Attached files
| file | filename |
|---|---|
| 8-K - GVI SECURITY SOLUTIONS INC | v163462_8k.htm |
| EX-2.2 - GVI SECURITY SOLUTIONS INC | v163462_ex2-2.htm |
| EX-10.1 - GVI SECURITY SOLUTIONS INC | v163462_ex10-1.htm |
| EX-10.3 - GVI SECURITY SOLUTIONS INC | v163462_ex10-3.htm |
| EX-10.2 - GVI SECURITY SOLUTIONS INC | v163462_ex10-2.htm |
| EX-99.1 - GVI SECURITY SOLUTIONS INC | v163462_ex99-1.htm |
AGREEMENT
AND PLAN OF MERGER
dated as
of October 21, 2009
among
GENNX360
GVI HOLDING INC.,
GENNX360
GVI ACQUISITION CORP.
and
GVI
SECURITY SOLUTIONS, INC.
Table of
Contents
|
ARTICLE I THE OFFER AND THE
MERGER
|
2
|
|
|
SECTION 1.1
|
The Offer
|
2
|
|
SECTION 1.2
|
Company Actions
|
4
|
|
SECTION 1.3
|
The Merger
|
5
|
|
SECTION 1.4
|
Effects of the Merger
|
5
|
|
SECTION 1.5
|
Closing
|
5
|
|
SECTION 1.6
|
Consummation of the Merger
|
5
|
|
SECTION 1.7
|
Organizational Documents; Directors and
Officers
|
5
|
|
SECTION 1.8
|
Top-Up Option
|
6
|
|
ARTICLE II EFFECT OF THE MERGER ON the CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES
|
7
|
|
|
SECTION 2.1
|
Conversion of Merger Sub Capital
Stock
|
7
|
|
SECTION 2.2
|
Conversion of Shares
|
7
|
|
SECTION 2.3
|
Exchange of Certificates
|
8
|
|
SECTION 2.4
|
Company Options; Restricted
Stock
|
10
|
|
SECTION 2.5
|
Taking of Necessary Action, Further
Action
|
10
|
|
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
|
11
|
|
|
SECTION 3.1
|
Organization
|
11
|
|
SECTION 3.2
|
Capitalization
|
12
|
|
SECTION 3.3
|
Authorization, No Conflict
|
13
|
|
SECTION 3.4
|
Subsidiaries
|
14
|
|
SECTION 3.5
|
SEC Reports and Financial
Statements
|
15
|
|
SECTION 3.6
|
Absence of Material Adverse Changes,
etc
|
16
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|
SECTION 3.7
|
Litigation
|
17
|
|
SECTION 3.8
|
Information Supplied
|
17
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|
SECTION 3.9
|
Broker’s or Finder’s Fees
|
17
|
|
SECTION 3.10
|
Employee Plans
|
18
|
|
SECTION 3.11
|
Opinion of Financial
Advisors
|
19
|
|
SECTION 3.12
|
Taxes
|
20
|
|
SECTION 3.13
|
Environmental Matters.
|
21
|
|
SECTION 3.14
|
Compliance with Laws
|
22
|
|
SECTION 3.15
|
Intellectual Property
|
23
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|
SECTION 3.16
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Employment Matters
|
23
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|
SECTION 3.17
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Insurance
|
23
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|
SECTION 3.18
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Material Contracts
|
24
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|
SECTION 3.19
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Properties
|
25
|
|
SECTION 3.20
|
State Takeover Statutes
|
25
|
|
SECTION 3.21
|
Required Vote of the Company
Stockholders
|
25
|
|
SECTION 3.22
|
Interested Party
Transactions
|
26
|
- i
-
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND MERGER SUB
|
26
|
|
|
SECTION 4.1
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Organization
|
26
|
|
SECTION 4.2
|
Merger Sub: Ownership of
Shares
|
26
|
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SECTION 4.3
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Authorization: No Conflict
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27
|
|
SECTION 4.4
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Information Supplied
|
28
|
|
SECTION 4.5
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Absence of Litigation
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28
|
|
SECTION 4.6
|
Availability of Funds
|
28
|
|
SECTION 4.7
|
Other Agreements or
Understandings
|
28
|
|
SECTION 4.8
|
No Additional
Representations
|
29
|
|
ARTICLE V CONDUCT OF BUSINESS PENDING THE
MERGER
|
29
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|
|
SECTION 5.1
|
Conduct of Business by the Company Pending the
Merger
|
29
|
|
SECTION 5.2
|
Consultation Rights
|
32
|
|
SECTION 5.3
|
No Right to Control Company Pre-Acceptance
Time
|
32
|
|
SECTION 5.4
|
Restricted Actions
|
32
|
|
ARTICLE VI ADDITIONAL
AGREEMENTS
|
32
|
|
|
SECTION 6.1
|
Preparation of Proxy Statement, Stockholders
Meetings
|
32
|
|
SECTION 6.2
|
Employee Benefit Matters
|
34
|
|
SECTION 6.3
|
Public Statements
|
34
|
|
SECTION 6.4
|
Standard of Efforts
|
34
|
|
SECTION 6.5
|
Notification of Certain
Matters
|
35
|
|
SECTION 6.6
|
Access to Information,
Confidentiality
|
35
|
|
SECTION 6.7
|
No Solicitation
|
36
|
|
SECTION 6.8
|
Indemnification and
Insurance
|
38
|
|
SECTION 6.9
|
Section 16 Matters
|
40
|
|
SECTION 6.10
|
Directors
|
40
|
|
SECTION 6.11
|
Securityholder Litigation
|
41
|
|
SECTION 6.12
|
Takeover Statute
|
41
|
|
SECTION 6.13
|
Rule 14d-10(d) Matters
|
41
|
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ARTICLE VII CONDITIONS
|
42
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|
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SECTION 7.1
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Conditions to Each Party’s Obligation To Effect
the Merger
|
42
|
|
SECTION 7.2
|
Conditions to Obligations of Parent and Merger
Sub
|
42
|
|
ARTICLE VIII TERMINATION, AMENDMENT AND
WAIVER
|
42
|
|
|
SECTION 8.1
|
Termination
|
42
|
|
SECTION 8.2
|
Effect of Termination
|
44
|
|
SECTION 8.3
|
Fees and Expenses
|
44
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|
SECTION 8.4
|
Amendment
|
44
|
|
SECTION 8.5
|
Waiver
|
44
|
- ii
-
|
ARTICLE IX GENERAL
PROVISIONS
|
45
|
|
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SECTION 9.1
|
Notices
|
45
|
|
SECTION 9.2
|
Representations and
Warranties
|
46
|
|
SECTION 9.3
|
Knowledge Qualifiers
|
46
|
|
SECTION 9.4
|
Interpretations
|
46
|
|
SECTION 9.5
|
Governing Law; Jurisdiction; Waiver of Jury
Trial
|
46
|
|
SECTION 9.6
|
Counterparts; Facsimile Transmission of
Signature
|
46
|
|
SECTION 9.7
|
Assignment: No Third Party
Beneficiaries
|
46
|
|
SECTION 9.8
|
Severability
|
47
|
|
SECTION 9.9
|
Entire Agreement
|
47
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|
SECTION 9.10
|
Enforcement
|
47
|
- iii
-
|
Defined Terms
|
Section
|
|
|
Acceptance
Time
|
1.8(b)
|
|
|
Agreement
|
Preamble
|
|
|
Appraisal
Shares
|
2.2(c)
|
|
|
Authorizations
|
3.14(b)
|
|
|
Available
Company SEC Document
|
Article
III
|
|
|
Cash
Amount
|
2.4(a)
|
|
|
CERCLA
|
3.13(b)
|
|
|
Certificate
of Merger
|
1.6
|
|
|
Certificates
|
2.3(b)
|
|
|
Closing
|
1.5
|
|
|
Closing
Date
|
1.5
|
|
|
Code
|
1.8(b)
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|
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Commitment
|
Recitals
|
|
|
Company
|
