AGREEMENT AND PLAN OF MERGER BY AND AMONG UNIVERSAL TRAILER HOLDINGS CORP., DART ACQUISITION CORP. and FEATHERLITE, INC. Dated as of July 26, 2006
EXHIBIT
2.1
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
UNIVERSAL
TRAILER HOLDINGS CORP.,
DART
ACQUISITION CORP.
and
FEATHERLITE,
INC.
Dated
as of
July 26, 2006
TABLE
OF CONTENTS
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Page
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ARTICLE
I.
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THE
MERGER
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1
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1.1
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The
Merger
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1
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1.2
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Effective
Time
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2
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1.3
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Effects
of the Merger
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2
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1.4
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Closing
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2
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ARTICLE
II.
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SURVIVING
CORPORATION
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2
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2.1
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Articles
of Incorporation
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2
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2.2
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Bylaws
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2
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2.3
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Directors
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2
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2.4
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Officers
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2
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ARTICLE
III.
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MERGER
CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE
MERGER
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3
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3.1
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Share
Consideration for the Merger; Conversion or Cancellation of Shares
in the
Merger
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3
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3.2
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Stock
Options and Warrants
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3
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3.3
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Payment
for Securities in the Merger.
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5
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3.4
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Dissenting
Shares.
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7
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3.5
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No
Further Rights or Transfers
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7
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3.6
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Certain
Company Actions
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7
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ARTICLE
IV.
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REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
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8
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4.1
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Corporate
Organization and Qualification
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8
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4.2
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Capitalization;
Subsidiaries
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8
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4.3
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Authority
Relative to This Agreement
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9
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4.4
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Consents
and Approvals; No Violation
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10
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4.5
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SEC
Reports; Financial Statements
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11
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4.6
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Absence
of Certain Changes or Events
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11
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4.7
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Litigation
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11
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4.8
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Absence
of Undisclosed Liabilities
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12
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4.9
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Proxy
Statement
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12
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4.10
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Taxes
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12
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4.11
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Employee
Benefit Plans; Labor Matters
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14
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4.12
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Environmental
Laws and Regulations
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16
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4.13
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Intellectual
Property
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16
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4.14
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Compliance
with Laws and Orders
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17
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4.15
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Board
Approval; Takeover Statutes
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17
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4.16
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Agreements,
Contracts and Commitments; Certain Other Agreements
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17
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4.17
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Permits
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18
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4.18
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Brokers
and Finders
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19
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4.19
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Opinion
of Financial Advisor
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19
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4.20
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Property
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19
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4.21
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Affiliate
Transactions
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19
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ARTICLE
V.
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REPRESENTATIONS
AND WARRANTIES OF PARENT AND NEWCO
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20
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5.1
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Corporate
Organization and Qualification
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20
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5.2
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Authority
Relative to This Agreement
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20
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5.3
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Consents
and Approvals; No Violation
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20
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5.4
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Proxy
Statement
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21
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5.5
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Cash
Consideration
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21
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5.6
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Interim
Operations of Newco
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21
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5.7
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Brokers
and Finders
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22
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5.8
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Share
Ownership
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22
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ARTICLE
VI.
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COVENANTS
AND AGREEMENTS
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22
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6.1
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Conduct
of Business of the Company
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22
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6.2
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No
Solicitation of Transactions.
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25
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6.3
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Reasonable
Best Efforts to Complete Transactions
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27
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6.4
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Shareholders
Meeting; Proxy Statement.
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28
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6.5
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Access
to Information
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29
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6.6
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Publicity
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30
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6.7
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Indemnification
of Directors and Officers
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30
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6.8
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Employees
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31
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ARTICLE
VII.
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CONDITIONS
TO CONSUMMATION OF THE MERGER
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32
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7.1
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Conditions
to Each Party’s Obligations to Effect the Merger
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32
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7.2
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Conditions
to the Company’s Obligations to Effect the Merger
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32
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7.3
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Conditions
to Parent’s and Newco’s Obligations to Effect the Merger
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33
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ARTICLE
VIII.
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TERMINATION;
WAIVER
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34
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8.1
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Termination
by Mutual Consent
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34
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8.2
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Termination
by Either Parent or the Company
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34
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8.3
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Termination
by Parent
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34
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8.4
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Termination
by the Company
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35
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8.5
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Effect
of Termination
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35
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8.6
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Extension;
Waiver
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36
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ARTICLE
IX.
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ADDITIONAL
DEFINITIONS
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37
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9.1
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Certain
Definitions
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37
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ARTICLE
X.
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MISCELLANEOUS
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39
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10.1
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Payment
of Expenses
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39
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10.2
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Survival
of Representations and Warranties; Survival of
Confidentiality
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39
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10.3
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Modification
or Amendment
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39
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10.4
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Waiver
of Conditions
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39
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10.5
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Counterparts
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40
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10.6
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Governing
Law
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40
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10.7
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Notices
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40
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10.8
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Entire
Agreement; Assignment
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41
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10.9
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Parties
in Interest
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41
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10.10
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Obligation
of Parent
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41
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10.11
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Severability
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41
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10.12
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Specific
Performance
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41
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10.13
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Certain
Interpretations
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42
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AGREEMENT
AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
(this
“Agreement”),
dated
as of July 26, 2006, by and among Universal Trailer Holdings Corp., a
Delaware corporation (“Parent”),
Dart
Acquisition Corp., a Minnesota corporation and a direct wholly-owned Subsidiary
of Parent (“Newco”),
and
Featherlite, Inc., a Minnesota corporation (the “Company”).
RECITALS
WHEREAS,
each of Parent and the Company has determined that it is in its best interests
for Parent to acquire the Company, upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS,
a special committee of the independent directors of the Company (the
“Special
Committee”),
established by the board of directors of the Company (the “Board
of Directors”),
has
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are in the best interests of the shareholders of the
Company, has approved this Agreement and the transactions contemplated hereby
in
accordance with the Minnesota Business Corporation Act (the “MBCA”),
and
has resolved to recommend that the shareholders of the Company adopt this
Agreement and approve the Merger;
WHEREAS,
the board of directors of each of Parent and Newco has approved this Agreement,
the Merger and the other transactions contemplated by this Agreement;
and
WHEREAS,
Parent, Newco and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger;
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements set forth herein, Parent, Newco and
the
Company hereby agree as follows:
ARTICLE
I.
THE
MERGER
1.1 The
Merger.
Subject
to the terms and conditions of this Agreement, at the Effective Time (as
defined
below), the Company and Newco shall consummate a merger (the “Merger”)
in
which (a) Newco shall be merged with and into the Company and the separate
corporate existence of Newco shall thereupon cease, (b) the Company shall
be the
surviving corporation in the Merger and shall continue to be governed by
the
Laws (as defined below) of the State of Minnesota, and (c) the separate
corporate existence of the Company shall continue unaffected by the Merger.
The
corporation surviving the Merger is sometimes hereinafter referred to as
the
“Surviving
Corporation.”
1.2 Effective
Time.
As soon
as practicable after the satisfaction or waiver of the conditions set forth
in
Article VII hereof, the appropriate parties hereto shall execute in the manner
required by the MBCA and file with the Minnesota Secretary of State appropriate
articles of merger relating to the Merger (the “Articles
of Merger”),
and
the parties hereto shall take such other reasonable and further actions as
may
be required by Law to make the Merger effective. The time that the Merger
becomes effective in accordance with applicable Law is hereinafter referred
to
as the “Effective
Time”.
1.3 Effects
of the Merger.
The
Merger shall have the effects set forth in Section 302A.641 of the
MBCA.
1.4 Closing.
The
closing of the Merger (the “Closing”)
shall
take place (a) at the offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, on the first business day
following the date on which the last of the conditions set forth in Article
VII
hereof shall be fulfilled or waived in accordance with this Agreement, or
(b) at
such other place, time and date as Parent and the Company may
agree.
ARTICLE
II.
SURVIVING
CORPORATION
2.1 Articles
of Incorporation.
The
Articles of Incorporation of Newco, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation, except that such Articles of Incorporation shall be amended
so as
to change the name of Newco to “Featherlite, Inc.,” until thereafter further
amended in accordance with the MBCA and the provisions of such Articles of
Incorporation.
2.2 Bylaws.
The
Bylaws of Newco, as in effect immediately prior to the Effective Time, shall
be
the Bylaws of the Surviving Corporation, until thereafter amended in accordance
with the MBCA and the provisions of Newco’s Articles of Incorporation and such
Bylaws.
2.3 Directors.
The
directors of Newco at the Effective Time shall, from and after the Effective
Time, be the initial directors of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal, in accordance with the Surviving
Corporation’s Articles of Incorporation and Bylaws.
2.4 Officers.
The
officers of Newco at the Effective Time shall, from and after the Effective
Time, be the initial officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal, in accordance with the Surviving
Corporation’s Articles of Incorporation and Bylaws.
ARTICLE
III.
MERGER
CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE
MERGER
3.1 Share
Consideration for the Merger; Conversion or Cancellation of Shares in the
Merger.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
Parent, Newco, the Company, the Surviving Corporation or the holders of any
outstanding shares of the Company’s Capital Stock described in Section 4.2
below, each share of such Capital Stock (collectively, the “Shares,”
and
each, a “Share”)
shall
be treated as follows:
(a) Each
Share issued and outstanding immediately prior to the Effective Time (other
than
Dissenting Shares (as defined below) and Shares owned by Parent, Newco or
any
direct or indirect wholly-owned Subsidiary of Parent (collectively,
“Parent
Companies”)
or by
any of the Company’s direct or indirect wholly-owned Subsidiaries) shall be
cancelled and extinguished and converted into the right to receive, pursuant
to
Section 3.3, an amount equal to $6.50 per Share in cash (the “Merger
Consideration”),
payable to the holder thereof, without interest thereon, upon the surrender
of
the certificate formerly representing such Share.
(b) Each
Share issued and outstanding and owned by the Parent Companies or any of
the
Company’s direct or indirect wholly-owned Subsidiaries immediately prior to the
Effective Time shall cease to be outstanding, be cancelled and retired, without
payment of any consideration therefor, and shall cease to exist.
(c) Each
share of common stock of Newco issued and outstanding immediately prior to
the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
3.2 Stock
Options and Warrants.
(a) Prior
to
the Effective Time, the Board of Directors or Special Committee shall adopt
such
resolutions or shall take such other actions as are required to approve the
measures contemplated by this Section 3.2. The Company shall use its best
efforts to obtain any necessary consent of the holders of Options and Warrants
(each as defined below) to effect this Section 3.2.
(b) The
Company shall take all necessary steps to ensure that, at the Effective Time,
each option to acquire shares of the Capital Stock (“Option”)
which
has been granted under the Company’s 1994 Stock Option Plan and the Company’s
2004 Equity Incentive Plan, or otherwise (collectively, the “Option
Plans”),
and
each warrant to purchase Capital Stock (“Warrant”),
and,
in each case, which is outstanding at the Effective Time, to the extent and
only
to the extent that such Option or Warrant is then exercisable in whole or
in
part in accordance with their respective terms, shall be cancelled. In
consideration of such cancellation, the holder of each such Option or Warrant
shall be entitled to receive, upon compliance with the provisions noted below,
a
lump sum cash payment in an amount equal to the product of the
following:
(i) the
excess, if any, of the Merger Consideration over the per share exercise price
of
each such Option or Warrant, multiplied by
(ii) the
number of vested shares of Capital Stock covered by such Option or Warrant
to
the extent not previously exercised
less
applicable taxes required to be withheld pursuant to
Section 3.2(f).
(c) If,
in
accordance with Section 3.2(b)(i) above, there is no excess of the Merger
Consideration over the per share price of any Option or Warrant, then any
such
Option or Warrant shall automatically be cancelled without any consideration
as
of the Effective Time.
(d) As
of the
Effective Time, each of the Option Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect
of the Capital Stock shall be terminated and cancelled (without any liability
on
the part of Parent or the Surviving Corporation other than as expressly set
forth in this Section 3.2).
(e) No
party
to this Agreement shall be liable to any holder of any Option or Warrant
for any
cash delivered to a public official pursuant to and in accordance with any
abandoned property, escheat or similar Law.
(f) Parent
shall cause the Surviving Corporation to deduct and withhold from the cash
otherwise payable to the holder of any Option or Warrant pursuant to this
Section 3.2, such amounts as the Parent and the Surviving Corporation
reasonably and in good faith determine are required to be deducted and withheld
with respect to the making of such payment under the Internal Revenue Code
of
1986, as amended (the “Code”),
or
any social security, FICA or Medicare tax Law, or any other provision of
federal, state, local or foreign tax Law. To the extent that amounts are
so
withheld by the Surviving Corporation, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the Option or Warrant
holder in respect of which such deduction and withholding was made by the
Surviving Corporation.
(g) The
Company and the Special Committee shall take any and all actions (including,
but
not limited to, giving requisite notices to, and using their best efforts
to
obtain all necessary consents from, holders of Options and Warrants advising
them of such cancellations and any rights pursuant to this Section 3.2) as
are necessary to (i) fully advise holders of Options of their rights under
the Option Plans and the Options in connection with the Merger and the rights
of
holders of Warrants of their rights under the Warrants in connection with
the
Merger, and (ii) effectuate the provisions of this Section 3.2 under
the terms of the Option Plans and Warrants. From and after the Effective
Time,
other than as expressly set forth in this Section 3.2, no holder of an
Option or Warrant shall have any rights in respect thereof other than to
receive
payment (if any) for the Options or Warrants as set forth in this
Section 3.2, and neither Parent nor the Surviving Corporation shall have
any liability or obligation under any of the Option Plans or, other than
the
obligation to make any required payment set forth in this Section 3.2, with
respect to the Options or Warrants.
