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Sample Business ContractsHome: Sample Business Contracts:
Execution Version
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE BOEING COMPANY
BOEING-AVENGER, INC.
and
AVIALL, INC.
Dated as of April 30, 2006
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Execution Version
TABLE OF CONTENTS
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Page
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ARTICLE 1 Defined Terms........................................................1
ARTICLE 2 The Merger..........................................................10
2.1 The Merger..................................................10
2.2 The Closing.................................................11
2.3 Effective Time..............................................11
2.4 Effect of the Merger........................................11
2.5 Certificate of Incorporation; Bylaws........................11
2.6 Directors and Officers......................................11
ARTICLE 3 Conversion of Securities; Exchange of Certificates..................11
3.1 Conversion of Securities....................................11
3.2 Exchange of Certificates....................................12
3.3 Share Transfer Books........................................14
3.4 Convertible Securities......................................14
3.5 Dissenting Stockholders.....................................15
ARTICLE 4 Company Representations and Warranties..............................15
4.1 Organization and Qualification; Subsidiaries................15
4.2 Certificate of Incorporation and Bylaws; Corporate Books
and Records.................................................16
4.3 Capitalization..............................................16
4.4 Authority...................................................18
4.5 No Conflict; Required Filings and Consents..................18
4.6 Permits; Compliance With Law................................19
4.7 SEC Filings; Financial Statements...........................20
4.8 Disclosure Documents........................................24
4.9 Absence of Certain Changes or Events........................24
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Execution Version
4.10 Employee Benefit Plans......................................26
4.11 Contracts; Customers and Suppliers..........................30
4.12 Litigation..................................................33
4.13 Environmental Matters.......................................33
4.14 Intellectual Property.......................................34
4.15 Taxes.......................................................39
4.16 Insurance...................................................40
4.17 Opinion of Financial Advisor................................41
4.18 Brokers.....................................................41
4.19 Properties..................................................41
4.20 Interested Party Transactions...............................42
ARTICLE 5 Representations and Warranties of Parent and Merger Sub.............42
5.1 Organization and Qualification; Subsidiaries................42
5.2 Authority...................................................42
5.3 No Conflict; Required Filings and Consents..................43
5.4 Ownership of Merger Sub; No Prior Activities................43
5.5 Financing...................................................43
5.6 Company Stock...............................................43
ARTICLE 6 Covenants...........................................................44
6.1 Conduct of Business by the Company Pending the Closing......44
6.2 Takeover Statutes...........................................47
6.3 Proxy Statement.............................................47
6.4 Company Stockholders Meeting; Board Recommendation..........48
6.5 Access to Information; Confidentiality......................49
6.6 No Solicitation of Transactions.............................49
6.7 Appropriate Action; Consents; Filings.......................51
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Execution Version
6.8 Certain Notices.............................................53
6.9 Public Announcements........................................53
6.10 Indemnification.............................................53
6.11 Employees...................................................54
6.12 Benefit Plans...............................................55
6.13 Standstill Provisions.......................................56
6.14 Third Party Consents; Notices...............................56
6.15 Section 16 Matters..........................................56
6.16 Reasonable Efforts; Cooperation.............................57
6.17 Notes Tender Offer..........................................57
ARTICLE 7 Closing Conditions..................................................58
7.1 Conditions to Obligations of Each Party Under
This Agreement..............................................58
7.2 Additional Conditions to Obligations of Parent and
Merger Sub..................................................58
7.3 Additional Conditions to Obligations of the Company.........59
ARTICLE 8 Termination, Amendment and Waiver...................................60
8.1 Termination.................................................60
8.2 Effect of Termination.......................................61
8.3 Amendment...................................................62
8.4 Waiver......................................................62
8.5 Fees and Expenses...........................................62
ARTICLE 9 General Provisions..................................................63
9.1 Non-Survival of Representations and Warranties..............63
9.2 Notices.....................................................63
9.3 Headings....................................................64
9.4 Severability................................................64
9.5 Entire Agreement............................................64
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Execution Version
9.6 Assignment..................................................64
9.7 Parties in Interest.........................................65
9.8 Mutual Drafting.............................................65
9.9 Governing Law; Consent to Jurisdiction; Waiver of Trial
by Jury.....................................................65
9.10 Disclosure..................................................66
9.11 Counterparts................................................66
9.12 Remedies Cumulative; Specific Performance...................66
9.13 Agreement to Protect Parent's Acquired Goodwill.............66
9.14 Interpretation..............................................66
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Execution Version
EXHIBITS
Exhibit A Form of Restated Certificate of Incorporation
Exhibit B Form of Amended and Restated Bylaws
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2006 (this
"Agreement"), by and among The Boeing Company, a Delaware corporation
("Parent"), Boeing-Avenger, Inc., a Delaware corporation and a direct wholly
owned subsidiary of Parent ("Merger Sub"), and Aviall, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved and declared advisable this Agreement and the merger
of Merger Sub with and into the Company (the "Merger") upon the terms and
subject to the conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"); and
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have determined that the Merger is in furtherance of and consistent
with their respective business strategies and is in the best interest of their
respective stockholders; and
WHEREAS, as a material inducement to the willingness of Parent to enter
into this Agreement, simultaneously with the execution of this Agreement,
certain employee-stockholders are entering into amendments and restatements to
their employment or severance agreements with each of the parties hereto and
non-competition agreements with Parent (the "Retention and Non-Competition
Agreements").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE 1
Defined Terms
For purposes of this Agreement, the term:
"Acquisition Proposal" means, with respect to the Company, any
agreement, offer, proposal or indication of interest (other than this Agreement,
the Merger or any other offer, proposal or indication of interest by Parent)
relating to or involving (i) the purchase from the Company or any Company
Subsidiary or any acquisition by any Person or Group of more than a 10% interest
in the total outstanding voting securities of the Company or more than a 10%
interest in the total outstanding voting securities of any Company Subsidiary or
any tender offer or exchange offer that if consummated would result in any
Person or Group Beneficially Owning 10% or more of the total outstanding voting
securities of the Company or 10% or more of the total outstanding voting
securities of any Company Subsidiary, (ii) any merger, consolidation, business
combination or similar transaction involving the Company or any Company
Subsidiary, or (iii) any sale, lease, mortgage, pledge, exchange, transfer,
license, acquisition or disposition of 10% or more of the consolidated assets of
the Company and the Company Subsidiaries in any single transaction or series of
related transactions (other than in the ordinary course of business).
"Affiliate" has the meaning used in Rule 145 promulgated under the
Securities Act.
"Agreement" has the meaning set forth in the preamble.
"Anti-Bribery Laws" has the meaning set forth in Section 4.6(d).
"Antitrust Laws" has the meaning set forth in Section 6.7(c).
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"Beneficial Ownership" (and related terms such as "Beneficially Owning"
or "Beneficial Owner") shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Blue Sky Laws" means state securities or "blue sky" laws.
"Business Day" has the meaning used in Rule 14d-1(g) promulgated under
the Exchange Act.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"Certificate of Merger" has the meaning set forth in Section 2.3.
"Certificates" has the meaning set forth in Section 3.2(a).
"Certifications" has the meaning set forth in Section 4.7(a).
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"COBRA" has the meaning set forth in Section 4.10(c).
"Code" means the United States Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Company" has the meaning set forth in the preamble.
"Company Balance Sheet" has the meaning set forth in Section 4.7(b).
"Company Balance Sheet Date" has the meaning set forth in Section
4.7(b).
"Company Benefit Plans" has the meaning set forth in Section 4.10(a).
"Company Board" means the Board of Directors of the Company.
"Company Board Recommendation" means the unanimous recommendation by
the Company Board that the Company's stockholders vote in favor of the adoption
of this Agreement.
"Company Bylaws" has the meaning set forth in Section 4.2.
"Company Certificate of Incorporation" has the meaning set forth in
Section 4.2.
"Company Common Share" means a share of common stock, par value $0.01
per share, of the Company.
"Company Disclosure Schedule" has the meaning set forth in the preamble
to Article 4.
"Company Financial Advisor" has the meaning set forth in Section 4.17.
"Company Financial Statements" has the meaning set forth in Section
4.7(b).
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"Company IP Rights" means (i) any and all Intellectual Property used or
held for use in the conduct of the business of the Company and the Company
Subsidiaries as currently conducted and (ii) any and all other Intellectual
Property owned by the Company and the Company Subsidiaries.
"Company IP Rights Agreements" has the meaning set forth in Section
4.14(h).
"Company Option" means any option granted, and not exercised, expired
or terminated, in connection with the performance of services, to a current or
former employee, director or independent contractor of the Company or any of the
Company Subsidiaries or any predecessor thereof to purchase Company Common
Shares pursuant to any Company Stock Option Plan.
"Company-Owned IP Rights" means Company IP Rights that are owned by the
Company or any of the Company Subsidiaries.
"Company Permits" has the meaning set forth in Section 4.6(a).
"Company Preferred Shares" has the meaning set forth in Section 4.3(a).
"Company Registered Intellectual Property" means all United States,
international and foreign (i) patents and patent applications (including
provisional applications) and all reissues, divisions, renewals, extensions,
continuations and continuations in part, (ii) registered trademarks and service
marks, applications to register trademarks or service marks, intent-to-use
applications, or other registrations or applications related to trademarks or
service marks, (iii) registered Internet domain names, (iv) registered
copyrights and applications for copyright registration, and (v) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or recorded by the
United States Patent and Trademark Office, the United States Copyright Office,
or any equivalent Governmental Entity, in each case of (i) through (v) that is
owned by, registered or filed in the name of, the Company or any of the Company
Subsidiaries.
"Company SARs" has the meaning set forth in Section 3.4(c).
"Company SEC Reports" has the meaning set forth in Section 4.7(a).
"Company Source Code" means any software source code, any material
portion or aspect thereof, or any material proprietary information or algorithm
contained in or relating to any software source code of any Company-Owned IP
Rights.
"Company Stockholders Approval" has the meaning set forth in Section
4.4(a).
"Company Stockholders Meeting" has the meaning set forth in Section
4.4(a).
"Company Stock Option Plan" means any stock option, stock bonus, stock
award or stock purchase plan, program or arrangement, as amended to date, of the
Company or any of the Company Subsidiaries or any predecessor thereof, including
the Company's 1998 Director's Stock Plan and the 1998 Stock Incentive Plan.
"Company Subsidiary" has the meaning set forth in Section 4.1(a).