Preamble
|
|
|
Company
Board
|
Recitals
|
|
|
Company
Disclosure Letter
|
Article
III
|
|
|
Company
Employee Benefit Plan
|
3.10(a)
|
|
|
Company
ERISA Affiliates
|
3.10(a)
|
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|
Company
Financial Advisor
|
3.9
|
|
|
Company
Financial Statements
|
3.5(b)
|
|
|
Company
Intellectual Property Rights
|
3.15
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|
|
Company
Material Adverse Effect
|
3.1(a)
|
|
|
Company
Material Contract
|
3.18(a)
|
|
|
Company
Preferred Stock
|
3.2
|
|
|
Company
SEC Reports
|
3.5(a)
|
|
|
Company
Stockholders Meeting
|
6.1(b)
|
|
|
Company
Subsidiaries
|
3.1
|
|
|
Confidentiality
Agreement
|
6.6(b)
|
|
|
Constituent
Corporations
|
1.3
|
|
|
Contract
|
3.18(a)
|
|
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D&O
Insurance
|
6.8(b)
|
|
|
DGCL
|
Recitals
|
|
|
Distributorship
Agreement
|
3.1
|
|
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Effective
Date
|
1.6
|
|
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Effective
Time
|
1.6
|
|
|
Employee
Benefit Plan
|
3.10(a)
|
|
|
Engagement
Letter
|
3.9
|
|
|
Environmental
Laws
|
3.13(b)
|
|
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Equity
Commitment Letter
|
Recitals
|
|
|
ERISA
|
3.10(i)
|
|
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Exchange
Act
|
1.1(a)
|
|
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Exchange
Agent
|
2.3(a)
|
|
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Exchange
Fund
|
2.3(a)
|
|
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Expense
Reimbursement
|
8.3(c)
|
- i
-
|
FCPA
|
3.14(c)
|
|
Fund
|
Recitals
|
|
GAAP
|
3.5(b)
|
|
Governmental
Authority
|
3.3(d)
|
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Hazardous
Substance
|
3.13(b)
|
|
Indemnified
Party
|
6.8(a)
|
|
Indemnifying
Parties
|
6.8(b)
|
|
Independent
Directors
|
6.10(a)
|
|
Information
Statement
|
3.3(d)
|
|
Intellectual
Property
|
3.15
|
|
Judgment
|
3.3(c)
|
|
Law
|
3.3(c)
|
|
Leases
|
3.19(b)
|
|
Lien
|
3.4(b)
|
|
Maximum
Amount
|
6.8(c)
|
|
Merger
|
Recitals
|
|
Merger
Consideration
|
2.2(a)
|
|
Merger
Sub
|
Preamble
|
|
Minimum
Tender Condition
|
Exhibit
A
|
|
Non-Qualified
Deferred Compensation Plan
|
3.10(j)
|
|
Offer
|
Recitals
|
|
Offer
Documents
|
1.1(b)
|
|
Offer
Price
|
Recitals
|
|
Options
|
2.4(a)
|
|
Outside
Date
|
8.1(b)
|
|
Parent
|
Preamble
|
|
Parent
Material Adverse Effect
|
4.1
|
|
Parent
Subsidiaries
|
4.3(b)
|
|
Payment
Rules
|
Exhibit
A
|
|
Permitted
Liens
|
3.19(a)
|
|
Person
|
3.4(a)
|
|
Proxy
Statement
|
3.3(d)
|
|
Qualified
Company Employee Benefit Plan
|
3.10(c)
|
|
RCRA
|
3.13(b)
|
|
Required
Company Stockholder Vote
|
3.3(a)
|
|
Restricted
Stock
|
2.4(b)
|
|
Samsung
|
3.1
|
|
Sarbanes-Oxley
Act
|
3.5(c)
|
|
Schedule
14D-9
|
1.2(b)
|
|
SEC
|
1.1(a)
|
|
Section
262
|
2.2(c)
|
|
Securities
Act
|
1.8(d)
|
|
Share
|
Preamble
|
|
Shares
|
Preamble
|
|
Special
Committee
|
1.1(e)
|
- ii
-
|
Stock
Plans
|
2.4(a)
|
|
Subsidiary
|
3.4(a)
|
|
Superior
Proposal
|
6.7(d)(ii)
|
|
Support
Agreements
|
Recitals
|
|
Surviving
Corporation
|
1.3
|
|
Takeover
Proposal
|
6.7(d)(i)
|
|
Tax
Return
|
3.12(j)
|
|
Taxes
|
3.12(j)
|
|
Termination
Date
|
8.2
|
|
Top-Up
Option
|
1.8(a)
|
|
Top-Up
Option Shares
|
1.8(a)
|
|
Transactions
|
1.2(a)
|
|
Warrant
|
2.4
|
- iii
-
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of
October 21, 2009, among GENNX360 GVI HOLDING, INC., a Delaware corporation
(“Parent”), GENNX360
GVI ACQUISITION CORP., a Delaware corporation and wholly-owned subsidiary of
Parent (“Merger Sub”),
and GVI SECURITY SOLUTIONS, INC., a Delaware corporation (the “Company”).
RECITALS
WHEREAS, the respective boards
of directors of Parent, Merger Sub and the Company have unanimously approved the
acquisition of the Company by Parent on the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, in furtherance of
such acquisition, Parent has agreed to cause Merger Sub to commence a tender
offer (as it may be amended from time to time as permitted under this Agreement,
the “Offer”) to
purchase all the shares of common stock, par value $0.001 per share, of the
Company (each a “Share”
and collectively, the “Shares”) at a price per Share
of $0.38 (such amount, or any other amount per Share paid pursuant to the Offer
and this Agreement, the “Offer
Price”), net to the seller in cash, without interest subject to any
withholding Taxes required by applicable Law, on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, following
consummation of the Offer, the parties intend that Merger Sub will be merged
with and into the Company (the “Merger”), with the Company
surviving the Merger as a wholly owned subsidiary of Parent in accordance with
the General Corporation Law of the State of Delaware (the “DGCL”), and each Share that
is not tendered and accepted pursuant to the Offer will thereupon be canceled
and converted into the right to receive cash in an amount equal to the Offer
Price, on the terms and subject to the conditions set forth herein;
WHEREAS, the respective boards
of directors of Parent, Merger Sub and the Company have (i) determined that this
Agreement and the Transactions (as defined in Section 1.2(a)),
including the Offer and the Merger, are advisable, fair to and in the best
interests of their respective stockholders and (ii) approved this Agreement and
the Transactions, including the Offer and the Merger, on the terms and subject
to the conditions set forth herein;
WHEREAS, the board of
directors of the Company (the “Company Board”) is
recommending that the stockholders of the Company accept the Offer, tender their
Shares into the Offer and, to the extent required by Law approve the Merger and
this Agreement;
WHEREAS, immediately prior to
the execution and delivery of this Agreement, and as a condition and inducement
to the willingness of Parent and Merger Sub to enter into this Agreement,
certain stockholders of the Company have delivered to Parent and Merger Sub
tender and support agreements (the “Support Agreements”),
providing that such stockholders shall, among other things, agree to tender into
the Offer; and
WHEREAS, concurrently with the
execution of this Agreement, and as a condition and inducement to the Company’s
willingness to enter into this Agreement, GenNx360 Capital Partners, L.P. (the
“Fund”), Parent and
Merger Sub have entered into an equity commitment letter, dated as of the date
hereof (the “Equity Commitment
Letter”) pursuant to which the Fund has committed, subject to the terms
and conditions set forth therein, to make the investments described therein (the
“Commitment”).