(h) Any
payment to be made to a holder of any Option or Warrant in accordance with
this
Section 3.2 shall be subject to Parent’s prior receipt of (i) the Option or
Warrant, as the case may be, for cancellation or delivery of an instrument
reasonably satisfactory to Parent effecting the cancellation of the Option
or
Warrant, as the case may be, and (ii) written instructions from the holder
of
such Option or Warrant specifying the manner in which any such payment is
to be
made, including the name to which a check for such payment should be made
and
the address where such check should be sent, or appropriate wire transfer
instructions. Upon receipt of such items, Parent shall direct the Paying
Agent
(as defined below) to make any such payment in respect of such Option or
Warrant. Until surrendered in accordance with the provisions of this
Section 3.2, each Option and Warrant shall represent for all purposes only
the right to receive the payments, if any, pursuant to this Section 3.2.
3.3 Payment
for Securities in the Merger.
The
manner of making payment for Shares, Options and Warrants in the Merger shall
be
as follows:
(a) Prior
to
the Effective Time, Parent shall designate a reputable bank or trust company
or
other entity reasonably acceptable to the Company to act as paying agent
for the
holders of Shares, Options and Warrants in connection with the Merger (the
“Paying
Agent”),
and
to receive the funds to which the holders of Shares will become entitled
pursuant to Section 3.1(a), and to which the holders of Options and
Warrants may become entitled pursuant to Section 3.2. Immediately prior to
the Effective Time, Parent shall deposit, or cause to be deposited, with
the
Paying Agent, for the benefit of the holders of Shares, Options and Warrants
the
funds necessary to make the payments contemplated by Sections 3.1 and 3.2,
respectively (the “Payment
Fund”).
The
Paying Agent shall, pursuant to irrevocable instructions, make the payments
contemplated by Sections 3.1(a) and 3.2, respectively, out of the Payment
Fund
in accordance with the provisions of Section 3.3(c) below.
(b) The
Paying Agent shall invest the Payment Fund as directed by Parent or Newco
in (i)
investment grade money market instruments, (ii) direct obligations of the
United
States of America, (iii) obligations for which the full faith and credit
of the
United States of America is pledged to provide for the payment of principal
and
interest, (iv) commercial paper rated the highest quality by either ▇▇▇▇▇’▇
Investors Services, Inc. or Standard & Poor’s Corporation, or (v)
certificates of deposit, bank repurchase agreements or bankers’ acceptances of
commercial banks with capital exceeding $1 billion, in each case having
maturities not to exceed thirty (30) days and as designated by Parent, with
any
interest earned thereon being payable to Parent. Parent shall cause the Payment
Fund to be promptly replenished to the extent of any losses incurred as a
result
of the aforementioned investments. All earnings thereon shall inure to the
benefit of Parent. If for any reason (including losses) the Payment Fund
is
inadequate to pay the amounts to which holders of Shares shall be entitled
under
Section 3.1(a) and this Section 3.3, and to which holders of Options
or Warrants shall be entitled under Section 3.2 and this Section 3.3,
Parent shall in any event be liable for payment thereof. The Payment Fund
shall
not be used for any purpose except as expressly provided in this
Agreement.
(c) As
soon
as reasonably practicable after the Effective Time, the Paying Agent shall
mail
to each holder of record (other than holders of certificates representing
Dissenting Shares and for Shares referred to in Section 3.1(b)) of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the “Certificates”),
(i) a
notice and letter of transmittal (which shall specify that delivery shall
be
effected, and risk of loss and title to the Certificates shall pass, only
upon
proper delivery of the Certificates to the Paying Agent, and shall be in
such
form and have such other provisions as Parent may reasonably specify), and
(ii)
instructions for use in effecting the surrender of the Certificates for payment
therefor. Upon surrender of Certificates for cancellation to the Paying Agent,
together with such letter of transmittal duly executed and properly completed,
and any other required documents, the holder of such Certificates shall be
entitled to receive for each Share represented by such Certificates the Merger
Consideration, without any interest thereon, less
any
required withholding of taxes, and the Certificates so surrendered shall
forthwith be cancelled. With respect to Options and Warrants, Parent shall
direct the Paying Agent to make payments to the holders of Options and Warrants
in accordance with the provisions of Section 3.2(h).
(d) If
payment is to be made to a Person other than the Person in whose name a
Certificate so surrendered is registered, it shall be a condition of payment
that the Certificate so surrendered shall be properly endorsed and otherwise
in
proper form for transfer and that the Person requesting such payment shall
pay
to the Paying Agent any transfer or other taxes required by reason of the
payment to a Person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 3.3, each Certificate (other than
certificates representing Dissenting Shares or Shares referred to in
Section 3.1(b)) shall represent for all purposes only the right to receive,
for each Share represented thereby, the Merger Consideration, and shall not
evidence any interest in, or any right to exercise the rights of a shareholder
or other equityholder of, the Company or the Surviving Corporation.
(e) Any
portion of the Payment Fund made available to the Paying Agent which remains
unclaimed by the former shareholders, holders of Options and holders of Warrants
of the Company for six (6) months after the Effective Time shall be delivered
to
Parent, upon demand of Parent, and any former shareholders, holders of Options
and holders of Warrants of the Company shall thereafter look only to Parent
for
payment of their claim for the aggregate Merger Consideration payable in
respect
of the Shares held by such former shareholder or for payment of their claim
for
the aggregate amount payable in respect of Options or Warrants pursuant to
Section 3.2 held by such former holders of Options or Warrants, as the case
may be, in each case without any interest thereon and subject to any taxes
required to be withheld.
(f) Neither
the Paying Agent nor any party to this Agreement shall be liable to any
shareholder of the Company for any Merger Consideration or cash delivered
to a
public official pursuant to and in accordance with any abandoned property,
escheat or similar Law.
(g) The
Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any former
holder
of Shares, Options or Warrants of the Company such amounts as Parent and
the
Surviving Corporation reasonably and in good faith determine are required
to be
deducted and withheld with respect to the making of such payment under the
Code,
or any social security, FICA or Medicare tax Law or any other provision of
federal, state, local or foreign tax Law. To the extent that amounts are
so
withheld by the Paying Agent, such withheld amounts shall be treated for
all
purposes of this Agreement as having been paid to the former holder of Shares,
Options or Warrants, as the case may be, in respect of which such deduction
and
withholding was made by the Paying Agent.
3.4 Dissenting
Shares.
(a) Notwithstanding
anything in this Agreement to the contrary, if Section 302A.471 of the MBCA
is applicable to the Merger, shares of Company Common Stock that are issued
and
outstanding immediately prior to the Effective Time and which are held by
a
holder who has not voted such Shares in favor of the Merger, who will have
delivered, prior to any vote on the Merger, a written demand for the fair
value
of such Shares in the manner provided in Section 302A.473 of the MBCA and
who, as of the Effective Time, will not have effectively withdrawn or lost
such
right to dissenters’ rights (“Dissenting
Shares”)
will
not be converted into or represent a right to receive the Merger Consideration
pursuant to Section 3.1(a), but the holder thereof will be entitled only to
such rights as are granted by Section 302A.473 of the MBCA. Each holder of
Dissenting Shares who becomes entitled to payment for such Shares pursuant
to
Sections 302A.471 and 302A.473 of the MBCA will receive payment therefor
from
the Surviving Corporation in accordance with the MBCA; provided,
however,
that if
any such holder of Dissenting Shares will have effectively withdrawn such
holder’s demand for appraisal of such Shares or lost such holder’s right to
appraisal and payment of such shares under Section 302A.473 of the MBCA,
such holder will forfeit the right to appraisal of such Shares and each such
Share will thereupon be deemed to have been canceled, extinguished and
converted, as of the Effective Time, into and represent the right to receive
payment from the Surviving Corporation of the Merger Consideration, as provided
in Section 3.1(a).
(b) The
Company will give Parent (i) prompt notice of any written notice of intent
to
demand fair value, any withdrawal of such notice and any other instrument
served
pursuant to Section 302A.473 of the MBCA received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
notice of intent to demand fair value under Section 302A.473 of the MBCA.
The Company will not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any such notices or offer to
settle
or settle any such demand.
3.5 No
Further Rights or Transfers.
Except
for the surrender of the Certificates representing the Shares in exchange
for
the right to receive the Merger Consideration with respect to each Share
or the
perfection of dissenters’ rights with respect to the Dissenting Shares, at and
after the Effective Time, a holder of Shares shall cease to have any rights
as a
shareholder of the Company, and no transfer of Shares shall thereafter be
made
on the stock transfer books of the Surviving Corporation.
3.6 Certain
Company Actions.
Prior
to the Effective Time, each of the Company and Parent shall take all such
steps
as may be required (to the extent permitted under applicable Law) to cause
any
dispositions of Shares (including derivative securities with respect to Shares)
resulting from the transactions contemplated by Article III of this Agreement
by
each individual who is subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act.
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby makes the representations and warranties in this Article IV
to
Parent and Newco, except as qualified or supplemented by sections in the
Company
Disclosure Schedule attached hereto. Each such Section of the Company
Disclosure Schedule is numbered by reference to representations and warranties
in a specific Section of this Article IV or a specific Section of
Article VI hereof; provided,
however,
that an
exception or qualification to, or supplemental information regarding,
representations, warranties or covenants in one Section of the Company
Disclosure Schedule shall also be deemed disclosed with respect to each other
warranty, representation or covenant to which the exception, qualification
or
supplemental disclosure reasonably relates and to which its relevance is
reasonably apparent.
4.1 Corporate
Organization and Qualification.
Each of
the Company and its Subsidiaries (as hereinafter defined in Section 9.1) is
a corporation duly organized, validly existing and in good standing under
the
Laws of its respective jurisdiction of incorporation and is qualified and
in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated or the business conducted by it require such
qualification, except where failure to so qualify or be in good standing
would
not have a Company Material Adverse Effect (as hereinafter defined in
Section 9.1). Each of the Company and its Subsidiaries has all requisite
corporate or limited liability company, as the case may be, power and authority
to own its properties and to carry on its business as it is now being conducted.
The Company has previously made available to Parent complete and correct
copies
of the Company’s Restated Articles of Incorporation, as amended and in effect on
the date hereof (the “Company
Articles”),
and
Amended and Restated Bylaws, as amended and in effect on the date hereof
(the
“Company
Bylaws”),
and
the certificate of incorporation and bylaws (or other comparable documents)
of
each of its Subsidiaries.
4.2 Capitalization;
Subsidiaries.
(a) The
authorized capital stock of the Company (the “Capital
Stock”)
consists of 50,000,000 shares, par value $0.01 per share, 40,000,000 shares
of
which are designated as common shares (the “Common
Shares”),
and
10,000,000 shares of which are undesignated. As of June 30, 2006, 11,060,160
Common Shares were issued and outstanding. All of the issued and outstanding
shares of Capital Stock have been duly authorized and validly issued and
are
fully paid and nonassessable and are free of preemptive rights. All of the
issued and outstanding shares of Capital Stock were issued in compliance
with
any preemptive rights and any other statutory or contractual rights of any
shareholders of the Company and in compliance with all applicable federal
and
state securities Laws. 947,451 Common Shares were reserved for issuance upon
the
exercise of outstanding awards pursuant to the Option Plans, and 225,000
Common
Shares were reserved for issuance upon the exercise of outstanding Warrants.
Section 4.2(a)
of the
Company Disclosure Schedule sets forth a correct, true and complete list
of each
Person who, as of the close of business on June 30, 2006, held an Option
under
any of the Option Plans or a Warrant, indicating with respect to each Option
and
Warrant then outstanding, the number of Shares subject to such Option or
Warrant, the grant date and exercise price of such Option or Warrant, and
the
vesting schedule and expiration of such Option or Warrant. Except as set
forth
above and in Section 4.2(a)
of the
Company Disclosure Schedule, there are not as of the date hereof, and at
the
Effective Time there will not be, any subscriptions, outstanding or authorized
options, warrants, convertible securities, calls, rights (including preemptive
rights), commitments or any other agreements of any character to which the
Company or any of its Subsidiaries is a party, or by which it may be bound,
requiring it to issue, transfer, sell, purchase, redeem or acquire any shares
of
its capital stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of its capital stock,
or requiring it to give any Person the right to receive any benefit or rights
similar to any rights enjoyed by or accruing to the holders of its shares
of
capital stock or any rights to participate in the equity or net income of
the
Company or any of its Subsidiaries. Except as set forth in Section 4.2(a)
of the
Company Disclosure Schedule, there are no shareholders’ agreements, voting
trusts or other agreements or understandings to which the Company or any
of its
Subsidiaries is a party or by which it is bound or, to the Knowledge of the
Company, between or among shareholders, in each case with respect to the
transfer or voting of any capital stock of the Company or any of its
Subsidiaries.
(b) Section 4.2(b)
of the
Company Disclosure Schedule sets forth a true and complete list of the names,
jurisdictions of organization, and jurisdictions of qualification as a foreign
entity of each of the Company’s Subsidiaries. Except as set forth in
Section 4.2(c)
of the
Company Disclosure Schedule, all outstanding shares of capital stock or other
equity interests of the Company’s Subsidiaries are owned by the Company or a
direct or indirect wholly-owned Subsidiary of the Company, free and clear
of all
Liens other than Permitted Liens (each as defined in Section 9.1).
4.3 Authority
Relative to This Agreement.
The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and each instrument required hereby to be executed and delivered
by it at the Closing, to perform its obligations hereunder or thereunder
and to
consummate the transactions contemplated hereby. This Agreement and each
instrument required hereby to be executed and delivered by the Company at
the
Closing and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by the Special Committee and
no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
other than the approval of the Merger and the adoption of this Agreement
by
holders of the Shares in accordance with the MBCA and the Company Articles.
This
Agreement has been duly and validly executed and delivered by the Company
and,
assuming that this Agreement constitutes the legal, valid and binding agreement
of Parent and Newco, constitutes the legal, valid and binding agreement of
the
Company, enforceable against the Company in accordance with its terms, except
that such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors’ rights generally, and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or
at law).
4.4 Consents
and Approvals; No Violation.
