1
AGREEMENT AND PLAN OF MERGER
AMONG
GENESISINTERMEDIA, INC.,
CAR RENTAL ▇▇▇▇▇▇.▇▇▇, INC.,
MAII HOLDINGS INC.
AND
MAII ACQUISITION, INC.
DATED AUGUST 16, 2001
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE MERGER
Section 1.1 The Merger..................................................................................1
Section 1.2 Effective Time..............................................................................1
Section 1.3 Effects of the Merger.......................................................................2
Section 1.4 Articles of Incorporation; Bylaws...........................................................2
Section 1.5 Directors and Officers......................................................................2
Section 1.6 Effect on Capital Stock.....................................................................3
Section 1.7 Withholding Rights..........................................................................3
Section 1.8 Further Assurances..........................................................................3
Section 1.9 Certain Adjustments.........................................................................3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1 Organization................................................................................4
Section 2.2 Corporate Authorization; Validity of Agreement..............................................4
Section 2.3 Consents and Approvals; No Violations.......................................................5
Section 2.4 Absence of Litigation.......................................................................5
Section 2.5 Brokers.....................................................................................5
Section 2.6 Takeover Statutes...........................................................................6
Section 2.7 Information Furnished to MAII and the Company...............................................6
Section 2.8 Opinion of Financial Advisor................................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 3.1 Organization................................................................................6
Section 3.2 Capital Structure...........................................................................7
Section 3.3 Corporate Authorization; Validity of Agreement; Necessary Action............................8
Section 3.4 Consents and Approvals; No Violations.......................................................8
Section 3.5 Financial Statements........................................................................9
Section 3.6 Employee Benefit Plans......................................................................9
Section 3.7 Compliance.................................................................................11
Section 3.8 Material Contracts.........................................................................11
Section 3.9 Absence of Litigation......................................................................12
Section 3.10 Tax Matters................................................................................12
Section 3.11 Title to Properties; Leases................................................................13
Section 3.12 Intellectual Property......................................................................13
Section 3.13 Environmental Laws.........................................................................13
Section 3.14 Brokers....................................................................................14
Section 3.15 Employees..................................................................................14
(i)
3
Section 3.16 Absence of Certain Changes.................................................................15
Section 3.17 Certain Payments...........................................................................15
Section 3.18 Information Furnished to Parent............................................................15
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of Merger Sub..........................................................15
Section 4.2 Access to Information......................................................................18
Section 4.3 Consents and Approvals.....................................................................19
Section 4.4 Supplemental Information...................................................................19
Section 4.5 No Solicitation............................................................................19
Section 4.6 Publicity..................................................................................21
Section 4.7 Notification of Certain Matters............................................................21
Section 4.8 Merger Sub Debt............................................................................22
Section 4.9 Board of Directors.........................................................................22
ARTICLE V
CONDITIONS
Section 5.1 Conditions to the Obligations of Each Party................................................22
Section 5.2 Conditions to the Obligations of Parent and Merger Sub.....................................23
Section 5.3 Conditions to the Obligations of MAII and the Company......................................24
ARTICLE VI
TERMINATION
Section 6.1 Termination................................................................................25
Section 6.2 Effect of Termination......................................................................26
Section 6.3 Expenses...................................................................................26
ARTICLE VII
MISCELLANEOUS
Section 7.1 Costs and Expenses.........................................................................27
Section 7.2 Amendment and Modification.................................................................27
Section 7.3 Survival of Representations, Warranties and Covenants......................................27
Section 7.4 Notices....................................................................................27
Section 7.5 Interpretation.............................................................................28
Section 7.6 Counterparts...............................................................................28
Section 7.7 Entire Agreement; No Third Party Beneficiaries.............................................28
Section 7.8 Severability...............................................................................28
Section 7.9 Specific Performance.......................................................................29
Section 7.10 Governing Law..............................................................................29
Section 7.11 Assignment.................................................................................29
Section 7.12 Headings...................................................................................29
(ii)
4
AGREEMENT AND PLAN OF
MERGER
Agreement and Plan of Merger, dated as of August 16, 2001 is entered
into among GenesisIntermedia, Inc., a
Delaware corporation ("Parent"), Car
Rental ▇▇▇▇▇▇.▇▇▇, Inc., a Nevada corporation and wholly owned Subsidiary of
Parent ("Merger Sub"), MAII Holdings, Inc., a Texas corporation ("MAII"), and
MAII Acquisition, Inc., a Nevada corporation and wholly owned Subsidiary of MAII
(the "Company"). Certain terms used herein but not otherwise defined shall have
the meanings ascribed thereto in Exhibit A attached hereto.
WHEREAS, the respective Boards of Directors of Parent, Company, MAII
and Merger Sub have determined that it is advisable and in the best interests of
their respective shareholders to consummate the merger of Merger Sub with and
into the Company (the "Merger"), upon the terms and subject to the conditions
set forth herein;
WHEREAS, Parent, Merger Sub, MAII and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the transactions contemplated hereby and also to prescribe various conditions to
the transactions contemplated hereby; and
WHEREAS, the respective Boards of Directors of Parent, Merger Sub, MAII
and the Company and the shareholders of Merger Sub and the Company have approved
the transactions contemplated by this Agreement and the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the applicable provisions of the NRS, at
the Effective Time, Merger Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
Section 1.2 Effective Time. Subject to the terms and conditions of this
Agreement, the parties hereto shall cause the Merger to be consummated by
filing, as soon as practicable after the Closing (as hereinafter defined), this
Agreement or articles of merger (the "Articles of Merger") with the Secretary of
State of the State of Nevada, in such form as required by, and executed in
accordance with the relevant provisions of, the NRS. The date and time of
acceptance of the filing of the Articles of Merger with the Secretary of State
of the State of Nevada (or such later time as shall be agreed to in writing by
the parties hereto and specified in the Articles of Merger) will be the
"Effective Time." The Closing shall take place at 11:00 a.m. (Dallas time) on
the business day immediately after the date on which all the conditions to
Closing (other than conditions that, by their terms, cannot be satisfied until
the Closing Date) set
1
5
forth in Article VI hereto shall have been satisfied, at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other
time, date and place as the parties shall agree.
Section 1.3 Effects of the Merger. Subject to Sections 1.4 and 1.5, the
Merger shall have the effects set forth in the applicable provisions of the NRS.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, immunities, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time and without any further action on
the part of the Company or Merger Sub, the Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time, as
amended or provided in the Articles of Merger shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as
provided therein and under the TBCA.
(b) At the Effective Time and without any further action on
the part of the Company or Merger Sub, the bylaws of the Company shall
be the bylaws of the Surviving Corporation and thereafter may be
amended or repealed in accordance with their terms or the terms of the
articles of incorporation of the Surviving Corporation and as provided
by law.
Section 1.5 Directors and Officers.
(a) At the Effective Time, the following individuals shall
serve as directors of the Surviving Corporation until their successors
shall 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: Ramy El-Batrawi,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇.
(b) At the Effective Time, the following individuals shall
serve as officers of the Surviving Corporation, in the capacities set
forth opposite their names, until their successors shall 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:
Name Office
---- ------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇ Chief Operating Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice President, Sales
▇▇▇▇ ▇▇▇▇▇ Chief Financial Officer
2
6
Section 1.6 Effect on Capital Stock.
(a) At the Effective Time, by virtue of the Merger, the
aggregate of all shares of Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares
to be cancelled in accordance with Section 1.6(c)) shall be converted
into the right to receive $11,600,000 in cash (the "Merger
Consideration"), and the Surviving Corporation shall become a
Subsidiary of MAII.
(b) As a result of the Merger, each holder (other than Merger
Sub, MAII and the Company) of a certificate which, immediately prior to
the Effective Time, represented shares of Merger Sub Common Stock (a
"Certificate") shall thereafter cease to have any rights with respect
to such shares of Merger Sub Common Stock, except the right to receive
the Merger Consideration in accordance with this Article I.
(c) All shares of Merger Sub Common Stock that are owned by
Merger Sub as treasury stock and any shares of Merger Sub Common Stock
owned by MAII, or the Company, or any other Subsidiary of MAII or the
Company shall be canceled and retired and shall cease to exist and no
stock of MAII or other consideration shall be delivered in exchange
therefor.
Section 1.7 Withholding Rights. MAII shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Merger Sub Common Stock such amounts as it is required
to deduct and withhold with respect to the making of such payment under the Code
and the rules and regulations promulgated thereunder, or any other provision of
applicable law. To the extent that amounts are so withheld by MAII, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Merger Sub Common Stock in respect of
which such deduction and withholding was made by MAII.
Section 1.8 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in MAII or in the Surviving
Corporation any and all right, title and interest in, to and under any of the
rights, properties or assets acquired or to be acquired by MAII or the Surviving
Corporation as a result of, or in connection with, the Merger.
Section 1.9 Certain Adjustments. If, between the date of this Agreement
and the Effective Time, the outstanding shares of Merger Sub Common Stock shall
have been changed into a different number of shares or different class of stock
by reason of any reclassification, recapitalization, stock split, split-up,
combination or exchange of shares, or a stock dividend or dividend payable in
any other securities shall be declared with a record date within such period, or
any similar event shall have occurred, the Merger Consideration shall be
appropriately adjusted to provide the holders of Merger Sub Common Stock the
same economic effect, voting
3
7
rights and other terms and designations as contemplated by this Agreement prior
to any such event.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
MAII and the Company jointly and severally represent and warrant to
Parent and Merger Sub that the statements contained in this Article II are true
and correct..