"Company Warrants" means warrants to purchase Company Common Shares
(other than Company Options and stock appreciation rights).
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"Confidential Information" has the meaning set forth in Section
4.14(s).
"Confidentiality Agreement" has the meaning set forth in Section 6.5.
"Continuing Employees" has the meaning set forth in Section 6.11(a).
"Contract" means any agreement, contract, subcontract, lease, sublease,
power of attorney, note, loan, evidence of Indebtedness, purchase and sales
order, letter of credit, undertaking, covenant not to compete, license,
instrument, obligation, commitment, binding understanding, promise, indenture,
option, warranty, policy or quotation, whether oral or written, express or
implied.
"Cost Accounting Standards" has the meaning set forth in Section
4.11(c).
"Credit Facility" means the Company's senior secured credit facility,
as described in the Company's Annual Report on Form 10-K for the period ending
December 31, 2005, and any footnotes, schedules or exhibits thereto including
any other documents or instruments executed in connection therewith.
"Dallas Lease" has the meaning set forth in Section 4.19(a).
"Dissenting Shares" has the meaning set forth in Section 3.5.
"Divestiture" means (a) the sale, license or other disposition or
holding separate (through the establishment of a trust or otherwise) of any
assets or categories of assets of Parent or any of its Affiliates or the Company
or any Company Subsidiary or (b) the holding separate of the Company Common
Shares or any limitation or regulation on the ability of Parent or any of its
Affiliates to exercise full rights of ownership of the Company Common Shares.
"DGCL" has the meaning set forth in the preamble.
"D&O Insurance" has the meaning set forth in Section 6.10(b).
"EDGAR" has the meaning set forth in Section 4.7(a).
"Effective Time" has the meaning set forth in Section 2.3.
"Encumbrance" means, with respect to any asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, title retention device,
conditional sale or other security arrangement, collateral assignment, claim,
charge, adverse claim of title, ownership or other similar encumbrance of any
kind in respect of such asset (including any restriction on (i) the voting of
any security or the transfer of any security or other asset, (ii) the receipt of
any income derived from any asset, and (iii) the use of any asset) other than
any encumbrance arising (A) under applicable Laws with respect to Taxes not yet
due and payable, or (B) under the Credit Facility.
"Engagement Letter" has the meaning set forth in Section 4.18.
"Environmental Claims" means all written or oral accusations,
allegations, complaints, notices of violation, claims, demands, suits or causes
of action for any damage, including personal injury or property damage,
investigatory costs, clean-up costs, governmental response costs, natural
resources damages, fines or penalties, arising out of or related to
Environmental Conditions or pursuant to applicable Environmental Laws.
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"Environmental Conditions" means Releases relating to or arising out of
the use, handling, storage, treatment, disposal, recycling, generation or
transportation of Hazardous Substances by the Company or any Company Subsidiary
or any entity for which the Company has financial responsibility. With respect
to Environmental Claims by third parties, Environmental Conditions also include
the exposure of Persons to Hazardous Substances from the operations of the
Company or any Company Subsidiary or any entity for which the Company has
financial responsibility at the workplace or the exposure of Persons or property
to Hazardous Substances from the operations of the Company or any Company
Subsidiary or any entity for which the Company has financial responsibility
migrating from or otherwise emanating from the Facilities.
"Environmental Laws" means all applicable foreign, federal, state,
district and local laws, all rules or regulations promulgated thereunder, and
all orders, consent orders, judgments, notices, or permits issued, promulgated
or entered pursuant thereto (collectively, "Regulations"), relating to pollution
or protection of the environment and occupational safety and health, including
(i) Regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment, (ii) Regulations relating
to the identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of Hazardous
Substances, (iii) Regulations relating to the health and safety of Persons
(including employees) or property, (iv) CERCLA, (v) the Toxic Substances Control
Act, (vi) the Hazardous Materials Transportation Act, (vii) the Resource
Conservation and Recovery Act, (viii) the Clean Water Act, (ix) the Safe
Drinking Water Act, (x) the Clean Air Act, (xi) the Occupational Health and
Safety Act, (xii) Federal Insecticide, Fungicide, Rodenticide Act, and (xiii)
the Emergency Planning and Community Right-to-Know Act.
"Environmental Reports" means any and all written reports, audits,
inspections, reviews, assessments, evaluations or other analyses that are in the
possession or control of the Company or any Company Subsidiary of (i) any
Environmental Conditions in, on or about the Facilities or (ii) compliance with
applicable Environmental Laws.
"Equity Interest" means any share, capital stock, partnership, member
or similar interest in any Person, and any option, warrant, right or security
(including debt securities) convertible, exchangeable or exercisable therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any entity or trade or business (whether or not
incorporated), other than the Company, that together with the Company is
considered under common control and treated as a single employer under Sections
414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning set forth in Section 3.2(b).
"Exchange Fund" has the meaning set forth in Section 3.2(b).
"Expenses" includes all reasonable out-of-pocket expenses (including
all fees and expenses of legal counsel, accountants, investment bankers, experts
and consultants to a party hereto and its Affiliates) incurred by a party or on
its behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the transactions
contemplated
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hereby, including the preparation, printing, filing and mailing of the Proxy
Statement and the solicitation of stockholder approvals and all other matters
related to the transactions contemplated hereby.
"Export Control Laws" has the meaning set forth in Section 4.6(c).
"Facilities" means all plants, offices, manufacturing facilities,
stores, warehouses, administration buildings and real property and related
facilities and fixtures owned or leased at any time by the Company or any of the
Company Subsidiaries.
"Foreign Plan" means each compensation and benefit plan required to be
maintained or contributed to by the Law or applicable custom or rule of the
relevant jurisdiction outside of the United States except for plans maintained
by Governmental Entities.
"GAAP" means generally accepted accounting principles as applied in the
United States.
"Government Contract" has the meaning set forth in Section 4.11(c).
"Governmental Entity" means any supranational, national, state,
municipal, local or foreign government, any court, tribunal, arbitrator,
administrative agency, commission or other governmental official, authority or
instrumentality, in each case whether domestic or foreign, any stock exchange or
similar self-regulatory organization or any quasi-governmental or private body
exercising any regulatory, Taxing or any other governmental or
quasi-governmental entity.
"Group" has the meaning as used in Section 13 of the Exchange Act,
except where the context otherwise requires.
"Hazardous Substances" means all pollutants, contaminants, chemicals,
wastes, and any other infectious, carcinogenic, ignitable, corrosive, reactive,
toxic or otherwise hazardous substances or materials (whether solids, liquids or
gases) subject to regulation, control or remediation under applicable
Environmental Laws. By way of example only, the term Hazardous Substances
includes petroleum and/or petroleum by-products, urea formaldehyde, flammable,
explosive and radioactive materials, radon gas, polychlorinated biphenyls,
pesticides, herbicides and asbestos.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Indemnified Parties" has the meaning set forth in Section 6.10(a).
"Indebtedness" means, with respect to any Person, without duplication,
(i) all obligations of such Person for borrowed money, or with respect to
deposits or advances of any kind to such Person, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (iii) all
obligations of such Person upon which interest charges are customarily paid,
(iv) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (v) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such Person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such Person's business), (vi) all capitalized lease obligations of such Person,
(vii) all obligations of others secured by any Encumbrance on property or assets
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (viii) all obligations of such Person under interest rate or
currency swap transactions (valued at the termination value thereof), (ix) all
letters of credit issued for the account of such Person (excluding letters of
credit issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course
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of business), (x) all obligations of such Person to purchase securities (or
other property) that arise out of or in connection with the sale of the same or
substantially similar securities or property, and (xi) all guarantees and
arrangements having the economic effect of a guarantee of such Person of any
indebtedness of any other Person.
"Intellectual Property" means any and all worldwide industrial and
intellectual property rights, including all patents and applications therefor
and all reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof, all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know-how, technology, technical data, proprietary processes and formulae,
algorithms, specifications, customer lists and supplier lists, all designs and
any registrations and applications therefor, all trade names, logos, common law
trademarks and service marks, trademark and service mark registrations and
applications therefor, Internet domain names, all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto, all computer software, including all source code, object code,
firmware, and development tools, images, drawings, graphics, files, records and
data, all rights in prototypes, all databases and data collections and all
rights therein, all moral and economic rights of authors and inventors, however
denominated, and any similar or equivalent rights to any of the foregoing.
"IRS" means the United States Internal Revenue Service.
"knowledge" means, with respect to a Person, the actual knowledge of a
fact, circumstance, event or other matter by the officers and directors of such
Person.
"Law" means any foreign or domestic federal, state, provincial, local,
municipal or other law, statute, code, treaty, ordinance, requirement, rule,
regulation, legal doctrine, order, permit, judgment, writ, stipulation, award,
injunction, decree or arbitration award or finding.
"Made Available" means the Company or its Representatives (i) made such
materials available to Parent or its Representatives during Parent's physical
due diligence inspection conducted between April 4, 2006 and April 8, 2006 at
the offices of Haynes and Boone, LLP, 901 Main Street, Suite 3100, Dallas, Texas
75202-3789, which materials were (x) as set forth on the data room indices
previously provided to Parent or its Representatives (true, correct and complete
copies of which are posted to the electronic database referred to in (iii) below
and physically delivered to Parent) or (y) physically delivered on or before
April 29, 2006 to Parent in the manner described in the applicable Section of
the Company Disclosure Schedule, (ii) posted such materials on the Company's
website at www.aviall.com on or before April 29, 2006, (iii) provided access to
such materials, to Parent or its Representatives on an electronic database
managed by Haynes and Boone, LLP at www.clientconnect.net, between April 10,
2006 and April 29, 2006, or (iv) filed Company SEC Reports with the SEC which
were available through EDGAR on or prior to the date of this Agreement.