- 1
-
NOW,
THEREFORE, in consideration of the foregoing and of the representations,
warranties, covenants and agreements set forth in this Agreement, the parties
hereto agree as follows:
ARTICLE
I
THE
OFFER AND THE MERGER
SECTION
1.1 The
Offer. (a) Provided
that this Agreement shall not have been terminated in accordance with Article VIII, as
promptly as practicable but in no event later than ten business days (as defined
in Rule 14d-1(g)(3) promulgated by the United States Securities and Exchange
Commission (the “SEC”)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) after the
date of this Agreement, Merger Sub shall, and Parent shall cause Merger Sub to,
commence the Offer within the meaning of the applicable rules and regulations of
the SEC. The obligations of Merger Sub to, and of Parent to cause
Merger Sub to, accept for payment, and pay for, any Shares tendered pursuant to
the Offer are subject to the conditions set forth in Exhibit
A.
(b) The
initial expiration date of the Offer shall be the 20th business day following
the commencement of the Offer (determined using Exchange Act Rule
14d-1(g)(3)). The Offer may not be terminated prior to its scheduled
expiration (as such expiration may be extended or re-extended in accordance with
this Agreement), unless this Agreement is terminated in accordance with Section
8.1. Merger Sub expressly reserves the right to waive any
condition to the Offer or modify the terms of the Offer, except that, without
the consent of the Company, Merger Sub shall not (i) reduce the number of Shares
subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum
Tender Condition (as defined in Exhibit A), (iv) add
to the conditions set forth in Exhibit A or modify
any condition set forth in Exhibit A in a manner
adverse to the holders of Shares, (v) extend the Offer (except as expressly
provided below), (vi) change the form of consideration payable in the Offer, or
(vii) otherwise amend the Offer in any manner adverse to the holders of
Shares. Notwithstanding the foregoing, Merger Sub may, without the
consent of the Company, extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer. If on or prior to any then scheduled
expiration date of the Offer, all of the conditions to the Offer (including the
conditions and requirements set forth in Exhibit A) have not
been satisfied, or waived by Parent or Merger Sub, Parent may, in its sole
discretion, without the consent of the Company cause Merger Sub to extend the
Offer for successive periods of up to twenty (20) business days each, the length
of each such period to be determined by Parent in its sole discretion, in order
to permit the satisfaction of such conditions, but in no event shall the Offer
be extended past the Outside Date without the Company’s Consent. If
fewer than 90% of the issued and outstanding Shares are accepted for payment
pursuant to the Offer, then Merger Sub may, and at the request of the Company,
shall, and upon any such request of the Company, Parent shall cause Merger Sub
to, make available a “subsequent offering period”, in accordance with Rule
14d-11 promulgated by the SEC under the Exchange Act, of not less than ten
business days (but in no event with an expiration date after December 31,
2009). For the avoidance of doubt, the parties hereto agree that
vested shares of Restricted Stock (as defined in Section 2.4(b)) may
be tendered in the Offer and be acquired by Parent or Merger Sub pursuant to the
Offer.
- 2
-
(c) If
at the then scheduled expiration date of the Offer, all of the conditions (other
than the Minimum Tender Condition) to the Offer set forth in Exhibit A (other than
any conditions which by their nature are to be satisfied at the closing of the
Offer) are satisfied or, if permitted, waived, Merger Sub shall, and Parent
shall cause Merger Sub to, extend the Offer in increments of not more than ten
business days each until such time as the Minimum Tender Condition is satisfied;
provided that Merger Sub shall not be required to extend the Offer beyond the
Outside Date (as defined in Section
8.1(b)).
(d) On
the terms and subject to the conditions of the Offer and this Agreement, Merger
Sub shall, and Parent shall cause Merger Sub to, pay for all Shares validly
tendered and not withdrawn pursuant to the Offer that Merger Sub becomes
obligated to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(e) On
the date of commencement of the Offer, Parent and Merger Sub shall file with the
SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which
shall contain an offer to purchase and a related letter of transmittal and
summary advertisement (such Schedule TO and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the “Offer
Documents”). The Company shall promptly provide Parent with
all information relating to the Company that is required to be included in the
Offer Documents, and hereby consents to the inclusion of the recommendations of
the Company Board and the Special Committee of Independent Directors of the
Company Board (the “Special
Committee”). Parent and Merger Sub agree that the Offer
Documents shall comply in all material respects with the requirements of
applicable Federal securities laws and, on the date first filed with the SEC and
on the date first published, sent or given to the Company’s stockholders shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Each of Parent, Merger Sub and the Company shall promptly
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and each of Parent and Merger Sub shall take all steps
necessary to amend or supplement the Offer Documents and to cause the Offer
Documents as so amended or supplemented to be filed with the SEC and the Offer
Documents as so amended or supplemented to be disseminated to the holders of the
Shares, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment upon the Offer Documents and any
amendments thereto prior to filing such documents with the SEC or dissemination
of such documents to the stockholders of the Company. Parent and
Merger Sub shall provide the Company and its counsel in writing with any
comments Parent, Merger Sub or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments, shall consult with the Company and its counsel prior to responding to
such comments, and shall provide to the Company and its counsel a copy of any
written responses thereto and telephonic notice of any oral responses or
discussions with the SEC staff.
- 3
-
(f) Parent
shall provide or cause to be provided to Merger Sub on a timely basis the funds
necessary to purchase any Shares that Merger Sub becomes obligated to purchase
pursuant to the Offer.
SECTION
1.2 Company
Actions. (a)
The Company hereby approves of and consents to the Offer, the Merger and the
other transactions contemplated by this Agreement (collectively, the “Transactions”).
(b) On
the date the Offer Documents are filed with the SEC, the Company shall file with
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect
to the Offer (such Schedule 14D-9, as amended from time to time, the “Schedule 14D-9”) describing
the recommendations referred to in Section 3.3(b)
(subject to Section
6.7(b) and (c)) and shall mail
the Schedule 14D-9 to the holders of Shares. The Company agrees that
the Schedule 14D-9 shall comply in all material respects with the requirements
of applicable Federal securities laws and, on the date first filed with the SEC
and on the date first published, sent or given to the Company’s stockholders
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Each of the Company, Parent and Merger Sub shall promptly
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading in any
material respect, and the Company shall take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the holders of Shares,
in each case as and to the extent required by applicable Federal securities
laws. Parent and its counsel shall be given reasonable opportunity to
review and comment upon the Schedule 14D-9 and any amendments thereto prior to
filing such documents with the SEC or dissemination of such documents to the
stockholders of the Company. The Company shall provide Parent and
Merger Sub and its counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments, shall consult with Parent and
Merger Sub and their counsel prior to responding to such comments, and shall
provide to Parent and Merger Sub and their counsel a copy of any written
responses thereto and telephonic notice of any oral responses or discussions
with the SEC staff.