Section 2.1 Organization. Each of MAII, the Company and their
respective Subsidiaries is a corporation or other business organization duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Each of MAII, the Company and
their respective Subsidiaries (i) is qualified or licensed in all jurisdictions
where such qualification or license is required to own and operate its
properties and conduct its business in the manner and at the places presently
conducted; (ii) holds all franchises, grants, licenses, certificates, permits,
consents and orders, all of which are valid and in full force and effect, from
all applicable United States and foreign regulatory authorities necessary to own
and operate its properties and to conduct its business in the manner and at the
places presently conducted; and (iii) has full power and authority (corporate
and other) to own, lease and operate its respective properties and assets and to
carry on its business as presently conducted and as proposed to be conducted,
except where the failure to be so qualified or licensed or to hold such
franchises, grants, licenses, certificates, permits, consents and orders or to
have such power and authority would not, when taken together with all other such
failures, reasonably be expected to have a Material Adverse Effect with respect
to MAII or the Company.
Section 2.2 Corporate Authorization; Validity of Agreement;.
(a) Each of MAII and the Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
performance by MAII and the Company of this Agreement, and the
consummation by them of the transactions contemplated hereby, have
been, subject to the receipt of the fairness opinion described in
Section 5.3(i) (the "Company Fairness Opinion"), duly and validly
authorized by their respective its board of directors and no other
corporate action or proceedings on the part of MAII or the Company are
necessary to authorize the execution and delivery by MAII and the
Company of this Agreement, and the consummation by them of the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by MAII and the Company and, assuming this Agreement
constitutes valid and binding obligations of each of Parent and Merger
Sub, as applicable, constitutes valid and binding obligations of each
of MAII and the Company enforceable against each of them in accordance
with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, fraudulent conveyance, moratorium or
other similar laws, now or hereafter in effect, affecting creditor'
rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
4
8
(b) Subject to the receipt of the Company Fairness Opinion,
the boards of directors of each of MAII and the Company have duly and
validly approved and taken all corporate action required to be taken by
each of them for the consummation of the transactions contemplated by
this Agreement, including, but not limited to, (i) having determined
that this Agreement, and the transactions contemplated hereby, taken
together, are advisable and in the best interests of the shareholders
of MAII and (ii) having taken all actions necessary to render the
provisions of Section 13.03 of the TBCA inapplicable to this Agreement
and the transactions anticipated hereby.
Section 2.3 Consents and Approvals; No Violations. Except for all
filings, permits, authorizations, consents and approvals as may be required
under, and compliance with other applicable requirements of, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), state securities
or "blue sky" laws and the filing and recordation of this Agreement or the
Articles of Merger as required by the NRS, neither the execution or delivery of
or the performance of MAII's and the Company's obligations under this Agreement
nor the consummation by MAII and the Company of the transactions contemplated
hereby or thereby nor compliance by MAII and the Company with any of the
provisions hereof will (i) result in any breach or violation of any provision of
the articles of incorporation or bylaws or similar organizational documents of
MAII or of any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any United States or foreign court,
arbitral tribunal, administrative agency or commission or other governmental or
other regulatory authority, body, commission or agency (a "Governmental
Entity"), except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not have a Material Adverse
Effect with respect to MAII, (iii) 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, amendment, cancellation, acceleration or
increase in the rate of interest), or require the consent of any third party
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which MAII or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound (an "MAII Agreement") or result in the creation of a Lien
upon any of the properties or assets of MAII or any of its Subsidiaries for
violations, breaches, defaults, or rights of termination, amendment,
cancellation or acceleration or Liens, which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect with respect
to MAII or (iv) violate any order, writ, injunction, judgment, decree, statute,
rule, regulation or law ("Law") applicable to MAII, any of its Subsidiaries or
any of their properties or assets.
Section 2.4 Absence of Litigation. There is no claim, suit, action or
proceeding or pending or, to the knowledge of MAII, any investigation or any
threat of any of the foregoing against MAII or any of its Subsidiaries, or any
property or asset of MAII or any of its Subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign which seeks to prevent, delay or postpone the consummation
of the transactions contemplated under this Agreement.
Section 2.5 Brokers. Except for fees paid to the Company's financial
advisor (the "Company Financial Advisor") in connection with the Company
Fairness Opinion, no broker,
5
9
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this
Agreement.
Section 2.6 Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation enacted
under any law applicable to MAII or the Company is applicable to this Agreement,
the Merger or the other transactions contemplated hereby. MAII has taken all
steps necessary to irrevocably exempt the transactions contemplated by this
Agreement from any applicable provisions of MAII's articles of incorporation or
bylaws and from Section 13.03 of the TBCA.
Section 2.7 Information Furnished to MAII and the Company. MAII and the
Company have been provided with, and are familiar with, the financial and other
information regarding the business and operations of Merger Sub that MAII and
Merger Sub deem necessary for evaluating the merits and risks of the
transactions contemplated by this Agreement.
Section 2.8 Opinion of Financial Advisor. MAII has received the
preliminary oral opinion of the Company Financial Advisor, to the effect that,
as of the date hereof, the transactions contemplated under this Agreement are
fair from a financial point of view to the shareholders of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent represents and warrants to the Company that the statements
contained in this Article IV are true and correct, except as set forth in the
disclosure statement delivered by Parent to the Company concurrently herewith
(the "Parent Disclosure Statement").
Section 3.1 Organization. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of Merger Sub and its Subsidiaries (i) is qualified or
licensed in all jurisdictions where such qualification or license is required to
own and operate its properties and conduct its business in the manner and at the
places presently conducted; (ii) holds all franchises, grants, licenses,
certificates, permits, consents and orders, all of which are valid and in full
force and effect, from all applicable United States and foreign regulatory
authorities necessary to own and operate its properties and to conduct its
business in the manner and at the places presently conducted; and (iii) has full
power and authority (corporate and other) to own, lease and operate its
respective properties and assets and to carry on its business as presently
conducted and as proposed to be conducted, except where the failure to be so
qualified or licensed or to hold such franchises, grants, licenses,
certificates, permits, consents and orders or to have such power and authority
would not, when taken together with all other such failures, reasonably be
expected to have a Material Adverse Effect with respect to Merger Sub. Section
3.1 of the Parent Disclosure Statement sets forth the name and jurisdiction of
incorporation or organization of each subsidiary of Merger Sub. Except as
disclosed in Section 3.1 of the Parent Disclosure Statement, Merger Sub does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
6
10
Section 3.2 Capital Structure.
(a) As of August 15, 2001, the authorized capital stock of
Merger Sub consists of 100,000,000 shares of Merger Sub Common Stock
and no shares of preferred stock ("Merger Sub Preferred Stock"). As of
August 15, 2001, (i) 10,000,999 shares of Merger Sub Common Stock were
issued and outstanding, (ii) no shares of Merger Sub Common Stock were
held in the treasury of Merger Sub or reserved for issuance under any
stock option plans ("Merger Sub Stock Option Plans") or under issued
and outstanding warrants. All the outstanding shares of Merger Sub's
capital stock are duly authorized, validly issued, fully paid and
non-assessable. There are no bonds, debentures, notes or other
indebtedness having voting rights (or convertible or exchangeable into
securities having such rights) ("Merger Sub Voting Debt") of Merger Sub
or any of its Subsidiaries issued and outstanding. There are no
existing (i) options, warrants, calls, preemptive rights, subscriptions
or other rights, convertible or exchangeable securities, agreements,
arrangements or commitments of any character, relating to the issued or
unissued capital stock of Merger Sub or any of its Subsidiaries,
obligating Merger Sub or any of its Subsidiaries to issue, transfer or
sell or cause to be issued, transferred or sold any shares of capital
stock or Merger Sub Voting Debt of, or other equity interest in, Merger
Sub or any of its Subsidiaries, (ii) securities convertible into or
exchangeable for such shares or equity interests or (iii) obligations
of Merger Sub or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, preemptive right, subscription or other
right, convertible security, agreement, arrangement or commitment.
(b) All of the outstanding shares of capital stock of each of
Merger Sub's Subsidiaries are beneficially owned by Merger Sub,
directly or indirectly, and all such shares have been validly issued
and are fully paid and non-assessable and, are owned by either Merger
Sub or one of its Subsidiaries free and clear of all liens.
(c) There are no voting trusts, proxies or other agreements or
understandings to which Merger Sub or any of its Subsidiaries is a
party with respect to the voting of the capital stock of Parent or any
of its Subsidiaries. None of Merger Sub or its Subsidiaries is a party
to any agreement or obligation, contingent or otherwise, to redeem,
repurchase or otherwise acquire or retire shares of capital stock of
Merger Sub or any of its Subsidiaries, whether as a result of the
transactions contemplated by this Agreement or otherwise.
(d) Since December 31, 2000, Merger Sub has not (i) made or
agreed to make any stock split or stock dividend, or issued or
permitted to be issued any shares of capital stock, or securities
exercisable for or convertible into shares of capital stock, of Merger
Sub other than pursuant to the Merger Sub Stock Option Plans or any
outstanding stock option, appreciation rights, performance units or
right to receive an equity interest granted by Merger Sub under the
Merger Sub Stock Option Plans ("Merger Sub Stock Options"), (ii)
repurchased, redeemed or otherwise acquired any shares of capital stock
of Merger Sub or (iii) declared, set aside, made or paid to the
stockholders of Merger Sub dividends or other distributions on the
outstanding shares of capital stock of Merger Sub.
