration.
(c) As promptly as practicable after the determination of the amount of
cash, if any, to be paid to holders of fractional interests, the Exchange Agent
shall so notify Parent, and Parent shall deposit or cause the Surviving
Corporation to deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
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Section 2.5 UNCLAIMED AMOUNTS. Any Merger Consideration remaining
unclaimed by holders of shares of Company Common Stock 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
(as defined in Section 3.1(c)(iii)) shall, to the extent permitted by law, be
returned to Parent or its assignee. Any holders of shares of Company Common
Stock whose shares have been returned to Parent pursuant to this section shall
look to Parent or its assignee for payment of the Merger Consideration and any
cash, dividends and other distributions in respect thereof issuable and/or
payable pursuant to this section upon due surrender of their Certificates (or
affidavits of loss in lieu thereof) without any interest thereon.
Section 2.6 NO LIABILITY. None of Parent, GPAA, Merger Sub, the
Company, the Exchange Agent or the Surviving Corporation 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 2.7 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such Person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will 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,
any cash in lieu of fractional shares of Parent Common Stock to which such
holders are entitled pursuant to Section 2.4, and unpaid dividends and
distributions on shares of Parent Common Stock to which such holders are
entitled pursuant to Section 2.2, deliverable in respect thereof, pursuant to
this Agreement.
Section 2.8 WITHHOLDING RIGHTS. Each of 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, Company Stock Options or any other equity rights in the Company such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law.
Section 2.9 FURTHER ASSURANCES. 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, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any 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 2.10 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.
Section 2.11 RESTRICTED STOCK. The shares of Parent Common Stock
issuable pursuant to the exchange of securities contemplated by Section 1.8(a)
above will not be registered under the Securities Act of 1933, as amended (the
"Securities Act") and will be exempt from such registration by reason of either
Section 4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated
under the Securities Act (collectively, the "Rule 506 Exemption") or Section
3(a)(10) of the Securities Act (the "3(a)(10) Exemption").
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Section 2.12 LEGEND REQUIREMENTS. If the shares of Parent Common Stock
issuable pursuant to the exchange of securities contemplated by Section 1.8(a)
above are issued pursuant to the Rule 506 Exemption, then each certificate
representing shares of Parent Common Stock will be endorsed with the following
legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT COVERING SUCH SECURITIES OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING
THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT.
(b) Any legend required to be placed thereon by applicable federal
or state securities laws.
If the shares of Parent Common Stock issuable pursuant to the exchange
of securities contemplated by Section 1.8(a) above are issued pursuant to the
3(a)(10) Exemption, then each certificate representing shares of Parent Common
Stock issued to Affiliates (as defined in Section 6.2(h) below) of the Company
will be endorsed with the following legends:
(c) THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), APPLIES, AND
MAY NOT BE TRANSFERRED UNLESS (1) SUCH TRANSFER IS MADE IN
ACCORDANCE WITH THE PROVISIONS OF SUCH RULE 145, (2) SUCH
TRANSFER HAS BEEN REGISTERED UNDER THE SECURITIES ACT, OR (3)
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED IS PROVIDED.
(d) Any legend required to be placed thereon by applicable federal
or state securities laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set
forth in the Parent Disclosure Schedule delivered by Parent to the Company prior
to the execution of this Agreement (the "Parent Disclosure Schedule") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant and any other representation or warranty, if the disclosure
set forth in the Parent Disclosure Schedule is readily applicable to such other
representation or warranty), Parent represents and warrants (which such
representations and warranties expressly exclude the Company) to the Company as
follows:
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(a) ORGANIZATION, STANDING AND POWER. Each of Parent and each of its
Subsidiaries (as defined in Section 8.11) is duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, has the requisite corporate (or similar) power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted, except where the failures to be so organized, existing and in good
standing or to have such power and authority, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect (as defined in Section
8.11) on Parent, and, to Parent's knowledge, is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failures to so qualify or to be in
good standing, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Parent.
(b) CAPITAL STRUCTURE.
(i) As of April 16, 2004, the authorized capital stock of
Parent consisted of (A) 75,000,000 shares of Parent Common Stock, $0.02 par
value, of which 6,078,585 shares were outstanding and (B) 25,000,000 shares of
preferred stock, $0.001 par value, none of which is outstanding. The shares of
Parent Common Stock to be issued in the Merger or upon exercise of stock options
converted in the Merger pursuant to Section 1.9 will be duly authorized, validly
issued, fully paid and non-assessable and free of any preemptive rights. There
were outstanding as of April 16, 2004 no options, warrants or other rights to
acquire capital stock from Parent other than options to acquire capital stock
from Parent representing in the aggregate the right to purchase approximately
513,900 shares of Parent Common Stock under Parent's stock option plans and
agreements.
(ii) Except as otherwise set forth in this Section 3.1(b) and
otherwise contemplated by this Agreement, as of the date of this Agreement,
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Parent or any of
its Subsidiaries is a party or by which any of them is bound obligating Parent
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of Parent or any of its Subsidiaries or obligating Parent or any of its
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. Except
as otherwise contemplated by this Agreement, as of the date of this Agreement,
there are no outstanding obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent or
any of its Subsidiaries.
-9-
(c) AUTHORITY; NO CONFLICTS.
(i) Parent has all requisite corporate power and authority to
enter into this Agreement and, subject to the Parent Stockholder Approval (as
defined in Section 8.11 below), to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent, subject in the case of the issuance of
the shares of Parent Common Stock in the Merger and the adoption of the Company
Stock Options to the Parent Stockholder Approval. This Agreement has been duly
executed and delivered by Parent and constitutes a valid and binding agreement
of Parent, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by Parent
does not or will not, as the case may be, and the consummation by Parent 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 or the loss of a material benefit under, any assets, (any such
conflict, violation, default, right of termination, amendment, cancellation or
acceleration, or loss, a "Violation") pursuant to: (A) any provision of the
articles of incorporation or bylaws of Parent, or (B) except as, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Parent.
(iii) No consent, approval, order or authorization of,
clearance by, or registration, declaration or filing with, any supranational,
national, state, municipal, local or foreign government, any instrumentality,
subdivision, court, administrative agency or commission or other authority
thereof, or any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental authority (a
"Governmental Entity"), is required by or with respect to Parent or any
Subsidiary of Parent 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 those required under or in relation to (A) the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (B) state securities or "blue sky" laws (the "Blue Sky Laws"), (C) the
Securities Act, (D) the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (E) the NGCL with respect to the filing of the Articles of
Merger and (F) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failures of which to make or obtain,
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Parent. Consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to any of the foregoing
clauses (A) through (F) are hereinafter referred to as "Necessary Consents."
-10-
(d) REPORTS AND FINANCIAL STATEMENTS. Parent has filed all required
registration statements, prospectuses, reports, schedules, forms, statements and
other documents known to Parent to be required to be filed by Parent with the
SEC since January 1, 2001 (collectively, including all exhibits thereto, the
"Parent SEC Reports"). The financial statements (including the related notes and
schedules) included or incorporated by reference in the Parent SEC Reports
presents fairly, or will present fairly, in all material respects, the
consolidated financial position and consolidated results of operations, retained
earnings and cash flows of Parent and its consolidated Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved except as otherwise noted therein, and
subject, in the case of 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. Such Parent SEC Reports, as of their respective dates
(and as of the date of any amendment to the respective Parent SEC Report),
complied as to form in all material respects with the applicable requirements of
the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
(e) BOARD APPROVAL. The Board of Directors of Parent, by resolutions
duly adopted by vote of those voting at a meeting duly called and held and not
subsequently rescinded or modified in any way (the "Parent Board Approval"), has
duly (i) determined that this Agreement and the Merger are advisable and are
fair, just and reasonable as to, and in the best interests of, Parent and its
stockholders and (ii) approved this Agreement, the Merger and the issuance of
the shares of Parent Common Stock to be issued in the Merger and to be issued
pursuant to the Company Stock Options assumed by Parent pursuant to Section 1.9
above.
(f) LITIGATION; COMPLIANCE WITH LAWS.
(i) As of the date of this Agreement, there are no suits,
actions or proceedings (collectively "Actions") pending or, to the knowledge of
Parent, threatened in writing, against or affecting Parent or any Subsidiary of
Parent which, in the aggregate, would reasonably be expected to have a Material
Adverse Effect on Parent, nor, to the knowledge of Parent, are there any
judgments, decrees, injunctions, rules or orders of any Governmental Entity or
arbitrator outstanding against Parent or any Subsidiary of Parent which, in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
Parent.
(ii) As of the date of this Agreement and except as, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Parent, Parent and its Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are
necessary for the operation of the businesses of Parent and its Subsidiaries, as
currently conducted (the "Parent Permits"). Parent and its Subsidiaries are in
compliance with the terms of the Parent Permits, except where the failures to so
comply, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on Parent. Except as disclosed in the Parent SEC Reports filed
prior to the date of this Agreement, to Parent's knowledge, neither Parent nor
any of its Subsidiaries is in material violation of, and Parent and its
Subsidiaries have not received any notices of material violations with respect
to, any laws, ordinances or regulations of any Governmental Entity.
-11-
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby or as disclosed in the Parent SEC Reports filed prior to the date of this
Agreement, and except as contemplated by this Agreement, since December 31,
2003, there has not been any declaration, setting aside or payment of any
dividend or other distribution in cash, stock or property in respect of Parent's
capital stock, except for dividends or other distributions on its capital stock
publicly announced prior to the date hereof. Except as disclosed in the Parent
SEC Reports filed prior to the date of this Agreement, since December 31, 2003,
there have not been any changes, circumstances or events which, in the
aggregate, have had, or would reasonably be expected to have, a Material Adverse
Effect on Parent.