(c) In
connection with the Offer, the Company shall cause its transfer agent to furnish
Merger Sub promptly with mailing labels containing the names and addresses of
the record holders of Shares as of a recent date and of those persons becoming
record holders subsequent to such date, together with copies of all lists of
stockholders, security position listings and computer files and all other
information in the Company’s possession or control regarding the beneficial
owners of Shares, and shall furnish to Merger Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in communicating the Offer
to the holders of Shares. Subject to the requirements of applicable
Law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Transactions,
Parent and Merger Sub shall hold in confidence the information contained in any
such labels, listings and files, shall use such information only in connection
with the Offer, the Merger and the Transactions and, if this Agreement shall be
terminated, shall, upon request, deliver to the Company all copies of such
information then in their possession.
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SECTION
1.3 The
Merger. At
the Effective Time, in accordance with this Agreement and the DGCL, Merger Sub
shall be merged with and into the Company, the separate existence of Merger Sub
shall cease, and the Company shall continue as the surviving
corporation. For purposes of this Agreement, (i) the corporation
surviving the Merger after the Effective Time may be referred to as the “Surviving Corporation” and
(ii) the Company and Merger Sub are collectively referred to as the “Constituent
Corporations”.
SECTION
1.4 Effects of
the Merger. The
Merger shall have the effects set forth in Section 259 of the DGCL.
SECTION
1.5 Closing. The
closing of the Merger (the “Closing”) shall take place at
the offices of Nixon Peabody LLP at 437 Madison Avenue, New York, New York at
10:00 a.m., local time, on a date to be specified by the parties, which shall be
no later than the second business day after satisfaction or (to the extent
permitted by applicable Law) waiver of the conditions set forth in Article VII and Exhibit A (other than
any such conditions which by their nature cannot be satisfied until the Closing
Date, which shall be required to be so satisfied or (to the extent permitted by
applicable Law) waived on the Closing Date), unless another time, date or place
is agreed to in writing by the parties hereto (such date upon which the Closing
occurs, the “Closing
Date”).
SECTION
1.6 Consummation
of the Merger. As
soon as practicable after the Closing, the parties hereto shall cause the Merger
to be consummated by filing with the Secretary of State of the State of Delaware
a certificate of merger or other appropriate documents (in any such case, the
“Certificate of
Merger”) in such form as required by, and executed in accordance with,
the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with such Secretary of
State, or at such later time as Parent and the Company shall agree and specify
in the Certificate of Merger (the time and date the Merger becomes effective
being the “Effective
Time” and “Effective
Date,” respectively).
SECTION
1.7 Organizational Documents;
Directors and Officers. The
certificate of incorporation of the Surviving Corporation shall be amended at
the Effective Time to conform to the certificate of incorporation of Merger Sub,
and as so amended, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided therein and under the
DGCL. The By-laws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended as provided therein and under the DGCL. The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation and shall serve until the earlier
of their resignation or removal or their respective successors are duly elected
or appointed and qualified, as the case may be. The officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation and shall serve until the earlier of their resignation
or removal or until their respective successors have been duly elected or
appointed and qualified, as the case may be.
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SECTION
1.8 Top-Up
Option. (a)
Subject to Sections
1.8(b) and (c), the Company
grants to Parent an irrevocable option (the “Top-Up Option”) to purchase
from the Company the number of Shares (the “Top-Up Option Shares”) equal
to the lesser of (i) the number of Shares that, when added to the number of
Shares owned by Merger Sub as of immediately prior to the exercise of the Top-Up
Option, constitutes one share more than 90% of the number of Shares then
outstanding on a fully diluted basis (determined in accordance with Exhibit A) (assuming
the issuance of the Top-Up Option Shares) or (ii) the aggregate of the number of
Shares held as treasury shares by the Company and its Subsidiaries and the
number of Shares that the Company is authorized to issue under its certificate
of incorporation but that are not issued and outstanding (and are not reserved
for issuance pursuant to the exercise of Options (as defined in Section 2.4(a))) as
of immediately prior to the exercise of the Top-Up Option.
(b) The
Top-Up Option may be exercised by Parent, in whole or in part, at any time at or
after the acceptance for payment of, and payment by Merger Sub for, any Shares
pursuant to the Offer (the “Acceptance
Time”). The aggregate purchase price payable for the Top-Up
Option Shares shall be determined by multiplying the number of such Top-Up
Option Shares by the Merger Consideration. Such purchase price may be
paid by Parent, at its election, either in cash or by executing and delivering
to the Company a promissory note having a principal amount equal to such
purchase price, or by any combination of cash and such promissory
note. Any such promissory note shall bear interest at the applicable
Federal rate determined under Section 1274(d) of the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder (the
“Code”), shall mature
on the first anniversary of the date of execution and delivery of such
promissory note and may be prepaid without premium or penalty.
(c) In
the event that Parent wishes to exercise the Top-Up Option, it shall deliver to
the Company a notice setting forth (i) the number of Top-Up Option Shares that
it intends to purchase pursuant to the Top-Up Option, (ii) the manner in which
it intends to pay the applicable purchase price and (iii) the place and time at
which the closing of the purchase of the Top-Up Option Shares by Parent is to
take place. At the closing of the purchase of the Top-Up Option
Shares, Parent shall cause to be delivered to the Company the consideration
required to be delivered in exchange for such Top-Up Option Shares, and the
Company shall cause to be issued to Parent a certificate representing such
shares.
(d) Parent
and Merger Sub acknowledge that the Top-Up Option Shares that Parent may acquire
upon exercise of the Top-Up Option will not be registered under the Securities
Act of 1933, as amended (the “Securities Act”), and will be
issued in reliance upon an exemption thereunder for transactions not involving a
public offering. Parent and Merger Sub represent and warrant to the
Company that Parent is, or will be upon the purchase of the Top-Up Option
Shares, an Accredited Investor, as defined in Rule 501 of Regulation D under the
Securities Act. Parent agrees that the Top-Up Option and the Top-Up
Option Shares to be acquired upon exercise of the Top-Up Option are being and
will be acquired by Parent for the purpose of investment and not with a view to,
or for resale in connection with, any distribution thereof in violation of the
Securities Act.
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ARTICLE
II
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION
2.1 Conversion of
Merger Sub Capital Stock. At
the Effective Time, by virtue of the Merger and without any action on the part
of Parent, Merger Sub, the Company or any holder of shares of Merger Sub capital
stock, each share of Merger Sub capital stock shall be converted into and become
one fully paid and nonassessable share of common stock, par value $0.001 per
share, of the Surviving Corporation.
SECTION
2.2 Conversion of
Shares. At
the Effective Time, by virtue of the Merger and without any action on the part
of Parent, Merger Sub, the Company or any holder of Shares:
(a) Each
Share issued and outstanding immediately prior to the Effective Time (other than
any shares to be canceled pursuant to Section 2.2(b) and
any Appraisal Shares (as defined in Section 2.2(c)) shall
be canceled and shall be converted automatically into the right to receive an
amount in cash per share equal to the Offer Price without interest thereon (the
“Merger
Consideration”). As of the Effective Time, all such Shares
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration upon surrender of such certificate in accordance with
Section 2.3,
without interest.
(b) Each
Share held in the treasury of the Company and each Share owned by Merger Sub,
Parent or any wholly-owned Subsidiary (as defined in Section 3.4(a)) of
Parent or of the Company immediately prior to the Effective Time shall be
canceled without any conversion thereof and no payment or distribution shall be
made with respect thereto.