"Material Adverse Effect" means any effect, event, occurrence,
development, circumstance, change or condition, including without limitation a
conflict with, or default or violation of, any Law (each an "Effect") that,
individually or in the aggregate with other Effects is, or is reasonably likely,
to (i) be materially adverse to the capitalization, assets (including intangible
assets), liabilities, business, financial condition or results of operations of
the Company and the Company Subsidiaries, taken as a whole, or (ii) materially
impede or delay the Company's ability to consummate the transactions
contemplated by this Agreement in accordance with its terms and applicable Laws;
except for the purposes of clause (i) above to the extent that such Effect
results from (A) changes or conditions affecting economic or capital markets in
the United States or internationally (which changes or conditions, in each case,
do not affect the Company in a substantially disproportionate manner), (B)
changes in international or national political conditions generally (which
changes, in each case, do not affect the Company in a substantially
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disproportionate manner), (C) changes or conditions affecting the aerospace
industry generally (which changes or conditions, in each case, do not affect the
Company in a substantially disproportionate manner), (D) changes in any Laws or
GAAP or the accounting rules and regulations of the SEC (which changes, in each
case, do not affect the Company in a substantially disproportionate manner), (E)
the announcement of this Agreement or the transactions contemplated hereby, or
(F) any changes in the trading volume or trading prices of Company Common
Shares, or any failure by the Company to meet analyst's forecasts or projections
(it being understood that the underlying cause of or causes of such changes or
failure may be deemed to constitute a Material Adverse Effect, and this clause
(F) shall be disregarded in determining whether the underlying cause of such
changes or failure is itself a Material Adverse Effect).
"Material Contract" has the meaning set forth in Section 4.11(a).
"Merger" has the meaning set forth in the preamble.
"Merger Consideration" has the meaning set forth in Section 3.1(a).
"Merger Sub" has the meaning set forth in the preamble.
"Noteholders" has the meaning set forth in Section 6.17(c).
"Notes Consents" has the meaning set forth in Section 6.17(b).
"Notes Offer to Purchase" has the meaning set forth in Section 6.17(a).
"Notes Tender Offer" has the meaning set forth in Section 6.17(a).
"Notes Tender Offer Documents" has the meaning set forth in Section
6.17(c).
"Notice of Superior Offer" has the meaning set forth in Section 6.6(d).
"Open Source Materials" means all software or other material that is
distributed as "free software," "open source software" or under a similar
licensing or distribution term.
"Other Filings" means all filings made by, or required to be made by,
the Company or Parent, as the case may be, with the SEC, other than the Proxy
Statement.
"Outside Date" has the meaning set forth in Section 8.1(b).
"Parent" has the meaning set forth in the preamble.
"Parent Material Adverse Effect" means any Effect that, individually or
in the aggregate with other Effects, is, or is reasonably likely, to (i) be
materially adverse to the capitalization, assets (including intangible assets),
liabilities, business, financial condition or results of operations of Parent
and Parent Subsidiaries, taken as a whole, or (ii) materially impede or delay
Parent's ability to consummate the transactions contemplated by this Agreement
in accordance with its terms and applicable Laws; except for the purposes of
clause (i) above to the extent that such Effect results from (A) changes or
conditions affecting economic or capital markets in the United States or
internationally (which changes or conditions, in each case, do not affect Parent
in a substantially disproportionate manner), (B) changes in international or
national political or regulatory conditions generally (which changes do not
affect Parent in a substantially disproportionate manner), (C) changes or
conditions affecting the aerospace industry
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generally (which changes or conditions, in each case, do not affect Parent in a
substantially disproportionate manner), (D) changes in any Laws or GAAP or the
accounting rules and regulations of the SEC (which changes, in each case, do not
affect Parent in a substantially disproportionate manner), (E) the announcement
of this Agreement or the transactions contemplated hereby, or (F), any changes
in the trading volume or trading prices of the capital stock of Parent or
failure by Parent to meet analyst's forecasts or projections (it being
understood that the underlying cause of or causes of such changes or failure may
be deemed to constitute a Parent Material Adverse Effect, and this clause (F)
shall be disregarded in determining whether the underlying cause of such changes
or failure is itself a Parent Material Adverse Effect).
"Parent Subsidiary" has the meaning set forth in Section 5.3(a).
"Person" means an individual, corporation, limited liability company,
partnership (limited, general or otherwise), association, trust, business trust,
unincorporated organization, or other entity or group.
"Proposed Amendments" has the meaning set forth in Section 6.17(d).
"Proxy Statement" has the meaning set forth in Section 6.3(a).
"Regulatory Conditions" has the meaning set forth in Section 8.1(b).
"Release" means any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping into the environment or the workplace of any
Hazardous Substance.
"Representatives" means an entity's directors, officers, employees,
Affiliates, accountants, consultants, legal counsel, advisors, investment
bankers, brokers, agents and other representatives.
"Repurchase Rights" means outstanding rights to repurchase Company
Common Shares that are held by the Company or similar restrictions in the
Company's favor with respect to Company Common Shares.
"Restraint" has the meaning set forth in Section 7.1(b).
"Savings Plan" has the meaning set forth in Section 6.12(b).
"SEC" means the Securities and Exchange Commission.
"Secretary of State" has the meaning set forth in Section 2.3.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Notes" has the meaning set forth in Section 6.17(a).
"SOXA" has the meaning set forth in Section 4.7(a).
"Standard NDAs" has the meaning set forth in Section 4.14(g).
"Statement No. 5" has the meaning set forth in Section 4.7(b).
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"Subsidiary" of a specified entity means any corporation, partnership,
limited liability company, joint venture or other entity of which the specified
entity (either alone or through or together with any other subsidiary) owns,
directly or indirectly, 50% or more of the stock or other equity or partnership
interests.
"Superior Offer" means, with respect to the Company, an unsolicited,
bona fide written offer made by a third party for an Acquisition Proposal
(except that references to "10%" in clauses (i) and (iii) of the definition of
"Acquisition Proposal" shall be deemed to be a reference to "50%"), on terms
that the Company Board has in good faith concluded (after consultation with its
outside legal counsel and its financial advisor), taking into account, among
other things, all legal, financial, regulatory and other aspects of the offer
and the Person making the offer, to be more favorable, from a financial point of
view, to the Company's stockholders (in their capacities as stockholders) than
the terms of the Merger and is reasonably capable of being consummated.
"Supplemental Indenture" has the meaning set forth in Section 6.17(d).
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Taxes" means (i) all taxes, levies, assessments, duties, imposts or
other like assessments, charges or fees (including estimated taxes, charges and
fees), including income, profits, corporations, advance corporation, gross
receipts, transfer, excise, property, sales, use value-added, ad valorem,
license, capital, wage, employment, payroll, withholding, social security,
severance, occupation, import, custom, stamp, alternative, add-on minimum,
environmental, franchise or other governmental taxes or charges, imposed by any
Governmental Entity responsible for the imposition of any such tax (each, a "Tax
Authority"), including any interest, penalties or additions to tax applicable or
related thereto, (ii) all liability for the payment of any amounts of the type
described in clause (i) as the result of being (or ceasing to be) a member of an
affiliated, consolidated, combined or unitary group (or being included (or
required to be included) in any Tax Return related thereto), and (iii) all
liability for the payment of any amounts as a result of an express or implied
obligation to indemnify or otherwise assume or succeed to the liability of any
other Person with respect to the payment of any amounts of the type described in
clause (i) or clause (ii).
"Tax Return" means any report, return, statement, declaration, claim
for refund, information return or other written information (including any
related or supporting schedules, statements or information and amended returns)
filed or required to be filed in connection with any Taxes, including the
administration of any Laws, regulations or administrative requirements relating
to any Taxes.
"Third Party Intellectual Property Rights" means any Intellectual
Property owned by a third party.
"WARN Act" has the meaning set forth in Section 4.10(n).
ARTICLE 2
The Merger
2.1 The Merger. Upon the terms and subject to satisfaction or waiver of
the conditions set forth in this Agreement, and in accordance with the DGCL,
Merger Sub, at the Effective Time, 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").
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2.2 The Closing. The closing of the transactions contemplated hereby
(the "Closing") shall take place at 10:00 am (EST) on a date designated by
Parent but that shall be no later than five Business Days after the satisfaction
or waiver of each of the conditions set forth in Article 7 (other than those
conditions that by their terms are to be satisfied at Closing, but subject to
the satisfaction or waiver of such condition at such time) or at such other time
or date as the parties hereto agree. The Closing shall take place at the offices
of Sheppard, Mullin, Richter & Hampton LLP, 30 Rockefeller Plaza, Suite 2400,
New York, NY 10112, or at such other location as the parties hereto agree. The
date on which the Closing occurs is herein referred to as the "Closing Date."
2.3 Effective Time. Subject to the provisions of this Agreement, a
certificate of merger satisfying the applicable requirements of the DGCL (the
"Certificate of Merger") shall be duly executed by the Company, and,
simultaneously with or as soon as practicable following the Closing, filed with
the Secretary of State of the State of Delaware (the "Secretary of State"). The
Merger shall become effective upon the later of: (a) the date and time of the
filing of the Certificate of Merger with the Secretary of State, or (b) such
later date and time as may be specified in the Certificate of Merger with the
prior written consent of Parent. The date and time the Merger becomes effective
is referred to in this Agreement as the "Effective Time."
2.4 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, 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.
2.5 Certificate of Incorporation; Bylaws. At the Effective Time, the
Company Certificate of Incorporation and the Company Bylaws as in effect
immediately prior to the Effective Time shall be amended so as to read in the
forms of Exhibits A and B hereto, respectively, and, as so amended, shall be the
certificate of incorporation and bylaws of the Surviving Corporation.
2.6 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time, together with Paul E. Fulchino, shall be the
directors of the Surviving Corporation, each to hold office in accordance with
the certificate of incorporation and bylaws of the Surviving Corporation. The
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, together with such other Persons (if any)
as set forth on Section 2.6 of the Company Disclosure Schedule, each to hold
office in accordance with the certificate of incorporation and bylaws of the
Surviving Corporation.
ARTICLE 3
Conversion of Securities; Exchange of Certificates
3.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) Conversion Generally. Each Company Common Share issued and
outstanding immediately prior to the Effective Time (other than any Company
Common Shares to be canceled pursuant to Section 3.1(b) and Dissenting Shares
referred to in Section 3.5) shall be converted, subject to other provisions of
this Section 3.1 and Section 3.2(e), into the right to receive $48.00 in cash
without interest (the "Merger Consideration"). At the Effective Time, all such
Company Common Shares shall no longer be outstanding and shall automatically
cease to exist, and each certificate previously representing
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any such shares shall thereafter represent only the right to receive the Merger
Consideration, subject to other provisions of this Section 3.1, Section 3.2(e)
and Section 3.5.
(b) Cancellation of Certain Shares. Each Company Common Share
held, immediately prior to the Effective Time, by the Company, Parent, Merger
Sub or any Subsidiary of Company, Parent or Merger Sub shall be canceled and
extinguished without any conversion thereof, and no payment shall be made with
respect thereto.