(a) Neither
the execution and delivery by the Company of this Agreement and of each
instrument required hereby to be executed and delivered by the Company at
the
Closing, nor the performance of its obligations hereunder and thereunder,
nor
the consummation by the Company of the transactions contemplated hereby,
will:
(i) conflict
with or result in any breach of any provision of the Company Articles or
Company
Bylaws or the respective Articles of Incorporation or Bylaws of any of the
Company’s Subsidiaries;
(ii) require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (A) in
connection with the applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the “HSR
Act”),
(B)
pursuant to the applicable requirements of the Securities Act of 1933, as
amended (the “Securities
Act”)
or the
Exchange Act, (C) the filing of the Articles of Merger pursuant to the MBCA
and
appropriate documents with the relevant authorities of other states in which
the
Company or any of its Subsidiaries is authorized to do business, (D) as may
be
required by any applicable state securities or “blue sky” Laws or state takeover
Laws, (E) such filings and consents as may be required under any environmental,
health or safety Law or regulation pertaining to any notification, disclosure
or
required approval triggered by the Merger or the transactions contemplated
by
this Agreement, (F) pursuant to the rules and regulations of NASDAQ, (G)
where
the failure to obtain such consent, approval, authorization or permit, or
to
make such filing or notification, would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, or adversely
affect the consummation of the transactions contemplated hereby or (H) such
filings, consents, approvals, orders, registrations and declarations as may
be
required as a result of the status or identity of Parent and/or
Newco;
(iii) except
as
set forth in Section 4.4(a)(iii)
of the
Company Disclosure Schedule, result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to
any right of termination, cancellation or acceleration or Lien) under any
of the
terms, conditions or provisions of any note, license, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries
is a
party or by which any of its or their assets may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation
or
acceleration or Lien) as to which requisite waivers or consents have been
obtained or which would not, individually or in the aggregate, reasonably
be
expected to have a Company Material Adverse Effect, or adversely affect the
consummation of the transactions contemplated hereby; or
(iv) assuming
that the consents, approvals, authorizations or permits and filings or
notifications referred to in this Section 4.4 are duly and timely obtained
or made and the approval of the Merger and the adoption of this Agreement
by the
Company’s shareholders have been obtained, violate any Order (as defined in
Section 4.14), or any statute, rule or regulation applicable to the Company
or any of its Subsidiaries, or to any of their respective assets, except
for
violations which would not, individually or in the aggregate, reasonably
be
expected to have a Company Material Adverse Effect.
(b) The
affirmative vote of the holders of a majority of the voting power of the
outstanding Shares in favor of the approval of this Agreement and the Merger
(the “Company
Shareholder Approval”)
is the
only vote of the holders of any class or series of the Company’s or its
Subsidiaries’ securities necessary to approve this Agreement, the Merger and the
other transactions contemplated hereby.
4.5 SEC
Reports; Financial Statements.
(a) The
Company has filed all forms, reports and documents required to be filed by
it
with the Securities and Exchange Commission (the “SEC”)
since
January 1, 2003, pursuant to the federal securities Laws and the SEC rules
and
regulations thereunder (collectively, the “Company
SEC Reports”),
all
of which, as of their respective dates (or if subsequently amended or superseded
by a Company SEC Report, then as of the date of such subsequent filing),
complied in all material respects with all applicable requirements of the
Exchange Act and the Securities Act, as the case may be. None of the Company
SEC
Reports, including, without limitation, any financial statements or schedules
included therein, as of their respective dates, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the
circumstances under which they were made, not misleading.
(b) The
consolidated balance sheets and the related consolidated statements of income
and cash flows (including the related notes thereto) of the Company included
in
the Company SEC Reports, as of their respective dates, (i) complied in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) were prepared
in
accordance with generally accepted accounting principles (“GAAP”)
applied on a basis consistent with prior periods (except as otherwise noted
therein and, subject, in the case of any unaudited interim financial statements,
to normal year-end adjustments and the lack of footnotes), and (iii) presented
fairly, in all material respects, the consolidated financial position of
the
Company and its consolidated Subsidiaries as of their respective dates, and
the
consolidated results of their operations and their cash flows for the periods
presented therein (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments), all in accordance with GAAP.
4.6 Absence
of Certain Changes or Events.
Except
as set forth in Section 4.6
of the
Company Disclosure Schedule or as contemplated by this Agreement, since
December 31, 2005, the Company has not suffered any Company Material
Adverse Effect, and to the Knowledge of the Company, no fact, condition or
circumstance exists that would reasonably be expected to have, individually
or
in the aggregate, a Company Material Adverse Effect
4.7 Litigation.
Except
as set forth in Section 4.7
of the
Company Disclosure Schedule, as of the date of this Agreement there are no
actions, claims, suits, proceedings, governmental investigations, inquiries
or
subpoenas (collectively, “Actions”),
pending or, to the Knowledge of the Company, threatened against the Company
or
any of its Subsidiaries, or any property or asset of the Company or any of
its
Subsidiaries, except for any Actions that, individually or in the aggregate,
are
not reasonably likely to result in a Company Material Adverse
Effect.
4.8 Absence
of Undisclosed Liabilities.
Except
as
set forth in the Company SEC Reports and except for obligations in connection
with the transactions contemplated hereby, neither the Company nor any of
its
Subsidiaries has any material liabilities or obligations of any nature (whether
accrued, absolute or contingent, asserted or unasserted, due or to become
due)
other than liabilities and obligations (i) reflected on the balance sheet
included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2006, or (ii) incurred after March 31, 2006 in the ordinary
course of business consistent with past practice.
4.9 Proxy
Statement.
The
Proxy Statement (as defined below) and other materials distributed to the
Company’s shareholders in connection with the Merger, including any amendments
or supplements thereto, will comply in all material respects with applicable
federal securities Laws, and the Proxy Statement will not, at the time that
it
or any amendment or supplement thereto is mailed to the Company’s shareholders,
at the time of the Shareholders Meeting (as defined below) or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Newco or Parent expressly for inclusion
in
the Proxy Statement.
4.10 Taxes.
(a) Tax
Returns.
(i) The
Company and each of its Subsidiaries have duly, timely and properly filed
all
federal, state, local and foreign tax returns (including, but not limited
to,
income, franchise, sales, payroll, employee withholding and social security
and
unemployment) which were or (in the case of returns not yet due but due on
or
before the date of the Closing, taking into account any valid extension of
the
time for filing) will be required to be filed with the appropriate taxing
authority. All such tax returns accurately reflect in all material respects
all
liabilities for taxes for the periods covered thereby, and the Company and
its
Subsidiaries have paid or accrued, or caused to be paid or accrued, all material
taxes for all periods or portions thereof ending on or prior to the date
of this
Agreement (whether or not shown on any tax return), including interest and
penalties and withholding amounts owed by the Company or any such Subsidiary,
other than amounts being contested in good faith for which appropriate reserves
have been included on the balance sheet of the appropriate Person. Without
limiting the generality of the foregoing, the accruals and reserves for current
taxes reflected in the financial statements included in the Company SEC Reports
are adequate in all material respects to cover all taxes accruable through
the
respective dates thereof (including interest and penalties, if any, thereon)
in
accordance with GAAP consistently applied.
(ii) Neither
the Company nor any of its Subsidiaries has received written notice of any
material claim made by a governmental authority in a jurisdiction where the
Company or such Subsidiary, as the case may be, does not file tax returns
that
the Company or such Subsidiary is or may be subject to taxation by that
jurisdiction.
(iii) No
unpaid
tax deficiencies have been proposed or assessed in writing against the Company
or any of its Subsidiaries and no material tax deficiencies, whether paid
or
unpaid, have been proposed or assessed in writing against the Company or
any of
its Subsidiaries since January 1, 2003.
(iv) Except
as
set forth in Section 4.10(a)(iv)
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is
liable for any taxes attributable to any other Person under any Law, whether
by
reason of being a member of another affiliated group, being a party to a
tax
sharing agreement, as a transferee or successor, or otherwise. Neither the
Company nor any of its Subsidiaries is a party to any material tax sharing,
tax
indemnity or other agreement or arrangement with any entity not included
in the
Company’s consolidated financial statements most recently filed by the Company
with the SEC. No Person has any right of claim, reimbursement, allocation
or
sharing against any tax refunds received or due to be received by the
Company.
(b) Audits.
Except
as set forth in Section 4.10(b)
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has
consented to any extension of time with respect to a tax assessment or
deficiency or has waived any statute of limitations in respect of taxes.
Except
as
set forth in Section 4.10(b)
of the
Company Disclosure Schedule, (i) none of the federal income tax returns of
the
Company or any of its Subsidiaries has been examined by the Internal Revenue
Service during the last six (6) taxable years, (ii) no tax audit, examinations
or other administrative or judicial proceedings are pending or being conducted,
or, to the Knowledge of the Company, threatened, with respect to any taxes
due
from or with respect to or attributable to the Company or any Subsidiary
of the
Company or any tax return filed by or with respect to the Company or any
Subsidiary of the Company, and (iii) no written notification of an intent
to
audit, to examine or to initiate administrative or judicial proceedings has
been
received by the Company or by any of its Subsidiaries.
(c) Liens.
Except
as set forth in Section 4.10(c)
of the
Company Disclosure Schedule, there are no tax Liens upon any property or
assets
of the Company or any of its Subsidiaries, except for Liens for current taxes
not yet due and payable and Permitted Liens.
(d) Withholding
Taxes.
The
Company and each of its Subsidiaries has properly withheld and timely paid
in
all material respects all taxes which it was required to withhold and pay
in
connection with or relating to salaries, compensation and other amounts paid
or
owing to its employees, consultants, creditors, shareholders, independent
contractors or other third parties. All Forms W-2 and 1099 required to be
filed
with respect thereto have been timely and properly filed.
(e) Other
Representations.
(i) Except
as
set forth in Section 4.10(e)
of the
Company Disclosure Schedule, there is no contract, agreement, plan or
arrangement to which the Company or any of its Subsidiaries is a party, or
to
which the Company or any of its Subsidiaries is bound, including, but not
limited to, the provisions of this Agreement, covering any Person that,
individually or collectively, has resulted or would result in the payment
of any
“excess parachute payment” within the meaning of Section 280G of the Code
or any similar provision of foreign, state or local Law.
(ii) Neither
the Company nor any of its Subsidiaries (A) is
a
party to or bound by any closing agreement or offer in compromise with any
taxing authority, (B) has been or will be required to include any material
adjustment in taxable income for any tax period (or portion thereof) pursuant
to
Section 481 or Section 263A of the Code or any similar provision of
foreign, state or local Law as a result of the transactions, events or
accounting methods employed prior to the Closing, (C) has any excess loss
account (as defined in Treasury Regulations Section 1.1502-19), or (D) has
any deferred intercompany gains (as defined in Treasury Regulations
Section 1.1502-13).
(iii) None
of
the assets of the Company or any of its Subsidiaries is (A) “tax
exempt use property”
within
the meaning of Section 168(h) of the Code, (B) subject to any lease made
pursuant to Section 168(f) (8) of the Internal Revenue Code of 1954 or (C)
directly or indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code.
(iv) The
Company and each of its Subsidiaries have disclosed on their federal income
tax
returns all positions taken therein that (A) constitute a reportable tax
shelter
transaction or any other tax shelter transaction within the meaning of
Section 6011 of the Code or (B) to the Knowledge of the Company, could give
rise to a substantial understatement of federal income Tax within the meaning
of
Section 6662 of the Code.
(v) Except
as
set forth in Section 4.10(e)
of the
Company Disclosure Schedule, there
are
no powers of attorney or other authorizations in effect that grant to any
Person
the authority to represent the Company or any of its Subsidiaries in connection
with any tax matter or proceeding.
4.11 Employee
Benefit Plans; Labor Matters.
(a) Employee
Benefit Plans.
(i) The
Company and the Subsidiaries have performed all material obligations required
to
be performed by them under and are not in any material respect in default
under
or in violation of, and to the Knowledge of the Company, there is no material
default or violation by any party to, any Company Plan. No Action is pending
or,
to the Knowledge of the Company, threatened with respect to any Company Plan
(other than claims for benefits in the ordinary course) and, to the Knowledge
of
the Company, no fact or event exists that could give rise to any such
Action.
(ii) All
contributions required to be made to each Company Plan under the terms thereof,
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
the
Code, or any other applicable Law have in all material respects been timely
made, and are in all material respects fully deductible in the year for which
they were paid or accrued. All other amounts that should be accrued in
accordance with GAAP as liabilities of the Company or any Subsidiary under
or
with respect to each Company Plan (including any unpaid administrative expenses
and incurred but not reported claims) for the current plan year of each Company
Plan have been recorded in all material respects on the books of the Company
or
such Subsidiary.
(iii) There
has
been no “reportable event,” as that term is defined in Section 4043 of
ERISA and the regulations thereunder, with respect to any of the Company
Plans
which would require the giving of notice, or any event requiring notice to
be
provided, under Section 4063(a) of ERISA.
(iv) To
the
Knowledge of the Company, there has been no violation of ERISA that could
reasonably be expected to result in a material liability with respect to
the
filing of applicable returns, reports, documents or notices regarding any
of the
Employee Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of such notices or documents to the participants
or
beneficiaries of the Employee Benefit Plans.
(v) No
Action
is pending or has been asserted or instituted against any Employee Benefit
Plan
or its assets or against the Company, or, to the Knowledge of the Company,
against any plan administrator or fiduciary of any Employee Benefit Plan,
with
respect to the operation of any such Employee Benefit Plan (other than routine,
uncontested benefit claims). To the Knowledge of the Company, the Company
has
not engaged in a nonexempt prohibited transaction described in Sections 406
of
ERISA or 4975 of the Code.
(vi) Neither
the Company nor any Subsidiary maintains, contributes to or is obligated
to
contribute to (or within the past three (3) years has maintained, contributed
to
or been obligated to contribute to) any Pension Plan that is subject to Title
IV
of ERISA or Section 412 of the Code.
(vii) There
will be no material liability of the Company or any Subsidiary (A) with respect
to any Company Plan that has previously been terminated or (B) under any
insurance policy or similar arrangement procured in connection with any Company
Plan in the nature of a retroactive rate adjustment, loss sharing arrangement,
or other liability arising wholly or partially out of events occurring before
the Effective Time.
(b) Labor
Matters.