(h) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of Parent.
(i) OPINION OF FINANCIAL ADVISOR. Parent has received the opinion of
BIA Financial Network, Inc., dated the date of this Agreement, to the effect
that, as of such date, the Exchange Ratio is fair, from a financial point of
view, to the stockholders of Parent.
(j) EMPLOYEE BENEFIT PLANS. To Parent's knowledge, each Benefit Plan
maintained by Parent has been operated and administered in all material respects
in accordance with its terms and applicable law, except where failure to do so
would not reasonably be expected to have a Material Adverse Effect on Parent. To
Parent's knowledge, the execution of this Agreement and the consummation of the
Merger will not constitute an event under any Benefit Plan maintained by Parent
that will or may result in any payment, acceleration, forgiveness of
indebtedness, vesting, distribution, increase in compensation or benefits or
obligation to fund benefits with respect to any Parent employee which, in the
aggregate, have had, or would reasonably be expected to have, a Material Adverse
Effect on Parent.
(k) ENVIRONMENTAL MATTERS.
(i) Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent and except as disclosed in
the Parent SEC Reports filed prior to the date of this Agreement, to the
knowledge of Parent, (i) the operations of Parent and its Subsidiaries have been
and are in compliance in all material respects with all Environmental Laws and
with all licenses required by Environmental Laws, (ii) there are no pending or,
to the knowledge of Parent, threatened, material Environmental Claims under or
pursuant to Environmental Laws against Parent or its Subsidiaries or involving
any real property currently or, to the knowledge of Parent, formerly owned,
operated or leased by Parent or its Subsidiaries, (iii) Parent and its
Subsidiaries have not incurred any material Environmental Liabilities and no
facts, circumstances or conditions relating to or attributable to any real
property currently or, to the knowledge of Parent, formerly owned, operated or
leased by Parent or its Subsidiaries or operations thereon would reasonably be
expected to result in Environmental Liabilities, and (iv) all real property
owned and all real property operated or leased by Parent or its Subsidiaries is
free of contamination from Hazardous Material that would have an adverse effect
on human health or the environment.
-12-
(ii) For purposes of this Section 3.1(k), Section 3.2(l) and
Section 3.3(d), the following terms shall have the following meanings:
"Environmental Claim" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
orders, claims, liens, investigations, requests for information, proceedings, or
notices of noncompliance or violation (written or oral) by any person
(including, without limitation, any governmental authority) alleging liability
or potential liability arising out of, based on or resulting from (A) the
presence release or disposal or threatened release or disposal, of any Hazardous
Materials at any location, or (B) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or permit thereunder, or
(C) any and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
exposure to or the presence, release, or disposal or threat thereof of any
Hazardous Materials.
"Environmental Law" means any applicable law, regulation,
code, license, permit, order, judgment, decree or injunction promulgated by any
Governmental Entity, (A) for the protection of the environment (including air,
water, soil and natural resources) or (B) regulating the use, storage, handling,
release or disposal of any chemical, material, waste or hazardous substance.
"Hazardous Material" means any substance listed, defined,
designated or regulated pursuant to any applicable Environmental Law including
petroleum products and byproducts, asbestos and polychlorinated biphenyls, but
excluding office, janitorial and other usual supplies used, stored and released
in customary amounts.
"Environmental Liabilities" means all liabilities, actions,
remedial obligations, losses, damages, fines, penalties and sanctions arising
under any Environmental Law.
(l) INTELLECTUAL PROPERTY. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Parent and except as
disclosed in the Parent SEC Reports filed prior to the date of this Agreement,
(i) Parent and each of its Subsidiaries owns, or has all necessary licenses to
use all Intellectual Property used in or necessary for the conduct of its
business as currently conducted; (ii) to the knowledge of Parent, the use of any
Intellectual Property by Parent and its Subsidiaries does not infringe on or
otherwise violate the rights of any Person and is in accordance with any
applicable license pursuant to which Parent or any Subsidiary acquired the right
to use any Intellectual Property; (iii) to the knowledge of Parent, no Person is
challenging, infringing on or otherwise violating any right of Parent or any of
its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Parent or its Subsidiaries; and (iv) neither Parent nor any of its
Subsidiaries has received any written notice or otherwise has knowledge of any
pending claim, order or proceeding with respect to any Intellectual Property
used by Parent and its Subsidiaries. For purposes of this Agreement,
"Intellectual Property" shall mean trademarks, service marks, brand names,
certification marks, trade dress and other indications of origin, the goodwill
associated with the foregoing and registrations, and applications to register;
inventions, discoveries and ideas; patents, applications for patents, and any
renewals, extensions or reissues thereof, in any such jurisdiction; nonpublic
information, trade secrets and confidential information; and registrations or
applications for registration of copyrights, and any renewals or extensions
thereof; and any similar intellectual property or proprietary rights.
-13-
(m) TAXES.
(i) Parent and each of its Subsidiaries has timely filed, or
has caused to be timely filed, all Tax Returns required to be filed, and all
Taxes shown to be due on such Tax Returns, or otherwise owed, have been or will
be timely paid.
(ii) To Parent's knowledge, the most recent financial
statements contained in the Parent SEC Reports reflect an adequate reserve for
all Taxes payable by Parent and its Subsidiaries for all taxable periods and
portions thereof through the date of such financial statements. No deficiency
with respect to any Taxes has been proposed, asserted or assessed against Parent
or any of its Subsidiaries, and no requests for waivers of the time to assess
any such Taxes are pending, except to the extent any such deficiency or request
for waiver, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect on Parent.
(iii) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of Parent or any of its
Subsidiaries. Neither Parent nor any of its Subsidiaries is bound by any Tax
sharing agreements with third parties.
(iv) For purposes of this Agreement:
(A) "Taxes" includes all forms of taxation, whenever created
or imposed, and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, Federal or other
Governmental Entity, or in connection with any agreement with respect to Taxes,
including all interest, penalties and additions imposed with respect to such
amounts.
(B) "Tax Return" means all Federal, state, local, provincial
and foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
(n) LABOR MATTERS. Except where failure to comply would not reasonably
be expected to have a Material Adverse Effect on Parent, to Parent's knowledge,
Parent is and has been in compliance with all applicable laws of the United
States, or of any state or local government or any subdivision thereof or of any
foreign government respecting employment and employment practices, terms and
conditions of employment and wages and hours, including, without limitation,
ERISA, the Code, the Immigration Reform and Control Act, the WARN Act, any laws
respecting employment discrimination, sexual harassment, disability rights or
benefits, equal opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, COBRA, labor relations,
employee leave issues, wage and hour standards, occupational safety and health
requirements and unemployment insurance and related matters, and is not engaged
in any unfair labor practices.
-14-
Section 3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
set forth in the Company Disclosure Schedule delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule")
(each section of which qualifies the correspondingly numbered representation and
warranty or covenant and any other representation or warranty, if the disclosure
set forth in the Company Disclosure Schedule is readily applicable to such other
representation or warranty), the Company represents and warrants to Parent as
follows:
(a) ORGANIZATION, STANDING AND POWER. The Company is duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the requisite corporate (or similar) power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failures to be so organized,
existing and in good standing or to have such power and authority, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company, and, to the Company's knowledge, is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failures so to qualify or to be in
good standing in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company. The Company has no Subsidiaries.
(b) CAPITAL STRUCTURE.
(i) As of April 16, 2004, the authorized capital stock of the
Company consisted of 50,000,000 shares of Company Common Stock, of which
10,695,936 shares were outstanding, and 10,000,000 shares of preferred stock,
none of which were outstanding. All issued and outstanding shares of the capital
stock of the Company are duly authorized, validly issued, fully paid and
non-assessable, and no class of capital stock is entitled to preemptive rights.
Except as otherwise contemplated by this Agreement, as of the date of this
Agreement, there are no options, warrants or other rights to acquire capital
stock from the Company or any rights to receive shares of capital stock of the
Company pursuant to any deferred compensation arrangement, other than options
and other rights to acquire capital stock of the Company representing in the
aggregate the right to purchase 2,481,000 shares of Company Common Stock
(collectively, the "Company Stock Options") under the Company's 1997 Stock
Option Plan and other stock option plans and agreements (collectively, the
"Company Stock Option Plan").
(ii) Except as otherwise set forth in this Section 3.2(b) and
otherwise contemplated by this Agreement, as of the date of this Agreement,
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company is a
party or by which it is bound obligating the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or obligating the Company to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company.
-15-
(c) AUTHORITY; NO CONFLICTS.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby, subject to the adoption of this Agreement and the
consummation of the Merger and other transactions contemplated hereby by the
Company Stockholder Approval (as defined in Section 8.11 below). The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject in the case of the consummation of the
Merger to the adoption of this Agreement and approval of the Merger by Company
Stockholder Approval. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by the
Company does not or will not, as the case may be, and the consummation by the
Company of the Merger and the other transactions contemplated hereby will not,
conflict with, or result in a Violation pursuant to: (A) any provision of the
articles of incorporation or bylaws of the Company or (B) except as, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company.
(iii) No consent, approval, order or authorization of,
clearance by, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Company 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 the Necessary
Consents and such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to make or obtain,
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company.
(d) FINANCIAL STATEMENTS. Each of the Company's financial statements
(including the related notes and schedules) present fairly, or will present
fairly, in all material respects, the consolidated financial position and
consolidated results of operations, retained earnings and cash flows of the
Company as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of
unaudited interim financial statements, to the absence of notes and normal and
recurring year-end adjustments that have not been and are not expected to be
material in amount.