(c) Change in Shares. In the event of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into capital stock), reorganization, reclassification,
combination, recapitalization or other like change with respect to the Company
Common Shares occurring after the date of this Agreement and prior to the
Effective Time, the Merger Consideration and all references in this Agreement to
specified numbers of shares of any class or series affected thereby, and all
calculations provided therefor that are based upon numbers of shares of any
class or series (or trading prices therefor) affected thereby, shall be
equitably adjusted to the extent necessary to provide the parties the same
economic effect as contemplated by this Agreement prior to such stock split,
reverse stock split, stock dividend, reorganization, reclassification,
combination, recapitalization or other like change.
(d) Capital Stock of Merger Sub. At the Effective Time, each
share of capital stock of Merger Sub that is issued and outstanding immediately
prior to the Effective Time will, by virtue of the Merger and without further
action on the part of the sole stockholder of Merger Sub, be converted into and
become one share of common stock of the Surviving Corporation (and the shares of
Surviving Corporation into which the shares of Merger Sub capital stock are so
converted shall be the only shares of the Surviving Corporation's capital stock
that are issued and outstanding immediately after the Effective Time). Each
certificate evidencing ownership of shares of Merger Sub common stock will
evidence ownership of such shares of common stock of the Surviving Corporation.
3.2 Exchange of Certificates.
(a) Exchange Procedures.
(i) Promptly after the Effective Time, Parent will
instruct the Exchange Agent to mail to each holder of record of Company Common
Shares (as of immediately prior to the Effective Time) (i) a letter of
transmittal that shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of the
certificates which immediately prior to the Effective Time represented such
holder's Company Common Shares ("Certificates") to the Exchange Agent and shall
contain such other provisions as Parent may reasonably specify and (ii)
instructions for use in effecting surrender by such holder of Certificates to
the Exchange Agent in exchange for the Merger Consideration.
(ii) The holder of each Certificate, upon the
surrender by such holder to the Exchange Agent of such Certificate, together
with the letter of transmittal duly completed and validly executed by such
holder in accordance with the instructions thereto, and such other documents as
may reasonably be required by the Exchange Agent, shall be entitled to receive
in exchange for such Certificate a check for the Merger Consideration into which
the Company Common Shares theretofore represented by such Certificate have been
converted pursuant to Section 3.1, and such Certificate shall forthwith
thereafter be canceled. In the event of a transfer of ownership of Company
Common Shares that is not registered on the transfer records of the Company, the
cash consideration payable hereunder with respect to such Company Common Shares
may be paid to a Person other than the Person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
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otherwise be in proper form for transfer. Each Certificate shall be deemed at
all times from and after the Effective Time to represent only the right to
receive, upon exchange as contemplated in this Section 3.2, the Merger
Consideration into which the Company Common Shares formerly represented by such
Certificate are converted in the Merger. No interest shall be paid or accrue on
any Merger Consideration payable upon surrender of any Certificate.
(b) Exchange Agent. At or prior to the Effective Time, Parent
or a direct or indirect Subsidiary of Parent shall enter into an agreement with
a nationally recognized financial institution designated by Parent (the
"Exchange Agent"), which shall establish reasonable procedures mutually
acceptable to Parent and the Company, for exchange in accordance with this
Article 3, through the Exchange Agent, an amount of cash sufficient to deliver
to the holders of Company Common Shares (other than Dissenting Shares) the
aggregate Merger Consideration (such cash being hereinafter referred to as the
"Exchange Fund") deliverable pursuant to Section 3.1 in exchange for outstanding
Company Common Shares. The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Merger Consideration contemplated to be issued
pursuant to Section 3.1 out of the Exchange Fund.
(c) Further Rights in Company Common Shares. All Merger
Consideration issued and paid upon conversion of the Company Common Shares in
accordance with the terms hereof shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to such Company Common Shares.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Shares for six
(6) months after the Effective Time shall be promptly delivered to Parent upon
demand, and any holders of Company Common Shares who have not theretofore
complied with this Article 3 shall thereafter look only to Parent (subject to
applicable abandoned property, escheat and similar Laws) for the Merger
Consideration, without any interest thereon, only as a general unsecured
creditor thereof. Notwithstanding anything to the contrary contained herein, if
any Certificate has not been surrendered prior to the fifth anniversary of the
Effective Time (or immediately prior to such earlier date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any amounts payable in respect
of such Certificate shall, to the extent permitted by applicable Laws, become
the property of Parent, free and clear of all claims or interests of any Person
previously entitled thereto.
(e) No Liability. None of Parent, the Company, Merger Sub or
the Surviving Corporation shall be liable to any Person for any cash from the
Exchange Fund delivered to a Governmental Entity pursuant to any applicable
abandoned property, escheat or similar Laws.
(f) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed, and, if
required by Parent or the Exchange Agent in their respective discretion, the
posting by such Person of a bond, in such reasonable amount as Parent or the
Exchange Agent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, without any interest thereon.
(g) Withholding. Parent, Merger Sub or the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Shares,
Company Options or Company Warrants such amounts as Parent, Merger Sub or the
Exchange Agent are required to deduct and withhold under the Code, or any
provision of state, local, provincial or foreign Tax Law, or pursuant to other
applicable judgments, decrees, injunctions or orders, with respect to the making
of such payment. To the extent that amounts are so withheld by Parent,
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Merger Sub or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of Company Common
Shares, Company Options or Company Warrants in respect of whom such deduction
and withholding was made by Parent, Merger Sub or the Exchange Agent.
3.3 Share Transfer Books. At the Effective Time, the share transfer
books of the Company shall be closed, and, thereafter, there shall be no further
registration of transfers of Company Common Shares theretofore outstanding on
the records of the Company. From and after the Effective Time, the holders of
certificates representing Company Common Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Company
Common Shares, except as otherwise provided herein or by applicable Laws. On and
after the Effective Time, any Certificates presented to the Exchange Agent or
Parent for any reason shall be converted into the Merger Consideration, without
interest.
3.4 Convertible Securities.
(a) Company Options. Prior to the Effective Time, the Company
shall take all action, including obtaining consents from holders of Company
Options, necessary to cause each then-outstanding unexpired and unexercised
Company Option, whether vested or unvested, to be canceled immediately prior to,
but subject to the occurrence of, the Effective Time. In consideration for such
cancellation, the holder of each such Company Option shall receive, as soon as
reasonably practicable at or after the Effective Time, a cash payment from
Parent or the Surviving Corporation equal to the product of (i) the total number
of shares that were subject to such Company Option immediately prior to the
Effective Time, and (ii) the excess (if any) of (A) the Merger Consideration
over (B) the exercise price per share subject to such Company Option, such cash
payment to be reduced by any required withholding of Taxes.
(b) Company Warrants. Following the Effective Time, each
Company Warrant shall represent only the right, upon the valid exercise thereof,
if any, to receive the Merger Consideration for each Company Common Share into
which such Company Warrant may be exercised and shall in no event be exercisable
for any equity securities of Parent, the Company or any of their Subsidiaries.
In addition, the Company shall take all action necessary to cause all holders of
Company Warrants to either fully exercise such Company Warrants prior to the
Effective Time or agree that such Company Warrants shall be terminated upon the
Effective Time; provided, however, that the holder of any such terminated
Company Warrant shall be entitled to receive following the Effective Time, upon
surrender of the certificate representing such Company Warrant, only an amount
equal to the product of (x) the number of Company Common Shares issuable upon
exercise of such Company Warrant multiplied by (y) the excess, if any, of the
per share Merger Consideration over the per share exercise price in effect for
such Company Warrant.
(c) Stock Appreciation Rights. At the Effective Time, except
as otherwise provided in the Retention and Non-Competition Agreements, all
Company stock appreciation rights ("Company SARs") then unvested shall vest in
accordance with their terms and each holder of Company SARs shall receive as
soon as reasonably practicable at or after the Effective Time, a cash payment
from Parent or the Surviving Corporation equal to the product of (i) the total
number of vested Company SARs (including those that vest pursuant to the
operation of this subsection (c)), and (ii) the excess (if any) of (A) the
Merger Consideration over (B) the grant price of such Company SARs, such cash
payment to be reduced by any required withholding of Taxes.
(d) The Company shall take all action necessary in order to
effect the foregoing provisions of this Section 3.4 as of the Effective Time.
Any materials to be submitted to the holders of
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Company Options or Company Warrants shall be subject to review and approval by
Parent (which approval shall not be unreasonably withheld or delayed).
3.5 Dissenting Stockholders. Notwithstanding anything in this Agreement
to the contrary, Company Common Shares that are outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has demanded appraisal for such Company
Common Shares in accordance with Section 262 of the DGCL ("Dissenting Shares")
shall not be converted into a right to receive the Merger Consideration and will
be paid for by the Surviving Corporation in accordance with Section 262 of the
DGCL; provided, however, that if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal and payment under
the DGCL, the right of such holder to such appraisal of its Company Common
Shares shall cease, and such Company Common Shares shall be deemed converted as
of the Effective Time into the right to receive the Merger Consideration as
provided in this Article 3. The Company shall give Parent prompt notice of any
written demands (or purported demands) for appraisal received by the Company,
withdrawals of such demands, and any other related instruments served pursuant
to Section 262 of the DGCL and received by the Company. Parent shall direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL and the Company shall not, except with Parent's prior written consent, (i)
voluntarily make any payment with respect to any demands for appraisal for
Dissenting Shares, (ii) offer to settle, or settle, any such demands, (iii)
waive any failure to timely deliver a written demand for appraisal in accordance
with the DGCL, or (iv) agree to do any of the foregoing.
ARTICLE 4
Company Representations and Warranties
Except as set forth in the disclosure schedule delivered by the Company
to Parent concurrently with the execution of this Agreement (the "Company
Disclosure Schedule"), which identifies exceptions by specific Section
references, the Company hereby represents and warrants to Parent and Merger Sub
as follows:
4.1 Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Subsidiary of the Company (each a "Company Subsidiary" and, collectively, the
"Company Subsidiaries") has been duly organized, and is validly existing and in
good standing, under the laws of the jurisdiction of its incorporation or
organization, as the case may be. Each of the Company and each Company
Subsidiary has the requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted and as currently proposed by it to be conducted,
except where failure to have such governmental approvals would not have a
Material Adverse Effect. Each of the Company and each Company Subsidiary is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification, licensing or good
standing necessary, except where the failure to be so qualified, licensed or in
good standing would not have, individually or in the aggregate, a Material
Adverse Effect.
(b) Section 4.1(b) of the Company Disclosure Schedule sets
forth a true, correct and complete list of all of the Company Subsidiaries and
the jurisdictions of their incorporation or organization, as the case may be.