Except
as set forth in Section 4.11(b)
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is
a party to any collective bargaining or other labor union contracts. There
is no
labor union or organizing activity pending or, to the Knowledge of the Company,
threatened, with respect to the Company, any of its Subsidiaries or their
respective businesses. There is no pending or, to the Knowledge of the Company,
threatened labor dispute, strike or work stoppage against the Company or
any of
its Subsidiaries which would interfere with the respective business activities
of the Company or its Subsidiaries, except where such dispute, strike or
work
stoppage would not reasonably be expected to have a Company Material Adverse
Effect. To
the
Knowledge of the Company, except as set forth in Section
4.11(b)
of the
Company Disclosure Schedule, no executive, key employee or significant group
of
employees plans to terminate employment with the Company or any Subsidiary
during the next twelve (12) months.
4.12 Environmental
Laws and Regulations.
Except
as set forth in the Company SEC Reports or as set forth in Section 4.12
of the
Company Disclosure Schedule: (i) the Company and each of its Subsidiaries
and their respective properties are in compliance in all material respects
with
all applicable federal, state, local and foreign Laws and regulations relating
to pollution or protection of human health or the environment, including,
without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. § 9601 et seq., and any amendments thereto, the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., and any amendments
thereto, the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq.,
any other Laws now in effect relating to, or imposing liability or standards
of
conduct concerning, any Hazardous Materials (as defined in Section 9.1),
and any Laws relating to the protection of human health and occupational
safety
for employees and others in the workplace
(collectively, “Environmental
Laws”);
(ii)
neither the Company nor any of its Subsidiaries has received within the period
of five (5) years prior to the Effective Time written notice of, or, to the
Knowledge of the Company, is the subject of, any action, cause of action,
claim,
investigation, demand or notice by any Person alleging material liability
under
or noncompliance in any material respect with any Environmental Law or advising
it that it is or may be responsible, or potentially responsible, for material
response costs with respect to a release or threatened release of any Hazardous
Materials; (iii) to
the
Knowledge of the Company, neither
the Company nor any of its Subsidiaries nor anyone acting on their behalf
in the
course of so acting, has used, generated, stored, released, manufactured,
processed, treated, transported or disposed of any Hazardous Materials on,
beneath or about any premises owned or used by the Company or any of its
Subsidiaries at any time, except for Hazardous Materials that were and are
used,
generated, stored, released, manufactured, processed, treated, transported
and
disposed of in the ordinary course of business in material
compliance with all applicable Environmental Laws, and (iv) to the
Knowledge of the Company, neither the Company nor any of its Subsidiaries
has
caused or is aware of any release or threat of release of any Hazardous
Materials on, beneath or about any premises owned or used by the Company
or any
of its Subsidiaries at any time, except such releases that are in material
compliance
with all applicable Environmental Laws.
4.13 Intellectual
Property.
(a) The
Company or a Subsidiary of the Company is the owner of, or a licensee under
a
valid license for, all items of intellectual property that are necessary
for the
conduct of the business of the Company and its Subsidiaries as presently
conducted, taken as a whole, including, without limitation, trade names,
unregistered trademarks and service marks, brand names, patents and copyrights.
Each such item of intellectual property owned by the Company or a Subsidiary
of
the Company (the “Owned
Intellectual Property”)
and
intellectual property licensed by the Company or a Subsidiary of the Company
(the “Licensed
Intellectual Property,”
and
collectively with the Owned Intellectual Property, the “Company
Intellectual Property”)
immediately prior to the Effective Time hereunder will be owned or available
for
use on substantially the same terms and conditions immediately subsequent
to the
Effective Time hereunder. Section
4.13(a)
of the
Disclosure Schedule sets forth a true and accurate list of all of the
registrations and applications for registration of any of the Owned Intellectual
Property.
(b) The
Company and its Subsidiaries own the entire right, title and interest in
and to
all of the Owned Intellectual Property, free and clear of all Liens (other
than
Permitted Liens), and have the right to use the Licensed Intellectual Property
pursuant to the terms of valid and subsisting license agreements. Neither
the
Company nor any of its Subsidiaries has received any notice or claim challenging
the Company’s or such Subsidiary’s ownership or rights to use any of the Company
Intellectual Property.
(c) Except
as
set forth in Section
4.13(c)
of the
Company Disclosure Schedule, to the Knowledge of the Company, neither the
Company nor any of its Subsidiaries is infringing upon or misappropriating
any
intellectual property, proprietary or other rights of third parties, other
than
any such infringement or misappropriation which would not be, individually
or in
the aggregate, material. There are no Actions pending or, to the Knowledge
of
the Company, threatened, asserting the invalidity, misuse, infringement or
unenforceability of any of the Company Intellectual Property. To the Knowledge
of the Company, no third party has infringed upon or misappropriated in any
material respect any rights of the Company or any of its Subsidiaries with
respect to the Company Intellectual Property.
4.14 Compliance
with Laws and Orders.
Except
with respect to the matters described in Sections 4.10, 4.11 and 4.12 or
as set
forth in Section 4.14
of the
Company Disclosure Schedule, (a) neither the Company nor any of its Subsidiaries
has in any material respect violated or failed to comply with, or is in any
material respect in default under, any law, statute, rule or regulation having
the effect of law of the United States or any state, county, city or other
political subdivision thereof or of any government or regulatory authority
(“Laws”),
or
writ, judgment, decree, injunction or similar order of any governmental or
regulatory authority, in each case, whether preliminary or final (an
“Order”),
applicable to the Company or any of its Subsidiaries or any of their respective
material assets and material properties and non-compliance with which has
resulted or would be reasonably likely to result in a material adverse effect
upon the Company, such Subsidiary or such asset or property, as the case
may be,
and (b) neither the Company nor any of its Subsidiaries has received any
written
notice from any governmental authority or other Person claiming any material
violation of any Law with respect to the Company, any of its Subsidiaries
or any
of their respective businesses.
4.15 Board
Approval; Takeover Statutes.
The
Special Committee has taken all action necessary to render inapplicable to
the
Merger and to the transactions contemplated by this Agreement the provisions
of
Section 302A.673 of the MBCA restricting business combinations with “interested
shareholders”. The Company does not have any stockholder or shareholder rights
agreement or any similar type of anti-takeover agreement.
4.16 Agreements,
Contracts and Commitments; Certain Other Agreements. Section 4.16
of the
Company Disclosure Schedule contains a list of the following written contracts,
agreements, understandings or other instruments or obligations to which either
the Company or any of its Subsidiaries is a party or by which the Company
or any
of its Subsidiaries is bound or has committed to be bound (the “Contracts”)
as of
the date hereof:
(i) all
leases for personal property in which the amount of payments which the Company
is required to make on an annual basis exceeds $50,000;
(ii) all
Contracts between the Company or any of its Subsidiaries and their
twenty (20)
largest customers determined on the basis of consolidated revenue for the
fiscal
year ended December 31, 2005;
(iii) all
Contracts between the Company or any of its Subsidiaries and their
twenty (20)
largest suppliers determined on the basis of the total dollar value of goods
or
services purchased by the Company and the Subsidiaries for the fiscal year
ended
December 31, 2005;
(iv) all
Contracts limiting
the freedom of the Company or any of its Subsidiaries to compete in any line
of
business or in any geographic area or with any Person;
(v) all
Contracts to make any capital expenditures in excess of $50,000;
and
(vi) all
Contracts with any director, officer, employee or consultant of or to the
Company or any of its Subsidiaries.
(b) All
Contracts required to be listed in Section 4.16(a)
of the
Company Disclosure Schedule and any “material contract” (as such term is defined
in Item 601(b)(10) of Regulation S-K of the Securities Act) with respect
to the
Company and its Subsidiaries (such contracts being referred to herein as
“Material
Contracts”)
are
valid and binding agreements of the Company or a Subsidiary of the Company
and
are in full force and effect. To the Knowledge of the Company, none of the
parties to the Material Contracts is
in
any
material respect in breach thereof or default thereunder or, subject to receipt
of the consents, waivers or amendments with respect to such Material Contracts
as are described in Section
4.4(a)(iii)
of the
Company
Disclosure Schedule,
will be
in any material respect in breach thereof or default thereunder as a result
of
the execution of this Agreement or the consummation of the transactions
contemplated hereby.
(c) Except
as
set forth in Section 4.16(c)
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is
a party to any oral or written agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. Except as set forth in Section 4.16(c)
of the
Company Disclosure Schedule, there are no amounts payable by the Company
or its
Subsidiaries to any officers of the Company or its Subsidiaries (in their
capacity as officers) as a result of the transactions contemplated by this
Agreement and/or any subsequent employment termination.
(d) No
information which is held in confidence by the Company pursuant to Section
6.5(b) below would, if disclosed, materially and adversely affect any of
the
Company’s representations and warranties made in this Article IV, or require
disclosure as an exception to any such representation or warranty.
4.17 Permits.
The
Company and each of its Subsidiaries hold all material permits, licenses,
variances, exemptions, orders, registrations, certificates and other approvals
from all governmental or regulatory authorities that are required from them
to
own, lease or operate their assets and to carry on their businesses as presently
conducted in compliance with all applicable Law (the “Company
Permits”).
Neither the Company nor any of its Subsidiaries is in material violation
of the
terms of any such Company Permit. To the Knowledge of the Company, the Merger,
in and of itself, would not cause the revocation or cancellation of any Company
Permit.
4.18 Brokers
and Finders.
Except
for the fees and expenses payable to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital,
Inc., which fees and expenses are reflected in its agreement with the Company
and will be paid by the Company, the Company has not employed, and to the
Knowledge of the Company, no other Person has made any arrangement by or
on
behalf of the Company with, any investment banker, broker, finder, consultant
or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder’s or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
4.19 Opinion
of Financial Advisor.
The
Special Committee has received the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
Financial Advisors, Inc. to the effect that, as of the date hereof, the Merger
Consideration to be received by the unaffiliated shareholders of the Company
for
each Share pursuant to the Merger is fair to such unaffiliated shareholders
from
a financial point of view. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Financial Advisors,
Inc. has consented to the inclusion of a copy of its written opinion in its
entirety in the Proxy Statement.
4.20 Property.
(a) No
material personal property owned by the Company or any of its Subsidiaries
or
included as an owned asset of the Company or any of its Subsidiaries in any
of
the financial statements included in the Company SEC Reports is subject to
any
Lien other than Permitted Liens. The Company and each of its Subsidiaries
holds
valid leasehold or license interests in all material personal
property leased by or licensed to it, in each case free and clear of all
Liens,
except for Permitted Liens.
(b) Descriptions
of all real property leased or owned by the Company and its Subsidiaries
are set
forth in Section
4.20
of the
Company Disclosure Schedule. The Company or a Subsidiary of the Company has
a
valid leasehold interest in all real property leased by it, free and clear
of
all Liens except for Permitted Liens. The
Company or a Subsidiary of the Company has good and marketable title to all
real
property owned by it (the “Owned
Real Property”),
free
and clear of any Liens other than Permitted Liens, and there are no (i) leases,
subleases, licenses, concessions, or other agreements granting to any party
or
parties the right of use or occupancy of any portion of any such Owned Real
Property or (ii) outstanding options or rights of first refusal to purchase
any
such Owned Real Property or any portion thereof or interest therein.
4.21 Affiliate
Transactions.
Except
as set forth in Section
4.21
of the
Company Disclosure Schedule or in the Company SEC Reports, no executive officer,
director or employee of the Company or any of its Subsidiaries or any Person
owning 1% or more of the Capital Stock (an “Affiliated
Party”)
is a
party to any Contract or, except as previously disclosed to Parent, has any
material interest in any property or assets owned by the Company or any of
its
Subsidiaries or has engaged in any transaction with the Company material
to the
Company between January 1, 2003 and June 30, 2006, or, to the Knowledge of
the
Company, thereafter. Each contract, commitment or other arrangement between
an
Affiliated Party and the Company or any of its Subsidiaries is on terms no
less
favorable to the Company and its Subsidiaries than would have been available
from an unaffiliated third party at the time such Contract or commitment
was
entered into. Between January 1, 2003 and June 30, 2006, and, to the Knowledge
of the Company, thereafter, no event or transaction has occurred that would
be
required to be reported as a Certain Relationship or Related Transaction
pursuant to Statement of Financial Accounting Standards No. 57 that was not
so reported. There are no outstanding loans to directors or officers of the
Company or any of its Subsidiaries of the kind prohibited by Section 402 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
ARTICLE
V.
REPRESENTATIONS
AND WARRANTIES OF PARENT AND NEWCO
Parent
and Newco represent and warrant, jointly and severally, to the Company
that:
5.1 Corporate
Organization and Qualification.
Each of
Parent and its Subsidiaries (including Newco) is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction
of
incorporation and is qualified and in good standing as a foreign corporation
in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except where the failure
to so qualify or be in such good standing would not have a Parent Material
Adverse Effect. Each of Parent and its Subsidiaries has all requisite power
and
authority (corporate or otherwise) to own its properties and to carry on
its
business as it is now being conducted.
5.2 Authority
Relative to This Agreement.
Each of
Parent and Newco has the requisite corporate power and authority to execute
and
deliver this Agreement and each instrument required hereby to be executed
and
delivered by it at Closing, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby. This Agreement and
each
instrument required hereby to be executed and delivered by Parent or Newco
at
Closing, and the consummation by Parent and Newco of the transactions
contemplated hereby have been duly and validly authorized by the respective
boards of directors of Parent and Newco and by Parent as the sole shareholder
of
Newco, and no other corporate proceedings on the part of Parent and Newco
are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Parent and Newco and, assuming that this Agreement
constitutes the legal, valid and binding agreement of the Company, constitutes
the legal, valid and binding agreement of each of Parent and Newco, enforceable
against each of them in accordance with its terms, except that such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to
creditors’ rights generally, and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity).
5.3 Consents
and Approvals; No Violation.