(e) BOARD APPROVAL. The Board of Directors of the Company, by
resolutions duly adopted by vote of those voting at a meeting duly called and
held and not subsequently rescinded or modified in any way, has duly (i)
determined that this Agreement and the Merger are advisable and are fair to and
in the best interests of the Company and its stockholders, (ii) approved this
Agreement and the Merger and (iii) recommended without qualification that the
stockholders of the Company adopt this Agreement and approve the Merger and
directed that this Agreement and the transactions contemplated hereby be
submitted for consideration by the Company's stockholders.
-16-
(f) LITIGATION; COMPLIANCE WITH LAWS.
(i) As of the date of this Agreement, there are no Actions
pending or, to the knowledge of the Company, threatened in writing, against or
affecting the Company which, in the aggregate, would reasonably be expected to
have a Material Adverse Effect on the Company, nor, to the knowledge of the
Company, are there any judgments, decrees, injunctions, rules or orders of any
Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary of the Company which, in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Company.
(ii) As of the date of this Agreement, and except as would, in
the aggregate, not reasonably be expected to have a Material Adverse Effect on
the Company, the Company holds all permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities which are necessary for the
operation of the businesses of the Company as currently conducted (the "Company
Permits"). The Company is in compliance with the terms of the Company Permits,
except where the failures to so comply, in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on the Company. To the Company's
knowledge, the Company is not in material violation of, and the Company has not
received any notices of material violations with respect to, any laws,
ordinances or regulations of any Governmental Entity.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, and except as permitted by Section 4.2, since December 31, 2003, (i) the
Company has conducted its business only in the ordinary course; and (ii) through
the date hereof, there has not been any declaration, setting aside or payment of
any dividend or other distribution in cash, stock or property in respect of the
Company's capital stock, except for dividends or other distributions on its
capital stock publicly announced prior to the date hereof. Since December 31,
2003, there have not been any changes, circumstances or events which, in the
aggregate, have had, or would reasonably be expected to have, a Material Adverse
Effect on the Company.
(h) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of the Company.
(i) OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to the holders of Company Common Stock.
(j) EMPLOYEE BENEFIT PLANS. To the Company's knowledge, each Benefit
Plan maintained by the Company (each, a "Company Benefit Plan") has been
operated and administered in all material respects in accordance with its terms
and applicable law, except where failure to do so would not reasonably be
expected to have a Material Adverse Effect on the Company. To the Company's
-17-
knowledge, the execution of this Agreement and the consummation of the Merger
will not constitute an event under any Company Benefit Plan that will or may
result in any payment, acceleration, termination, forgiveness of indebtedness,
vesting, distribution, increase in compensation or benefits or obligation to
fund benefits with respect to any Company employee which, in the aggregate, have
had, or would reasonably be expected to have, a Material Adverse Effect on the
Company.
(k) NO RESTRICTIONS ON THE MERGER; TAKEOVER STATUTES. Sections 78.378
to 78.3793, inclusive, and 78.411 to 78.444, inclusive, of the NGCL, and any
other potentially applicable anti-takeover or similar statute or regulation or
provision of the certificate of incorporation or by-laws, or other
organizational or constitutive document or governing instruments of the Company
are inapplicable to this Agreement and the transactions contemplated hereby.
(l) ENVIRONMENTAL MATTERS. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company, (i) to
the knowledge of the Company, the operations of the Company have been and are in
compliance in all material respects with all Environmental Laws and with all
licenses required by Environmental Laws, (ii) there are no pending or, to the
knowledge of the Company, threatened, material Environmental Claims under or
pursuant to Environmental Laws against the Company involving any real property
currently or, to the knowledge of the Company, formerly owned, operated or
leased by the Company, (iii) to the knowledge of the Company, the Company has
not incurred any material Environmental Liabilities and no facts, circumstances
or conditions relating to or attributable to any real property currently or, to
the knowledge of the Company, formerly owned, operated or leased by the Company
or operations thereon would reasonably be expected to result in Environmental
Liabilities and (iv) to the knowledge of the Company, all real property owned
and all real property operated or leased by the Company is free of contamination
from Hazardous Material that would have an adverse effect on human health or the
environment.
(m) INTELLECTUAL PROPERTY. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company, (i) the
Company owns, or has all necessary licenses to use, all Intellectual Property
used in or necessary for the conduct of its business as currently conducted;
(ii) to the knowledge of the Company, the use of any Intellectual Property by
the Company does not infringe on or otherwise violate the rights of any Person
and is in accordance with any applicable license pursuant to which the Company
acquired the right to use any Intellectual Property; (iii) to the knowledge of
the Company, no Person is challenging, infringing on or otherwise violating any
right of the Company with respect to any Intellectual Property owned by and/or
licensed to the Company; and (iv) the Company has not received any written
notice and does not otherwise have knowledge of any pending claim, order or
proceeding with respect to any Intellectual Property used by the Company.
-18-
(n) TAXES.
(i) The Company has provided to Parent all information
necessary for Parent to timely file, or cause to be timely filed, all
consolidated Tax Returns required to be filed by Parent and which include the
Company.
(ii) The Company's financial statements reflect an adequate
reserve for all Taxes payable by the Company for all taxable periods and
portions thereof through the date of such financial statements. No deficiency
with respect to any Taxes has been proposed, asserted or assessed against the
Company, and no requests for waivers of the time to assess any such Taxes are
pending, except to the extent any such deficiency or request for waiver,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company.
(iii) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Company. The Company
is not bound by any Tax sharing agreements with third parties.
(o) LABOR MATTERS. Except where failure to comply would not reasonably
be expected to have a Material Adverse Effect on the Company, to the Company's
knowledge, the Company is and has been in compliance with all applicable laws of
the United States, or of any state or local government or any subdivision
thereof or of any foreign government respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, ERISA, the Code, the Immigration Reform and Control Act, the
WARN Act, any laws respecting employment discrimination, sexual harassment,
disability rights or benefits, equal opportunity, plant closure issues,
affirmative action, workers' compensation, employee benefits, severance
payments, COBRA, labor relations, employee leave issues, wage and hour
standards, occupational safety and health requirements and unemployment
insurance and related matters, and is not engaged in any unfair labor practices.
Section 3.3 REPRESENTATIONS AND WARRANTIES OF GPAA. GPAA represents and
warrants to the Company as follows:
(a) ORGANIZATION, STANDING AND POWER; SUBSIDIARIES. GPAA is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has the requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, except where the failures to be so organized, existing and in
good standing or to have such power and authority, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on GPAA, and, to GPAA's
knowledge, is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failures so to qualify or to be in good standing, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
GPAA. GPAA is a direct, wholly-owned subsidiary of Parent.
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(b) AUTHORITY; NO CONFLICTS.
(i) GPAA has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of GPAA. This Agreement has been duly executed and
delivered by GPAA and constitutes a valid and binding agreement of GPAA,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by GPAA does
not or will not, as the case may be, and the consummation by GPAA of the
transactions contemplated hereby will not, conflict with, or result in any
Violation pursuant to: (A) any provision of the articles of incorporation or
bylaws of GPAA, or (B) except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on GPAA.
(iii) No consent, approval, order or authorization of,
clearance by, or registration, declaration or filing with, any Governmental
Entity, is required by or with respect to GPAA in connection with the execution
and delivery of this Agreement by GPAA or the transactions contemplated hereby,
except for the Necessary Consents and such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failures of which to
make or obtain, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on GPAA.
(c) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, since December 31, 2003, there has not been any declaration, setting
aside or payment of any dividend or other distribution in cash, stock or
property in respect of GPAA's capital stock, except for dividends or other
distributions on its capital stock publicly announced prior to the date hereof.
Since December 31, 2003, there have not been any changes, circumstances or
events which, in the aggregate, have had, or would reasonably be expected to
have, a Material Adverse Effect on GPAA.
(d) ENVIRONMENTAL MATTERS.
(i) Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on GPAA, to the knowledge of GPAA,
(i) the operations of GPAA have been and are in compliance in all material
respects with all Environmental Laws and with all licenses required by
Environmental Laws, (ii) there are no pending or, to the knowledge of GPAA,
threatened, material Environmental Claims under or pursuant to Environmental
Laws against GPAA or involving any real property currently or, to the knowledge
of GPAA, formerly owned, operated or leased by GPAA, (iii) GPAA has not incurred
any material Environmental Liabilities and no facts, circumstances or conditions
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relating to or attributable to any real property currently or, to the knowledge
of GPAA, formerly owned, operated or leased by GPAA or operations thereon would
reasonably be expected to result in Environmental Liabilities, and (iv) all real
property owned and all real property operated or leased by GPAA is free of
contamination from Hazardous Material that would have an adverse effect on human
health or the environment.
(e) TAXES.
(i) GPAA has timely filed, or has caused to be timely filed,
all Tax Returns required to be filed, and all Taxes shown to be due on such Tax
Returns, or otherwise owed, have been or will be timely paid.
(ii) No deficiency with respect to any Taxes has been
proposed, asserted or assessed against GPAA, and no requests for waivers of the
time to assess any such Taxes are pending, except to the extent any such
deficiency or request for waiver, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect on GPAA.
There are no material Liens for Taxes (other than for current
Taxes not yet due and payable) on the assets of GPAA. GPAA is not bound by any
Tax sharing agreements with third parties.
(f) FINANCIAL STATEMENTS. Each of GPAA's financial statements
(including the related notes and schedules) present fairly, or will present
fairly, in all material respects, the consolidated financial position and
consolidated results of operations, retained earnings and cash flows of GPAA as
of the respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of unaudited interim financial
statements, to the absence of notes and normal and recurring year-end
adjustments that have not been made and are not expected to be material in
amount.