None of the Company or any Company Subsidiary holds an Equity Interest in any
other Person (other than a Company Subsidiary). The Company is the direct or
indirect owner of all of the issued and outstanding shares of capital stock or
limited liability company interests of
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each Company Subsidiary, and all such shares of capital stock and limited
liability company interests are duly authorized, validly issued, fully paid and
nonassessable. All of the issued and outstanding shares of capital stock or
limited liability company interests of each Company Subsidiary are owned
directly or indirectly by the Company free and clear of all Encumbrances and are
not subject to any preemptive right or right of first refusal created by
statute, the Certificate of Incorporation and Bylaws or other equivalent
organizational documents, as applicable, of such Company Subsidiary or any
Contract to which such Company Subsidiary is a party or by which it is bound.
Other than prepaid purchase obligations to suppliers, there are no outstanding
contractual obligations of the Company or any Company Subsidiary to loan funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Person, other than a Company Subsidiary.
(c) There are no outstanding subscriptions, options, warrants,
"put" or "call" rights, exchangeable or convertible securities or other
Contracts of any character relating to the issued or unissued capital stock or
other securities of any Company Subsidiary, or otherwise obligating the Company
or any Company Subsidiary to issue, transfer, sell, purchase, redeem or
otherwise acquire or sell any such securities of a Company Subsidiary.
(d) The Company has Made Available to Parent copies of all
certificate or articles of incorporation, bylaws, and other organizational
documents of each of the Company Subsidiaries, as currently in effect. The
Company has Made Available to Parent copies of all charters of each committee of
the Company Board and any code of conduct or similar policy adopted by the
Company.
4.2 Certificate of Incorporation and Bylaws; Corporate Books and
Records. The copy of the Company's Restated Certificate of Incorporation (the
"Company Certificate of Incorporation") attached to Section 4.2(i) of the
Company Disclosure Schedule and the copy of the Company's Amended and Restated
Bylaws (the "Company Bylaws") attached to Section 4.2(ii) of the Company
Disclosure Schedule are true, correct and complete copies thereof as in effect
on the date hereof. The Company has Made Available to Parent a true, correct and
complete copy of the Certificate of Incorporation and Bylaws or other equivalent
organizational documents, as applicable, of each Company Subsidiary, in each
case as amended to date. Neither the Company nor any Company Subsidiary is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents. True, correct and complete copies of all
minute books of the Company and Aviall Services, Inc. (containing records of all
proceedings, consents, actions and meetings of the Board of Directors,
committees of the Board of Directors and stockholders of the Company and Aviall
Services, Inc.) from January 1, 2003 through February 23, 2006 and January 30,
2006, respectively, have been Made Available by the Company to Parent. For the
period from January 1, 2003 through the date of this Agreement, there are no
records of any material proceedings, consents, actions or meetings of the Board
of Directors and stockholders of any Company Subsidiary other than those that
have been Made Available. The minute books of the Company and each Company
Subsidiary Made Available to Parent contain materially accurate summaries of all
meetings of directors and stockholders or actions by written consent of the
directors and stockholders of the Company and the respective Company
Subsidiaries from January 1, 2003 through January 30, 2006 and there have been
no material proceedings, consents, actions or meetings of the Board of Directors
or stockholders of any Company Subsidiary since January 30, 2006 until the date
of this Agreement.
4.3 Capitalization.
(a) The authorized capital shares of the Company consist of
80,000,000 Company Common Shares and 10,000,000 shares of preferred stock, par
value $0.01 per share (the "Company Preferred Shares"). As of April 24, 2006,
(A) 34,206,454 Company Common Shares (other than treasury shares) were issued
and outstanding, all of which were validly issued and fully paid, nonassessable
and
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free of preemptive rights of which 169,367 are subject to unvested awards of
restricted stock, and (B) 2,068,165 Company Common Shares were held in the
treasury of the Company. As of the date hereof, no Company Preferred Shares are
issued or outstanding. There are no options, warrants, reserved Company Common
Shares, or other rights, Contracts or arrangements of any character to which the
Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary is bound relating to the issued or unissued Equity Interests
of the Company or any Company Subsidiary, or securities convertible into or
exchangeable for such Equity Interests, or obligating the Company or any Company
Subsidiary to issue or sell any of its capital shares or other Equity Interests,
or securities convertible into or exchangeable for such capital shares of, or
other Equity Interests in, the Company or any Company Subsidiary. Since December
31, 2005, the Company has not issued any Equity Interests, or securities
convertible into or exchangeable for such Equity Interests, other than those
Company Common Shares reserved for issuance as set forth in this Section 4.3 or
Section 4.3(a) of the Company Disclosure Schedule. All issued and outstanding
Company Common Shares and all outstanding Company Options and Company Warrants
were issued, and all repurchases of Company Common Shares were made, in material
compliance with all applicable Laws, including federal and state securities laws
and all requirements set forth in applicable Contracts.
(b) As of April 24, 2006, the Company has reserved 3,190,220
Company Common Shares for issuance to employees, non-employee directors and
consultants pursuant to the Company Stock Option Plans, of which 2,862,884
shares are subject to outstanding and unexercised Company Options or Company
SARs with a weighted average exercise or base price of $18.77. As of the date of
this Agreement, there were no Company Common Shares that are subject to
Repurchase Rights. All of the Company Common Shares subject to issuance under
the Company Stock Option Plans, upon issuance prior to the Effective Time on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. True, correct and complete copies of each of the
Company Stock Option Plans and the standard form of all agreements and
instruments relating to or issued under each Company Stock Option Plan and all
agreements and instruments relating to or issued under the Company Stock Option
Plans or Company Options that differ in any material respect from such standard
form agreements have been Made Available to Parent, and such agreements and
instruments have not been amended, modified or supplemented since being Made
Available to Parent, and there are no agreements, understandings or commitments
to amend, modify or supplement such agreements or instruments in any case from
those Made Available to Parent.
(c) As of the date of this Agreement, there are outstanding
and unexercised Company Warrants to purchase 262,500 Company Common Shares and
262,500 Company Common Shares were reserved for issuance pursuant thereto.
Section 4.3(c) of the Company Disclosure Schedule identifies for each Company
Warrant, (i) the name of the holder of such Company Warrant as of the date of
this Agreement, (ii) the date on which such Company Warrant was granted, (iii)
the exercise price per share of such Company Warrant, (iv) the number of shares
covered by such Company Warrant, (v) the number of Company Common Shares as to
which such Company Warrant had vested at such date, (vi) the applicable vesting
schedule for such Company Warrant and whether the exercisability or vesting of
such Company Warrant will be accelerated in any way by the Merger or the
transactions contemplated hereby, (vii) whether such Company Warrant was issued
in connection with the performance of services and (viii) the date on which such
Company Warrant expires. All of the Company Common Shares subject to issuance
pursuant to Company Warrants, upon issuance prior to or at the Effective Time on
the terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. The Company has Made Available to Parent complete and
correct copies of all Company Warrants. All outstanding Company Warrants will
represent rights to acquire only the Merger Consideration following the
Effective Time pursuant to Section 3.4(b).
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(d) Other than arising under the Credit Facility and as
provided in the Company Stock Option Plans or Company's agreements granting
Company Stock Options to employees of the Company or any Company Subsidiary,
there are no outstanding contractual obligations of the Company or any Company
Subsidiary (i) restricting the transfer of, (ii) affecting the voting rights of,
(iii) requiring the repurchase, redemption or disposition of, or containing any
right of first refusal with respect to, (iv) requiring the registration for sale
of, or (v) granting any preemptive or antidilutive right with respect to, any
Company Common Shares or any other Equity Interests in the Company or any
Company Subsidiary.
4.4 Authority.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated by this Agreement
(other than the Company Stockholders Approval). The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action (other than the Company Stockholders Approval). This
Agreement has been duly authorized and validly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject only to
the effect, if any, of (i) applicable bankruptcy and other similar Laws
affecting the rights of creditors generally and (ii) rules of Law governing
specific performance, injunctive relief and other equitable remedies. The
Company Board has unanimously (A) approved and declared advisable this Agreement
and the Merger, (B) determined that this Agreement and the terms and conditions
of the Merger are fair to, advisable and in the best interests of the Company
and its stockholders, and (C) has directed that the adoption of this Agreement
be submitted to the Company's stockholders for approval at a meeting of such
stockholders and recommended that all of the Company's stockholders adopt this
Agreement. The affirmative vote of the holders of a majority of all Company
Common Shares issued and outstanding on the record date set for the meeting of
the Company's stockholders to adopt this Agreement (the "Company Stockholders
Meeting") is the only vote of the holders of capital stock of the Company
necessary to adopt this Agreement and effect the Merger under applicable Law and
the Company Certificate of Incorporation (the "Company Stockholders Approval").
(b) The Company has taken all appropriate actions so that the
restrictions on "business combinations" contained in Section 203 of the DGCL
will not apply with respect to or as a result of this Agreement and the
transactions contemplated hereby, including the Merger, without any further
action on the part of the Company's stockholders or the Company Board. Other
than Section 203 of the DGCL, no state takeover statute or similar statute or
regulation is applicable to, or purports to be applicable to, this Agreement,
the Merger or any other transactions contemplated by this Agreement.
4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company or
consummation of the transactions contemplated by this Agreement, subject to
obtaining the Company Stockholders Approval, will not, (i) conflict with or
violate any provision of the Company Certificate of Incorporation or Company
Bylaws or any equivalent organizational documents of any Company Subsidiary,
(ii) assuming that all consents, approvals, authorizations and permits described
in Section 4.5(b) have been obtained and all filings and notifications described
in Section 4.5(b) have been made and any waiting periods thereunder have
terminated or expired, conflict with or violate any Law applicable to the
Company or any Company Subsidiary, or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, (iii) result in the
creation of any Encumbrance on any of the properties or assets of the Company or
any Company
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Subsidiary or (iv) require any consent or approval under, result in any breach
of or any loss of any benefit under, or modify, accelerate or terminate any
rights or obligations under, or constitute a change of control or default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any right of termination, vesting, amendment, acceleration or
cancellation pursuant to, any Material Contract or Company Permit, except in the
case of clauses (iii) and (iv), for such Encumbrances, or absences of consents
or approvals, which would not have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except under the Exchange Act, the
Securities Act, any applicable Blue Sky Laws, the rules and regulations of the
New York Stock Exchange, Antitrust Laws, and the filing of the Certificate of
Merger as required by the DGCL.