7
11
Section 3.3 Corporate Authorization; Validity of Agreement; Necessary
Action.
(a) Each of Parent and Merger Sub has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
performance by Parent and Merger Sub of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been,
duly and validly authorized by their respective boards of directors and
no other corporate action or proceedings on the part of the part of
Parent or Merger Sub are necessary to authorize the execution and
delivery by Parent or Merger Sub of this Agreement and the consummation
by Parent and Merger Sub of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and Merger
Sub, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, constitutes a valid and binding obligation
of each of Parent and Merger Sub, enforceable against each of them in
accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium or other similar laws, now or hereafter in effect, affecting
creditors' rights generally and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) The Boards of Directors of each of Parent and Merger Sub
have duly and validly approved and taken all corporate action required
to be taken by each of them for the consummation of the transactions
contemplated by this Agreement, including, but not limited to, having
determined that this Agreement, and the transactions contemplated
hereby, taken together, are advisable and in the best interests of the
stockholders of Parent.
Section 3.4 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
compliance with other applicable requirements of, the Exchange Act, the
Securities Act, the HSR Act, state securities or "blue sky" laws, and for the
filing or recordation of this Agreement or the Articles of Merger as required by
the NRS, neither the execution or delivery of or the performance of the
obligations under this Agreement by Parent and Merger Sub nor the consummation
by Parent and Merger Sub of the transactions contemplated hereby nor compliance
by Parent and Merger Sub with any of the provisions hereof will (i) result in
any breach or violation of any provision of the memorandum or certificate of
incorporation or bylaws or similar organizational documents of Parent or any of
its Subsidiaries, (ii) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity, except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not have a Material Adverse Effect with respect to Parent, (iii)
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,
amendment, cancellation or acceleration or increase in the rate of interest), or
require the consent of any third party under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, lease, license, contract, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries is a party or by which any
of their properties or assets may be bound (a "Parent Agreement") or result in
the creation of a Lien upon any of the properties or assets of Parent or
violations, breaches,
8
12
defaults, or rights of termination, amendment, cancellation or acceleration,
which would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect with respect to Parent or (iv) violate any Law
applicable to Parent, any of its Subsidiaries or any of their properties or
assets.
Section 3.5 Financial Statements.
(a) Merger Sub has delivered to MAII copies of Merger Sub's
unaudited year-end financial statements for and as of the end of the
fiscal years ended December 31, 2000, and unaudited balance sheet and
income statement and statement of cash flows for the six month period
ended June 30, 2001 (collectively, the "Merger Sub Financial
Statements").
(b) Each of the audited and unaudited Merger Sub Financial
Statements have been prepared in accordance with GAAP applied on a
consistent basis during the relevant periods (except as may be
disclosed in the notes thereto), and present fairly the consolidated
financial position and consolidated results of operations and changes
in cash flows of Merger Sub and its Subsidiaries as of the respective
dates or for the respective periods reflected therein, except, in the
case of the unaudited interim financial statements, for normal and
recurring year-end adjustments that are not material.
(c) On the balance sheet of Merger Sub as of June 30, 2001
included in the Merger Sub Financial Statements (the "Latest Merger Sub
Balance Sheet"), or in the notes thereto, neither Merger Sub nor any of
its Subsidiaries has any liabilities, debts, claims or obligations of
any nature (whether accrued, absolute, direct or indirect, contingent
or otherwise, whether due or to become due), and there is no existing
condition or set of circumstances which would reasonably be expected,
individually or in the aggregate, to result in such a liability, except
for liabilities or obligations incurred in the ordinary course of
business consistent with past practice since June 30, 2001, none of
which would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect with respect to Merger Sub.
Section 3.6 Employee Benefit Plans.
(a) Section 3.6 of the Parent Disclosure Statement contains a
true and complete list of each "employee benefit plan" (within the
meaning of section 3(3) of ERISA), including, without limitation,
multi-employer plans within the meaning of ERISA section 3(37)), and
all stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not
subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or
informal, oral or written, legally binding or not, under which any
employee or former employee of Merger Sub or its Subsidiaries (the
"Merger Sub Employees") has any present or future right to benefits
sponsored, maintained or contributed to by Merger Sub or its
Subsidiaries or under which Merger Sub or its Subsidiaries has had or
has any present or future liability. All such
9
13
plans, agreements, programs, policies and arrangements shall be
collectively referred to as the "Merger Sub Plans."
(b) With respect to each Merger Sub Plan, Merger Sub has given
to the Company a current, accurate and complete copy (or, to the extent
no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding
instrument; (ii) the most recent determination letter, if applicable;
(iii) any summary plan description and other written communications (or
a description of any oral communications) by Merger Sub or its
Subsidiaries to their employees concerning the extent of the benefits
provided under a Merger Sub Plan; and (iv) for the three most recent
years (A) the Form 5500 and attached schedules, (B) audited financial
statements, (C) actuarial valuation reports and (D) attorney's response
to an auditor's request for information.
(c) (i) Each Merger Sub Plan has been established and
administered in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other applicable laws,
rules and regulations; (ii) each Merger Sub Plan which is intended to
be qualified within the meaning of Code section 401(a) and any related
trust which is intended to be qualified within the meaning of Code
section 501(a) are so qualified and have received favorable
determination letters as to their qualification, and nothing has
occurred, whether by action or failure to act, that could reasonably be
expected to cause the loss of such qualification; (iii) no event has
occurred and no condition exists that would subject Merger Sub or its
Subsidiaries, either directly or by reason of their affiliation with
any member of their Controlled Group to any tax, fine, lien, penalty or
other liability imposed by ERISA, the Code or other applicable laws,
rules and regulations; (iv) for each Merger Sub Plan with respect to
which a Form 5500 has been filed, no material change has occurred with
respect to the matters covered by the most recent Form since the date
thereof; (v) no "reportable event," "prohibited transaction" or
"accumulated funding deficiency" (whether or not waived) has occurred
with respect to any Merger Sub Plan; (vi) no Merger Sub Plan provides
retiree welfare benefits and neither Merger Sub nor its Subsidiaries
have any obligations to provide any retiree welfare benefits; and (vii)
all awards, grants or bonuses made pursuant to any Merger Sub Plan have
been, or will be, fully deductible to Merger Sub or its Subsidiaries
notwithstanding the provisions of Section 162(m) of the Internal
Revenue Code and the regulations promulgated thereunder.
(d) With respect to each of the Merger Sub Plans that is not a
multi-employer plan within the meaning of section 3(37) of ERISA but is
subject to Title IV of ERISA, as of the Closing Date, the assets of
each such Merger Sub Plan are at least equal in value to the present
value of the accrued benefits (vested and unvested) of the participants
in such Merger Sub Plan on a termination and projected benefit
obligation basis, based on the actuarial methods and assumptions
indicated in the most recent actuarial valuation reports.
(e) No Merger Sub Plan is a "multi-employer plan" and neither
Merger Sub, its Subsidiaries nor any member of their Controlled Group
has at any time sponsored or contributed to any multi-employer plan. No
event or condition has occurred
10
14
in connection with which Merger Sub or any of its ERISA Affiliates
could be subject to any liability, encumbrance or lien with respect to
any Merger Sub Plan under ERISA, the Code or any other applicable law
or under any agreement or arrangement pursuant to or under which Merger
Sub or any of its ERISA Affiliates are required to indemnify any person
against such liability.
(f) With respect to any Merger Sub Plan, (i) no actions, suits
or claims (other than routine claims for benefits in the ordinary
course) are pending or, to the knowledge of Parent or Merger Sub,
threatened, (ii) to the knowledge of Parent or Merger Sub, no facts or
circumstances exist that could give rise to any such actions, suits or
claims, (iii) no written or oral communication has been received from
the PBGC in respect of any Merger Sub Plan subject to Title IV of ERISA
concerning the funded status of any such plan or any transfer of assets
and liabilities from any such plan in connection with the transactions
contemplated herein, and (iv) to the knowledge of Parent or Merger Sub,
no administrative investigation, audit or other administrative
proceeding by the Department of Labor, the PBGC, the Internal Revenue
Service or other governmental agencies are pending, threatened or in
progress.
(g) No Merger Sub Plan exists that, as a result of the
transaction contemplated by this Agreement, could result in the payment
to any Merger Sub Employee of any money or other property or could
result in the acceleration or provision of any other rights or benefits
to any Merger Sub Employee, whether or not such payment, right or
benefit would constitute a parachute payment within the meaning of Code
section 280G, whether or not some other or subsequent event or
occurrence is required in connection therewith.
Section 3.7 Compliance. Neither Merger Sub nor any of its Subsidiaries
is in default under or violation of (and no event has occurred which with notice
or lapse of time or both, would constitute a default under or violation of (i)
its articles of incorporation or by-laws or other governing document, (ii) any
Law applicable to Merger Sub or any of its Subsidiaries or by which any of their
respective properties or assets is bound or affected, (iii) any Merger Sub
Agreement, or (iv) any material license, permit, or other authorization,
domestic or foreign, necessary to conduct their respective businesses, except in
the case of (ii), (iii) and (iv) for any defaults or violations that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to Merger Sub.
Section 3.8 Material Contracts.