(c) Appraisal Rights.
Notwithstanding anything in this Agreement to the contrary, Shares (“Appraisal Shares”) that are
outstanding immediately prior to the Effective Time and that are held by any
person who is entitled to demand and properly demands appraisal of such
Appraisal Shares pursuant to, and who complies in all respects with, Section 262
of the DGCL (“Section 262”) shall not be
converted into the right to receive Merger Consideration as provided in Section 2.2(a), but
rather the holders of Appraisal Shares shall be entitled to payment of the fair
value of such Appraisal Shares in accordance with Section 262 (and at the
Effective Time, such Appraisal Shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and such holders shall cease
to have any right with respect thereto, except the right to receive the fair
value of such Appraisal Shares in accordance with Section 262); provided, however, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section 262, then the right of such holder to be paid
the fair value of such holder’s Appraisal Shares shall cease and such Appraisal
Shares shall be deemed to have been converted as of the Effective Time into, and
to have become exchangeable solely for the right to receive Merger Consideration
as provided in Section
2.2(a). The Company shall serve prompt notice to Parent of any
demands received by the Company for appraisal of any Shares, and Parent shall
have the right to participate in and control all negotiations and proceedings
with respect to such demands. Prior to the Effective Time, the
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle or offer to settle, any such demands, or agree to do
any of the foregoing.
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SECTION
2.3 Exchange of
Certificates.
(a) Exchange
Agent. Prior to the Effective Time, Parent shall enter into an
agreement with such bank or trust company as may be designated by Parent and
reasonably acceptable to the Company (the “Exchange Agent”), which shall
provide for the payment of Merger Consideration in accordance with the terms of
this Section
2.3. Parent shall, or shall take all steps necessary to enable
and cause the Surviving Corporation to, deposit with the Exchange Agent as of
the Effective Time, for the benefit of the holders of Shares, for payment by the
Exchange Agent in accordance with this Article II, the cash
necessary to pay for the Shares converted into the right to receive Merger
Consideration (the “Exchange
Fund”). The Exchange Fund shall not be used for any other
purpose. The Exchange Fund shall, pending its disbursement to such
holders, be invested by the Exchange Agent as directed by Parent. Any
net profit resulting from, or interest or income produced by, such amounts on
deposit with the Exchange Agent will be payable to Parent or as Parent otherwise
directs. Any portion of the Merger Consideration deposited with the
Exchange Agent to pay for Shares for which appraisal rights have been perfected
shall be returned to Parent upon demand.
(b) Exchange
Procedures. As soon as reasonably practicable after the
Effective Time but in any event not later than five business days thereafter,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the “Certificates”) whose shares
were converted into the right to receive the Merger Consideration pursuant to
Section 2.2,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in surrendering the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall receive in exchange therefor the amount of cash
which the Shares theretofore represented by such Certificate entitle such holder
to receive pursuant to the provisions of this Article II and the
Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of Shares that is not registered in the transfer
records of the Company, payment may be made to a Person other than the Person in
whose name the Certificate so surrendered is registered if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
Person requesting such issuance shall pay any transfer or other Taxes required
by reason of the payment to a Person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. Each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
surrender in accordance with this Section 2.3 the
Merger Consideration into which the Shares shall have been converted pursuant to
Section
2.2. No interest shall be paid or shall accrue on any cash
payable to holders of Certificates pursuant to the provisions of this Article
II.
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(c) No Further Ownership Rights
in Shares. The Merger Consideration paid upon the surrender
for exchange of Certificates in accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificate. There shall be no
further registration of transfers on the stock transfer books of the Company of
the Shares that were outstanding immediately prior to the Effective
Time. If after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in Article II, except as
otherwise provided by Law.
(d) Termination of Exchange
Fund. Any portion of the Exchange Fund that remains
undistributed to the holders of Certificates for one year after the Effective
Time shall be delivered to Parent, upon demand, and any holders of Certificates
who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for Merger
Consideration.
(e) No
Liability. None of Parent, Merger Sub, the Company or the
Exchange Agent shall be liable to any Person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate shall
not have been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any amounts payable pursuant to
this Article II
would otherwise escheat to or become the property of any Governmental Authority
(as defined in Section
3.3), any such amounts shall, to the extent permitted by applicable Law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any Person previously entitled thereto.
(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, the posting by such Person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration with
respect thereto pursuant to this Agreement.
(g) Withholding
Rights. Each of Parent, Merger Sub and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as it is
required to deduct and withhold with respect to the making of such payment under
applicable tax Laws. To the extent that amounts are so withheld by
Parent, Merger Sub or the Exchange Agent and paid to the appropriate taxing
authorities, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Parent, Merger Sub or the Exchange
Agent.
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SECTION
2.4 Company
Options; Restricted Stock. (a)
At the Effective Time, by virtue of the Merger and without any action on the
part of any holder of any outstanding Option (as hereinafter defined), whether
vested or unvested, exercisable or unexercisable, each Option and Warrant that
is outstanding and unexercised immediately prior thereto shall immediately and
fully vest, and subject to the terms and conditions set forth below in this
Section 2.4,
each such Option or Warrant, as applicable, shall terminate and be canceled at
the Effective Time and each holder of an Option or Warrant, as applicable, will
be entitled to receive from the Company, and shall receive as soon as
practicable following the Effective Time, in settlement of each Option or
Warrant, as applicable, a Cash Amount. The “Cash Amount” shall be equal
to the net amount of (A) the product of (i) the excess, if any, of the Merger
Consideration over the exercise price per share of such Option or Warrant, as
applicable, multiplied by (ii) the number of shares subject to such Option or
Warrant, as applicable, less (B) any applicable withholdings for
Taxes. If the exercise price per share of any Option or Warrant, as
applicable, equals or exceeds the Merger Consideration, the Cash Amount therefor
shall be zero and, for the avoidance of doubt, such Options and Warrants shall
terminate and be canceled at the Effective Time. As used in this
Agreement, (i) “Options” means any option
granted, and, immediately before the Effective Time not exercised, expired or
terminated, to a current or former employee, director or independent contractor
of the Company or any of the Company Subsidiaries (as defined in Section 3.1) or any
former subsidiary of the Company or predecessor thereof to purchase Shares
pursuant to the Stock Plans or any other Contract (as defined in Section 3.18(a));
(ii) “Warrants” means
any warrant granted, and, immediately before the Effective Time not exercised,
expired or terminated, to any Person by the Company or any of the Company
Subsidiaries or any former subsidiary of the Company or predecessor thereof to
purchase Shares pursuant to any Contract; and (iii) “Stock Plans” means the 2004
Long-Term Incentive Plan and the 2008 Long-Term Incentive Plan.
(b) As
soon as practicable following the date of this Agreement, the Company Board (or,
if appropriate, any committee thereof administering the Stock Plans) shall adopt
such resolutions or take such other actions as may be required to (i) cancel all
outstanding Options and Warrants that are out-of-the-money, (ii) terminate the
Stock Plans as of the Effective Time and (iii) provide for the lapse as of
immediately following the Acceptance Time of all forfeiture provisions
applicable to any shares of Restricted Stock. As used in this
Agreement, “Restricted
Stock” means any award of restricted Shares (including any restricted
stock unit or performance stock unit award) outstanding immediately following
the Acceptance Time with respect to which the restrictions have not lapsed, and
which award shall not have previously expired or terminated, to a current or
former employee, director or independent contractor of the Company or any of the
Company Subsidiaries or any predecessor thereof pursuant to any applicable Stock
Plan or any other Contract (as defined in Section 3.18(a)) entered into by the
Company or any of the Company Subsidiaries.