4.6 Permits; Compliance With Law.
(a) Each of the Company and each Company Subsidiary is in
possession of all authorizations, licenses, permits, certificates,
registrations, approvals and clearances of any Governmental Entity, and has made
all filings, applications and registrations with any Governmental Entity, in
each case that are necessary for the Company and each Company Subsidiary to own,
lease and/or operate its properties or other assets, or to carry on its
respective businesses substantially in the manner described in the Company SEC
Reports filed prior to the date hereof and substantially as it is being
conducted as of the date hereof (the "Company Permits"), and all such Company
Permits are valid and in full force and effect, except where the failure to
have, or the suspension or cancellation of, or failure to be valid or in full
force and effect of, any of the Company Permits would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) None of the Company or any Company Subsidiary is in
conflict with, or in default or violation of, (A) any Law applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected or (B) any Company
Permit, except, with respect to both clauses (A) and (B), for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, be material to the Company and the Company Subsidiaries taken as a
whole. None of the Company Permits will become terminable, in whole or in part,
as a result of the transactions contemplated by this Agreement, except as would
not, individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor any Company Subsidiary has, within the last three (3) years,
received any written warning, notice of violation, notice of revocation or other
communication from or on behalf of any Governmental Entity, alleging (x) any
material violation of any Company Permit or (y) that the Company or any Company
Subsidiary requires any material Company Permit for its business as currently
conducted that is not currently held by it. No investigation or material inquiry
by any Governmental Entity with respect to the Company or any Company Subsidiary
is pending or, to the knowledge of the Company, threatened, in each case with
respect to any alleged or claimed violation of Law applicable to the Company or
any Company Subsidiary or by which any property or asset of the Company or any
Company Subsidiary is bound or affected.
(c) The Company and each Company Subsidiary are in material
compliance with all statutory and regulatory requirements under the Arms Export
Control Act (22 U.S.C. 2778), the International Traffic in Arms Regulations (22
C.F.R. ss. 120 et seq.), the Export Administration Regulations (15 C.F.R. ss.
730 et seq.) and associated executive orders, the Laws implemented by the Office
of Foreign Assets Controls, United States Department of Treasury and all other
domestic or foreign Laws relating to export control (collectively, the "Export
Control Laws") except as would not individually or in the aggregate be material
to the Company and the Company Subsidiaries taken as a whole. Neither the
Company nor any Company Subsidiary has received any written communication that
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alleges that the Company or any Company Subsidiary is not, or may not be, in
compliance with, or has, or may have, any liability under Export Control Laws.
The Company and each Company Subsidiary has all necessary authority under the
Export Control Laws to conduct their respective businesses substantially in the
manner described in the Company SEC Reports filed prior to the date hereof and
substantially as they are being conducted on the date hereof except as would
not, individually or in the aggregate, be material to the Company or the Company
Subsidiaries.
(d) The Company, each Company Subsidiary, all directors,
officers, employees, Affiliates and authorized agents of each of the foregoing
and any other Person associated with or acting on behalf of the Company or any
Company Subsidiary are in compliance with all legal requirements under (i) the
Foreign Corrupt Practices Act (15 U.S.C. ss.ss. 78dd-1, et seq) and the
Organization for Economic Cooperation and Development Convention Against Bribery
of Foreign Public Officials in International Business Transactions and
legislation implementing such Convention, (ii) all international anti-bribery
conventions (other than the convention described in clause (i)), and (iii) all
other applicable Laws where any of the foregoing Persons do business relating to
corruption, bribery, ethical business conduct, money laundering, political
contributions, gifts and gratuities, or lawful expenses, to public officials and
private persons, and Laws requiring the disclosure of agency relationships or
commissions and the anticorruption rules of any international financial
institutions with which it does business (collectively, the "Anti-Bribery Laws")
except as would not, individually or in the aggregate, be material to the
Company or the Company Subsidiaries. Neither the Company nor any Company
Subsidiary has received any written communication that alleges that the Company,
any Company Subsidiary, any director, officer, employee, Affiliate or authorized
agents of any of the foregoing or any other Person associated with or acting on
behalf of the Company or any Company Subsidiary is, or may be, in violation of,
or has, or may have, any material liability under, the Anti-Bribery Laws.
(e) Neither the Company nor any of the Company Subsidiaries
(i) takes title to, or takes possession of, any products or goods (other than
goods of the Company or any Company Subsidiary) that are listed for sale on the
Inventory Locator Service, LLC electronic marketplace or any other electronic
marketplace, auction- or exchange-related Internet or online website or postings
owned or controlled by the Company or the Company Subsidiaries or (ii) receives
or collects any compensation or fees from the Inventory Locator Service, LLC
electronic marketplace or any other electronic marketplace, auction- or
exchange-related Internet or online website or postings, owned or controlled by
the Company or the Company Subsidiaries other than subscription fees for
participation or membership in the Inventory Locator Service, LLC electronic
marketplace.
(f) Neither the Company nor any Company Subsidiary is a
"Specially Designated National" or other "Blocked Person" identified by the
United States government, nor a Person that is owned or controlled by or acts on
behalf of a "Specially Designated National" or "Blocked Person." To the
Company's knowledge, none of Company's Affiliates or brokers or any director,
officer, employee, nor authorized agent of the Company or any Company Subsidiary
(if any), acting or benefiting in any capacity in connection with this
Agreement, and none of the funds or other assets to be transferred hereunder are
the property of, or beneficially owned, directly or indirectly, by any
"Specially Designated National" or "Blocked Person," nor are such funds or other
assets the proceeds of any specified unlawful activity as defined by 18 U.S.C.
ss. 1956(c)(7). None of the Company or any Company Subsidiary has engaged in or
facilitated any prohibited transactions with any "Specially Designated National"
or other "Blocked Person" without proper prior authorization from the United
States government.
4.7 SEC Filings; Financial Statements.
(a) The Company has filed on a timely basis all forms,
reports, statements, schedules and documents (including items incorporated by
reference) required to be filed by it with the SEC since
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January 1, 2003. Except to the extent available in full without redaction on the
SEC's web site through the Electronic Data Gathering, Analysis and Retrieval
System ("EDGAR"), including those filed on or after the date of this Agreement,
the Company has Made Available to Parent copies of, in the form filed with the
SEC, all of the following documents filed on or after January 1, 2003 through
the date hereof: (i) the Company's Annual Reports on Form 10-K, (ii) the
Company's Quarterly Reports on Form 10-Q, (iii) all proxy and information
statements relating to the Company's meetings of stockholders (whether annual or
special) and all information statements relating to stockholder consents, (iv)
the Company's Current Reports on Form 8-K, (v) all other forms, reports,
statements, schedules and documents filed by the Company with the SEC (the
forms, reports, statements, schedules and other documents referred to in clauses
(i), (ii), (iii), (iv) and (v) above, whether or not available through EDGAR,
are, collectively, including those filed on or after the date of this Agreement,
the "Company SEC Reports" and (vi) all certifications and statements required by
Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002 ("SOXA"), and the rules and regulations of the SEC
promulgated thereunder, with respect to any report referred to in clause (i) or
(ii) (collectively, the "Certifications"). To the Company's knowledge, except as
disclosed in the Company SEC, each director and officer (as defined in Rule
16a-1(f) under the Exchange Act) of the Company has filed with the SEC on a
timely basis all statements required by Section 16(a) of the Exchange Act and
the rules and regulations thereunder. No Company Subsidiary is, or since January
1, 2003 has been, required to file any form, report, statement, schedule or
other document with the SEC. As used in this Section 4.7, the term "file" shall
be broadly construed to include any manner in which a document or information is
furnished, transmitted or otherwise made available to the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports
(the "Company Financial Statements"), including each of the Company SEC Reports
filed after the date of this Agreement until the Closing, (i) complied as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, (ii) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q, Form 8-K or any successor form under
the Exchange Act), and (iii) fairly presented the consolidated financial
position of the Company and the Company Subsidiaries as at the respective dates
thereof and the consolidated results of Company's and the Company Subsidiaries'
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring immaterial year-end adjustments in accordance with GAAP.
The balance sheet of the Company as of December 31, 2005 (the "Company Balance
Sheet Date") contained in the Company SEC Reports is hereinafter referred to as
the "Company Balance Sheet." Neither the Company nor any Company Subsidiary has
any liabilities (absolute, accrued, contingent or otherwise) required under GAAP
to be set forth on a balance sheet that are, individually or in the aggregate,
material to the business, results of operations or financial condition of the
Company and the Company Subsidiaries taken as a whole, except for (A)
liabilities incurred since the Company Balance Sheet Date in the ordinary course
of business consistent with past practice which are of the type that typically
recur and which do not result from any breach of contract, tort or violation of
any Law, (B) those specifically set forth or specifically and adequately
reserved against in the Company Balance Sheet, and (C) the fees and expenses of
investment bankers, attorneys and accountants incurred in connection with this
Agreement. Except as reflected in the Company Financial Statements, neither the
Company nor any Company Subsidiary is a party to any material off-balance sheet
arrangements (as defined in Item 303 of Regulation S-K). All reserves that are
set forth in or reflected in the Company Balance Sheet have been established in
accordance with GAAP consistently applied. At the Company Balance Sheet Date,
there were no material loss contingencies (as such term is used in Statement of
Financial Accounting Standards No. 5 ("Statement No. 5") issued by the Financial
Accounting Standards Board in March 1975) that are not adequately provided for
in the Company Balance Sheet as required by Statement No. 5. The Company
Financial Statements comply in all material
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respects with the American Institute of Certified Public Accountants' Statement
of Position 97-2. The Company has not had any material dispute with any of its
auditors regarding accounting matters or policies during any of its past three
(3) full fiscal years or during the current fiscal year-to-date including
without limitation any dispute that would be required to be disclosed in the
Company SEC Reports. The books and records of the Company and each Company
Subsidiary have been maintained, and are being maintained, in all material
respects in accordance with applicable Law and accounting requirements, and the
Company Financial Statements are consistent with such books and records.
(c) The Company has Made Available to Parent a true, correct
and complete copy of (i) any amendments or modifications, which have not yet
been filed with the SEC but that are required to be filed, to Contracts or
documents that previously had been filed by the Company with the SEC pursuant to
the Securities Act or the Exchange Act, and (ii) any correspondence between the
Company and the SEC (including all comment letters received by the Company from
the SEC and all responses to such comment letters by or on behalf of the
Company) for the Company's three (3) prior fiscal years. No investigation by the
SEC with respect to the Company or any Company Subsidiary is pending or, to the
knowledge of the Company, threatened.