(a) Section 3.8 of the Parent Disclosure Statement lists all
material contracts of Merger Sub and its Subsidiaries (the "Merger Sub
Material Contracts"). Neither Merger Sub nor any of its Subsidiaries
nor, to the knowledge of Parent or Merger Sub, any other party thereto
has violated any provision of, or committed or failed to perform any
act which with or without notice, lapse of time or both would
constitute a default under the provisions of any Merger Sub Material
Contract, except for such defaults that would not, individually or in
the aggregate, reasonably be expected to have a Merger Sub Material
Adverse Effect with respect to Merger Sub.
11
15
(b) Neither Merger Sub nor any of its Subsidiaries is party to
any agreement containing any provision or covenant limiting in any
material respect the ability of Merger Sub or any of its Subsidiaries
to (i) sell any products or services of or to any other person, (ii)
engage in any line of business in any geographical area or (iii)
compete with or obtain products or services from any person or limiting
the ability of any person to provide products or services to Merger Sub
or any of its Subsidiaries.
(c) Subject to obtaining the consents referred to in Section
3.4, neither Merger Sub nor any of its Subsidiaries is a party to or
bound by any contract, agreement or arrangement that would cause the
rights or obligations of any party thereto to change upon the
consummation of the Merger.
Section 3.9 Absence of Litigation. Except as set forth in Section 3.9
of the Parent Disclosure Statement, there is no claim, suit, action or
proceeding pending or, to the knowledge of Parent or Merger Sub, any
investigation or any threat of any of the foregoing against Merger Sub or any of
its Subsidiaries, or any property or asset of Merger Sub or any of its
Subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Neither Merger Sub nor any of its Subsidiaries nor any of their respective
properties or assets is subject to any order, writ, judgment, injunction,
decree, determination or award having, or which would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. There are no
pending or, to the knowledge of Parent or Merger Sub, threatened claims for
indemnification by Merger Sub in favor of directors, officers, employees or
agents of Merger Sub.
Section 3.10 Tax Matters. Except as set forth in Section 3.10 of the
Parent Disclosure Statement, Merger Sub and each of its Subsidiaries have
properly completed and timely filed all Tax Returns required to be filed by
them. All Taxes due and owing by Merger Sub or any Subsidiary of Merger Sub
(whether or not shown on a return) have been paid and adequate reserves are
provided in the Merger Sub Financial Statements for Taxes owning but not yet
due. There is (i) no material claim for Taxes that is a Lien against the
property of Merger Sub or any or its Subsidiaries or is being asserted against
Merger Sub or any of its Subsidiaries other than Liens for Taxes not yet due and
payable, (ii) no audit of any Tax Return of Merger Sub of any of its
Subsidiaries being conducted by a Tax Authority (as defined below), (iii) no
extension of the statute of limitations on the assessment of any Taxes granted
by Merger Sub or any of its Subsidiaries is currently in effect. Neither Merger
Sub nor any of its Subsidiaries is a party to any agreement, contract or
arrangement that may result in the payment of any amount that would not be
deductible by reason of Section 280G or Section 404 of the Code. Neither Merger
Sub nor any of its Subsidiaries 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 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Merger. Neither Merger Sub nor any of its
Subsidiaries has filed or will file any consent to have the provisions of
paragraph 341(f)(2) of the Code (or comparable provisions of any state Tax laws)
apply to Merger Sub or any of its Subsidiaries. Neither Merger Sub nor any
Subsidiary of Merger Sub is a party to any Tax sharing or Tax allocation
agreement nor does Merger Sub or any Subsidiary have any liability or potential
liability to another party under any such agreement.
12
16
Section 3.11 Title to Properties; Leases. Except as set forth in
Section 3.11 of the Parent Disclosure Statement, Merger Sub and each of its
Subsidiaries have good and marketable title to, and each is the lawful owner of,
or has the right to use pursuant to a license or otherwise, all of the tangible
and intangible assets, properties and rights reflected in the Merger Sub
Financial Statements or acquired since the date of the latest Merger Sub
Financial Statement, free and clear of all Liens and material defects in title,
in each case except where the failure to have title, be the owner or have the
right to use would not reasonably be expected to interfere in any material
respect with the conduct of the business of Merger Sub or any of its
Subsidiaries as currently conducted. Merger Sub has provided MAII with a copy or
an accurate summary of the material terms of all material real property and
personal property leases of Merger Sub and each of its Subsidiaries. All such
leases are valid, binding and, assuming such leases constitute valid and binding
obligations of each other party thereto, constitute valid and binding
obligations of Merger Sub or its Subsidiaries enforceable against Merger Sub or
its Subsidiaries in accordance with their respective terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and there does not exist under any lease of
real property or personal property any event which, with notice or lapse of time
or both, would constitute a material default by Merger Sub or any of its
Subsidiaries or, to the knowledge of Parent or Merger Sub or any Subsidiaries of
Merger Sub, by any other party thereto.
Section 3.12 Intellectual Property.
(a) Section 3.12 of the Parent Disclosure Statement sets
forth, with respect to Intellectual Property owned, held or used by
Merger Sub and each of its Subsidiaries ("Merger Sub IP"), all patents,
registrations and applications relating thereto, all material
unregistered Intellectual Property and all licenses, consents, royalty
and other agreements concerning Merger Sub IP to which Merger Sub or
any of its Subsidiaries is a party ("IP Licenses").
(b) Merger Sub and each of its Subsidiaries owns or has the
right to use all the Intellectual Property necessary to conduct the
business of Merger Sub and its Subsidiaries as it is currently
conducted. To the knowledge of Parent, Merger Sub and each of Merger
Sub's Subsidiaries, Merger Sub IP does not infringe or otherwise impair
the Intellectual Property of any third party and is not being infringed
or impaired by any third party. To the knowledge of Parent and Merger
Sub and each Subsidiary of Merger Sub, no party to an IP License is, or
is alleged to be, in breach or default thereunder. The transactions
contemplated by this Agreement shall not impair the rights of Merger
Sub or any of its Subsidiary under any IP License, or cause any
payments to be due thereunder.
Section 3.13 Environmental Laws. Except to the extent that any
inaccuracy in any of the representations set forth in this Section 3.14,
individually or in the aggregate with any other inaccuracy under the respective
representations set forth in this Section 3.14, would not reasonably be expected
to have a Material Adverse Effect with respect to Merger Sub, each of Merger Sub
and each of its Subsidiaries is in compliance with all Environmental Laws
applicable
13
17
to the properties, assets or businesses of Merger Sub and its Subsidiaries, and
possesses and complies with and has possessed and complied with all
Environmental Permits required under such laws. None of Parent, Merger Sub and
Merger Sub's Subsidiaries has received any Environmental Claim, and to the
knowledge of Parent, Merger Sub and Merger Sub's Subsidiaries there are no
threatened Environmental Claims or any Environmental Claims pending or
threatened against any entity for which Merger Sub or any of its Subsidiaries
may be responsible. None of Merger Sub and its Subsidiaries has assumed,
contractually or by operation of law, any known liabilities or obligations under
any Environmental Laws. To the knowledge of Parent and Merger Sub, there are no
present or past events, conditions, circumstances, practices, plans or legal
requirements that would reasonably be expected to (i) result in liability to
Merger Sub or any of its Subsidiaries under Environmental Laws, or (ii) prevent,
or reasonably be expected to increase the burden on, Merger Sub or any of its
Subsidiaries in complying with Environmental Laws or in obtaining, renewing, or
complying with all Environmental Permits required under such laws. To the
knowledge of Parent and Merger Sub, there have been no Hazardous Materials or
other conditions at or from any property owned, operated or otherwise used by
Merger Sub or any of its Subsidiaries now or, to the best knowledge of Parent
and Merger Sub, in the past that would reasonably be expected to give rise to
liability of Merger Sub or any of its Subsidiaries under any Environmental Law.
Parent has provided to the Company all Environmental Reports in the possession
or control of Parent or any of its Subsidiaries.
Section 3.14 Brokers. No broker, finder or investment banker (other
than Riverdale, LLC (the "Parent Financial Advisor")) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement. Parent has furnished to the Company
a complete and accurate copy of all agreements between Parent and the Parent
Financial Advisor pursuant to which the Parent Financial Advisor would be
entitled to any payment relating to the transactions contemplated hereby.
Section 3.15 Employees. Except as disclosed in Section 3.15 of the
Parent Disclosure Statement or as provided for in this Agreement, as of the date
hereof, neither Merger Sub nor any of its Subsidiaries is a party to any oral or
written (i) consulting agreement not terminable on 30 days' or less notice
involving the payment of more than $10,000 per annum or $100,000 per annum in
the aggregate for all such agreements, (ii) union or collective bargaining
agreement, (iii) agreement with any executive officer or other key employee of
Merger Sub or any of its Subsidiaries the benefits of which are contingent or
vest, or the terms of which are materially altered, upon the occurrence of a
transaction involving Merger Sub or any of its Subsidiaries of the nature
contemplated by this Agreement, (iv) agreement with respect to any executive
officer or other key employee of Merger Sub or any of its Subsidiaries providing
any term of employment or compensation guarantee extending for a period longer
than three months and for the payment of more than $25,000 per annum or $100,000
per annum in the aggregate for all such agreements or (v) agreement or plan,
including any stock option, stock appreciation right, restricted stock 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. Since January 1, 2001, neither Merger Sub nor any of its
Subsidiaries has had any employee strikes, work stoppages, slowdowns or lockouts
or received any requests for certifications of bargaining units or any other
14
18
requests for collective bargaining. There is no unfair labor practice,
employment discrimination or other complaint against Merger Sub or any of its
Subsidiaries pending or, to the knowledge of Parent or Merger Sub, threatened.