(g) LABOR MATTERS. Except where failure to comply would not reasonably
be expected to have a Material Adverse Effect on GPAA, to GPAA's knowledge, GPAA
is and has been in compliance with all applicable laws of the United States, or
of any state or local government or any subdivision thereof or of any foreign
government respecting employment and employment practices, terms and conditions
of employment and wages and hours, including, without limitation, ERISA, the
Code, the Immigration Reform and Control Act, the WARN Act, any laws respecting
employment discrimination, sexual harassment, disability rights or benefits,
equal opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, COBRA, labor relations,
employee leave issues, wage and hour standards, occupational safety and health
requirements and unemployment insurance and related matters, and is not engaged
in any unfair labor practices.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 COVENANTS OF PARENT AND GPAA. During the period from the
date of this Agreement and continuing until the Effective Time, Parent agrees as
to itself and its Subsidiaries (excluding the Company) that (except as expressly
contemplated or permitted by this Agreement or as disclosed in the Parent
Disclosure Schedule or as required by a Governmental Entity of competent
jurisdiction or to the extent that the Company shall otherwise consent in
writing):
(a) ORDINARY COURSE. Parent and GPAA (except as otherwise contemplated
herein) shall carry on their respective businesses in the usual, regular and
ordinary course in all material respects, in substantially the same manner as
heretofore conducted, and shall use reasonable efforts to preserve intact their
present lines of business, maintain their rights and franchises and preserve
their relationships with customers, suppliers and others having business
dealings with them; PROVIDED, HOWEVER, that no action by Parent or its
Subsidiaries with respect to matters permitted by any other provision in this
Agreement shall be deemed a breach of this Section 4.1(a). Nothing contained in
this Section 4.1(a) or in this Agreement shall be deemed to limit the ability of
Parent to (i) issue shares of common stock in BONA FIDE transactions, (ii) issue
options in the ordinary course of business, (iii) issue shares upon the exercise
of stock options, (iv) propose, recommend or consummate the Reincorporation, or
(v) appoint additional individuals to its Board of Directors in accordance with
its bylaws.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Parent shall not, and shall
not propose to, (i) declare or pay any dividends or distributions on or make
other distributions in respect of any of its capital stock, or (ii) repurchase,
redeem or otherwise acquire any shares of its capital stock.
(c) GOVERNING DOCUMENTS. Except to the extent required to comply with
applicable law or their obligations hereunder, or as otherwise contemplated
herein, Parent and GPAA shall not materially amend or propose to so amend their
respective certificates or articles of incorporation, bylaws or other governing
documents, provided, however, that Parent may propose, recommend or consummate
the Reincorporation.
(d) GOVERNMENTAL FILINGS. Parent shall file all periodic reports
required to be filed by Parent with the SEC (and all other Governmental
Entities) between the date of this Agreement and the Effective Time.
Section 4.2 COVENANTS OF THE COMPANY. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees
that (except as expressly contemplated or permitted by this Agreement, as
disclosed in the Company Disclosure Schedule or as required by a Governmental
Entity of competent jurisdiction or to the extent that Parent shall otherwise
consent in writing):
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(a) ORDINARY COURSE. The Company shall carry on its businesses in the
usual, regular and ordinary course in all material respects, in substantially
the same manner as heretofore conducted, and shall use reasonable efforts to
preserve intact its present lines of business, maintain its rights and
franchises and preserve its relationships with customers, suppliers and others
having business dealings with it; PROVIDED, HOWEVER, that no action by the
Company with respect to matters permitted by any other provision in this
Agreement shall be deemed a breach of this Section 4.2(a).
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. The Company shall not, and
shall not propose to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, or (ii) repurchase, redeem
or otherwise acquire any shares of its capital stock.
(c) ISSUANCE OF SECURITIES. Except for the issuance of the Company
Preferred Stock as described in Section 5.13 hereof, the Company shall not
issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of its capital stock of any class, or enter into any commitment,
arrangement, undertaking or agreement with respect to any of the foregoing
(including, without limitation, the granting of Company Stock Options) without
the prior written consent of Parent, provided, however, that the Company may
issue shares of Company Common Stock upon the exercise of Company Stock Options
issued and outstanding as of the date hereof in accordance with their present
terms.
(d) GOVERNING DOCUMENTS. Except to the extent required to comply with
applicable law or its obligations hereunder, the Company shall not amend or
propose to so amend its certificate of incorporation or bylaws.
(e) COMPENSATION. Without the consent of Parent, the Company shall not
increase the amount of compensation of any director, executive officer or
employee, make any increase in or commitment to increase any employee benefits,
issue any additional Company Stock Options, adopt or make any commitment to
adopt any additional Benefit Plan or make any contribution to any Benefit Plan,
except in the ordinary course of business consistent with past practices or as
required by an agreement existing on the date hereof.
(f) SETTLEMENT OF LITIGATION. The Company shall not settle or
compromise any material action, suit or claim, or enter into any consent decree,
injunction or similar restraint or form of equitable relief in settlement of any
material action, suit or claim.
(g) NO RELATED ACTIONS. The Company will not agree or commit to any of
the foregoing.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 INFORMATION STATEMENT; FAIRNESS HEARING AND PERMIT; CONSENT
SOLICITATION; INVESTMENT REPRESENTATION LETTER.
(a) INFORMATION STATEMENT. As soon as practicable after the execution
of this Agreement, the Company shall prepare, with the cooperation of Parent, an
information statement relating to this Agreement and the transactions
contemplated hereby (the "Information Statement"). The form of Information
Statement delivered to Parent by the Company pursuant to the previous statement
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shall be true, correct and complete in all material respects. Each of the
Company and Parent shall use its reasonable best efforts to cause the
Information Statement to comply with all requirements of applicable federal and
state securities laws. Each of the Company and Parent shall provide promptly to
the other such information concerning its business and financial statements and
affairs as, in the reasonable judgment of the providing party or its counsel,
may be required or appropriate for inclusion in the Information Statement, or in
any amendments or supplements thereto, and to cause its counsel to cooperate
with the other's counsel in the preparation of the Information Statement. The
Information Statement shall constitute a disclosure document for the offer and
issuance of the shares of Parent Common Stock to be received by the holders of
the Company Common Stock and/or the Company Stock Options in the Merger and,
either an Information/Proxy Statement or a consent solicitation for solicitation
of the Company Stockholder Approval of the Merger, whichever is requested by
Parent. Whenever any event occurs that is required to be set forth in an
amendment or supplement to the Information Statement, the Company and Parent
shall cooperate in delivering any such amendment or supplement to all the
holders of the Company Common Stock and/or the Company Stock Options and/or
filing any such amendment or supplement with the appropriate government
officials. The Information Statement shall include the unqualified
recommendation of the Board of Directors of the Company in favor of the adoption
of this Agreement and approval of the Merger and the determination of the Board
of Directors of the Company that the terms and conditions of the Merger and this
Agreement are advisable and are fair to and in the best interests of the Company
and its stockholders (the "COMPANY RECOMMENDATIONS"). Anything to the contrary
contained herein notwithstanding, the Company shall not include in the
Information Statement any information with respect to Parent or its affiliates,
the form and content of which information shall not have been approved by Parent
prior to such inclusion.
(b) FAIRNESS HEARING AND PERMIT. As soon as reasonably practical after
the date of this Agreement and the preparation of the draft Information
Statement, Parent shall use its commercially reasonable efforts to file with the
California Department of Corporations an Application for Fairness Hearing
pursuant to Section 25142 of the California Corporate Securities Law of 1968, as
amended, and the rules promulgated thereunder ("CALIFORNIA SECURITIES LAW") for
approval of the terms and conditions regarding the issuance of the shares of
Parent Common Stock in the Merger, and to obtain Qualification by Permit
regarding the issuance of the shares of Parent Common Stock in the Merger
pursuant to a permit issued under Section 25121 of the California Securities Law
(the "Section 3(a)(10) Application").
(c) CONSENT SOLICITATION; MEETING. After the approval of the 3(a)(10)
Application by the California Commissioner of Corporations, or if Parent
determines that the issuance of the shares of Parent Common Stock in the Merger
shall be exempt from registration by reason of the Rule 506 Exemption, and
Parent decides in its sole discretion to use the Rule 506 Exemption, the Company
shall promptly take all action necessary in accordance with the CGCL, the NGCL,
its Articles of Incorporation and its bylaws to secure Company Stockholder
Approval either by the written consent of its stockholders, or at the request of
Parent, by holding a special meeting of the stockholders. The Company shall use
its best efforts to obtain the Company Stockholder Approval and shall take all
other action necessary or advisable to secure the consent of the Company's
stockholders required to effect each of the transactions contemplated by this
Agreement.
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(d) INVESTMENT REPRESENTATION LETTER. If the shares of Parent Common
Stock issuable pursuant to the exchange of securities contemplated by Section
1.8(a) above are issued under the 506 Exemption, then prior to the time that
consents of the Company's stockholders are solicited, the Company shall cause
each of its stockholders and each of its option holders to execute and deliver
to Parent an Investment Representation Letter in a form customary for such
transaction or otherwise provide such representations and warranties as Parent
reasonably requests as it deems reasonably necessary to establish the 506
Exemption and exemptions under applicable blue sky laws.