(d) Each of the Company SEC Reports (i) as of the date of the
filing of such report, complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as the case may be, and, to the
extent then applicable, SOXA, including in each case, the rules and regulations
thereunder, and (ii) as of its filing date (or, if amended or superseded by a
subsequent filing prior to the date hereof, on the date of such filing) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(e) Each of the principal executive officer and principal
financial officer of the Company (or each former principal executive officer and
each former principal financial officer of the Company) has made all of the
Certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and
Sections 302 and 906 of SOXA, and the rules and regulations of the SEC
promulgated thereunder. The Certifications complied in all material respects
with Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of
SOXA, and the rules and regulations promulgated thereunder and the statements
contained in the Certifications were true and correct as of the date of the
filing thereof. For purposes of this Agreement, "principal executive officer"
and "principal financial officer" shall have the meanings given to such terms in
SOXA.
(f) The Company has implemented and maintains "disclosure
controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act), and such disclosure controls and procedures are reasonably
designed to ensure that (i) all information (both financial and non-financial)
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and (ii) all such
information is accumulated and communicated to the Company's management,
including its principal executive officer and principal financial officer, or
Persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure and to make the certifications of the principal
executive officer and the principal financial officer of the Company required by
Section 302 of SOXA with respect to such reports. The Company has Made Available
to Parent copies of all written descriptions of, and all policies, manuals and
other material documents promulgating such disclosure controls and procedures.
(g) The Company is, and since January 1, 2003 has been, in
compliance in all material respects with (i) the applicable listing and
corporate governance rules and regulations of the New
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York Stock Exchange, and (ii) the applicable provisions of SOXA. There has been
no material correspondence between the Company and the New York Stock Exchange
since January 1, 2003.
(h) Neither the Company nor any Company Subsidiary nor, to the
knowledge of the Company, any director, officer, employee, auditor, accountant
or Representative of the Company or any Company Subsidiary has received any
complaint, allegation, assertion or claim, in each case, regarding the
accounting or auditing practices, procedures, methodologies or methods or
potential fraudulent conduct of the Company or any Company Subsidiary or their
respective internal controls, or any material inaccuracy in the Company's
Financial Statements, including any complaint, allegation, assertion or claim
that the Company or any Company Subsidiary has engaged in questionable
accounting or auditing practices. No attorney representing the Company or any
Company Subsidiary, or current or former employee of the Company or of any
Company Subsidiary, has reported to the Company Board or any committee thereof
or to any director or officer of the Company evidence of a violation of
securities Laws, breach of fiduciary duty, fraudulent conduct or similar
violation by the Company or any of its officers, directors, employees or agents.
(i) PricewaterhouseCoopers LLP, which has expressed its
opinion with respect to the Company's Financial Statements for each of the years
in the five (5) year period ended December 31, 2005 included in the Company SEC
Reports (including the related notes), is "independent" with respect to the
Company and the Company Subsidiaries within the meaning of Regulation S-X and
has been "independent" within such meaning at all times since December 31, 2000.
The Company has made such disclosure of non-audit services performed by
PricewaterhouseCoopers LLP in its proxy statements with respect to its annual
meetings of stockholders as is required under the rules and regulations of the
SEC, and all such non-audit services have been approved in advance by the audit
committee of the Company Board.
(j) The Company has implemented and maintains a system of
internal control over "financial reporting" (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) sufficient to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP, including,
without limitation, that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Since January 1, 2003, other than in connection with SOXA
compliance and process improvements implemented voluntarily by the Company, (a)
there have not been any changes in the Company's internal control over financial
reporting that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting; (b) there have
not been any "significant deficiencies" or "material weaknesses" (as defined by
the Public Company Accounting Board) in the design or operation of the Company's
internal controls and procedures that could adversely affect the Company's
ability to record, process, summarize and report the financial data, (c) to the
extent there have been any such significant deficiencies or material weaknesses,
they have been disclosed to the Company's outside auditors and the audit
committee of the Company Board, and (d) there has not been any fraud, whether or
not material, that involves management or other employees who have a significant
role in the Company's internal control and procedures. The Company has Made
Available to Parent copies of all reports and other documents concerning
internal controls filed with the SEC or delivered to the Company by its
auditors, in each case, prior to the date of this Agreement. The Company has
Made Available to Parent accurate and complete copies of all written
descriptions of, and all policies, manuals and other material documents
promulgating such internal accounting controls in effect as of the date of this
Agreement.
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4.8 Disclosure Documents.
(a) The Proxy Statement and any Other Filings made by the
Company, and any amendments or supplements thereto, at (i) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the Company's stockholders, (ii) the time of the Company Stockholders Meeting,
and (iii) the Effective Time, will comply as to form in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and
other applicable Laws.
(b) The Proxy Statement and any Other Filings made by the
Company, and any amendments or supplements thereto, do not, and will not, at (i)
the time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the Company's stockholders, (ii) the time of the Company
Stockholders Meeting, and (iii) the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. Notwithstanding
the foregoing, no representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein about Parent or Merger
Sub supplied by Parent or Merger Sub for inclusion or incorporation by reference
in the Proxy Statement.
4.9 Absence of Certain Changes or Events. Since December 31, 2005, the
Company and each Company Subsidiary has, except as otherwise permitted by this
Agreement, conducted its business only in the ordinary course consistent with
past practice and, since such date:
(a) there has not been any Material Adverse Effect or an event
or development that would, individually or in the aggregate, have a Material
Adverse Effect;
(b) there has not been any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of the Company's capital stock, or any purchase,
redemption or other acquisition by the Company of any of the Company's capital
stock or any other securities of the Company or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees or consultants following their termination pursuant to the terms
of existing Repurchase Rights;
(c) there has not been any split, combination or
reclassification of any of the Company's capital stock;
(d) there has not been any material increase in compensation
or fringe benefits paid or payable to any of the officers, directors or managers
or employees of the Company or any Company Subsidiary at the Vice President or
director level or higher, or who earn base salary of more than $150,000 per
year, or any payment by the Company or any of the Company Subsidiaries of any
bonus to any of their officers, directors or managers or employees at the Vice
President or director level or higher, or who earn base salary of more than
$150,000 per year, or any granting, by the Company or any of the Company
Subsidiaries of any increase in severance or termination pay, or any entry by
the Company or any of the Company Subsidiaries into, or material modification or
amendment of, any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company of the nature contemplated hereby, or any
subsequent event, other than increases in the ordinary course of business in
base salary and target bonuses for employees who are not officers of the
Company, in an amount that does not exceed 10% of such base salary, in
connection with periodic compensation or performance reviews;
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(e) there has not been any material modification of any
deferred compensation plan within the meaning of Section 409A of the Code and
the proposed regulations promulgated thereunder and Internal Revenue Service
Notice 2005-1;
(f) there has not been any change by the Company or any of the
Company Subsidiaries in its accounting methods, principles or practices
(including any material change in depreciation or amortization policies or rates
or revenue recognition policies), except as required by concurrent changes in
GAAP;
(g) there has not been any revaluation by the Company or any
of the Company Subsidiaries of any of its material assets, including, without
limitation, writing-off notes or accounts receivable other than immaterial
write-offs in the ordinary course of business;
(h) neither the Company nor any of the Company Subsidiaries
has cancelled or forgiven any material debts or waived any claims or rights
having material value;
(i) there has not been any sale, transfer, or other
disposition of any Company IP Rights or any other material properties or assets
(real, personal or mixed, tangible or intangible) by the Company or any of the
Company Subsidiaries, except for non-exclusive licenses in the ordinary course
of business consistent with past practice;
(j) there has not been any material impairment of any Company
IP Rights or any material adverse change in the Company's or any of the Company
Subsidiaries' rights to use any Intellectual Property licensed from a third
party, in each case, other than in the ordinary course of business consistent
with past practice;
(k) there has not been any material damage, destruction or
loss with respect to assets of the Company or any of the Company Subsidiaries;
(l) neither the Company nor any Company Subsidiary has made
any material loan, advance or capital contribution to, or investment in, any
Person (other than a Company Subsidiary), including without limitation any loan,
advance or capital contribution (regardless of amount) to any director, officer
or other Affiliate of the Company, in each case, other than (i) loans, advances
or capital contributions to or investments in wholly-owned Subsidiaries or
entities that became wholly-owned Subsidiaries made in the ordinary course of
business, (ii) investments made in accordance with the Company's investment
guidelines, a copy of which has been Made Available to Parent, in the ordinary
course of business consistent with past practice and (iii) routine travel
advances in accordance with the Company's travel and expense policy in effect as
of the date of this Agreement (a copy of which has been Made Available to
Parent), sales commission draws to employees of the Company or any Company
Subsidiary and advance purchase payments to the suppliers set forth on Section
4.9(l) of the Company Disclosure Schedule, in an aggregate amount not in excess
of $1,000,000 in the ordinary course of business consistent with past practice;
(m) there has not been any material change with respect to the
management, supervisory or other key personnel of the Company, any termination
of employment of any such employees or a material number of employees, or any
labor dispute or claim arising under the National Labor Relations Act involving
the Company or any Company Subsidiary;
(n) neither the Company nor any Company Subsidiary has
incurred, created or assumed any Encumbrance on any material assets;
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(o) neither the Company nor any Company Subsidiary has paid or
discharged any material Encumbrance or material liability other than in
accordance with its terms in the ordinary course of business consistent with
past practices;
(p) neither the Company nor any Company Subsidiary has agreed,
whether in writing or otherwise, to take any action described in this Section;
and
(q) there has not been any termination or any material
modification, amendment or change to, or waiver of any rights under, any
Material Contract.