Section 3.16 Absence of Certain Changes. Since December 31, 2000, there
has not occurred any event, change, circumstance, condition or effect (including
the incurrence of any liabilities of any nature, whether or not accrued,
contingent or otherwise) having or reasonably likely to have, in the aggregate,
a Material Adverse Effect with respect to Merger Sub or any of its Subsidiaries.
Except as set forth in Section 3.16 of the Parent Disclosure Statement, since
March 31, 2001, Merger Sub and its Subsidiaries have conducted their respective
businesses in the ordinary course consistent with past practice. Since March 31,
2001, neither Merger Sub nor any of its Subsidiaries have taken any action which
if taken after the date hereof but prior to Closing would have been prohibited
by Section 4.1(b) hereof
Section 3.17 Certain Payments. Neither Merger Sub nor any of its
Subsidiaries nor any director, officer or employee, of Merger Sub or any of its
Subsidiaries has paid or caused to be paid, directly or indirectly, in
connection with the business of Merger Sub or any of its Subsidiaries (a) to any
government or agency thereof or any agent of any supplier or customer any bribe,
kick-back or other similar payment; or (b) any contribution to any political
party or candidate (other than from personal funds of directors, officers or
employees not reimbursed by their respective employers or as otherwise permitted
by applicable law).
Section 3.18 Information Furnished to Parent. Parent has been provided
with, and is familiar with, the financial and other information regarding the
business and operations of MAII, including, but not limited to, the MAII SEC
Documents, that Parent deems necessary for evaluating the merits and risks of
the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of Merger Sub.
During the period from the date of this Agreement to the Effective Time, Merger
Sub will, and will cause its Subsidiaries to, conduct their operations, only in,
and not take any action except in, the ordinary and usual course of business and
consistent with past practice, and use its and its reasonable best efforts to
preserve intact its business organization, to keep available the services of its
officers and employees and to maintain advantageous relationships with its
customers, creditors, licensors, licensees, suppliers, contractors, business
partners and others with whom Merger Sub and its Subsidiaries have business
relationships. Without limiting the generality of the foregoing, prior to the
Effective Time, Merger Sub will not, and will not permit any of its Subsidiaries
to without the prior written consent of the other parties to this Agreement
(which may be withheld in their sole discretion):
(a) split, combine or reclassify any shares of its capital
stock; declare, pay or set aside for payment any dividend or other
distribution payable in cash, stock, property or otherwise in respect
of its capital stock; or directly or indirectly redeem, purchase,
repurchase or otherwise acquire any shares of its capital stock or any
securities
15
19
or obligations convertible into or exchangeable for any shares of its
capital stock except in accordance with the terms, as in effect on the
date hereof, of any agreement listed in Section 3.2 of the Parent
Disclosure Statement, as the case may be;
(b) authorize for issuance, issue, sell, pledge, dispose of or
encumber, deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issuance or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any of its
capital stock or any securities convertible into or exercisable or
exchangeable for shares of its capital stock, except in accordance with
the terms, as in effect on the date hereof, of any Merger Sub Options
listed in Section 3.2 of the Parent Disclosure Statement;
(c) (i) incur or assume any debt or issue any debt securities
except for borrowings under existing lines of credit in the ordinary
course of business consistent with past practice, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person, (iii) make any loans or advances to any person, or make any
capital contributions to, or investments in, any other person, other
than with respect to extensions of credit to their respective customers
in the ordinary course of business consistent with past practice, (iv)
pledge or otherwise encumber shares of capital stock of any of its
Subsidiaries, or (v) mortgage or pledge any of its assets, tangible or
intangible, or create any material Lien thereupon;
(d) except as may be required by Law, enter into, adopt, amend
or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or other
employee benefit plan; or enter into or amend any employment or
severance agreement with, increase in any manner the salary, wages,
bonus, commission, or other compensation or benefits of any of their
respective directors or officers or of any of their respective
Subsidiaries; or increase in any manner the salary, wages, bonus,
commission or other compensation or benefits of any of their other
employees or agents except, in the case of employees other than
directors or officers, for salary increases and employee promotions in
the ordinary course of business consistent with past practice; or hire
employees at the vice president level or higher except to fill
vacancies; or pay any benefit not required by any plan and arrangement
as in effect as of the date hereof (including the granting of stock
options, stock appreciation rights or performance units);
(e) acquire (by merger, amalgamation, consolidation or
acquisition of stock or assets) any corporation, partnership or other
business organization or division thereof or make any investment either
by purchase of stock or securities, contributions to capital, property
transfer or acquisition (including by lease) of any material amount of
properties or assets of any other individual or entity;
(f) except as expressly required herein, (i) pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of
16
20
business consistent with past practice or in accordance with their
terms as in effect on the date hereof or (ii) waive, release, grant or
transfer any rights of material value or modify or change in any
material respect any existing license, lease, contract or other
document other than in the ordinary course of business, consistent with
past practice;
(g) amend their respective articles or certificates of
incorporation, bylaws or other organizational documents;
(h) adopt a plan of complete or partial liquidation or
resolutions providing for the complete or partial liquidation,
dissolution, merger (other than the Merger), consolidation,
restructuring, recapitalization or other reorganization;
(i) enter into any new lines of business or otherwise make
material changes to the operation of its business;
(j) sell (whether by merger, consolidation or otherwise),
lease, encumber, transfer or dispose of any material assets, or enter
into any material commitment or transaction outside the ordinary course
of business consistent with past practices;
(k) authorize or make or commit to make any capital
expenditures, except for transactions in the ordinary course of
business consistent with past practice (but in no event in excess of
$100,000 in the aggregate);
(l) make any Tax elections, make or change any method of Tax
accounting (except as may be required by Law), file any amended Tax
Returns, settle or compromise any material Tax liability, or waive or
extend the statute of limitations for imposing or assessing any
material Taxes;
(m) settle or compromise any suits or claims of liability,
including, but not limited to suits or claims against their respective
directors, officers, employees or agents;
(n) take any action likely to materially decrease or diminish
their respective assets or net worth;
(o) except as may be required as a result of a change in Law
or in GAAP (with the written concurrence of their respective
independent accountants), change any of the accounting principles or
practices used by it;
(p) enter into any agreement providing for the acceleration of
payment, vesting or performance or other consequence as a result of a
change in control;
(q) enter into, amend or waive any provision of any Material
Contract; or
17
21
(r) take any action or agree, in writing or otherwise, to take
any of the foregoing actions or any action which would make any
representation or warranty in Article II or Article III hereof
materially untrue or incorrect.
Section 4.2 Access to Information.
Merger Sub shall (and shall cause each of its Subsidiaries to) afford to the
Representatives of MAII reasonable access, during normal business hours, during
the period prior to the Effective Time, to all of its and its Subsidiaries'
personnel, offices and other facilities, and, during such period, Merger Sub
shall (and shall cause each of its Subsidiaries to) furnish promptly to MAII (i)
a copy of each material report, schedule, registration statement and other
document filed or received by it during such period relating to the federal
securities laws and (ii) all other information, including financial and
operating data, concerning its business, properties and personnel as MAII may
reasonably request (including any Tax Returns or other Tax related information
pertaining to Merger Sub and its Subsidiaries).
(a) No investigation pursuant to this Section 4.2 or otherwise
shall affect any representation or warranty contained in this Agreement
or any condition to the obligations of the parties hereto.
(b) Each party will hold, and will use its best reasonable
efforts to cause its Representatives to hold, in strict confidence,
unless (i) compelled to disclose by judicial or administrative process
or by other requirements of applicable Laws of Governmental Entity
(including, without limitation, in connection with obtaining the
necessary approvals of this Agreement or the transactions contemplated
hereby of Governmental Entity); provided the party compelled to
disclose provides the other party with reasonable notice sufficient to
permit such party to seek a protective order, or (ii) disclosed in an
action or proceeding brought by a party hereto in pursuit of its rights
or in the exercise of its remedies hereunder, all documents and
information concerning the other party and its subsidiaries furnished
to it by such other party or its Representatives in connection with
this Agreement or the transactions contemplated hereby, except to the
extent that such documents or information can be shown to have been (x)
previously known by MAII or Parent, as the case may be, or its
Representatives, (y) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault
of MAII or Parent, as the case may be, and its Representatives or (z)
later acquired by MAII or Parent, as the case may be, or its
Representatives from another source if the recipient is not aware that
such source is under an obligation to MAII or Parent, as the case may
be, to keep such documents and information confidential. In the event
that this Agreement is terminated without the transactions contemplated
hereby having been consummated, upon the request of MAII or Parent, as
the case may be, the other party will, and will cause its
Representatives to, promptly redeliver or cause to be redelivered all
copies of documents and information furnished by MAII or Parent, as the
case may be, or its Representatives to such party and its
Representatives in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings related
thereto or based thereon prepared by MAII or Parent, as the case may
be, or its Representatives.
18
22
Section 4.3 Consents and Approvals.
(a) Each of MAII, the Company, Parent and Merger Sub will use
all commercially reasonable efforts to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement
and the transactions contemplated hereby, which actions shall include
furnishing all information in connection with approvals of or filings
with any Governmental Entity, and will promptly cooperate with and
furnish information to each other in connection with any such
requirements imposed upon any of them or any of their Subsidiaries in
connection with this Agreement and the transactions contemplated
hereby. Each of MAII, the Company, Parent and Merger Sub will, and will
cause its Subsidiaries to, use its reasonable best efforts to obtain
any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity or other public or private third party required
to be obtained or made by Parent, Merger Sub, MAII, the Company or any
of their Subsidiaries or necessary in the reasonable opinion of Parent,
Merger Sub, MAII or the Company in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement.