Section 5.2 ACCESS TO INFORMATION/EMPLOYEES. Upon reasonable notice,
each party shall afford to the officers, employees, accountants, counsel,
financial advisors and other authorized representatives of the other party
reasonable access during normal business hours, during the period prior to the
Effective Time, to its properties, books, contracts, commitments, records,
officers and employees and, during such period, such party shall furnish
promptly to the other party (a) a copy of each report, schedule, registration
statement and other document filed, published, announced or received by it
during such period pursuant to the requirements of Federal or state securities
laws, as applicable (other than documents which such party is not permitted to
disclose under applicable law), and (b) all other information concerning it and
its business, properties and personnel as such other party may reasonably
request (including consultation on a regular basis with such parties, agents,
advisors, attorneys and representatives with respect to litigation matters);
PROVIDED, HOWEVER, that either party may restrict the foregoing access to the
extent that, in the reasonable judgment of such party, the information is
subject to confidentiality obligations to a third party.
Section 5.3 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each party will use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under this Agreement and
applicable laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable after the
date hereof.
Section 5.4 ACQUISITION PROPOSALS. The Company agrees neither it nor
any of the officers and directors of it shall, and that it shall use its
reasonable best efforts to cause its employees, agents and representatives
(including any investment banker, attorney or accountant retained by it) not to,
directly or indirectly, initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries or the making of any
proposal or offer with respect to a merger, reorganization, consolidation, share
exchange or purchase, business combination, recapitalization, liquidation,
dissolution or similar transaction involving it, or any purchase or sale of the
consolidated assets of the Company having an aggregate value equal to 3% or more
of the book value of the Company's total assets, or (except as provided in
Section 4.2(c) above) any purchase or sale of, or tender or exchange offer for
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equity securities of the Company (any such proposal or offer, other than a
proposal or offer made by Parent or an affiliate thereof, being hereinafter
referred to as an "Acquisition Proposal"). The Company further agrees that
neither it nor any of the officers and directors of it shall, and that it shall
use its reasonable best efforts to cause its employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it) not to, directly or indirectly, have any discussion with or
provide any confidential information or data to any Person relating to an
Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or accept an Acquisition Proposal. Notwithstanding anything
in this Agreement to the contrary, the Company and the Company's Board of
Directors shall be permitted to (A) effect a change in the Company
Recommendation, or (B) engage in any discussions or negotiations with, or
provide any information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by any such Person, if and only to the extent that,
(i) in the case of clause (A) above, the Company has received an unsolicited
bona fide written Acquisition Proposal from a third party and the Company's
Board of Directors concludes in good faith that such Acquisition Proposal
constitutes a Superior Proposal (as defined in Section 8.11) and the Board of
Directors of the Company has affirmatively voted to accept such Acquisition
Proposal, (ii) in the case of clause (B) above, the Company's Board of Directors
concludes in good faith that there is a reasonable likelihood that such
Acquisition Proposal will result in a Superior Proposal, (iii) in the case of
clause (B) above, prior to providing any information or data to any Person in
connection with an Acquisition Proposal by any such Person, the Company's Board
of Directors receives from such Person an executed confidentiality agreement and
(iv) in the case of clause (B) above, prior to providing any information or data
to any Person or entering into discussions or negotiations with any Person, the
Company notifies Parent promptly of such inquiries, proposals or offers received
by, any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, any of its representatives indicating,
in connection with such notice, the name of such Person and the material terms
and conditions of any inquiries, proposals or offers. Notwithstanding the
foregoing, the Company's Board of Directors may only take the actions set forth
in the foregoing clauses (i) through (iv) in the previous sentence to the extent
that the Company's Board of Directors shall conclude in good faith on the basis
of written advice of outside counsel that such action is necessary in order for
the Company's Board of Directors to act in a manner which is consistent with its
fiduciary obligations under applicable law. The Company agrees that it will
promptly keep Parent informed of the status and terms of any such proposals or
offers and the status and terms of any such discussions or negotiations,
including the identity of the person or group engaging in such discussions or
negotiations. The Company agrees that it will, and will cause its officers,
directors and representatives to, immediately cease and cause to be terminated
any activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any Acquisition
Proposal. The Company agrees that it will use reasonable best efforts to
promptly inform its directors, officers, key employees, agents and
representatives of the obligations undertaken in this Section 5.4. Nothing in
this Section 5.4 shall (x) permit the Company to terminate this Agreement
(except as specifically provided in Article VII hereof) or (y) affect any other
obligation of the Company under this Agreement.
Section 5.5 EMPLOYEE BENEFITS MATTERS. At the Effective Time, the
Surviving Corporation shall provide employment to all employees who were
employed by the Company as of the Effective Time ("Continuing Employees").
Nothing contained herein shall be deemed to guarantee employment for any period
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of time or preclude the Surviving Corporation's ability to terminate any
Continuing Employee for any reason subsequent to the Effective Time. Except as
may be otherwise required by law, nothing contained herein shall require
Surviving Corporation or Parent to continue any particular Company Benefit Plan
or compensation plan, program or arrangement, or prevent the amendment,
modification or termination thereof.
Section 5.6 FEES AND EXPENSES. Subject to Section 7.2, whether or not
the Merger is consummated, all Expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such Expenses, PROVIDED THAT, if the Merger is consummated, the
Surviving Corporation shall pay, or cause to be paid, any and all property or
transfer taxes imposed on the Company. As used in this Agreement, "Expenses"
includes all out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby, including the preparation, printing, filing and/or mailing of the
consent solicitation materials and the solicitation of stockholder approvals and
all other matters related to the transactions contemplated hereby.
Section 5.7 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
From and after the Effective Time, Parent agrees that it will indemnify and hold
harmless, against any costs or expenses (including attorney's fees), judgments,
fines, losses, claims damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, and provide advancement of expenses to all
directors of the Company (a) to the same extent such persons are indemnified or
have the right to advancement of expenses as of the date of this Agreement by
the Company pursuant to the Company's certificate of incorporation, bylaws and
indemnification agreements, if any, in existence on the date hereof with any
directors, and (b) to the fullest extent permitted by law for acts or omissions
while serving in their capacity as directors of the Company at or prior to the
Effective Time (including for acts or omissions occurring in connection with the
approval of this Agreement and the consummation of the transactions contemplated
hereby). Parent will maintain for a period of not less than five years from the
Effective Time a D&O Insurance policy (or a policy providing substantially
similar coverage as the coverage currently provides) (the "D&O Insurance") for
all persons who are directors and officers of the Company and its Subsidiaries
covered by the Parent's D&O Insurance as of the Effective Time on the date of
this Agreement; PROVIDED that Parent shall not be required to spend as an annual
premium for such D&O Insurance an amount in excess of 200% of the annual premium
paid for D&O Insurance in effect prior to the date of this Agreement; and
PROVIDED FURTHER that Parent shall nevertheless be obligated to provide such
coverage as may be obtained for such amount (including purchasing tail coverage
for the remainder of the five year period to the extent of such amount if
insurance is not otherwise available). The provisions of this Section are
intended for the benefit of, and shall be enforceable by, each indemnified party
and his or her heirs and representatives.
Section 5.8 PUBLIC ANNOUNCEMENTS. Parent and the Company shall use
reasonable best efforts to develop a joint communications plan and each party
shall use reasonable best efforts (i) to ensure that all press releases and
other public statements with respect to the transactions contemplated hereby
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shall be consistent with such joint communications plan, and (ii) unless
otherwise required by applicable law or by obligations pursuant to any listing
agreement with, or rules of, any securities exchange, to consult with each other
before issuing any press release or, to the extent practical, otherwise making
any public statement with respect to this Agreement or the transactions
contemplated hereby.
Section 5.9 TAX TREATMENT. Parent and the Company intend the Merger to
qualify as a reorganization under Section 368(a) of the Code. Each of Parent and
the Company, and each of their respective affiliates shall, to the extent
consistent with their rights and obligations under this Agreement, use their
reasonable best efforts to cause the Merger to so qualify. Parent shall obtain
the opinion of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP ("▇▇▇▇ ▇▇▇▇▇▇▇▇"), counsel
to Parent, referred to in Section 6.2(c) of this Agreement. For purposes of the
tax opinion described in Section 6.2(c) and Section 6.3(c) of this Agreement,
each of Parent and the Company shall provide representation letters reasonably
acceptable to ▇▇▇▇ ▇▇▇▇▇▇▇▇. Except for actions specifically contemplated by
this Agreement, each of Parent, Merger Sub and the Company and each of their
respective affiliates shall use their reasonable best efforts not to take any
action, fail to take any action, cause any action to be taken or not taken, or
suffer to exist any condition, which action or failure to take action or
condition would prevent, or would be reasonably likely to prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
Section 5.10 APPOINTMENT TO PARENT'S BOARD OF DIRECTORS. Parent shall
cause ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to be
appointed to Parent's Board of Directors on the second business day after the
Effective Time if such individuals are not already serving on Parent's Board of
Directors as long as such individuals do not have a disqualifying relationship
which precludes a finding by Parent's Board of Directors that such individuals
are independent or other relationship which, in the Board's opinion, would
interfere with such person's exercise of independent judgment in carrying out
their responsibilities as a director of Parent, as set forth in NASD Rule 4200.
Section 5.11 VOTING AGREEMENT. Concurrently with the execution of this
Agreement, the Company shall cause each Person named in SCHEDULE 5.11 to execute
and deliver to Parent a Voting Agreement in the form attached as EXHIBIT A
hereto.
Section 5.12 GPAA LLC FORMATION. Prior to the Effective Time, and in
connection with the formation of a limited liability company to be wholly owned
by GPAA (the "GPAA LLC"), GPAA shall contribute and convey all of its assets
(excluding any shares of capital stock of the Company and the interests of the
GPAA LLC) and liabilities to the GPAA LLC.