SECTION
2.5 Taking of
Necessary Action, Further Action. Each
of Parent, Merger Sub and the Company shall use reasonable best efforts to take
all such actions as may be necessary or appropriate in order to effectuate the
Merger under the DGCL, as promptly as commercially practicable. If
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of either of the Constituent
Corporations, the officers and directors of the Surviving Corporation are fully
authorized in the name of each Constituent Corporation or otherwise to take, and
shall take, all such lawful and necessary action.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except as
set forth in (i) the reports, schedules, forms, statements and other documents
filed by the Company with, or furnished by the Company to, the SEC after
December 31, 2007, and, in each case, publicly available prior to the date of
this Agreement (each, an “Available Company SEC
Document”) (excluding any disclosures set forth in any “risk factor”
section thereof (other than factual information contained therein) or in any
section related to forward-looking statements to the extent that they are
predictive or forward-looking in nature (other than factual information
contained therein)), but only to the extent that the particular disclosure is
reasonably sufficient on its face without further inquiry to inform Parent of
the information required to be disclosed in respect of the applicable sections
of this Agreement to avoid a breach under the representation and warranty or
covenant corresponding to such sections or (ii) the disclosure letter (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein, provided that any
disclosure set forth with respect to any particular section shall be deemed to
be disclosed in reference to all other applicable sections of this Agreement if
the disclosure in respect of the particular section is reasonably sufficient on
its face without further inquiry to inform Parent of the information required to
be disclosed in respect of the other sections to avoid a breach under the
representation and warranty or covenant corresponding to such other sections)
delivered by the Company to Parent (the “Company Disclosure Letter”)
immediately prior to execution of this Agreement, the Company hereby represents
and warrants to Parent and Merger Sub, as of the date hereof and as of the
Closing Date, as follows:
SECTION
3.1 Organization. Each
of the Company and the Subsidiaries of the Company (the “Company Subsidiaries”) is a
corporation or limited liability company duly organized, validly existing and,
where applicable, in good standing under the laws of the jurisdiction of its
organization. Each of the Company and the Company Subsidiaries has
all requisite power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to own,
operate and lease its properties and to carry on its business as now conducted,
except for such franchises, licenses, permits, authorizations and approvals, the
lack of which, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect. A
“Company Material Adverse
Effect” means, any fact, circumstance, change or effect that has a
material adverse effect on (i) the financial condition, results of operations,
business, assets or liabilities (contingent or otherwise) of the Company and the
Company Subsidiaries considered as a single enterprise, or (ii) the
ability of the Company to perform its obligations under this Agreement or to
consummate the Transactions provided, however, that no fact, circumstance,
change or effect shall be included in the definition of Company Material Adverse
Effect that (A) arises out of general political, economic or market conditions
or general changes or developments in the industry in which the Company and its
Subsidiaries operate that do not materially and disproportionately adversely
affect the business, operations, assets, liabilities, financial condition or
results of operations of the Company and the Company Subsidiaries considered as
a single enterprise compared to businesses or entities operating in the same
industry in which the Company and the Company Subsidiaries operate, (B) results
from or is caused by acts of terrorism or war (whether or not declared) or
natural disasters occurring after the date hereof, (C) any action
taken by the Company or any of its Subsidiaries expressly authorized, permitted
or required by this Agreement or with Parent’s prior written consent, (D)
results from changes in Law or any applicable accounting regulations or
principles or the interpretations thereof that do not materially and
disproportionately adversely affect the business, operations, assets,
liabilities, financial condition or results of operations of the Company and the
Company Subsidiaries considered as a single enterprise compared to businesses or
entities operating in the same industry in which the Company and the Company
Subsidiaries operate, or (E) results from changes in the price or trading
volume of the Company’s stock (provided that any event, condition, change,
occurrence or development of a state of circumstances that may have caused or
contributed to such change in market price or trading volume shall not be
excluded under this proviso). Notwithstanding the foregoing, either
the termination of the Distributorship Agreement, dated October 2, 2006, as
amended on November 20, 2008 (the “Distributorship Agreement”),
between Samsung Electronics Co., Ltd. (“Samsung”) and GVI Security
Inc. or the written notification by Samsung of its intention to terminate the
Distributorship Agreement shall be deemed to be a Company Material Adverse
Effect. The copies of the certificate of incorporation and bylaws of
the Company which are incorporated by reference as exhibits to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2008 are
complete and correct copies of such documents and contain all amendments thereto
as in effect on the date of this Agreement.
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SECTION
3.2 Capitalization.
The
authorized capital stock of the Company consists of (i) 200,000,000 Shares and
(ii) 3,000,000 shares of preferred stock, par value $0.001 per share, (“Company Preferred
Stock”). As of the date hereof: (A) 27,285,301
Shares were issued and outstanding, including 60,000 shares of Restricted Stock;
(B) no shares of Company Preferred Stock were issued or outstanding; (C) no
Shares were held by the Company in its treasury; (D) there were outstanding
Options to purchase 5,942,217 Shares and 957,782 Shares remained available for
issuance under the Stock Plans; (E) there were outstanding Warrants to purchase
2,909,596 Shares and (F) there are no other shares of capital stock of the
Company, Options, Warrants, subscriptions, calls, rights, convertible securities
or other agreements (including any rights agreement) or commitments of any
character to which the Company or a Company Subsidiary is a party relating to
the issuance, transfer, sale, delivery, voting or redemption (including any
rights of conversion or exchange under any outstanding security or other
instrument) for any of the capital stock or other equity interests of, or other
ownership interests in, the Company issued, reserved for issuance or
outstanding. Such issued and outstanding Shares have been duly
authorized and validly issued, are fully paid and nonassessable, and are free of
preemptive rights. Section 3.2 of the
Company Disclosure Letter sets forth, as of the date hereof, each Option,
Restricted Stock award and Warrant of the Company outstanding, the number of
Shares issuable thereunder and the expiration date and the exercise or
conversion price relating thereto. Other than as set forth in Section 3.2 of the
Company Disclosure Letter, the Company has not, subsequent to December 31, 2008,
declared or paid any dividend, or declared or made any distribution on, or
authorized the creation or issuance of, or issued, or authorized or effected any
split-up or any other recapitalization of, any of its capital stock, or directly
or indirectly redeemed, purchased or otherwise acquired any of its outstanding
capital stock. The Company has not heretofore agreed to take any such
action, and there are no outstanding contractual obligations of the Company of
any kind to redeem, purchase or otherwise acquire any outstanding shares of
capital stock of the Company. Other than the Shares, there are no
outstanding bonds, debentures, notes or other indebtedness or securities of the
Company having the right to vote (or, other than the outstanding Options and
Warrants, convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company may
vote.
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SECTION
3.3 Authorization, No
Conflict.
(a) The
Company has the requisite corporate power and authority to enter into and
deliver this Agreement and all other agreements and documents contemplated
hereby to which it is a party and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder and the
consummation by the Company of the Transactions have been duly authorized and
approved by the Company Board. No other corporate proceedings on the
part of the Company or any of the Company Subsidiaries are necessary to
authorize the execution and delivery of this Agreement, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
Transactions, except, in the case of the Merger, for the approval of this
Agreement by the holders of a majority of the issued and outstanding Shares (the
“Required Company Stockholder
Vote”). This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to bankruptcy, insolvency or
similar Laws affecting the enforcement of creditors rights generally and
equitable principles of general applicability.