(b) MAII and Parent will (i) take all actions necessary to
make the filings required of it or its affiliates under the HSR Act
with respect to the transactions contemplated by this Agreement as
promptly as practicable following the date of this Agreement, (ii)
comply with any request for additional information received from the
Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act, (iii) cooperate with each other in
connection with filings under the HSR Act and (iv) request early
termination of the applicable waiting period.
(c) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable, whether under applicable
laws and regulations or otherwise, or to remove any injunctions or
other impediments or delays, legal or otherwise, (i) to cause the
conditions to closing set forth in Article V to be satisfied, and (ii)
otherwise to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. In case at any time after
the Effective Time any further action is necessary to carry out the
purposes of this Agreement, the proper officers and directors of MAII
and the Surviving Corporation shall use all reasonable efforts to take,
or cause to be taken, all such necessary actions.
Section 4.4 Supplemental Information. Except where prohibited by
applicable statutes and regulations, each party shall promptly provide the other
(or its counsel) with copies of all filings, material notices or material
communications made by such party with any Governmental Entity (including the
SEC or the National Association of Securities Dealers, Inc. (the "NASD")) in
connection with this Agreement or the transactions contemplated hereby.
Section 4.5 No Solicitation.
(a) From and after the date hereof, neither MAII nor any of
its Subsidiaries shall (whether directly or indirectly through its or
their officers, directors, agents, representatives, advisors or other
intermediaries (collectively,
19
23
"Representatives")), nor shall MAII or any of its Subsidiaries
authorize or permit any of its or their Representatives to, (a)
solicit, initiate, encourage (including by way of furnishing
information) or take any action knowingly to facilitate the submission
of any inquiries, proposals or offers (whether or not in writing) from
any person relating to, (i) any acquisition or purchase of 15% or more
of the consolidated assets of MAII and its Subsidiaries or of 15% or
more of any class of equity securities of MAII or any of its
Subsidiaries, (ii) any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of
MAII or any of its Subsidiaries (including through the ownership of
securities convertible or exercisable into or exchangeable for equity
securities of MAII), (iii) any merger, consolidation, business
combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving MAII or any
of its Subsidiaries whose assets, individually or in the aggregate,
constitute 15% or more of the consolidated assets of MAII, or (iv) any
other transaction the consummation of which would or would reasonably
be expected to impede, interfere with, prevent or materially delay the
Merger (any of the foregoing, being a "Transaction Proposal" with
respect to MAII), or agree to or endorse any Transaction Proposal, or
(b) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any other person any
information with respect to its business, properties or assets in
connection with any of the foregoing, or otherwise cooperate in any way
with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the
foregoing; provided, however, that the foregoing shall not prohibit
MAII, prior to the receipt of MAII Shareholder Approval, (A) from
complying with Rule 14e-2 and Rule 14d-9 under the Exchange Act with
regard to a bona fide tender offer or exchange offer or (B) from
participating in negotiations or discussions with or furnishing
information to any person in connection with an unsolicited bona fide
Transaction Proposal which is submitted in writing by such person to
the Board of Directors of MAII after the date of this Agreement and
prior to MAII Shareholder Approval; provided further, however, that
prior to participating in any such discussions or negotiations or
furnishing any information, the Board of Directors of MAII shall have
concluded in good faith, based on the advice of its outside financial
advisors, that such Transaction Proposal is reasonably likely to be or
to result in a Superior Shareholder Alternative, and based on the
advice of its outside legal counsel, that participating in such
negotiations or discussions or furnishing such information is required
in order to prevent the Board of Directors of MAII from breaching its
fiduciary duties to the shareholders of MAII; and provided, further,
that the Board of Directors of MAII shall not take any of the foregoing
actions unless it provides Parent with contemporaneous notice thereof.
MAII agrees that it will keep Parent informed, to the extent disclosure
is not prohibited by the terms of any confidentiality agreement with
the party making such Transaction Proposal, of the status of any such
material discussions or negotiations. MAII agrees to immediately cease
and cause its Representatives to cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing, and shall use all commercially
reasonable efforts to cause any such parties in possession of
confidential information about MAII that was furnished by or on behalf
of MAII to return or destroy all such information in the possession of
any such party or in the possession of any agent or advisor of any such
20
24
party. MAII agrees not to release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which
such party or its Subsidiaries is a party. MAII shall ensure that its
officers, directors and employees and any investment banker or other
Representative retained by it are aware of the restrictions described
in this Section 4.5. "Superior Shareholder Alternative" means any of
the transactions described in clause (i), (ii) or (iii) of the
definition of Transaction Proposal (with all of the percentages
included in the definition of such term raised to 51% for purposes of
this definition) with respect to which any required financing is
committed or, in the good faith judgment of the Board of Directors of
MAII to which such Transaction Proposal applies, based on the written
advice of its outside financial advisors, is reasonably capable of
being financed by the person making the proposal, and with respect to
which such board of directors shall have concluded in good faith, based
on the advice of its outside legal counsel and financial advisors, is
reasonably capable of being completed, taking into account all legal,
financial, regulatory and other aspects of the Transaction Proposal and
the person making the proposal, and would, if consummated, result in a
transaction more favorable to the shareholders of MAII to which such
Transaction Proposal applies from a financial point of view than the
transactions contemplated by this Agreement.
(b) From and after the date hereof, neither Parent nor any of
its Subsidiaries shall (whether directly or indirectly through its or
their officers, directors, agents, representatives, advisors or other
intermediaries (collectively, "Representatives")), nor shall Parent or
any of its Subsidiaries authorize or permit any of its or their
Representatives to, (a) solicit, initiate, encourage (including by way
of furnishing information) or take any action knowingly to facilitate
the submission of any inquiries, proposals or offers (whether or not in
writing) from any person relating to any Transaction Proposal with
respect to Merger Sub or agree to or endorse any such Transaction
Proposal, or (b) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to any other
person any information with respect to Merger Sub's business,
properties or assets in connection with any of the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate
in, facilitate or encourage, any effort or attempt by any other person
to do or seek any of the foregoing.
Section 4.6 Publicity. So long as this Agreement is in effect, neither
MAII nor Parent nor their affiliates or Subsidiaries shall issue or cause the
publication of any press release or other public statement or announcement with
respect to this Agreement or the transactions contemplated hereby without prior
approval of the other party, except as may be required by law or by obligations
pursuant to any agreement with the NASD, and in such case shall use all
reasonable efforts to consult with the other party prior to such release or
announcement being issued.
Section 4.7 Notification of Certain Matters. MAII shall give prompt
notice to Parent, and Parent shall give prompt notice to MAII, of (a) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would cause any representation or warranty of MAII, the Company, Parent or
Merger Sub as the case may be, contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (b) any
material failure of MAII or Parent, as the case may be, to comply with or
satisfy any covenant, condition
21
25
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 4.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 4.8 Merger Sub Debt. Immediately prior to the Effective Time,
Parent will contribute all amounts owed by Merger Sub to Parent (except for the
Parent Indebtedness as provided below) to Merger Sub as an equity contribution
to Parent's current holdings of Merger Sub Common Stock. To the extent
permissible under applicable law, the Surviving Corporation shall, and MAII
shall cause the Surviving Corporation to, pay, by wire transfer of immediately
available funds, any and all debt liabilities of Surviving Corporation owed to
Parent as a result of Surviving Corporation's assumption, through the Merger, of
such debt liabilities of Merger Sub; provided that (a) such debt liabilities
have been incurred by Merger Sub since August 1, 2001, (b) the proceeds of such
debt liabilities were used by Merger Sub solely to purchase automobile
inventory, (c) all automobile inventory so purchased was paid for entirely in
cash, and (d) the Surviving Corporation will receive either one hundred percent
(100%) of the proceeds from the sale of the automobile inventory so purchased or
will own the automobile inventory so purchased free and clear of any Lien (other
than Liens arising from security interests in after acquired inventory that were
granted to third parties (other than Parent) prior August 1, 2001). Parent
represents and warrants to MAII and the Company that, assuming payment of the
Parent Indebtedness as set forth in this Section 4.8, there are no debts or
other liabilities owed by Merger Sub to Parent.
Section 4.9 Board of Directors. Parent and MAII hereby agree that for a
period of two (2) years following the Effective Time, the Board of Directors of
MAII will consist of five members, three of whom shall be designated by ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as a group, and two of
whom shall be designated by Parent. Parent agrees to vote, or cause to be voted,
all all voting securities of MAII owned by Parent or any of its Affiliates or
Subsidiaries in favor of the nominees selected by the parties as provided in the
above sentence, and further agrees not to take any action which would diminish
the prospects of any such designee from being elected to MAII's Board of
Directors as provided above.
ARTICLE V
CONDITIONS
Section 5.1 Conditions to the Obligations of Each Party. The
obligations of MAII and the Company, on the one hand, and Parent and Merger Sub,
on the other hand, to consummate the Merger are subject to the satisfaction (or,
if permissible, waiver by the party for whose benefit such conditions exist) of
the following conditions:
(a) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other Governmental Entity of
competent jurisdiction or other legal restraint or prohibition
preventing or making illegal the consummation of the Merger shall be in
effect; provided, however, that the parties hereto shall use all
commercially reasonable efforts to have any such injunction, order,
restraint or prohibition vacated.