Section 5.13 EXCHANGE OF COMPANY COMMON STOCK FOR COMPANY PREFERRED
STOCK. Prior to the Effective Time, the Company shall file with the Secretary of
State of the State of Nevada a properly executed certificate of designation
designating the powers, preferences, rights and qualifications, limitations and
restrictions of the Series A Preferred Stock, par value $0.001 per share, of the
Company (the "Company Preferred Stock"), which shall be acceptable to GPAA in
its sole discretion. Immediately prior to the Effective Time, GPAA and the
Company shall cause each share of Company Common Stock held by GPAA to be
exchanged for one share of Company Preferred Stock; such exchange is intended to
be a tax-free recapitalization pursuant to Section 368(a)(1)(E) of the Code.
Section 5.14 REGISTRATION RIGHTS. If the shares of Parent Common Stock
issuable pursuant to the exchange of securities contemplated by Section 1.8(a)
above are issued under the 506 Exemption, then Parent shall grant to the
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stockholders of the Company the right to request, upon the written request from
the stockholders of the Company holding a majority of the shares of Parent
Common Stock issuable at the Effective Time, Parent to file, at Parent's expense
(but excluding underwriters' or brokers' discounts and commissions), one
registration statement under the Securities Act covering the registration of
such shares of Parent Common Stock for the public resale of the shares of Parent
Common Stock on a continuous or delayed basis pursuant to Rule 415(a)(1) of the
Securities Act, and Parent shall prepare and file such registration statement.
The stockholders of the Company shall have a period of one (1) year after the
Effective Time in which to request such registration by Parent, and Parent shall
keep such registration statement effective for (i) one (1) year after the
effective date of such registration statement, (ii) the date that is two (2)
years from the Effective Time, or (iii) until all shares included in such
registration statement have been sold, whichever occurs first. If the
stockholders of the Company initiating the registration request hereunder intend
to distribute the shares of Parent Common Stock by means of an underwriting,
they shall so advise Parent. In such event, the right of any stockholder of the
Company to include his, her or its shares of Parent Common Stock in such
registration shall be conditioned upon such stockholder's participation in such
underwriting and the inclusion of such shares in the underwriting, and all
stockholders of the Company proposing to distribute their shares of Parent
Common Stock through such underwriting shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting. It shall be a condition precedent to the obligations of
Parent to take any action pursuant to the rights granted to the stockholders of
the Company pursuant to this section that each stockholder shall furnish to
Parent such information regarding itself, the shares of Parent Common Stock held
by it, and the intended method of disposition of such securities as Parent shall
reasonably request and as shall be required in connection with the actions to be
taken by Parent. Notwithstanding the foregoing, if Parent shall furnish to the
stockholders of the Company requesting a registration statement pursuant to this
section a certificate signed by the Chief Executive Officer of Parent stating
that in the good faith judgment of the Board of Directors of Parent, it would be
seriously detrimental to Parent and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, Parent shall have the right to defer taking action with
respect to such filing for a period of not more than 120 days after receipt of
the request from the requisite number of stockholders of the Company; provided,
however, that Parent may not utilize this right more than once. In addition, if
a material development or transaction affecting Parent that has not yet been
publicly disclosed occurs after such registration statement is declared
effective, and if Parent shall determine in good faith that it would be
adversely affected by such disclosure, Parent may so notify the stockholders of
the Company and shall deliver to the stockholders of the Company a certificate
signed by an officer of Parent affirming that Parent would be adversely affected
by such disclosure (such notice being referred to herein as a "DEFERRAL
NOTICE"), and shall thereafter be entitled to defer preparing and furnishing any
required supplement or amendment to such registration statement until such time
as it would not be so adversely affected, but in any event for a period of no
more than one hundred twenty (120) days following delivery of the Deferral
Notice to each stockholder of the Company selling shares pursuant to the
registration statement, at which time it shall so notify the stockholders of the
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Company and shall prepare and furnish to the stockholders of the Company any
such supplement or amendment as may then be required. Following receipt of a
Deferral Notice, the Holders shall not make any further sales of shares of
Parent Common Stock pursuant to the registration statement until the
stockholders of the Company receive such notice from Parent that such amendment
or supplement has been filed with the Securities and Exchange Commission.
Following receipt of any supplement or amendment to any prospectus, the
stockholders of the Company shall deliver such amended, supplemental or revised
prospectus in connection with any offers or sales of Parent Common Stock, and
shall not deliver or use any prospectus not so supplemented, amended or revised.
If Parent issues a Deferral Notice, Parent will extend the period of
effectiveness of the registration statement for an amount of time equal to the
length of the deferral period. Notwithstanding any other provision of this
Section of this Agreement, Parent may not issue a Deferral Notice more than two
consecutive times in any twelve (12) month period.
Section 5.15 SECTION 16b-3. Prior to the Effective Time, Parent's Board
of Directors shall adopt a resolution seeking to cause the acquisition of equity
securities of Parent (including any derivative securities) which occurs at the
Effective Time by virtue of the Merger by each individual who is or becomes at
the Effective Time a director or officer of Parent or the Surviving Corporation
that is subject to Section 16(b) of the Exchange Act to be exempt from Section
16(b) under Rule 16b-3 promulgated under the Exchange Act to the extent
permitted by law.
Section 5.16 MERGER SUB. Parent shall form Merger Sub prior to the
Effective time as a Nevada corporation which shall be wholly owned by Parent.
Parent shall ensure that Merger Sub shall not conduct or operate any business
prior to the Merger.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of the Company and Parent to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) STOCKHOLDER APPROVAL. The Company shall have obtained the Company
Stockholder Approval in connection with the adoption of this Agreement and
approval of the Merger by the stockholders of the Company. Parent shall have
obtained the Parent Stockholder Approval.
(b) NO INJUNCTIONS OR RESTRAINTS, ILLEGALITY. No Laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order, judgment, decision, opinion or decree
issued by a court or other Governmental Entity of competent jurisdiction in the
United States shall be in effect, having the effect of making the Merger illegal
or otherwise prohibiting consummation of the Merger.
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(c) GOVERNMENTAL AND REGULATORY APPROVALS. Other than the filings
provided for under Section 1.3, all consents, clearances, approvals and actions
of, filings with and notices to any Governmental Entity required of Parent, the
Company, GPAA or Merger Sub in connection with the execution and delivery of
this Agreement and the consummation of the Merger, the issuance of the shares of
Parent Common Stock in the Merger and the other transactions contemplated hereby
shall have been made or obtained (as the case may be), except for those the
failure of which to be made or obtained, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Parent and its
Subsidiaries (including the Surviving Corporation and its Subsidiaries), taken
together after giving effect to the Merger.
(d) BLUE SKY APPROVALS. Parent shall have received all state securities
and "blue sky" permits and approvals necessary to consummate the transactions
contemplated hereby, or shall have applicable exemptions therefrom.
Section 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT. The
obligations of Parent to effect the Merger are subject to the satisfaction of,
or waiver by Parent, 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 this Agreement that is qualified as to
Material Adverse Effect shall be true and correct, and each of the
representations and warranties of the Company set forth in this Agreement that
is not so qualified shall be true and correct, except where the failure to be so
true and correct, individually or in the aggregate, would not have a Material
Adverse Effect on the Company, in each case, 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 in either case that such representations and warranties speak as
of another date), and Parent shall have received a certificate of the chief
executive officer and the chief financial officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed or complied with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are qualified as
to Material Adverse Effect and shall have performed or complied in all material
respects with all other material agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date and Parent
shall have received a certificate of the chief executive officer and the chief
financial officer of the Company to such effect.
(c) TAX OPINION. Parent shall have received from ▇▇▇▇ ▇▇▇▇▇▇▇▇ on or
before the Closing Date, a written opinion addressed to Parent dated as of such
date in a form reasonably acceptable to Parent. In rendering such opinion, ▇▇▇▇
▇▇▇▇▇▇▇▇ shall be entitled to rely upon certificates, representations and
warranties provided by Parent and the Company as reasonably requested by ▇▇▇▇
▇▇▇▇▇▇▇▇.
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(d) NO MATERIAL CHANGE. The Company shall not have suffered from the
date of this Agreement any change that would reasonably be expected to have a
Material Adverse Effect on the Company.
(e) LIMIT ON NUMBER OF DISSENTING SHARES. The number of Dissenting
Shares shall not exceed three percent (3%) of the number of outstanding shares
of capital stock of the Company as of the Effective Time.
(f) INJUNCTIONS OR RESTRAINTS ON CONDUCT OF BUSINESS. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
provision limiting or restricting Parent's ownership, conduct or operation of
the Company or the business of the Company following the Closing shall be in
effect, nor shall any suit, action or proceeding before any court or other
governmental entity seeking any of the foregoing, seeking to obtain from Parent
or Company or any of their respective affiliates in connection with the Merger
any material damages, or seeking any other relief that following the Merger
could reasonably be expected to materially limit or restrict the ability of
Parent and/or its subsidiaries to own and conduct the assets, stock and
businesses owned by Parent and/or its subsidiaries prior to the Merger and the
assets and business owned and conducted by the Company prior to the Merger, be
pending or threatened.
(g) ACKNOWLEDGMENT OF ASSUMPTION OF OPTIONS. All holders of Company
Stock Options shall have delivered an acknowledgment to Parent acknowledging the
assumption of the Company Stock Options by Parent and the number of shares of
Parent Common Stock to be issuable upon the exercise of such options after the
Closing and the exercise price of such options after the Closing.