(b) The
Company Board, at a meeting duly called and held, duly and unanimously adopted
resolutions (i) approving this Agreement, the Offer, the Merger and the other
Transactions, (ii) determining that the terms of the Offer, the Merger and the
other Transactions are fair to and in the best interests of the Company and its
stockholders, (iii) recommending that the holders of Shares accept the Offer and
tender their Shares pursuant to the Offer, (iv) recommending that the holders of
Shares approve this Agreement and (v) declaring that this Agreement is
advisable. Such resolutions are sufficient to render inapplicable to
Parent and Merger Sub and this Agreement, the Offer, the Merger and the other
Transactions the provisions of Section 203 of the DGCL. The Company
(acting through the compensation committee of the Company Board) has approved
the arrangements between the Company and certain members of management of the
Company set forth in Exhibit B and has
determined that such management arrangements are (A) being entered into in
connection with or as compensation for future employment services and (B) not
based on the number of securities that are or may be tendered by any management
employees in the Offer.
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(c) Other
than as set forth in Section 3.3(c) of the
Company Disclosure Letter, neither the execution and delivery of this Agreement
by the Company nor the consummation by the Company of the Transactions nor
compliance by the Company with any of the provisions herein will (i) result in a
violation or breach of or conflict with the certificate or articles of
incorporation or bylaws or other similar organizational documents of the Company
or any of the Company Subsidiaries, (ii) result in a violation or breach of or
conflict with any provisions of or result in the loss of any benefit under, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination, cancellation
of, or give rise to a right of purchase under, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any Lien (as defined in Section 3.4(b)) upon
any of the properties or assets owned or operated by the Company or any Company
Subsidiaries, under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, Contract, lease, agreement or
other instrument or obligation of any kind to which the Company or any of the
Company Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries or any of their respective properties or assets may be bound or
(iii) subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in paragraph
(d) below, violate any judgment, ruling, order, writ, preliminary or other
injunction or decree, (“Judgment”) or any statute,
law, ordinance, rule or regulation (“Law”) applicable to the
Company or any of the Company Subsidiaries or any of their respective properties
or assets, other than any such event described in items (ii) or (iii) which,
individually or in the aggregate, has not had a Company Material Adverse
Effect.
(d) No
consent, approval, order to authorization of, or registration, declaration or
filing with, any Federal, state, local or foreign governmental or regulatory
authority (a “Governmental
Authority”) is necessary to be obtained or made by the Company or any
Company Subsidiary in connection with the Company’s execution, delivery and
performance of this Agreement or the consummation by the Company of the
Transactions, except for (i) compliance with the DGCL, with respect to the
filing of the Certificate of Merger (ii) the filing with the SEC of (A) the
Schedule 14D-9, (B) a proxy or information statement relating to the Company
Stockholders Meeting (as defined in Section 6.1(b)) (such
proxy or information statement, as amended or supplemented from time to time,
the “Proxy Statement”
(C) any information statement required by Rule 14f-1 promulgated by the SEC
under the Exchange Act (the “Information Statement”) in
connection with the Offer and (D) such reports under Section 13 or 16 of the
Exchange Act and the rules and regulations promulgated thereunder that may be
required in connection with this Agreement and the Transactions, and (iii)
compliance with the “blue sky” laws of various states.
SECTION
3.4 Subsidiaries
(a) The
Company Subsidiaries, their respective jurisdictions of organization and the
Company’s percentage ownership therein are identified in Section 3.4(a) of the
Company Disclosure Letter. The Company has provided Parent with
complete and correct copies of the certificates of incorporation and bylaws and
all amendments thereto of the Company Subsidiaries as in effect on the date of
this Agreement. As used in this Agreement, (i) “Subsidiary” means with
respect to any Person, another Person, an amount of the voting securities or
other voting ownership interests of which is sufficient to elect at least a
majority of its board of directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first Person; and (ii) “Person” means an individual,
corporation, partnership, limited partnership, joint venture, association,
trust, unincorporated organization, limited liability company or other
entity.
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(b) All
of the outstanding shares of capital stock or other equity securities of, or
other ownership interests in, each Company Subsidiary are, where applicable,
duly authorized, validly issued, fully paid and nonassessable, and such shares,
securities or interests are owned by the Company or by a Company Subsidiary free
and clear of any Liens or limitations on voting rights. There are no
subscriptions, options, Warrants, calls, rights, convertible securities or other
agreements or commitments of any character relating to the issuance, transfer,
sales, delivery, voting or redemption (including any rights of conversion or
exchange under any outstanding security or other instrument) for any of the
capital stock or other equity interests of, or other ownership interests in, any
Company Subsidiary. Except as set forth in Section 3.4(b) of the
Company Disclosure Letter, there are no agreements requiring the Company or any
Company Subsidiary to make contributions to the capital of, or lend or advance
funds to, any Company Subsidiary. Except for its interest in Company
Subsidiaries, or as disclosed in Section 3.4(b) of the
Company Disclosure Letter, the Company does not own, directly or indirectly,
capital stock of, or other equity interests in, any Person, or any options,
Warrants, rights or securities convertible, exchangeable or exercisable
thereof. As used in this Agreement, “Lien” means, with respect to
any asset, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
SECTION
3.5 SEC Reports and
Financial Statements. (a)
Since January 1, 2007, the Company has timely filed with or furnished the SEC
all forms, reports, schedules, registration statements, definitive proxy
statements and other documents (collectively, including all exhibits thereto,
the “Company SEC
Reports”) required to be filed or furnished by the Company with the
SEC. As of their respective dates, and giving effect to any
amendments or supplements thereto filed prior to the date of this Agreement, the
Company SEC Reports complied in all material respects with the Securities Act,
Exchange Act, and the respective rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Reports and none of the Company SEC
Reports contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. None of the Company Subsidiaries is required to
file any forms, reports or other documents with the SEC pursuant to Section 13
or 15 of the Exchange Act. The Company has made available to Parent
correct and complete copies of all material correspondence between the SEC, on
the one hand, and the Company and any Company Subsidiaries, on the other hand,
occurring since January 1, 2007. As of the date hereof, there are no
material outstanding or unresolved comments in comment letters from the SEC
staff with respect to any of the Company SEC Reports. To the
knowledge of the Company, as of the date hereof, none of the Company SEC Reports
is the subject of ongoing SEC review, outstanding SEC comment or outstanding SEC
investigation.
(b) The
consolidated balance sheets and the related consolidated statements of income,
stockholders’ equity and cash flows (including, in each case, any related notes
and schedules thereto) (collectively, the “Company Financial
Statements”) of the Company contained in the Company SEC Reports comply
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in conformity with United States generally accepted accounting
principles (“GAAP”)
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as
otherwise noted therein or to the extent required by GAAP) and present fairly in
all material respects the consolidated financial position and the consolidated
results of operations and cash flows of the Company and the Company Subsidiaries
as of the dates or for the periods presented therein (subject, in the case of
unaudited statements, to normal and recurring year-end
adjustments). The Company has not received any written advice or
written notification from its independent certified public accountants that it
has used any improper accounting practice that would have the effect of not
reflecting or incorrectly reflecting in the financial statements or in the books
and records of the Company and the Company Subsidiaries, any properties, assets,
liabilities, revenues or expenses in any material respect. Except as
reflected in the consolidated balance sheet for the six months ended June 30,
2009 included in the Company Financial Statements or as set forth in Section 3.5(b) of the
Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and the Company Subsidiaries or in the
notes thereto, other than any liabilities incurred in the ordinary course of
business consistent with past practice since June 30, 2009 which would not,
individually or in the aggregate be material to the Company or the Company
Subsidiaries, taken as a whole.