4.10 Employee Benefit Plans.
(a) Section 4.10(a) of the Company Disclosure Schedule lists
as of the date of this Agreement, with respect to the Company, any Company
Subsidiary and any ERISA Affiliate, (i) all employee benefit plans within the
meaning of Section 3(3) of ERISA, (ii) each loan from the Company or an ERISA
Affiliate to an employee in excess of $10,000, (iii) all stock option, stock
purchase, phantom stock, stock appreciation right, stock-based compensation,
supplemental retirement, severance, sabbatical, employee relocation, cafeteria
benefit (Section 125 of the Code), dependent care (Section 129 of the Code),
life insurance or accident insurance plans, programs or arrangements, (iv) all
bonus, pension, profit sharing, savings, retirement, deferred compensation or
incentive plans, programs and arrangements, (v) other fringe and employee
benefit plans, programs or arrangements that apply to senior management and that
do not generally apply to all employees, and (vi) any employment or service
agreements (except for offer letters providing for at-will employment that do
not provide for severance, acceleration or post-termination benefits),
compensation agreements and severance agreements, written or otherwise, for the
benefit of, or relating to, any present or former director, officer, employee,
or consultant (provided that, for former directors, officers, employees and
consultants, such arrangements need only be listed if unsatisfied obligations of
the Company or any Company Subsidiary of greater than $10,000 remain thereunder)
under which any of the Company or any Company Subsidiary or ERISA Affiliate
could reasonably be expected to have any liability (all of the foregoing
described in clauses (i) through (vi), collectively, but exclusive of any
Foreign Plan, the "Company Benefit Plans"). There are no defined benefit or
retiree medical plans outside of the United States other than any Foreign Plan.
Furthermore, to the knowledge of the Company, there are no benefit plans outside
the United States that have a material cost to the local business other than any
Foreign Plan. The Company has not, since July 30, 2002, extended credit,
arranged for the extension of credit, or renewed, modified or forgiven an
extension of credit made prior to such date, in the form of a personal loan to
or for any Person who was, at any time since such date, an officer or director
of the Company.
(b) Prior to the date of this Agreement, the Company has Made
Available to Parent a true, correct and complete copy of each of the Company
Benefit Plans and any related plan documents (including adoption agreements,
vendor Contracts and administrative services agreements, trust documents,
insurance policies or Contracts including policies relating to fiduciary
liability insurance, bonds required by ERISA, amendments to the Company Benefit
Plans, employee booklets, summary plan descriptions, and summaries of material
modifications and any material employee communications of the Company relating
to changes to the Company Benefit Plans) and has, with respect to each Company
Benefit Plan that is subject to ERISA reporting requirements, Made Available to
Parent true, correct and complete copies of the Form 5500 reports filed for the
last three (3) plan years (including all audits, financial statements, schedules
and attachments thereto). Any Company Benefit Plan intended to be qualified
under Section 401(a) of the Code has (i) obtained from the IRS a current
favorable determination letter as to its qualified status under the Code, or
(ii) has been established under a standardized master and prototype or volume
submitter plan for which a current favorable IRS advisory letter or opinion
letter has been obtained by the plan sponsor and is valid as to the adopting
employer.
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The Company has also Made Available to Parent a true, correct and complete copy
of the most recent such IRS determination letter, advisory letter or opinion
letter issued with respect to each such the Company Benefit Plan, and to the
knowledge of the Company nothing has occurred since the issuance of each such
letter that could reasonably be expected to cause the loss of the Tax-qualified
status of any Company Benefit Plan subject to Section 401(a) of the Code. The
Company has also Made Available to Parent all registration statements and
prospectuses and investment policy statements prepared in connection with each
Company Benefit Plan. All individuals who, pursuant to the terms of any Company
Benefit Plan, are entitled to participate in any Company Benefit Plan, are
currently participating in such Company Benefit Plan or have been offered an
opportunity to do so and have declined in writing. Neither the Company nor any
Company Subsidiary nor any ERISA Affiliate sponsors or maintains any self-funded
employee benefit plan, including any plan to which a stop-loss policy applies.
(c) None of the Company Benefit Plans promises or provides
retiree medical or other retiree welfare benefits to any Person other than as
required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") or applicable state law. There has been no "prohibited
transaction" (within the meaning of Section 406 of ERISA and Section 4975 of the
Code) with respect to any Company Benefit Plan that is not exempt under Section
408 of ERISA which has not been corrected and as to which any unsatisfied
penalties and excise taxes are reasonably likely to exist. Each Company Benefit
Plan has been administered in all material respects in accordance with its terms
and the requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), and the Company, each Company Subsidiary and
each ERISA Affiliate has performed all obligations required to be performed by
it under, is not in any material respect in default under or in violation of,
and has no knowledge of any material default or violation by any other party to,
any of the Company Benefit Plans. All contributions required to be made by the
Company, any Company Subsidiary or any ERISA Affiliate to any Company Benefit
Plan have been made on or before their due dates and, to the extent required by
GAAP, all amounts have been accrued for the current plan year (and no further
contributions will be due or will have accrued thereunder as of the Closing
Date, other than contributions accrued in the ordinary course of business,
consistent with past practice, after the Company Balance Sheet Date as a result
of the operations of the Company and the Company Subsidiaries after the Company
Balance Sheet Date). In addition, with respect to each Company Benefit Plan
intended to include a Code Section 401(k) arrangement, the Company and each
Company Subsidiary and ERISA Affiliate have at all times made timely deposits of
employee salary reduction contributions and participant loan repayments, as
determined pursuant to regulations issued by the United States Department of
Labor. No Company Benefit Plan is subject to, and neither the Company nor any
Company Subsidiary or ERISA Affiliate has incurred or reasonably expects to
incur any liability under Title IV of ERISA (other than for the payment of
insurance premiums to the Pension Benefit Guaranty Corporation). No Company
Benefit Plan has an accumulated funding deficiency within the meaning of Section
412 of the Code. With respect to each Company Benefit Plan subject to ERISA as
either an employee pension benefit plan within the meaning of Section 3(2) of
ERISA or an employee welfare benefit plan within the meaning of Section 3(1) of
ERISA, the Company has prepared in good faith and timely filed all requisite
governmental reports (which were true, correct and complete as of the date
filed), including any required audit reports, and has properly and timely filed
and distributed or posted all notices and reports to employees required to be
filed, distributed or posted with respect to each such Company Benefit Plan. No
suit, administrative proceeding, action or other litigation has been brought, or
to the knowledge of the Company or any Company Subsidiary, is threatened,
against the Company or any Company Subsidiary or with respect to any such
Company Benefit Plan, including any audit or inquiry by the IRS or United States
Department of Labor.
(d) Neither the Company nor any Company Subsidiary or ERISA
Affiliate is a party to, or has made any contribution to or otherwise incurred
any obligation under, any "multiemployer plan" as such term is
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defined in Section 3(37) of ERISA or any "multiple employer plan" as such term
is defined in Section 413(c) of the Code to which the Company or any Company
Subsidiaries has any liability (contingent or otherwise). There has been no
termination or partial termination of any Company Benefit Plan within the
meaning of Section 411(d)(3) of the Code in respect of which the Company or any
Company Subsidiaries has any liability (contingent or otherwise).
(e) As regards each Foreign Plan, (i) such Foreign Plan is in
compliance with the provisions of the Laws of each jurisdiction in which such
Foreign Plan is maintained, to the extent those Laws are applicable to such
Foreign Plan, (ii) the Company, each Company Subsidiary, and each ERISA
Affiliate has complied with all applicable reporting and notice requirements,
and such Foreign Plan has obtained from the Governmental Entity having
jurisdiction with respect to such Foreign Plan any required determinations, if
any, that such Foreign Plan is in compliance with the laws of the relevant
jurisdiction if such determinations are required in order to give effect to such
Foreign Plan, and (iii) such Foreign Plan has been administered in all material
respects in accordance with its terms and applicable Law and regulations.
(f) Section 4.10(f) of the Company Disclosure Schedule lists
each Person who the Company reasonably believes is, with respect to the Company,
any Company Subsidiary and/or any ERISA Affiliate, a "disqualified individual"
(within the meaning of Section 280G of the Code and the regulations promulgated
thereunder) determined as of the date hereof.
(g) Section 4.10(g) of the Company Disclosure Schedule lists
as of the date of this Agreement the number of employees of the Company or any
Company Subsidiary who are absent from active work because of disability or
other leave in excess of four Business Days, the nature of such leave (e.g.,
short-term or long-term disability), and the number of such employees who have
been absent for more than thirty (30) days.
(h) None of the execution and delivery of this Agreement, the
consummation of the Merger or any other transaction contemplated hereby or any
termination of employment or service in connection therewith or subsequent
thereto will (i) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any Person
other than accrued payments, (ii) materially increase or otherwise enhance any
benefits otherwise payable by the Company or any Company Subsidiary, (iii)
result in the acceleration of the time of payment or vesting of any such
benefits, except as required under Section 411(d)(3) of the Code, (iv) increase
the amount of compensation due to any Person, or (v) result in the forgiveness
in whole or in part of any outstanding loans made by the Company or any Company
Subsidiary to any Person.
(i) To the knowledge of the Company, (i) Section 4.10(i) of
the Company Disclosure Schedule lists each Company Benefit Plan that grants any
compensation, equity award or bonus that could be deemed deferred compensation
within the meaning of Section 409A of the Code, and (ii) such Company Benefit
Plan is in compliance with Section 409A of the Code.
(j) (i) Each of the Company and each Company Subsidiary is in
compliance in all material respects with all currently applicable Laws
respecting employment, discrimination in employment, terms and conditions of
employment, worker classification (including the proper classification of
workers as independent contractors and consultants), wages, hours and
occupational safety and health and employment practices, including the
Immigration Reform and Control Act, (ii) the Company and each Company Subsidiary
has paid in full to all employees, independent contractors and consultants all
wages, salaries, commissions, bonuses, benefits, and other compensation due to
or on behalf of such employees, independent contractors or consultants in
accordance with applicable Law, (iii) neither the Company nor any Company
Subsidiary is liable for any payment to any trust or other fund or to any
Governmental Entity, with respect to unemployment compensation benefits, social
security or
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other benefits or obligations for employees (other than routine payments to be
made in the normal course of business and consistent with past practice), and
(iv) there are no material controversies pending or, to the knowledge of the
Company, threatened, between the Company or any Company Subsidiary and any of
their respective employees, which controversies have or could reasonably be
expected to result in an action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity.
(k) To the knowledge of the Company, neither Company nor any
of the Company Subsidiaries has any obligation to pay any amount or provide any
benefit to any former employee or officer, other than obligations (i) for which
Company has established a reserve for such amount on the Company Balance Sheet
in accordance with GAAP and (ii) pursuant to Contracts entered into after the
Company Balance Sheet Date and disclosed on Section 4.10(k) of the Company
Disclosure Schedule. Neither the Company nor any Company Subsidiary is a party
to or bound by any collective bargaining agreement or other labor union
Contract, no collective bargaining agreement is being negotiated by the Company
or any Company Subsidiary and neither the Company nor any Company Subsidiary has
any duty to bargain with any labor o |