22
26
(b) Governmental and Regulatory Approvals. All regulatory
approvals and other actions or approvals by any Governmental Entity
required to permit the consummation of the Merger shall have been
obtained (without any terms or conditions to such approvals which would
impose material and adverse limitations on the ability of MAII and its
Subsidiaries (including the Surviving Corporation following the Merger)
to conduct their business after the Effective Time, which would require
changes to the terms of this Agreement or which would change the
consideration payable to shareholders of Merger Sub in the Merger) and
such approvals shall be in full force and effect.
(c) HSR Approvals. Any waiting period (and any extension
thereof) or period for any referral to any body applicable to the
Merger under the HSR Act shall have expired or been terminated.
Section 5.2 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction (or waiver by Parent) of the following further conditions:
(a) Representations and Warranties. The representations and
warranties of MAII and the Company qualified as to materiality shall be
true and accurate (and those not so qualified shall be true and
accurate in all material respects) as of the Effective Time as if made
at and as of such time (except for those representations and warranties
that address matters only as of a particular date or only with respect
to a specific period of time which need only be true and accurate (or
true and accurate in all material respects) as of such date or with
respect to such period). Parent shall have received a certificate of
the chief executive officer of MAII to such effect.
(b) Performance of Obligations. MAII and its Subsidiaries
shall have performed or complied with all agreements and covenants
required to be performed or complied with by them under this Agreement
at or prior to the Closing Date that are qualified as to materiality
and shall have performed or complied in all material respects with all
other agreements and covenants required to be performed by them under
this Agreement at or prior to the Closing Date that are not so
qualified, and Parent shall have received a certificate of the chief
executive officer of MAII to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, there shall not have occurred any event, change,
circumstance, condition or effect that shall have caused, or shall be
reasonably likely to cause, a Material Adverse Effect with respect to
MAII.
(d) Consents. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that all licenses, permits,
consents, approvals, authorizations, qualifications and orders of all
third parties listed on Section 2.3 of the Company Disclosure Statement
have been obtained without, in the case of third parties, the payment
or imposition of any material costs or obligations.
23
27
(e) Opinion of Counsel. Parent and Merger Sub shall have
received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P., counsel to MAII, dated
the Closing Date, substantially in the form mutually agreed upon by the
parties.
(f) Waiver of TBCA Provision. The Board of Directors of MAII
shall have approved the acquisition of beneficial ownership of MAII
Common Stock contemplated by the Merger and certain other concurrent
purchases to be made by Parent from existing shareholders of MAII under
Part Thirteen (Art. 13.01-13.08) of the TBCA.
Section 5.3 Conditions to the Obligations of MAII and the Company. The
obligations of MAII and the Company to consummate the Merger are subject to the
satisfaction (or waiver by MAII) of the following further conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub qualified as to materiality shall
be true and accurate (and those not so qualified shall be true and
accurate in all material respects) as of the Effective Time as if made
at and as of such time (except for those representations and warranties
that address matters only as of a particular date or only with respect
to a specific period of time which need only be true and accurate (or
true and accurate in all material respects) as of such date or with
respect to such period. MAII shall have received a certificate of the
chief executive officer of Parent to such effect.
(b) Performance of Obligations. Parent and its Subsidiaries
shall have performed or complied with all agreements and covenants
required to be performed or complied with by them under this Agreement
at or prior to the Closing Date that are qualified as to materiality
and shall have performed or complied in all material respects with all
other agreements and covenants required to be performed by them under
this Agreement at or prior to the Closing Date that are not so
qualified, and MAII shall have received a certificate of the chief
executive officer of Parent to such effect.
(c) No Material Adverse Change. Since the date of the
Agreement, there shall not have occurred any event, change,
circumstance, condition or effect that shall have caused, or shall be
reasonably likely to cause, a Material Adverse Effect with respect to
Merger Sub.
(d) Consents. MAII shall have received evidence, in form and
substance reasonably satisfactory to it, that all licenses, permits,
consents, approvals, authorizations, qualifications and orders of all
third parties listed on Section 3.4 of the Parent Disclosure Statement
have been obtained.
(e) Ajax Acquisition. Merger Sub shall have completed the
acquisition of Ajax Rent A Car on substantially the terms currently
contemplated, with Parent incurring and paying any and all additional
consideration therefore and all related costs and expenses; it being
agreed and understood that Merger Sub shall not be liable for any such
consideration, costs or expenses.
24
28
(f) Due Diligence. The completion, to MAII's reasonable
satisfaction, of its due diligence review of Merger Sub within ten (10)
days of the date of this Agreement.
(g) Parent Disclosure Statement. MAII shall have received from
Parent, to the reasonable satisfaction of MAII, the Parent Disclosure
Statement within ten (10) days of the date of this Agreement.
(h) Capital Contribution. Parent shall have converted
$6,600,000 of debt liability owed to Parent by Merger Sub into common
equity of Merger Sub.
(i) Opinion of Financial Advisor. MAII shall have received an
opinion from Company Financial Advisor to the effect that, as of the
date of such opinion, the transactions contemplated under this
Agreement are fair from a financial point of view to the shareholders
of the Company.
(j) Opinion of Counsel. MAII shall have received the opinion
of Nida & ▇▇▇▇▇▇▇, LLP, counsel to Parent, dated the Closing Date, in
the form mutually agreed upon by the parties.
ARTICLE VI
TERMINATION
Section 6.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time.
(a) by the mutual written consent of Parent and MAII;
(b) by either Parent or MAII if any Governmental Entity (i)
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable or
(ii) shall have failed to issue an order, decree or ruling or to take
any other action, as applicable, and such denial of a request to issue
such order, decree, ruling or take such other action shall have become
final and nonappealable, in the case of each of (i) and (ii) which is
necessary to fulfill the conditions set forth in Sections 6.1(b) and
6.1(e); provided, however, that the right to terminate this Agreement
under this Section 6.1(b) shall not be available to any party whose
failure to comply with Section 4.3 has been the cause of such action or
failure to act; or
(c) by either Parent or MAII if the Merger shall not have been
consummated on or before September 15, 2001 (the "Termination Date");
provided, that the right to terminate this Agreement under this Section
6.1(c) shall not be available to the party whose failure to fulfill any
of its obligations under this Agreement has resulted in the failure of
the Merger to occur on or before such date; or
25
29
(d) by Parent, if, prior to the Effective Time, MAII or MAII's
Board of Directors shall have (i) withdrawn, modified or amended in any
respect adverse to Parent its adoption of this Agreement, (ii)
approved, recommended or entered into an agreement with respect to, or
consummated, any Transaction Proposal from a person other than Parent
or any of its affiliates, or (iii) in response to the commencement of
any tender offer or exchange offer for 10% or more of the outstanding
MAII Common Stock, not recommended rejection of such tender offer or
exchange offer within ten (10) Business Days after the commencement
thereof (as such term is defined in Rule 14d-2 under the Exchange Act);
(e) by MAII, if, prior to the Effective Time, the board of
directors of MAII (or any committee thereof) shall have withdrawn, or
modified or changed its approval of the Merger in order to approve and
permit MAII to execute a definitive agreement providing for a Superior
Shareholder Alternative; or
(f) (i) by MAII, if Parent or Merger Sub breaches any of its
representations, covenants or agreements contained in this Agreement
and such breach (A) would permit MAII not to consummate the Merger
pursuant to Sections 5.3(a) or 5.3(b), (B) either by its terms cannot
be cured by the Closing Date or with respect to any such breach that is
reasonably capable of being remedied, the breach is not remedied within
20 days after MAII has furnished Parent with written notice of such
breach and (C) the Liability Estimate with respect thereto as
determined by MAII is in excess of $500,000; or (ii) by Parent, if MAII
or the Company breaches any of its representations, covenants or
agreements contained in this Agreement and such breach (A) would permit
Parent not to consummate the Merger pursuant to Sections 5.2(a) or
5.2(b), (B) either by its terms cannot be cured by the Closing Date or
with respect to any such breach that is reasonably capable of being
remedied, is not remedied within 20 days after Parent has furnished
MAII with written notice of such breach and (C) the Liability Estimate
with respect thereto as determined by Parent is in excess of $500,000.
Section 6.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 6.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become null and void, and there shall be no liability on the part of Parent,
Merger Sub, MAII or the Company except (a) for fraud or for willful breach of
this Agreement, (b) for the payment of the Expenses in accordance with Section
6.3, (c) the agreements contained in Section 4.2(b)and (d) as set forth in this
Section 6.2 and in Article VII.
Section 6.3 Expenses. Subject to the last sentence of this Section 6.3,
but in addition to any other amounts which may be payable pursuant to any other
Section of this Article VII, in the event of a termination (a) under Section
6.1(e) or 6.1(f)(ii) MAII shall reimburse Parent, for all reasonable
out-of-pocket expenses and fees (including fees payable to all counsel,
accountants, financial advisors, financial printers, experts and consultants,
collectively "Expenses and Fees"), and (b) under Section 6.1(f)(i), Parent shall
reimburse MAII for Expenses and Fees, incurred in connection with this Agreement
by the party to be reimbursed, regardless of whether such Expenses and Fees were
incurred prior to, concurrently with or after the execution of this Agreement.