(h) AFFILIATE AGREEMENTS. Schedule 6.2(h) sets forth those persons who,
in the Company's reasonable judgment, are or may be "affiliates" of the Company
within the meaning of Rule 145 (each such person an "AFFILIATE") promulgated
under the Securities Act. The Company shall provide Parent such information and
documents as Parent shall reasonably request for purposes of reviewing such
list. If requested by Parent, the Company shall use its reasonable efforts to
deliver or cause to be delivered to Parent prior to the Closing from each of the
Affiliates of the Company listed on Schedule 6.2(h) and any other persons
reasonably deemed by Parent to be an Affiliate, an executed Affiliate Agreement
substantially in the form attached hereto as EXHIBIT B. Parent shall be entitled
to place appropriate legends on the certificates evidencing any Parent Common
Stock to be received by such Affiliates pursuant to the terms of this Agreement,
and to issue appropriate stop transfer instructions to the transfer agent for
Parent Common Stock, consistent with the terms of such Affiliate Agreements.
Section 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are subject to the satisfaction
of, or waiver by the Company, on or prior to the Closing Date of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Parent and GPAA set forth in this Agreement that is qualified as
to Material Adverse Effect shall be true and correct, and each of the
representations and warranties of Parent and GPAA set forth in this Agreement
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that is not so qualified shall be true and correct, except where the failure to
be so true and correct, individually or in the aggregate, would not have a
Material Adverse Effect on Parent or GPAA, in each case, 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 in either case that such representations and
warranties speak as of another date, and except to the extent such
representations and warranties are modified by transactions expressly
contemplated by this Agreement including, without limitation, the
Reincorporation), and the Company shall have received certificates of the chief
executive officers and the chief financial officers of Parent and GPAA to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND GPAA. Parent and GPAA
shall each have performed or complied with all agreements and covenants required
to be performed by it under this Agreement at or prior to the Closing Date that
are qualified as to Material Adverse Effect and shall have performed or complied
in all material respects with all other material agreements and covenants
required to be performed by it under this Agreement at or prior to the Closing
Date, and the Company shall have received certificates of the chief executive
officers and the chief financial officers of Parent and GPAA to such effect.
(c) TAX OPINION. Parent shall have received from ▇▇▇▇ ▇▇▇▇▇▇▇▇ on or
before the Closing Date, a written opinion addressed to Parent dated as of such
date in a form reasonably acceptable to the Company and upon which the
stockholders of the Company may rely. In rendering such opinion, ▇▇▇▇ ▇▇▇▇▇▇▇▇
shall be entitled to rely upon certificates, representations and warranties
provided by Parent and the Company as reasonably requested by ▇▇▇▇ ▇▇▇▇▇▇▇▇.
(d) NO MATERIAL CHANGES. Parent and its Subsidiaries shall not have
suffered from the date of this Agreement any change that would reasonably be
expected to have a Material Adverse Effect on Parent, excluding matters or
changes arising from events or items disclosed in the Parent Disclosure
Schedule.
(e) ASSIGNMENT OF GPAA ASSETS AND LIABILITIES. GPAA shall have
contributed and conveyed all of its assets (excluding any shares of capital
stock of the Company and the interests of the GPAA LLC) and liabilities to the
GPAA LLC.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1 GENERAL. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time notwithstanding approval thereof by either the stockholders of
the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of the
Company and Parent;
(b) by the Company or Parent if the Closing shall not have occurred on
or before November 15, 2004 or any other date that Parent and the Company agree
upon in writing (the "Termination Date" which term shall include the date of any
extension under this Section 7.1(b)); PROVIDED, HOWEVER, that if Parent and the
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Company determine in writing that Section 3(a)(10) Application will not be
approved, or cannot reasonably be expected to be approved, in time to permit the
Closing to occur on or before November 15, 2004, or if the California
Commissioner of Corporations notifies Parent or the Company of its determination
not to grant a hearing and/or not to issue a permit approving the Section
3(a)(10) Application and Parent reasonably determines that a private placement
of the securities or Rule 506 Exemption is not available with respect to the
issuance of the shares of Parent Common Stock in the Merger, then the right to
terminate this Agreement under this Section 7.1(b) shall not be available to
either party until ten (10) days after such determination or notification, as
the case may be, or any other date that Parent and the Company may agree upon in
writing; and PROVIDED, FURTHER, that if on the Termination Date the conditions
to Closing set forth in Section 6.1(c) shall not have been fulfilled but all
other conditions to Closing shall or shall be capable of being fulfilled then
the Termination Date shall be automatically extended to December 31, 2004; and
PROVIDED, FURTHER, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any material
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur before such date;
(c) by the Company, if Parent or GPAA shall have breached in any
material respect any of its representations or warranties (except to the extent
such representations and warranties are modified by transactions expressly
contemplated by this Agreement including, without limitation, the
Reincorporation) or failed to perform in any material respect any of its
covenants or other agreements contained in this Agreement, which breach or
failure to perform (1) is incapable of being cured by Parent or GPAA prior to
the Termination Date and (2) renders the condition set forth in Section 6.3(a)
or Section 6.3(b) incapable of being satisfied prior to the Termination Date;
(d) by Parent, if the Company shall have breached in any material
respect any of its representations or warranties or failed to perform in any
material respect any of its covenants or other agreements contained in this
Agreement, which breach or failure to perform (1) is incapable of being cured by
the Company prior to the Termination Date and (2) renders the condition set
forth in Section 6.2(a) or Section 6.2(b) incapable of being satisfied prior to
the Termination Date;
(e) by the Company or Parent, upon written notice to the other party,
if a Governmental Entity of competent jurisdiction shall have issued an
injunction, order, judgment, decision, opinion, decree or ruling or taken any
other action (which the party seeking to terminate shall have used its
reasonable best efforts to resist, resolve, annul, quash, or lift, as
applicable, subject to the provisions of Section 5.3) permanently enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that the party seeking to terminate this Agreement
pursuant to this clause (e) has fulfilled its obligations under Section 5.3;
(f) by Parent if the Board of Directors of the Company shall have
withdrawn or changed or modified the Company Recommendation in a manner adverse
to Parent;
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(g) by the Company, if the (i) Board of Directors of the Company
authorizes the Company, subject to complying with the terms of this Agreement,
to enter into a binding written agreement concerning a transaction that
constitutes a Superior Proposal to the Company and the Company notifies Parent
in writing that it intends to enter into such an agreement, attaching the most
current version of such agreement (or a description of all material terms and
conditions thereof) to such notice, (ii) Parent does not make, within five
business days of receipt of the Company's written notification of its intention
to enter into a binding agreement for such Superior Proposal, an offer that the
Board of Directors of the Company determines, in good faith after consultation
with a financial advisor of nationally recognized reputation, is at least as
favorable to the Company's stockholders as such Superior Proposal, it being
understood that the Company shall not enter into any such binding agreement
during such five-day period, and (iii) the Company, at or prior to any
termination pursuant to this Section 7.1(g), pays Parent the Termination Fee (as
defined below) set forth in Section 7.2;
(h) by Parent, if (i) the Company Stockholder Approval shall not have
been received by October 31, 2004, or (ii) the Parent Stockholder Approval shall
not have been received by October 31, 2004, or (iii) the Company Stockholder
Approval is not obtained by reason of the failure to obtain the required vote or
the failure to secure the required written consent of the Company's stockholders
within thirty (30) days after the date that the California Commissioner of
Corporations issues the permit approving the 3(a)(10) Application; and
(i) by Parent, if a Business Combination as described in Section
7.2(c)(iv) occurs prior to the Effective Time.
Section 7.2 OBLIGATIONS IN EVENT OF TERMINATION.
(a) In the event of any termination of this Agreement as provided in
Section 7.1, this Agreement shall forthwith become wholly void and of no further
force and effect (except with respect to Section 5.6, this Section 7.2 and
Article VIII, which shall remain in full force and effect) and there shall be no
liability on the part of the Company, GPAA or Parent; PROVIDED, HOWEVER, that
termination shall not preclude any party from suing the other party for, or
relieve any party hereto from any liability arising from, a breach of this
Agreement.
(b) If this Agreement is terminated: (i) by Parent pursuant to Section
7.1(f); (ii) by Parent pursuant to Section 7.1(h) because of the failure to
obtain the Company Stockholder Approval by such date or within the allotted
time; (iii) by Parent or the Company pursuant to Section 7.1(b) because the
Merger shall not have been consummated at or prior to the Termination Date, and,
at the time of the termination, (x) the Company Stockholder Approval shall not
have been obtained and (y) after the date hereof and prior to the Termination
Date there shall have been made an offer or proposal for, or an announcement of
any intention with respect to, a transaction that would constitute a Business
Combination involving the Company (whether or not such offer, proposal,
announcement or agreement will have been rejected or withdrawn prior to the
Termination Date); (iv) by the Company pursuant to Section 7.1(g); or (v) by
Parent pursuant to Section 7.1(i), then (A) in the case of clauses (b)(i),
(b)(ii), and (b)(iii) if within twelve months of termination of this Agreement,
the Company enters into a definitive agreement with any Person (other than
Parent or any of Parent's affiliates) with respect to a Business Combination or
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any Business Combination with respect to the Company is consummated, then the
Company shall pay to Parent, not later than one business day after the earlier
of the date such agreement is entered into or such Business Combination is
consummated, a termination fee of Five Million Dollars ($5,000,000) (the
"Termination Fee") and (B) in the case of clauses (b)(iv) and (b)(v), the
Company shall pay to Parent, at or prior to such termination pursuant to Section
7.1(g) or 7.1(i), the Termination Fee. Notwithstanding the foregoing, the
Company shall have no obligation to pay to Parent the Termination Fee if: in the
case of clause (b)(i), the Board of Directors of the Company shall have
withdrawn or changed or modified the Company Recommendation in a manner adverse
to Parent because of a Superior Proposal to which Parent or GPAA consents or is
a party at the time such Company Recommendation is withdrawn, changed or
modified, and the Business Combination occurring within twelve months of
termination is one to which Parent or GPAA consents or is a party; in the case
of clause (b)(ii), provided that the Company submits this Agreement and the
transactions contemplated hereby to the vote of the outstanding shares of the
Company and the Board of Directors of the Company shall not have withdrawn or
changed or modified the Company Recommendation in a manner adverse to Parent, if
GPAA withholds its vote or consent for adopting this Agreement and approving the
transactions contemplated hereby, or votes against such adoption and approval
and at the time of such termination Parent or GPAA consents or is a party to a
Business Combination, and the Business Combination occurring within twelve
months of termination is one to which Parent or GPAA consents or is a party; in
the case of clause (b)(iii) the Business Combination occurring within twelve
months of termination is one to which Parent or GPAA consents or is a party; in
the case of clause (b)(iv), the Superior Proposal referred to therein is one to
which Parent or GPAA consents or is a party at the time of such termination, and
in the case of clause (b)(v), the Business Combination is one to which Parent or
GPAA consents or is a party at the time of such termination.