Neither
the execution and delivery by Parent or Newco of this Agreement and of each
instrument required hereby to be delivered by Parent and Newco at the Closing,
nor the performance by Parent and Newco of their respective obligations
hereunder and thereunder, nor the consummation by Parent and Newco of the
transactions contemplated hereby, will:
(a) conflict
with or result in any breach of any provision of the Articles of Incorporation
(or Certificate of Incorporation, as the case may be) or Bylaws, respectively,
of Parent or Newco;
(b) require
any consent, approval, authorization, permit or filing with or notification
to,
any governmental or regulatory authority, except (i) in connection with the
applicable requirements of the HSR Act, (ii) pursuant to the applicable
requirements of the Securities Act or the Exchange Act, (iii) the filing
of the
Articles of Merger pursuant to the MBCA, (iv) as may be required by any
applicable state securities or “blue sky” Laws or state takeover Laws, (v) such
filings, consents, approvals, orders, registrations, declarations and filings
as
may be required under the Laws of any foreign country in which Parent or
any of
its Subsidiaries conducts any business or owns any assets, (vi) such filings
and
consents as may be required under any environmental, health or safety Law
or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement,
or
(vii) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not, individually or
in
the aggregate, reasonably be expected to have a Parent Material Adverse Effect
or adversely affect the consummation of the transactions contemplated
hereby;
(c) result
in
a violation or breach of, or constitute (with or without due notice or lapse
of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or Lien) under any of the terms, conditions or provisions
of any
note, license, agreement or other instrument or obligation to which Parent
or
any of its Subsidiaries is a party or by which any of their assets may be
bound,
except for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or Lien) as to which requisite waivers or consents
have been obtained or which, individually or in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect or adversely
affect the consummation of the transactions contemplated hereby; or
(d) assuming
that the consents, approvals, authorizations or permits and filings or
notifications referred to in this Section 5.3 are duly and timely obtained
or made, violate in any material respect any Order, statute, rule or regulation
applicable to Parent or any of its Subsidiaries or to any of their respective
assets.
5.4 Proxy
Statement.
None of
the information supplied by Parent or Newco in writing for inclusion in the
Proxy Statement will, at the time that it or any amendment or supplement
thereto
is mailed to the Company’s shareholders, at the time of the Shareholders Meeting
or at the Effective Time, contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under
which
they are made, not misleading. No representation or warranty is made by Parent
or Newco with respect to statements made or incorporated by reference in
the
Proxy Statement based on information supplied by the Company expressly for
inclusion or incorporation by reference therein.
5.5 Cash
Consideration.
Parent
has available to it, or at the Closing will have available to it, sufficient
cash resources necessary to make the payments for the Shares contemplated
by
this Agreement and all associated costs and expenses.
5.6 Interim
Operations of Newco.
Newco
was formed solely for the purpose of engaging in the transactions contemplated
hereby and has not engaged in any business activities or conducted any
operations, other than in connection with the transactions contemplated
hereby.
5.7 Brokers
and Finders.
Except
as set forth in Section 5.7
of the
Parent Disclosure Schedule, neither Parent nor Newco has employed, and to
the
knowledge of Parent and Newco, no other Person has made any arrangement by
or on
behalf of Parent or Newco with, any investment banker, broker, finder,
consultant or intermediary in connection with the transactions contemplated
by
this Agreement which would be entitled to any investment banking, brokerage,
finder’s or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
5.8 Share
Ownership.
As of
the date hereof, none of Parent, Newco or any of their Affiliates (i)
beneficially owns, directly or indirectly, any Shares, or (ii) is party to
any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, Shares.
5.9 Featherlite
Coaches.
Parent
has previously provided to the Company complete and correct copies of (i)
the
Asset Purchase Agreement between Parent and Featherlite Coaches, Inc., a
Nevada
corporation (“Featherlite
Coaches”),
pursuant to which Featherlite Coaches has agreed to acquire from the Surviving
Corporation, immediately after the Effective Time, certain assets and
liabilities associated with the Company’s coach division (the “Asset
Purchase Agreement”),
and
(ii) all other documents between Featherlite Coaches and Parent and any of
their
respective Affiliates relating to the Asset Purchase Agreement and the
transactions contemplated thereby (the “Asset
Purchase Documents”).
Other
than the Asset Purchase Agreement and the Asset Purchase Documents, neither
Parent nor any Affiliate thereof is, or is contemplated to be, a party to
any
written or oral contract, agreement, understanding or arrangement with
Featherlite Coaches or any Affiliate thereof, including any agreement regarding
employment or consulting after the Effective Time.
5.10. Financing.
Parent
has previously provided to the Company or its advisors complete and correct
copies of proposal letters from third parties to provide debt financing to
Parent and Newco in connection with the Merger.
ARTICLE
VI.
COVENANTS
AND AGREEMENTS
6.1 Conduct
of Business of the Company.
The
Company agrees that during the period from the date of this Agreement to
the
Effective Time (unless Parent shall otherwise agree in writing and except
as
otherwise contemplated by this Agreement), the Company will, and will cause
each
of its Subsidiaries to, conduct its operations according to its ordinary
and
usual course of business consistent with past practice in compliance in all
material respects with all applicable Laws, pay its debts and taxes when
due
(subject to good faith disputes over such debts), pay or perform other material
obligations when due, and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this Agreement,
use
commercially reasonable efforts to preserve intact its current business
organizations, keep available the service of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it to the end that goodwill and ongoing businesses
shall
not be impaired in any material respect at the Effective Time. Without limiting
the generality of the foregoing, and except as otherwise expressly permitted
in
this Agreement, or as set forth in Section 6.1
of the
Company Disclosure Schedule, prior to the Effective Time, neither the Company
nor any of its Subsidiaries will, without the prior written consent of Parent
(which will not be unreasonably withheld or delayed):
(a) except
for shares to be issued or delivered upon exercise of the outstanding Options
in
accordance with the Option Plans or outstanding Warrants in accordance with
their respective terms or as set forth in Section 6.1
of the
Company Disclosure Schedule, issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale, disposition
or
pledge or other encumbrance of (i) any additional shares of capital stock
of any
class (including the Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of
capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital
stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock, or (ii) any other
securities in respect of, in lieu of, or in substitution for, Shares outstanding
on the date hereof;
(b) redeem,
purchase or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any of its outstanding shares of capital stock;
(c) split,
combine, subdivide or reclassify any shares of capital stock or declare,
set
aside for payment or pay any dividend, or make any other actual, constructive
or
deemed distribution in respect of any shares of Capital Stock or otherwise
make
any payments to shareholders in their capacity as such, except for “upstream”
dividends paid by a Subsidiary to the Company;
(d) adopt
a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or
any of
its Subsidiaries (other than the Merger);
(e) adopt
any
amendment, modification or repeal, or propose to, or permit or consent to,
any
amendment, modification or repeal of its Articles of Incorporation or Bylaws
or
alter through merger, liquidation, reorganization, restructuring or in any
other
fashion the corporate structure or ownership of any of the Company’s
Subsidiaries;
(f) make
any
acquisition, by means of merger, consolidation, acquisition of all or
substantially all of the assets, capital stock or equity interests, or otherwise
of any Person, or make any disposition or assignment, of any of its capital
stock, material assets or properties or permit any of its assets or properties
to be subject to any Liens (other than Permitted Liens), except to the extent
such disposition or Lien is made or incurred in the ordinary course of business
consistent with past practice;
(g) other
than in the ordinary course of business consistent with past practice, incur
any
indebtedness for borrowed money or guarantee any such indebtedness, or make
any
loans, advances or capital contributions to, or investments in, any other
Person
other than to or in the Company or any of its Subsidiaries;
(h) grant
any
increases (other than as required by Law) in the compensation, pension,
retirement or other employment benefit of any character, or grant any new
material benefit to any of its directors, officers or employees, except for
increases in compensation for employees who are not officers in the ordinary
course of business and in accordance with past practice;
(i) pay
or
agree to pay any pension, retirement allowance or other employee benefit
with
respect to its directors, employees, agents or consultants not required or
contemplated by any of the existing Company Plans as in effect on the date
hereof;
(j) enter
into any new, or amend, any existing employment, severance, change of control
or
termination agreement with any director, officer, consultant, agent or
employee;
(k) except
as
may be required to comply with applicable Law, become obligated under any
new
pension plan, welfare plan, multiemployer plan, employee benefit plan, severance
plan, benefit arrangement or similar plan or arrangement, which was not in
existence on the date hereof, or amend any such plan or arrangement in existence
on the date hereof if such amendment would have the effect of enhancing any
benefits thereunder;
(l) change
or
remove certified public accountants for the Company or change any of the
accounting methods, policies, procedures, practices or principles used by
the
Company unless required by GAAP or the SEC;
(m) enter
into, or become obligated under, or change, amend, terminate or otherwise
modify
any Material Contract, except in the ordinary course of business consistent
with
past practice;
(n) modify
the terms of, discount, setoff or accelerate the collection of, any accounts
receivable, except in the ordinary course of business consistent with past
practice;
(o) pay
accounts payable and other obligations and liabilities other than in the
ordinary course of business consistent with past practice;
(p) fail
to
maintain in all material respects inventory levels appropriate for the
businesses of the Company and its Subsidiaries;
(q) make
or
commit to make aggregate capital expenditures in excess of
$100,000;
(r) settle
any material pending claim or other material disagreement in an amount in
excess
of $100,000 absent prior consultation with Parent;
(s) grant
any
Lien on the capital stock of the Company or any of its Subsidiaries except
for a
Permitted Lien;
(t) enter
into, directly or indirectly, any new material transaction with any Affiliate
of
the Company (excluding transactions with the Subsidiaries in the ordinary
course
of business and consistent with past practice), including, without limitation,
any transaction, agreement, arrangement or understanding with any affiliate
or
other Person covered under Item 404 of Regulation S-K under the Securities
Act
that would be required to be disclosed under such Item 404;
(u) take,
undertake, incur, authorize, commit or agree to take any action that would
cause
any of the representations or warranties in Article IV to be untrue in any
respect (other than as a result of the conduct of their business in the ordinary
course) or would reasonably be anticipated to cause any of the conditions
to
closing set forth in Article VII not to be satisfied;
(v) incur
any
expenses or liabilities of the Company for the benefit of or in support of
the
operations of the Company’s Coach division, unless such expenses or liabilities
are and remain through the Effective Time identified and accounted for in
the
books and records of the Company as expenses or liabilities of the Coach
division; or
(w) authorize,
recommend, propose or announce an intention to do any of the foregoing, or
enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing.
6.2 No
Solicitation of Transactions.
(a) The
Company has, and has caused each officer, director or employee of, or any
investment banker, attorney or other advisor or representative of the Company,
to immediately cease and cause to be terminated all existing activities,
discussions, solicitations, communications or negotiations with any Third
Party
(as defined below) conducted prior to the date hereof with respect to any
Competing Transaction (as defined below). The Company shall not, nor shall
it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor
or
representative of, the Company or any of its Subsidiaries to, (i) solicit
or
initiate, encourage, or facilitate, directly or indirectly, any inquiries
relating to, or the submission of, any proposal or offer, whether in writing
or
otherwise, from any Person other than Parent, Newco or any Affiliates thereof
(a
“Third
Party”)
to
acquire beneficial ownership (as defined under Rule 13(d) of the Exchange
Act)
of all or more than fifteen percent (15%) of the assets of the Company and
its
Subsidiaries, taken as a whole, or fifteen percent (15%) or more of any class
of
equity securities of the Company pursuant to a merger, consolidation or other
business combination, sale of shares of stock, sale of assets, tender offer,
exchange offer or similar transaction or series of related transactions,
which
is structured to permit such Third Party to acquire beneficial ownership
of more
than fifteen percent (15%) of the assets of the Company and its Subsidiaries,
taken as a whole, or fifteen percent (15%) or more of any class of equity
securities of the Company (a “Competing
Transaction”);
(ii)
participate or engage in any discussions or negotiations with any Third Party
regarding any Competing Transaction, or furnish to any Third Party any
information or data with respect to or access to the properties of the Company
in connection with a Competing Transaction, or take any other action to
facilitate the making of any proposal that constitutes, or may reasonably
be
expected to lead to, any Competing Transaction; or (iii) enter into any
agreement with respect to any Competing Transaction, approve or recommend
or
resolve to approve or recommend any Competing Transaction, or enter into
any
agreement requiring it to abandon, terminate or fail to consummate the Merger
and the other transactions contemplated by this Agreement. Notwithstanding
the
foregoing sentence or anything to the contrary in this Agreement, if the
Company
receives (in the absence of any violation of this Section 6.2) a bona fide,
written proposal or offer for a Competing Transaction by a Third Party prior
to
the receipt of the Company Shareholder Approval, which the Special Committee
determines in good faith (after consulting the Special Committee’s independent
financial advisor) (A) is reasonably likely to result in terms which are
more
favorable from a financial point of view to the holders of Shares than the
Merger and the other transactions contemplated by this Agreement, and (B)
is
reasonably capable of being consummated (provided,
that
the Company, including the Special Committee, and any of its advisors, shall
be
permitted to contact such Third Party and its advisors solely for the purpose
of
clarifying the proposal and any material contingencies and the capability
of
consummation) (a “Superior
Competing Transaction”),
then
the Company may, in response to an unsolicited request therefor and subject
to
compliance with Section 6.2(b), furnish information with respect to the
Company and its Subsidiaries to, and participate in discussions and negotiations
directly or through its representatives with, such Third Party. Notwithstanding
the foregoing, the Company shall not provide any non-public information to
any
such Third Party unless the Company provides such non-public information
pursuant to a nondisclosure agreement. The Company shall be permitted to
waive
the provisions of any “standstill” agreement between the Company and a Third
Party to the extent necessary to permit such Third Party to submit a Competing
Transaction that the Special Committee believes, in its good faith judgment,
is
reasonably likely to result in a Superior Competing Transaction. Nothing
contained in this Agreement shall prevent the Special Committee from (i)
complying with any applicable Law, rule or regulation, including, without
limitation, Rule 14d-9 and Rule l4e-2 promulgated under the Exchange Act,
(ii)
making any disclosure to its shareholders required by applicable Law, rule
or
regulation or by the rules and regulations of NASDAQ, or (iii) otherwise
making
such disclosure to the Company’s shareholders or otherwise that the Special
Committee (after consultation with counsel) concludes in good faith is necessary
in order to comply with its fiduciary duties to the Company’s shareholders under
applicable Law.