The party incurring the obligation to reimburse Expenses and Fees shall make
26
30
payment to the other party promptly, but in no event later than thirty (30)
business days following written notice thereof, together with reasonable
supporting documentation, provided that in no event will the amounts payable by
MAII to Parent or by Parent to MAII under this Section 6.3 exceed $1,000,000.00.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Costs and Expenses. Except as set forth in Article VI, all
costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such expenses, except that Parent shall be responsible for and shall
bear all costs and expenses incurred by Merger Sub in connection with this
Agreement and the consummation of the transactions contemplated hereby.
Section 7.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects by
written agreement of the parties hereto, pursuant to action taken by their
respective Boards of Directors, at any time prior to the Effective Time with
respect to any of the terms contained herein.
Section 7.3 Survival of Representations, Warranties and Covenants. The
representations and warranties set forth in Article III of this Agreement shall
survive the Effective Time for a period of eighteen (18) months. Parent
specifically agrees to indemnify the Surviving Corporation for any and all
claims, damages, penalties, judgments, liabilities, costs and expenses
(including court costs and attorney's fees) incurred in connection with the
matter disclosed in Section 3.9 of the Parent Disclosure Statement in excess of
$35,000. Except as provided above and for those covenants and agreements
contained herein or therein that by their terms apply or are to be performed in
whole or in part after the Effective Time, none of the representations,
warranties, covenants or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
Section 7.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
GenesisIntermedia, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: Ramy El-Batrawi
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
27
31
with a copy to:
Nida & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to MAII or the Company, to:
MAII Holdings, Inc.
▇▇▇▇ Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 7.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation."
Section 7.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 7.7 Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreements (including the exhibits hereto and
the documents and the instruments referred to herein and therein): (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
Section 7.8 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
28
32
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially 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 a mutually acceptable manner in order that the transactions
contemplated hereby may be consummated as originally contemplated to the fullest
extent possible.
Section 7.9 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not per-formed in accordance with the terms hereof and that the parties shall be
entitled to the remedy of specific performance of the terms hereof, in addition
to any other remedy at law or equity.
Section 7.10 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of
Delaware.
Section 7.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Company may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
MAII or to any direct or indirect wholly owned Subsidiary of MAII; provided,
however, that no such assignment shall relieve MAII from any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 7.12 Headings. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. References to Articles or Sections, unless
otherwise specified, are to Articles and Sections of this Agreement.
IN WITNESS WHEREOF, Parent, Merger Sub, MAII and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
GENESISINTERMEDIA, INC.
By:
-----------------------------------------
Name
-----------------------------------
Title:
---------------------------------
CAR RENTAL ▇▇▇▇▇▇.▇▇▇, INC.
By:
-----------------------------------------
Name
-----------------------------------
Title:
---------------------------------
29
33
MAII ACQUISITION, INC.
By:
-----------------------------------------
Name
-----------------------------------
Title:
---------------------------------
MAII HOLDINGS, INC.
By:
-----------------------------------------
Name
-----------------------------------
Title:
---------------------------------
30
34
EXHIBIT A
DEFINITIONS
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a bank
holiday in the State of
Delaware.
"CERTIFICATE" shall have the meaning set forth in Section 1.6(b).
"CLOSING" shall mean the closing of the Merger.
"CLOSING DATE" shall mean the date of Closing.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"DOLLARS" or "$" means United States dollars.
"EFFECTIVE TIME" shall have the meaning set forth in Section 1.2.
"ENVIRONMENTAL CLAIM" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any person
alleging liability or potential liability arising out of, relating to, based on
or resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, whether or not such property
is owned, leased or operated or (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or Environmental Permit
or (iii) otherwise relating to obligations or liabilities under any
Environmental Laws; provided, however, that the term "Environmental Claim" shall
not include any such claim, demand, action, suit, complaint, proceeding or other
communication under an insurance or reinsurance policy issued by MAII, the
Company, Merger Sub or Parent.
"ENVIRONMENTAL LAWS" means all applicable statutes, rules, regulations,
ordinances, orders, decrees and common law, in each case of any Governmental
Entity, as they exist at the date hereof, relating in any manner to
contamination, pollution or protection of human health or the environment,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, the Solid Waste Disposal Act, the Resource
Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Occupational Safety and Health Act, the Emergency
Planning and Community-Right-to-Know Act, the Safe Drinking Water Act, all as
amended, and similar state laws.
"ENVIRONMENTAL PERMITS" means all permits, licenses, registrations and
other governmental authorizations required for an entity and its facilities to
conduct its business under Environmental Laws.
A-1
35
"ENVIRONMENTAL REPORT" means any report, study, assessment, audit, or
other similar document that addresses any issue of noncompliance with, or
liability under, any Environmental Law.
"FAIR MARKET VALUE" shall mean with respect to a specified date, the
average closing price of the security being valued as reported by the Nasdaq
Stock Market ,or if the security being valued is listed on a securities
exchange, the last reported sales price of the security on such exchange which
shall be or consolidated trading if applicable to such exchange, or if neither
so reported or listed, the last reported bid price of such security for the ten
(10) consecutive trading days ending on the date immediately prior to the
specified date. In the absence of one or more such quotations, the board of
directors of the company issuing or that has issued such security shall
determine the Fair Market Value of such security on the basis of such quotations
as it in good faith considers appropriate.
"GOVERNMENTAL ENTITY" shall have the meaning set forth in Section 2.4.
"HAZARDOUS MATERIALS" means any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity,
and any other substances of any kind, whether or not any such substance is
defined as hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental Law.
"INTELLECTUAL PROPERTY" shall mean all U.S., state and foreign
intellectual property, including without limitation all (i) (a) patents,
inventions, discoveries, processes, designs, techniques, developments,
technology, and related improvements and know-how; (b) copyrights and works of
authorship in any media, including computer programs, firmware, software,
applications, Web site content, files, databases, documentation and related
items; (c) trademarks, service marks, trade names, brand names, corporate names,
domain names, logos, trade dress, the goodwill of any business symbolized
thereby, and all common-law rights relating thereto; (d) trade secrets and other
confidential or proprietary documents, files, analyses, lists, ways of doing
business and/or information; (ii) registrations, applications and recordings
related thereto; and (iii) rights to obtain renewals, extensions, continuations,
continuations-in-part, reissues, divisions or similar legal protections related
thereto.
"KNOWLEDGE" means such party's actual knowledge after due inquiry of
officers, directors and other employees of such party reasonably believed to
have knowledge of the matter in question.
"LIABILITY ESTIMATE" means the good faith estimate of the amount
(reasonably based on the information possessed at the time of such estimate) of
costs, expenses, losses damages and liabilities incurred or suffered, directly
or indirectly, by the party making the estimate (including, without limitation,
reasonable legal fees and expenses).
"LIEN" means any mortgage, lien (other than liens for Taxes not yet
due), security interest, pledge, lease or other charge or encumbrance of any
kind, including, the lien or retained security title of a purchase money
creditor or conditional vendor, and any easement, right of way or other
encumbrance on title to real property, and any agreement to give any of the
foregoing.
A-2
36
"MAII COMMON STOCK" shall mean the common stock, par value $0.002 per
share, of MAII.
"MAII STOCK OPTION" shall mean each outstanding option to purchase
shares of the MAII Common Stock issued pursuant to the MAII Stock Option Plans.
"MAII STOCK OPTION PLAN" shall mean MAII's Amended and Restated 1994
Long-Term Incentive Plan, which superseded the Company's Statutory Incentive
Stock Option Plan dated January 24, 1990.
"MATERIAL ADVERSE EFFECT" shall, when used in connection with any
entity or any of its Subsidiaries, mean any change or effect that, either
individually or in the aggregate with all other changes or effects, (i) is
materially adverse to the business, operations, assets, liabilities (including
contingent liabilities), condition (financial or otherwise), results of
operations or prospects of such person and its Subsidiaries taken as a whole or
(ii) could reasonably be expected to materially impair the ability of such
person to consummate the Merger and to perform its other obligations hereunder
on a timely basis.
"MERGER CONSIDERATION" shall have the meaning set forth in Section
1.6(a)
"MERGER SUB COMMON STOCK" shall mean the common stock, par value $.001
per share, of Merger Sub.
"NASDAQ" shall mean the Nasdaq Stock Market, Inc.
"NRS" shall mean the Nevada Revised Statutes.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization or other entity.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended and
the rules and regulations promulgated thereunder.
"SUBSIDIARY" means, with respect to a specified person, each
corporation, partnership or other entity in which the specified person owns or
controls, directly or indirectly through one or more intermediaries, 50 percent
or more of the stock or other interests having general voting power in the
election of directors or persons performing similar functions or rights to 50
percent or more of any distributions.
"SUPERIOR SHAREHOLDER ALTERNATIVE" shall have the meaning set forth in
Section 4.5(a)
"SURVIVING CORPORATION" shall have the meaning set forth in Section
1.1.
"TAX" (and, with correlative meaning, "Taxes" and "Taxable") means any
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax,
A-3
37
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Tax Authority.
"TAX AUTHORITY" means any governmental authority (domestic or foreign)
with the power to impose Taxes.
"TAX RETURN" shall mean any return, statement, report or form
(including, without limitation, estimated tax returns and reports, withholding
tax returns and reports and information reports and returns) required to be
filed with respect to Taxes.
"TBCA" shall mean the Texas Business Corporation Act.
"TRANSACTION PROPOSAL" shall have the meaning set forth in Section
4.5(a).
A-4