(c) For the purposes of this Section 7.2, "Business Combination" means
with respect to the Company, (i) a merger, reorganization, consolidation, share
exchange or purchase, business combination, recapitalization, liquidation,
dissolution or similar transaction involving such party as a result of which
either (A) the Company's stockholders prior to such transaction or series of
related transactions in the aggregate cease to own (by virtue of their ownership
of such party's shares) at least 50% of the voting securities of the entity
surviving or resulting from such transaction (or the ultimate parent entity
thereof) or, regardless of the percentage of voting securities held by such
stockholders, if any Person shall beneficially own, directly or indirectly, at
least 40% of the voting securities of such surviving entity or ultimate parent
entity or (B) the individuals comprising the Board of Directors of the Company
prior to such transaction or series of related transactions do not constitute a
majority of the Board of Directors of such surviving entity or ultimate parent
entity, (ii) a sale, lease, exchange, transfer or other disposition of at least
40% of the assets of the Company, taken as a whole, in a single transaction or a
series of related transactions, or (iii) the acquisition, directly or
indirectly, by a Person of beneficial ownership of 40% or more of the common
stock of the Company whether by merger, reorganization, consolidation, share
exchange or purchase, business combination, recapitalization, liquidation,
dissolution or otherwise (other than a merger, reorganization, consolidation,
share exchange or purchase, business combination, recapitalization, liquidation,
dissolution or similar transaction upon the consummation of which the Company's
stockholders would in the aggregate beneficially own greater than 50% of the
voting securities of such Person), or (iv) the acquisition, directly or
indirectly, by a Person of beneficial ownership of 50% or more of the common
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stock of the Company then outstanding and not held by GPAA whether by merger,
reorganization, consolidation, share exchange or purchase, business combination,
recapitalization, liquidation, dissolution or otherwise.
(d) All payments under this Section 7.2 shall be made by wire transfer
of immediately available funds to an account designated by Parent.
(e) The parties each agree that the agreements contained in Section
7.2(b) are an integral part of the transaction contemplated by this Agreement
and constitute liquidated damages and not a penalty. If the Company fails to
promptly pay Parent any fee due under such Section 7.2(b), the Company shall pay
the costs and expenses of Parent (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or legal action,
taken to collect payment.
Section 7.3 AMENDMENT. This Agreement may be amended by the parties, by
action taken or authorized by their respective Boards of Directors, at any time
before or after the Company Stockholder Approval or the Parent Stockholder
Approval, as the case may be, but, after any such approvals by the stockholders,
no amendment shall be made which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
Section 7.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties, (ii)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
Section 7.5 NO EFFECT ON EXISTING AGREEMENTS. Except as expressly set
forth herein, nothing in this Agreement shall affect the rights and obligations
of the parties with respect to any other agreements between the parties.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time.
Section 8.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or by telecopy or telefacsimile, upon confirmation of
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receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Parent or GPAA, to:
Outdoor Channel Holdings, Inc.
Gold Prospector's Association of America, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Chief Financial Officer
with a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Seventeenth Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to the Company to:
The Outdoor Channel, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Section 8.3 INTERPRETATION. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. 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 8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
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Section 8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement (including the EXHIBITS and SCHEDULES hereto)
constitutes the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 5.7 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
Section 8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California (without giving effect to
choice of law principles thereof).
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, 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. Notwithstanding the foregoing, upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties 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 in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
Section 8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other party, and any attempt to make any such assignment
without such consent shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
Section 8.9 SUBMISSION TO JURISDICTION. Each of Parent, GPAA and the
Company irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the Courts of the State of California, and each of
Parent, GPAA and the Company hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts.
Section 8.10 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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Section 8.11 DEFINITIONS. As used in this Agreement:
(a) "beneficial ownership" or "beneficially own" shall have the meaning
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(b) "Benefit Plans" means, with respect to any Person, each employee
benefit plan, program, policy, arrangement and contract (including, without
limitation, any "employee benefit plan," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and any
bonus, deferred compensation, stock bonus, stock purchase, restricted stock,
stock option, employment, termination, stay agreement or bonus, change in
control and severance plan, program, policy, arrangement and contract, written
or oral) in effect on the date of this Agreement or disclosed on the Company
Disclosure Schedule or the Parent Disclosure Schedule, as the case may be, to
which such Person or its Subsidiary is a party, which is maintained or
contributed to by such Person, or with respect to which such Person could incur
material liability under Section 4069, 4201 or 4212(c) of ERISA.
(c) "Board of Directors" means the Board of Directors of any specified
Person and any committees thereof.
(d) "Business Day" means any day on which banks are not required or
authorized to close in the State of California.
(e) "Company Stockholder Approval" means the affirmative vote of (i)
the holders of a majority of the outstanding shares of Company Common Stock and
entitled to vote hereon, and (ii) the holders of a majority of the outstanding
shares of Company Common Stock and entitled to vote hereon, but disregarding the
shares of Company Common Stock held by GPAA or the Company, in favor of adopting
this Agreement and approving the transactions contemplated hereby.
(f) "known" or "knowledge" means, with respect to any party, the actual
knowledge of such party's executive officers and senior management and such
knowledge as would be reasonably expected to be known by such executive officers
in the ordinary and usual course of the performance of their professional
responsibilities to such party.
(g) "Material Adverse Effect" means, with respect to any entity, any
event, change, circumstance or effect that is or is reasonably likely to be
materially adverse to (i) the business, financial condition or results of
operations of such entity and its Subsidiaries, taken as a whole, other than any
event, change, circumstance or effect relating (w) to the economy or financial
markets in general, (x) in general to the industries in which such entity
operates and not specifically relating to (or having the effect of specifically
relating to or having a materially disproportionate effect (relative to most
other industry participants) on) such entity, (y) to changes in applicable law
or regulations or in GAAP or arising out of the accounting for the transactions
contemplated hereby or (z) to the announcement of this Agreement or the
transactions contemplated hereby or (ii) the ability of such entity to
consummate the transactions contemplated by this Agreement. Except as
specifically set forth in this Agreement, all references to Material Adverse
Effect on Parent or its Subsidiaries contained in this Agreement shall be deemed
to refer solely to Parent and its Subsidiaries without including its ownership
of the Company.
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(h) "Merger Sub" means a Nevada corporation to be formed prior to the
Effective Time which shall be a wholly owned subsidiary of Parent.
(i) "other party" means, with respect to the Company, Parent and GPAA
and means, with respect to Parent and GPAA, the Company, unless the context
otherwise requires.
(j) "Parent Stockholder Approval" means the affirmative vote of the
holders of a majority of the outstanding shares of Parent Common Stock and
entitled to vote hereon, in favor of the issuance of the shares of Parent Common
Stock in the Merger and the adoption of the Company Stock Options.
(k) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(l) "Reincorporation" means the reincorporation of Parent from its
current state of incorporation of Alaska into Delaware or any other state
reasonably determined by Parent's board of directors, and in connection
therewith, the adoption of a new Certificate or Articles of Incorporation,
bylaws and other governing documents, and other agreements and instruments,
containing provisions that are appropriate or customary for public companies,
including, without limitation, indemnification agreements for officers and
directors, long-term incentive plans, and employee stock purchase plans.
(m) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries. Notwithstanding the
foregoing, the term "Subsidiary" for purposes of the representations and
warranties in Article III shall specifically exclude the Company.
(n) "Superior Proposal" means with respect to the Company, a bona fide
written proposal made by a third party which is (I)(i) for a sale, lease,
exchange, transfer or other disposition of at least 40% of the assets of the
Company, taken as a whole, in a single transaction or a series of related
transactions, or (ii) for the acquisition, directly or indirectly, by such third
party of beneficial ownership of 40% or more of the common stock of the Company
whether by merger, reorganization, consolidation, share exchange or purchase,
business combination, recapitalization, liquidation, dissolution or similar
transaction, and which is (II) otherwise on terms which the Board of Directors
of the Company in good faith concludes (after consultation with its financial
advisors and outside counsel), taking into account, among other things, all
legal, financial, regulatory and other aspects of the proposal and the third
party making the proposal, (i) would, if consummated, result in a transaction
that is more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being
completed.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Parent, GPAA and the Company have caused
this Agreement, as amended and restated as of May 12, 2004, to be signed by
their respective officers thereunto duly authorized.
OUTDOOR CHANNEL HOLDINGS, INC.
an Alaska corporation
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
GOLD PROSPECTOR'S ASSOCIATION
OF AMERICA, INC., a California corporation
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
THE OUTDOOR CHANNEL, INC.,
a Nevada corporation
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Co-President
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
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