(b) The
Company shall advise Parent orally and in writing within three (3) business
days after receipt of any proposal or offer for a Competing Transaction made
in
accordance with Section 6.2(a) of (i) any proposal for a Competing
Transaction received by any officer or director of the Company or, to the
Knowledge of the Company, any financial advisor, attorney or other advisor
or
representative of the Company, and (ii) the material terms of such Competing
Transaction (but not the identity of the entity proposing the Competing
Transaction). The Company shall keep Parent reasonably informed of the status
of, and any material changes to, the terms of any such Competing Transaction
proposal in a timely manner.
(c) In
the
event the Special Committee determines that it has received a proposal for
a
Superior Competing Transaction and determines in good faith (after consultation
with counsel) that taking any or all of the following actions is necessary
in
order to comply with its fiduciary duties under applicable Law, and provided,
that
neither the Company nor any representative of the Company has breached any
of
the provisions of this Section 6.2, the Company and the Special Committee
may (i) withdraw, modify or change the Board of Director’s approval or
recommendation of this Agreement or the Merger, (ii) approve or recommend
to the
Company’s shareholders such Superior Competing Transaction, (iii) terminate this
Agreement in accordance with Section 8.4(iii), and (iv) publicly announce
the Board of Director’s intention to do any or all of the
foregoing.
6.3 Reasonable
Best Efforts to Complete Transactions.
(a) Subject
to the terms and conditions herein provided, each of the parties hereto shall
cooperate with the other and use its reasonable best efforts to take, or
cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws to consummate and make effective,
in
the most expeditious manner possible, the Merger and the other transactions
contemplated by this Agreement, including using its reasonable best efforts
to
obtain all necessary or appropriate waivers, consents and approvals, to effect
all necessary registrations, filings and submissions (including, but not
limited
to, (i) filings under the HSR Act, which shall be made within thirty (30)
days after the date of this Agreement, and any other submissions requested
by
the Federal Trade Commission or Department of Justice, (ii) the filings referred
to in Sections 4.4(a)(ii) and 5.3(b), and (iii) such filings, consents,
approvals, orders registrations and declarations as may be required under
the
Laws of any foreign country in which the Company or any of its Subsidiaries
conducts any business or owns any assets, which shall be made within ten
(10)
business days after the date of this Agreement), and to lift any injunction
or
other legal bar to the Merger (and, in such case, to proceed with the Merger
as
expeditiously as possible), subject, however, to the requisite votes of the
shareholders of the Company.
(b) Each
of
the parties hereto agrees to cooperate with each other in taking, or causing
to
be taken, all actions necessary to delist the Common Shares from NASDAQ and
to
terminate registration under the Exchange Act; provided,
that
such delisting and termination shall not be effective until the end of the
day
upon which the Effective Time occurs.
(c) Each
of
the Company and Parent shall keep the other reasonably informed of the status
of
their respective efforts to consummate the transactions contemplated hereby,
including by furnishing the other with such necessary information and reasonable
assistance as it may reasonably request in connection with its preparation
of
necessary filings or submissions of information to any governmental authority
and by giving prompt notice of (i) any representation or warranty made by
it
contained in this Agreement becoming untrue or inaccurate in any material
respect, (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by
it under this Agreement; provided,
however,
that no
such notification provided pursuant to clause (i) or (ii) above shall affect
the
representations, warranties, covenants or agreements of the parties or the
conditions to or obligations of the parties under this Agreement, (iii)
any
notice or other communication from any Person alleging that the consent of
such
Person is or may be required in connection with the Merger or the transactions
contemplated by this Agreement, (iv) any notice or other communication relating
to an investigation or restraint from any governmental authority in connection
with the Merger or the transactions contemplated by this Agreement, and (v)
any
Action commenced or, to the Knowledge of the Company, on the one hand, or
Parent’s knowledge, on the other hand, threatened against, relating to or
involving or otherwise affecting the Company or any of its Subsidiaries,
on the
one hand, and Parent or Newco, on the other hand, and which, if pending on
the
date of this Agreement, would have been required to have been disclosed pursuant
to Article IV or Article V, as the case may be, or which relate to the
consummation of the transactions contemplated by this Agreement.
Parent
shall keep the Company informed of material developments with respect to
the
implementation of the financing of the transactions contemplated hereby.
Each of
the Company and Parent may, as it deems advisable and necessary, reasonably
designate any competitively sensitive material provided to the other under
this
Section 6.3(c) as “outside counsel only” and, in such event, such material
and the information contained therein shall be given only to the outside
legal
counsel of the recipient and shall not be disclosed by such counsel to non-legal
directors, officers, employees or other advisors or representatives of the
recipient unless express permission is obtained in advance from the source
of
the materials or its legal counsel.
(d) Notwithstanding
anything to the contrary set forth in this Section 6.3 or elsewhere in this
Agreement, if any governmental authority that has the authority to enforce
any antitrust Law seeks, or authorizes its staff to seek, a preliminary
injunction or restraining order to enjoin consummation of the Merger, none
of
the parties hereto shall be required to take or agree to take any action
which
such party reasonably believes would be prohibited or restricted under such
preliminary injunction or restraining order, or shall be required to waive
any
of the conditions to the Merger.
(e) Notwithstanding
the foregoing, the Company shall not be obligated to use its reasonable efforts
or take any action pursuant to this Section 6.3 if in the good faith
opinion of the Special Committee (after consultation with counsel) such actions
might be inconsistent with its fiduciary duties to the Company’s shareholders
under applicable Law.
6.4 Shareholders
Meeting; Proxy Statement.
(a) The
Company, acting through the Special Committee, shall:
(i) (A)
use
all commercially reasonable efforts to promptly prepare and, within
thirty (30) days after the date of this Agreement, file with the SEC a
proxy statement for the purposes of considering and taking action upon this
Agreement (the “Proxy
Statement”),
(B)
obtain and furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent and Newco, respond promptly
to any
comments made by the SEC with respect to the Proxy Statement and any preliminary
version thereof, and (C) undertake to obtain the necessary approvals by its
shareholders of this Agreement and the Merger and the other transactions
contemplated hereby unless, in the good faith opinion of the Special Committee
(after consultation with counsel), taking any such action might be inconsistent
with its fiduciary duties to the Company’s shareholders under applicable
Law;
(ii) include
in the Proxy Statement the unanimous recommendation of the Special Committee
that the shareholders of the Company vote in favor of the approval of this
Agreement and the Merger and use its reasonable best efforts to solicit from
the
shareholders of the Company proxies in favor of adoption of this Agreement
and
approval of the Merger for the Shareholders Meeting; provided,
that,
notwithstanding anything to the contrary set forth in this Agreement, the
Special Committee may withdraw, modify or amend its recommendation if, in
the
good faith opinion of the Special Committee (after consultation with counsel),
such recommendation might be inconsistent with its fiduciary duties to the
Company’s shareholders under applicable Law, in which case any such withdrawal,
modification or amendment shall not constitute a breach of this Agreement;
(iii) duly
call, give notice of, convene and hold a special meeting of its shareholders
for
the purpose of considering and taking action upon this Agreement and the
Merger
(the “Shareholders
Meeting”),
to be
held twenty-one (21) days following filing of the definitive Proxy
Statement with the SEC; and
(iv) if
at any
time prior to the Shareholders Meeting any information relating to the Company,
or any of its Affiliates, officers or directors, should be discovered by
the
Company which should be set forth in an amendment or supplement to the Proxy
Statement, so that it would not include any misstatement of a material fact
or
omit to state any material fact necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading, the
Company shall promptly notify Parent and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to
the
extent required by Law, disseminated to the shareholders of the
Company.
(b) Parent
and Newco shall each cause their respective representatives to fully cooperate
with the Company in the preparation of the Proxy Statement, and shall, upon
request, furnish the Company with all information concerning it and its
Affiliates as the Company may deem reasonably necessary or advisable in
connection with the preparation of the Proxy Statement. If at any time prior
to
the Shareholders Meeting any information relating to the Parent, or any of
its
Affiliates, officers or directors, should be discovered by Parent which should
be set forth in an amendment or supplement to the Proxy Statement, so that
it
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, Parent shall promptly
notify the Company and an appropriate amendment or supplement describing
such
information shall be promptly filed with the SEC and, to the extent required
by
Law, disseminated to the shareholders of the Company
(c) At
the
Shareholders Meeting, Parent, Newco and their Affiliates shall vote all Shares,
if any, owned by them in favor of approval of this Agreement, the Merger
and the
other transactions contemplated hereby.
6.5 Access
to Information.
(a) The
Company shall (and shall cause each of its Subsidiaries to) afford to officers,
employees, counsel, accountants and other authorized representatives of Parent
(“Representatives”),
in
order to evaluate the transactions contemplated by this Agreement, reasonable
access, during normal business hours and upon reasonable advance notice
throughout the period prior to the Effective Time, to its properties, books,
records, facilities, officers, directors and accountants and, during such
period, shall (and shall cause each of its Subsidiaries to) furnish or make
available reasonably promptly to such Representatives all information concerning
its business, properties and personnel as may reasonably be requested;
provided,
however,
that
any such access shall be conducted under the supervision of personnel of
the
Company and in a manner that does not unreasonably interfere with the normal
operations of the Company.
Parent
agrees that it shall not, and shall cause its Representatives not to, use
any
information obtained pursuant to this Section 6.5 for any purpose unrelated
to the consummation of the transactions contemplated by this
Agreement.
(b) Notwithstanding
anything to the contrary set forth herein, nothing in this Section 6.5 shall
require the Company to disclose any information that, on the advice of its
counsel, (i) it is not legally permitted to disclose or the disclosure of
which would contravene any applicable Law or binding order, (ii) the
disclosure of which would jeopardize any attorney-client or other legal
privilege, or (iii) the disclosure of which would conflict with, violate or
cause a default under any existing agreement to which it is a party, provided
that the Company shall use its reasonable best efforts to obtain the consent
of
any third party capable of waiving any provision pursuant to which any such
conflict, violation or default might arise.
(c) No
information received pursuant to an investigation made under this
Section 6.5 shall be deemed to (i) qualify, modify, amend or otherwise
affect any representations, warranties, covenants or other agreements of
the
Company set forth in this Agreement or any certificate or other instrument
delivered to Parent and Newco in connection with the transactions contemplated
hereby, (ii) amend or otherwise supplement the information set forth in the
Company Disclosure Schedule, (iii) limit or restrict the remedies available
to the parties under applicable Law arising out of a breach of this Agreement,
or (iv) limit or restrict the ability of either party to invoke or rely on
the conditions to the obligations of the parties to consummate the transactions
contemplated by this Agreement set forth in Article VII hereof.
(d) The
Confidentiality Agreement, dated January 30, 2006 (the “Confidentiality
Agreement”),
by
and between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital, Inc., on behalf of the
Company, and Parent shall apply, in accordance with the terms thereof, to
information furnished by the Company, its Subsidiaries and the Company’s
officers, employees, counsel, accountants and other authorized representatives
pursuant to this Section 6.5.
6.6 Publicity.
The
parties shall consult with each other and shall mutually agree upon any press
releases or public announcements pertaining to this Agreement and the Merger
and
shall not issue any such press releases or make any such public announcements
prior to such consultation and agreement, except as may be required by
applicable Law or by obligations pursuant to any agreement with any national
securities exchange or automated quotation system, in which case the party
proposing to issue such press release or make such public announcement shall
use
its reasonable efforts to consult in good faith with the other parties before
issuing any such press releases or making any such public announcements;
provided,
that no
such consultation shall be
required
to make any disclosure or otherwise take any action expressly permitted by
Section 6.2.
6.7 Indemnification
of Directors and Officers.
(a) Parent
and Newco agree that all rights to indemnification existing in favor of,
and all
exculpations and limitations of the personal liability of, the directors,
officers, employees and agents of the Company (the “Indemnified
Parties”)
in the
Company Articles and Company Bylaws, and of the Company’s Subsidiaries in their
respective Articles of Incorporation and Bylaws, as in effect as of the date
hereof with respect to matters occurring at or prior to the Effective Time,
including the Merger, shall continue in full force and effect for a period
of
not less than six (6) years from the Effective Time; provided,
however,
that
(i) all rights to indemnification in respect of any such claims (each, a
“Claim”)
asserted or made within such period shall continue until the disposition
of such
Claim, and (ii) Parent and Newco shall acquire “tail” directors’ and officers’
liability insurance and fiduciary insurance policies covering Claims with
respect to matters occurring at or prior to the Effective Time, including
the
Merger, that are no less favorable to the Indemnified Parties than the Company’s
existing directors’ and officers’ liability insurance and fiduciary insurance
policies in effect immediately prior to the Effective Time.
(b) This
Section 6.7 is intended for the irrevocable benefit of, and to grant third
party
rights to, the Indemnified Parties and shall be binding on all successors
and
assigns of Parent, the Company and the Surviving Corporation. Each of the
Indemnified Parties shall be entitled to enforce the covenants contained
in this
Section 6.7. The obligations under this Section 6.7 shall
not
be terminated, amended or otherwise modified in such a manner as to adversely
affect any Indemnified Party (or any other Person who is a beneficiary under
the
“tail” policy referred to in paragraph (a) above) (and their respective
heirs,
successors and assignees)
without
the prior written consent of such Indemnified Party (or other Person who
is a
beneficiary under such “tail” policy) (and their respective heirs,
successors and assignees).
The
rights of each Indemnified Party (and other Person who is a beneficiary under
such “tail” policy) (and their respective heirs,
successors and assignees)
under
this Section 6.7 shall be in addition to, and not in substitution for, any
other
rights that such Persons may have under the certificate or articles of
incorporation, bylaws or other equivalent organizational documents, any
indemnification agreements to which such Indemnified Party or other Person
is a
party, or applicable Law (whether in a proceeding at Law or in
equity).
(c) In
the
event that the Surviving Corporation or any of its successors or assigns
(i)
consolidates with or merges with or into any other Person and shall not be
the
continuing or surviving entity of such consolidation or merger, or (ii)
transfers or conveys a majority of its properties and assets to any Person,
then, and in each such case, proper provision shall be made so that the
successors, assigns and transferees of the Surviving Corporation, as the
case
may be, assume the obligations set forth in this Section 6.7.
(d) To
the
extent permitted by law, at rights of indemnification for the benefit of
any
Indemnified Party shall be mandatory rather than permissive.
6.8 Employees.
(a) At
the
Effective Time, Parent agrees that, except
for those employees resigning as of the Effective Time as contemplated in
Section
4.11(b)
of the
Company Disclosure Schedule, all
employees of the Company and its Subsidiaries immediately prior to the Effective
Time shall be offered comparable continuing employment at rates of pay and
with
benefits under employee benefit plans, programs, arrangements and policies
for
the benefit of employees of the Company and its Subsidiaries that in the
aggregate are no less favorable to such employees than the rates of pay in
effect for the twelve (12) months prior to the Effective Time and the Company
Plans set forth in Section 6.8(a)
of the
Company Disclosure Schedule, provided that payment of any amounts payable
under
the Company’s incentive bonus program described in Section 6.8(a)
of the
Company Disclosure Schedule shall be made in the ordinary course to Persons
employed by the Company or its Subsidiaries as of the end of the calendar
year
2006, and shall not be accelerated or pro-rated as a result of the occurrence
of
the Merger and the other transactions contemplated hereby. Neither this
Section 6.8 nor any other provision of this Agreement shall limit the
ability or the right of the Surviving Corporation or its Subsidiaries to
terminate the employment, or to alter any applicable rates of pay or benefits
under employee benefit plans, programs, arrangements and policies, of any
employees of the Company or any of its Subsidiaries who continue as employees
of
the Surviving Corporation or any of its Subsidiaries (collectively, the
“Continuing
Employees”)
after
the Effective Time (subject to the rights of any such employees pursuant
to any
agreement which is to be binding after the Effective Time as set forth in
Section 6.8(b)
of the
Company Disclosure Schedule). All service credited to each Continuing Employee
shall be recognized by Parent for all purposes, including vacation and for
purposes of eligibility, vesting and benefit accruals under any employee
benefit
plan provided by Parent for the benefit of the employees. Without limiting
the
foregoing, Parent shall not treat any Continuing Employee as a “new” employee
for purposes of any pre-existing condition exclusions, waiting periods, evidence
of insurability requirements or similar provision under any health or other
welfare plan, and shall make appropriate arrangements with its insurance
carrier(s), to the extent applicable, to ensure such result.
(b) Parent
and the Surviving Corporation hereby agree to honor (without modification)
and
assume, to the extent required, the Change of Control Agreements, as set
forth
in Section 6.8(b)
of the
Company Disclosure Schedule, as in effect at the Effective Time.
ARTICLE
VII.
CONDITIONS
TO CONSUMMATION OF THE MERGER
7.1 Conditions
to Each Party’s Obligations to Effect the Merger.
The
respective obligations of each party to this Agreement to effect the Merger
are
subject to the satisfaction or written waiver, at or prior to the Effective
Time, of the following conditions:
(a) Shareholder
Approval.
The
Company Shareholder Approval shall have been obtained in accordance with
applicable Law and the Company Articles and Company By-Laws.
(b) Injunction.
There
shall not be in effect any statute, rule, regulation, executive Order enacted,
issued, entered or promulgated by a court or governmental or regulatory agency
of competent jurisdiction directing that the transactions contemplated herein
not be consummated; provided,
however,
that
prior to invoking this condition each party shall use its commercially
reasonable efforts to have any such decree, ruling, injunction or order
vacated.
(c) Governmental
Filings and Consents.
All
governmental consents, orders and approvals legally required for the
consummation of the Merger and the transactions contemplated hereby shall
have
been obtained and be in effect at the Effective Time, and the waiting periods
under the HSR Act and under all other applicable antitrust Laws shall have
expired or been terminated.
7.2 Conditions
to the Company’s Obligations to Effect the Merger.
The
obligations of the Company to effect the Merger are subject to the satisfaction,
at or prior to the Effective Time, of the following additional conditions
(any
of which may be waived by the Company, in whole or in part, at any time prior
to
the Effective Time):
(a) The
representations and warranties of Parent and Newco contained in this Agreement
shall be true and correct (in all material respects, in the case of
representations and warranties not already qualified as to materiality by
their
terms), and shall be true and correct in all respects (in the case of
representations and warranties qualified as to materiality by their terms),
at
and as of the Effective Time as though made on and as of such date (except
(i)
for changes specifically permitted by this Agreement, and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date), except for inaccuracies
of
such representations and warranties the circumstances giving rise to which,
individually or in the aggregate, do not constitute and could not reasonably
be
expected to have a Parent Material Adverse Effect, and the Company shall
have
received a certificate of the President or a Vice President of Parent to
the
foregoing effect.
(b) Parent
and Newco shall have performed and complied with in all material respects
their
obligations under this Agreement, taken as a whole, to be performed or complied
with on or prior to the Effective Time, and the Company shall have received
a
certificate of the President or a Vice President of Parent to the foregoing
effect.
7.3 Conditions
to Parent’s and Newco’s Obligations to Effect the Merger.
The
obligations of Parent and Newco to effect the Merger are subject to the
satisfaction, at or prior to the Effective Time, of the following additional
conditions (any of which may be waived by Parent and Newco, in whole or in
part,
at any time prior to the Effective Time):
(a) The
representations and warranties of the Company contained in this Agreement
shall
be true and correct (in all material respects, in the case of representations
and warranties not already qualified as to materiality by their terms), and
shall be true and correct in all respects (in the case of representations
and
warranties qualified as to materiality by their terms), at and as of the
Effective Time as though made on and as of such date (except (i) for changes
specifically permitted by this Agreement, and (ii) that those representations
and warranties which address matters only as of a particular date shall remain
true and correct as of such date), except for inaccuracies of such
representations and warranties the circumstances giving rise to which,
individually or in the aggregate, do not constitute and could not reasonably
be
expected to have a Company Material Adverse Effect, and Parent shall have
received a certificate of the President or a Vice President of the Company
to
the foregoing effect.
(b) The
Company shall have performed and complied with in all material respects its
obligations under this Agreement, taken as a whole, to be performed or complied
with on or prior to the Effective Time, and Parent shall have received a
certificate of the President or a Vice President of the Company to the foregoing
effect.
(c) The
Company shall have obtained the consents from Persons other than governmental
authorities listed in Section 7.3(c)
of the
Company Disclosure Schedule.
(d) Less
than
ten percent (10%) of the outstanding shares of Capital Stock shall be Dissenting
Shares.
(e) There
shall not have been any change, development, condition, event or circumstance
that, individually or in the aggregate, has had, or would reasonably be expected
to have, a Company Material Adverse Effect.
(f) There
shall not be pending any Action against the Company, any of its Subsidiaries
or
any of their respective directors, officers or members, in each case that
has a
reasonable likelihood of success challenging this Agreement or the transactions
contemplated hereby, seeking to delay, restrain or prohibit the Merger, seeking
to prohibit or impose material limitations on the ownership or operations
of all
or a portion of the operations or assets of the Company or any of its
Subsidiaries, or to pay any material damages.
(g) Newco
shall have (i) obtained financing sufficient for payment of the aggregate
Merger Consideration on terms and conditions satisfactory to Parent and Newco,
and (ii) completed confirmatory due diligence satisfactory to the sources
of such financing.
(h) The
Asset
Purchase Agreement and the other Asset Purchase Documents shall be in full
force
and effect, and all conditions to the consummation of the transactions
contemplated thereby, other than the occurrence of the Effective Time, shall
have been satisfied.
ARTICLE
VIII.
TERMINATION;
WAIVER
8.1 Termination
by Mutual Consent.
This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time, by the mutual written consent of Parent and the
Company.
8.2 Termination
by Either Parent or the Company.
This
Agreement may be terminated and the Merger may be abandoned by Parent or
the
Company if (i) any court of competent jurisdiction in the United States or
some
other governmental body or regulatory authority shall have issued an Order
permanently restraining, enjoining or otherwise prohibiting the Merger and
such
Order shall have become final and non-appealable, (ii) the Company Shareholder
Approval shall not have been received at the Shareholders Meeting duly called
and held at which a quorum was present or any adjournment thereto; provided
that the
right to terminate this Agreement pursuant to this Section 8.2(ii) (A)
shall not be available to the Company if the Company has breached the provisions
of Section 6.2, and (B) shall be subject to the Company’s obligation to
make the Special Termination Payment described in Section 8.5(c)
immediately upon such termination, as well as to pay Reimbursable Expenses
pursuant to Section 8.5(d) and any other amounts determined to be payable
under
Section 8.5(c) as and when due, or (iii) the Effective Time shall not have
occurred on or before October 31, 2006 (the “Termination
Date”);
provided,
that
(A) the right to terminate this Agreement pursuant to this Section 8.2(iii)
shall not be available to any party whose failure to fulfill any of its
obligations under this Agreement results in such failure to close, and (B)
the
Termination Date for any termination by the Company pursuant to this
Section 8.2(iii) shall be extended by the number of days in excess of
thirty (30) days that is required to obtain final SEC approval of the Proxy
Statement (measured from the date of the first filing of the preliminary
Proxy
Statement with the SEC until the date the Proxy Statement is mailed to the
shareholders of the Company).
8.3 Termination
by Parent.
This
Agreement may be terminated by Parent prior to the Effective Time, if (i)
the
Company shall have failed to perform in any material respect any of its material
obligations under this Agreement (including, without limitation, any of its
obligations under Section 6.2) to be performed at or prior to such date of
termination, which failure to perform is not cured, or is incapable of being
cured, within thirty (30) days after the receipt by the Company of written
notice of such failure, (ii) any representation or warranty of the Company
contained in this Agreement shall not be true and correct (except for changes
permitted by this Agreement and those representations which address matters
only
as of a particular date shall remain true and correct as of such date), except,
in any case, such failures to be true and correct which would not reasonably
be
expected to have a Company Material Adverse Effect or are not reasonably
likely
to adversely affect the Company’s ability to consummate the Merger, if such
failure to be true and correct is not cured, or is incapable of being cured,
within thirty (30) days after the receipt by the Company of written notice
of such failure, (iii) the Special Committee withdraws or modifies or changes
its recommendation of this Agreement or the Merger in a manner adverse to
Parent
or Newco other than in connection with a Superior Competing Transaction,
or (iv)
if the Company shall have approved or recommended a Superior Competing
Transaction.
8.4 Termination
by the Company.
This
Agreement may be terminated by the Company and the Merger may be abandoned
at
any time prior to the Effective Time if (i) Newco or Parent shall have failed
to
perform in any material respect any of their material obligations under this
Agreement to be performed at or prior to such date of termination, which
failure
to perform is not cured, or is incapable of being cured, within thirty (30)
days after the receipt by Parent of written notice of such failure, (ii)
any
representation or warranty of Newco or Parent contained in this Agreement
shall
not be true and correct (except for changes permitted by this Agreement and
those representations which address matters only as of a particular date
shall
remain true and correct as of such date), except, in any case, such failures
to
be true and correct which would not reasonably be expected to have a Parent
Material Adverse Effect or are not reasonably likely to adversely effect
Parent’s or Newco’s ability to complete the Merger, if such failure to be true
and correct is not cured, or is incapable of being cured, within
thirty (30) days after receipt by Parent of written notice of such failure,
or (iii) the Special Committee withdraws or modifies or changes its
recommendation of this Agreement or the Merger and there exists at such time
a
proposal or offer for a Competing Transaction that constitutes a Superior
Competing Transaction and the Special Committee approves, and the Company
concurrently enters into, a definitive agreement providing for the
implementation of a Superior Competing Transaction; provided,
that
the Company shall have made the payment of the Termination Fee to Parent
required by Section 8.5(b) concurrent with and as a condition to such
termination.
8.5 Effect
of Termination.
(a) In
the
event of the termination and abandonment of this Agreement pursuant to this
Article VIII, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any party hereto or its Affiliates,
directors, officers or shareholders, other than the provisions of this
Section 8.5 and the provisions of Sections 10.1 and 10.2 and
Section 6.5(e). Nothing contained in this Section 8.5 shall relieve
any party from liability for any fraud or the intentional breach of any covenant
or other agreement contained in this Agreement occurring prior to such
termination.
(b) In
the
event of termination of this Agreement without consummation of the transactions
contemplated hereby:
(i) by
Parent
pursuant to Section 8.3(iii); or
(ii) by
the
Company pursuant to Section 8.4(iii);
then
the
Company shall make payment to Parent by wire transfer of immediately available
funds of a fee in the amount of Two Million Dollars ($2,000,000) (the
“Termination
Fee”),
in
the case of clause (i) above, within two (2) business days of such
termination, or, in the case of clause (ii) above, concurrently with such
termination. In the event that this Agreement is terminated and pursuant
to the
terms of this Agreement Parent is entitled to receive the Termination Fee,
the
receipt of the Termination Fee by Parent pursuant to the provisions of this
Section 8.5 shall be the exclusive remedy of Parent and Parent shall not be
entitled to any further or other rights, claims or remedies at law or in
equity,
all of which further rights, claims and remedies Parent irrevocably waives;
provided,
that
Parent shall not be precluded from exercising any remedies upon the failure
of
the Company to pay the Termination Fee when due.
(c) In
the
event of termination of this Agreement without consummation of the transactions
contemplated hereby by either Parent or the Company pursuant to
Section 8.2(ii), then the Company shall make payment to Parent by wire
transfer of immediately available funds of the amount of Five Hundred Thousand
Dollars ($500,000) (the “Special
Termination Payment”),
concurrently with such termination, provided
that if
within six (6) months of the date of such termination, the Company and/or
its
shareholders consummates a Superior Competing Transaction, then the Company
shall make payment to Parent by wire transfer of immediately available funds,
concurrently with the completion of such Superior Competing Transaction,
of an
amount equal to the amount of the Termination Fee, less
the
aggregate amount of the Special Termination Payment and all Reimbursable
Expenses actually paid by the Company to Parent pursuant to this Section
8.5(c)
and Section 8.5(d).
(d) If
either
Parent or the Company terminates this Agreement without consummation of the
transactions contemplated hereby pursuant to Section 8.2(ii), or Parent
terminates this Agreement without consummation of the transactions contemplated
hereby pursuant to any of Sections 8.3(i), 8.3(ii) or 8.3(iv), then the
Company shall promptly following such termination, upon written request from
Parent and receipt of reasonable substantiation therefor, reimburse Parent
for
all out-of-pocket fees and expenses incurred by Parent in connection with
the
transactions contemplated by this Agreement, including without limitation
reasonable fees and expenses of Parent’s legal counsel, accountants and
financial advisors, commitment fees paid or payable by Parent to potential
financing sources, and fees and expenses of potential financing sources that
Parent is required to pay or reimburse (“Reimbursable
Expenses”),
all
as and to the extent reasonably documented by Parent, up to a maximum amount
reimbursable under this Section 8.5(d) of One Million Dollars ($1,000,000),
provided
that in
the event the Company disputes any claim for Reimbursable Expenses, such
disputed claim shall be submitted for arbitration to a single arbitrator,
as
agreed upon by the Parent and the Company, for arbitration in accordance
with
the rules then in force of the American Arbitration Association (“AAA”)
in New
York, New York. In the absence of agreement between the Company and the Parent
on the identity of an arbitrator within 15 days after arbitration is sought
by
either party, the arbitral tribunal shall consist of three arbitrators, one
arbitrator to be selected by each of the Company and the Parent and the third
arbitrator to be selected by agreement of the first two arbitrators. In the
event either party hereto fails to select an arbitrator within 30 days after
arbitration is sought by either party or if the two arbitrators selected
by the
parties cannot agree as to the third arbitrator within 15 days after they
are
selected, such arbitrator or arbitrators shall be appointed by the AAA at
the
request of either of the parties. The decision rendered by the arbitrator
or
arbitrators shall be accompanied by a written opinion in support thereof.
Such
decision shall be final and binding upon the parties in dispute without right
of
appeal. Judgment upon any such decision may be entered into in any court
having
jurisdiction thereof, or application may be made to such court for a judicial
acceptance of the decision and an order of enforcement. Costs of the arbitration
shall be assessed by the arbitrator or arbitrators against any and all of
the
parties in dispute, and shall be paid promptly by the party or parties so
assessed.
8.6 Extension;
Waiver.
At any
time prior to the Effective Time, each of Parent, Newco and the Company may
(i)
extend the time for the performance of any of the obligations or other acts
of
the other parties hereto, (ii) waive any inaccuracies in the representations
and
warranties of the other parties contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii) waive compliance by the other
parties hereto with any of the agreements or conditions contained herein.
Any
agreement on the part of any party hereto to any such extension or waiver
shall
be valid only if set forth in any instrument in writing signed on behalf
of such
party. The failure of any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE
IX.
ADDITIONAL
DEFINITIONS
9.1 Certain
Definitions.
As used
herein:
(a) An
“Affiliate”
of,
or
a Person “affiliated” with, a specific Person is a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or
is under common control with, the Person specified.
(b) “Change
of Control Agreement”
means
any agreement substantially in the form of any agreement between the Company
and
any employee of the Company that provides such employee the opportunity to
receive retention payments and severance payments on the terms and conditions
set forth therein and listed in Section 6.8(b)
of the
Company Disclosure Schedule.
(c) “Company
Material Adverse Effect”
shall
mean a material adverse change in the financial condition, business, assets,
liabilities, properties or results of operations of the Company and its
Subsidiaries, taken as a whole, excluding any changes or effects resulting
from
(i) general changes in economic, or financial or capital market conditions,
(ii)
terrorism, war or the outbreak of hostilities, (iii) changes in conditions
generally applicable to the industries in which the Company and its Subsidiaries
are involved, in each case which do not affect the Company and its Subsidiaries,
taken as a whole, to a materially disproportionate degree relative to other
companies in such industries, (iv) changes in the Law or GAAP, (v) changes
or
litigation which result from the announcement of the transactions contemplated
hereby, the taking of any action contemplated or required by this Agreement,
or
the consummation of the transactions contemplated hereby, or (vi) changes
relating only to the Company’s coach division.
(d) “Company
Plan”
means
(i)
all
“employee benefit plans” (as defined in Section 3(3) of ERISA), and any
other employee benefit arrangements or payroll practices (including, without
limitation, severance pay, vacation pay, company awards, salary continuation
for
disability, sick leave, death benefit, hospitalization, medical welfare benefit,
deferred compensation, profit sharing, retirement, retiree medical or life
insurance, supplemental retirement, bonus or other incentive compensation,
stock
purchase, stock option, restricted stock and phantom stock arrangements or
policies) (collectively, the “Employee
Benefit Plans”);
(ii)
all Employee Benefit Plans which are “pension plans” (as defined in
Section 3(2) of ERISA (“Pension
Plans”));
and
(iii) all material employment, termination, bonus, severance or other contracts
or agreements, including the Change of Control Agreements (“Employment
Agreements”),
in
each case to which the Company or any ERISA Affiliate (as defined below)
is a
party, with respect to which the Company or any ERISA Affiliate has any
obligation or which are maintained by the Company or any ERISA Affiliate
or to
which the Company or an ERISA Affiliate contributes or is obligated to
contribute with respect to current or former employees of the
Company.
(e) “Hazardous
Materials”
means
petroleum
and all derivatives thereof or synthetic substitutes therefor, asbestos and
asbestos-containing materials, and any and all materials now or hereafter
defined, listed, designated or classified as, or otherwise determined to
be,
“hazardous wastes,” “hazardous substances,” “radioactive,” “solid wastes,” or
“toxic” under or pursuant to or otherwise listed or regulated pursuant to any
Environmental Law.
(f) “Knowledge
of the Company”
shall
mean the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and/or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ after such individuals have made all
reasonable inquiries of those Persons reporting to such individuals who are
reasonably likely to have such knowledge.
(g) “Lien”
means
any charge, encumbrance, lien, pledge, security interest or adverse claim.
(h) “Parent
Material Adverse Effect”
shall
mean a material adverse change in the financial condition, business, assets,
liabilities, properties or results of operations of Parent and its Subsidiaries,
taken as a whole, excluding any changes or effects resulting from (i) general
changes in economic, or financial or capital market conditions, (ii) terrorism,
war or the outbreak of hostilities, (iii) changes in conditions generally
applicable to the industries in which Parent and its Subsidiaries are involved,
in each case which do not affect Parent and its Subsidiaries, taken as a
whole,
to a materially disproportionate degree relative to other companies in such
industries, (iv) changes in the Law or GAAP, or (v) changes or litigation
which
result from the announcement of the transactions contemplated hereby, the
taking
of any action contemplated or required by this Agreement, or the consummation
of
the transactions contemplated hereby.
(i) “Permitted
Lien”
means
(i)
Liens
for utilities and current taxes not yet due and payable, (ii) mechanics’,
carriers’, workers’, repairers’, materialmen’s, warehousemen’s, lessor’s,
landlord’s and other similar Liens arising or incurred in the ordinary course of
business with respect to which the underlying obligations are not yet due
and
payable, (iii) Liens for taxes being contested in good faith for which
appropriate reserves have been included on the balance sheet of the applicable
Person, (iv) easements, restrictive covenants and similar encumbrances or
impediments against any of the Company’s assets or properties which do not
materially interfere with the business of the Company and its Subsidiaries,
(v) minor irregularities and defects of title which do not materially
interfere with the business of the Company and its Subsidiaries, and
(vi) the Liens listed in Section
9.1(i)
of the
Company Disclosure Schedule.
(j) “Person”
means
an individual, corporation, partnership, limited liability company, association,
trust, unincorporated organization other entity or group (as defined in
Section 13(d)(3) of the Exchange Act).
(k) “Subsidiary”
means,
with respect to any party, any Person of which (i) such party or any
Subsidiary of such party owns, of record or beneficially, at least 50% of
the
outstanding equity or voting securities or interests of such Person, or
(ii) such party or any Subsidiary of such party has the right to elect at
least a majority of the board of directors or others performing similar
functions with respect to such Person.
ARTICLE
X.
MISCELLANEOUS
10.1 Payment
of Expenses.
Except
as otherwise provided in Section 8.5, whether or not the Merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of
the
transactions contemplated hereby.
10.2 Survival
of Representations and Warranties; Survival of Confidentiality.
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 beyond the earlier of (i)
termination of this Agreement, or (ii) 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 and/or
the
provisions of this Article X. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, none of the Company,
Parent or Newco makes any other representations or warranties, and each hereby
disclaims any other representations and warranties made by itself or any
of its
officers, directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement,
the documents and the instruments referred to herein, or the transactions
contemplated hereby or thereby, notwithstanding the delivery or disclosure
to
any other party or other party’s representatives of any documentation or other
information with respect to any one or more of the foregoing. The
Confidentiality Agreement shall survive the execution and delivery of this
Agreement and any termination of this Agreement in accordance with the terms
of
such Confidentiality Agreement, and the provisions of such Confidentiality
Agreement shall apply to all information and material delivered by any party
hereunder.
10.3 Modification
or Amendment.
Subject
to the applicable provisions of the MBCA, at any time prior to the Effective
Time, the parties hereto may modify or amend this Agreement, by written
agreement executed and delivered by duly authorized officers of the respective
parties; provided,
however,
that
after approval of this Agreement by the shareholders of the Company, no
amendment shall be made which changes the consideration payable in the Merger
or
adversely affects the rights of the Company’s shareholders hereunder, or which
by Law requires further approval by the Company’s shareholders, without the
approval of such shareholders.
10.4 Waiver
of Conditions.
The
conditions to each of the parties’ obligations to consummate the Merger are for
the sole benefit of such party and may be waived by such party in whole or
in
part to the extent permitted by applicable Law.
10.5 Counterparts.
For the
convenience of the parties hereto, this Agreement may be executed in any
number
of counterparts (including by facsimile), each such counterpart being deemed
to
be an original instrument, and all such counterparts shall together constitute
the same agreement.
10.6 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the Laws
of the
State of Minnesota, without giving effect to the principles of conflicts
of law
thereof.
10.7 Notices.
Unless
otherwise set forth herein, any notice, request, instruction or other document
to be given hereunder by any party to the other parties shall be in writing
and
shall be deemed duly given (i) upon delivery, when delivered personally,
(ii)
one (1) business day after being sent by overnight courier or when sent by
facsimile transmission (with a confirming copy sent by overnight courier),
and
(iii) five (5) business days after being sent by registered or certified
mail,
postage prepaid, as follows:
If
to the
Company:
Featherlite,
Inc.
Highways
63 and 9
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
With
a
copy (which shall not constitute effective notice) to:
▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, P.A.
▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇, Esq.
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
If
to
Parent or Newco:
c/o
▇▇▇▇▇
▇▇▇▇▇ & Company, Inc.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
With
a
copy (which shall not constitute effective notice) to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇
▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Attn:
T.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
or
to
such other Persons or addresses as may be designated in writing by the party
to
receive such notice.
10.8 Entire
Agreement; Assignment.
This
Agreement (including the exhibits, schedules, documents and instruments referred
to herein, including the Confidentiality Agreement) constitutes the entire
agreement of the parties and supersedes all prior agreements and understandings,
both written and oral, among the parties hereto, or any of them, with respect
to
the subject matter hereof. All exhibits and schedules (including the Company
Disclosure Schedule) attached to this Agreement are expressly made a part
of,
and incorporated by reference into, this Agreement. This Agreement may not
be
assigned by any of the parties hereto by operation of Law or otherwise without
the written consent of the other parties except that (a) Parent may assign
any
or all of its rights hereunder to any Affiliate of Parent and Newco may assign
any or all of its rights hereunder to any other newly organized corporation
under the Laws of the State of Minnesota, all of the capital stock of which
is
owned directly or indirectly by Parent; provided, that Parent shall remain
liable on a direct and primary basis for the performance of any such direct
or
indirect Subsidiary, and (b) either Parent or Newco may collaterally assign
its
rights hereunder to any lender.
10.9 Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and their respective successors and assigns. Nothing in this Agreement,
express or implied, other than the right to receive the consideration payable
in
the Merger pursuant to Article III hereof, is intended to or shall confer
upon
any other Person any rights, benefits or remedies of any nature whatsoever
under
or by reason of this Agreement; provided,
however,
that
the provisions of Section 6.7 shall inure to the benefit of and be
enforceable by the Indemnified Parties.
10.10 Obligation
of Parent.
Whenever this Agreement requires Newco to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause
Newco
to take such action and a guarantee of the performance thereof.
10.11 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of Law or public policy, all other conditions
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 a manner adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the fullest extent possible.
10.12 Specific
Performance.
The
parties agree that irreparable damage would occur and that the parties would
not
have any adequate remedy at law 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.
10.13 Certain
Interpretations.
For
purposes of this Agreement:
(a) Unless
otherwise specified, all references in this Agreement to Articles, Sections,
Schedules and Exhibits shall be deemed to refer to Articles, Sections, Schedules
and Exhibits to this Agreement.
(b) The
Article, Section and paragraph captions herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be
deemed
to limit or otherwise affect any of the provisions hereof.
(c) The
words
“include,” includes” and “including,” when used herein shall be deemed in each
case to be followed by the words “without limitation.”
(d) The
parties hereto agree that they have been represented by legal counsel during
the
negotiation and execution of this Agreement and, therefore, waive the
application of any Law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document shall be construed against
the party drafting such agreement or document.
[Remainder
of page intentionally left blank]
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement and Plan of Merger to be executed
by
their respective duly authorized officers as of the date first above
written.
| FEATHERLITE, INC. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
|
|
||
| Title: President & CEO | ||
| UNIVERSAL TRAILER HOLDINGS CORP. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |
|
|
||
| Title: President | ||
| DART ACQUISITION CORP. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |
|
|
||
| Title: President | ||