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(c) With
respect to each annual report on Form 10-K, each quarterly report on Form 10-Q
and each amendment of any such report included in the Company SEC Reports filed
since June 1, 2007, 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) have made all certifications
and management reports on internal control over financial reporting required by
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the
Exchange Act, and any related rules and regulations promulgated by the SEC, and
the statements contained in such certifications and reports are complete and
correct.
(d) The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) or 15d-15(e) promulgated by the SEC under
the Exchange Act); such disclosure controls and procedures are reasonably
designed to ensure that material information relating to the Company and the
Company Subsidiaries required to be disclosed in the Company’s reports filed or
submitted under the Exchange Act is made known to the Company’s principal
executive officer and its principal financial officer by others within those
entities, particularly during the periods in which the periodic reports required
under the Exchange Act are being prepared; and, to the knowledge of the Company,
such disclosure controls and procedures are effective in timely alerting the
Company’s principal executive officer and its principal financial officer to
material information required to be included in the Company’s periodic reports
required under the Exchange Act. Section 3.5(d) of the
Company Disclosure Letter lists, and the Company has made available to Parent,
complete and correct copies of all written descriptions of, and all policies,
manuals and other documents promulgating, such disclosure controls and
procedures. The Company is not aware of (a) any significant
deficiencies or material weaknesses in the design or operation of internal
controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) or (b) any fraud that involves management or other employees who have a
significant role in the Company’s internal controls over financial
reporting.
(e) The
Company is in compliance in all material respects with all current listing and
corporate governance requirements applicable to it, and is in compliance in all
material respects with all rules, regulations and requirements of the
Sarbanes-Oxley Act.
SECTION
3.6 Absence of
Material Adverse Changes, etc. Since
December 31, 2008, the Company and the Company Subsidiaries have conducted their
business in the ordinary course of business consistent with past practice and
between December 31, 2008 and the date of this Agreement, there has not been or
occurred:
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(a) any
event, condition, change, occurrence or development that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect; or
(b) any
event, condition, action or occurrence that if taken during the period from the
date of this Agreement through the Effective Time, would constitute a breach of
Section
5.1(b).
SECTION
3.7 Litigation. There
are no (i) suits, actions, claims, Judgments or legal, administrative,
arbitration or other proceedings or governmental investigations pending or, to
the knowledge of the Company, threatened, to which the Company or any of the
Company Subsidiaries is a party; or (ii) Judgments of any
Governmental Authority or arbitrator outstanding against the Company or any of
the Company Subsidiaries, in either case, which individually or in the aggregate
are material to the Company and the Company Subsidiaries, taken as a
whole.
SECTION
3.8 Information
Supplied. None
of the information supplied or to be supplied by the Company specifically for
inclusion or incorporation by reference in (i) the Offer Documents, the Schedule
14D-9 or the Information Statement will at the time such document is filed with
the SEC, at any time it is amended or supplemented or at the time it is first
published, sent or given to the holders of Shares, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement will, at the date it is first mailed to the holders of Shares or
at the time of the Company Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule
14D-9, the Information Statement and the Proxy Statement will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder. No representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Merger Sub in writing specifically
for inclusion or incorporation by reference in the Schedule 14D-9, the
Information Statement or the Proxy Statement.
SECTION
3.9 Broker’s or
Finder’s Fees. Except
for Imperial Capital, LLC (the “Company Financial Advisor”)
pursuant to the terms and conditions of the engagement letter, dated as of June
23, 2009 (the “Engagement
Letter”), no agent, broker, Person or firm acting on behalf of the
Company or any Company Subsidiary or under the Company’s or any Company
Subsidiary’s authority is or will be entitled to any advisory, commission or
broker’s or finder’s fee or commission from any of the parties hereto in
connection with any of the Transactions.
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SECTION
3.10 Employee
Plans. (a)
Section 3.10(a)
of the Company Disclosure Letter sets forth all Company Employee Benefit
Plans. As used in this Agreement, “Company Employee Benefit
Plan” means an Employee Benefit Plan maintained, adopted, sponsored,
contributed or required to be contributed to by the Company or any entity with
which the Company is considered a single employer under Section 414(b), (c) or
(m) of the Code (“Company
ERISA Affiliates”) with respect to any current or former employee,
officer or director of the Company or any of the Company Subsidiaries or any
beneficiary or dependent thereof and under which the Company or any Company
ERISA Affiliate would reasonably be expected to have any material
liability. As used in this Agreement, “Employee Benefit Plan” means
any material plan, program, policy, practice, agreement or other arrangement,
whether written or unwritten, relating to pension, profit-sharing, bonus,
incentive compensation, deferred compensation, vacation, sick pay, stock
purchase, stock option, phantom equity, severance, supplemental unemployment,
hospitalization or other medical, life, or other insurance, long- or short-term
disability, change of control, fringe benefit or any other similar employee
benefits.
(b) With
respect to each Company Employee Benefit Plan, the Company has made available to
Parent a true, correct and complete copy of (i) each currently effective written
Company Employee Benefit Plan (or a description of any non-written Company
Employee Benefit Plan) and all amendments thereto, if any, (ii) the most recent
Annual Report (Form 5500 Series) including all applicable schedules, if any,
(iii) the current summary plan description and any material modifications
thereto, if any, or any written summary provided to participants with respect to
any plan for which no summary plan description exists, (iv) the most recent
determination letter (or if applicable, advisory or opinion letter) from the
Internal Revenue Service, if any, and (v) all material notices relating to
liabilities for benefits given to such Company Employee Benefit Plan, the
Company, or any Company ERISA Affiliate by the Internal Revenue Service,
Department of Labor, Pension Benefit Guarantee Corporation, or other
governmental agency relating to such Company Employee Benefit
Plan. The Company has no express or implied commitment (i) to create
or incur liability with respect to or cause to exist any employee benefit plan,
program or arrangement other than a Company Employee Benefit Plan listed in
Section 3.10(a)
of the Company Disclosure Letter, or (ii) to modify, change or terminate any
Employee Benefit Plan, other than with respect to a modification or change
required by ERISA or the Code.
(c) Each
Company Employee Plan that is intended to be “qualified” within the meaning of
Section 401(a) of the Code (“Qualified Company Employee Benefit
Plan”) has been the subject of a favorable determination letter (or, if
applicable, advisory or opinion letter) from the Internal Revenue Service that
has not been revoked (or if not determined to be so qualified, such Company
Employee Benefit Plan may still be amended within the remedial amendment period
to cure any qualification defect to the extent permitted by Law), and to the
Company’s knowledge, no event has occurred and no condition exists that would
reasonably be expected to adversely affect the qualified status of any such
Company Employee Benefit Plan or result in the imposition of any liability,
penalty or tax under ERISA or the Code.
(d) Each
Company Employee Benefit Plan has been operated and administered in all material
respects in accordance with its provisions and in material compliance with all
applicable provisions of ERISA and the Code. All contributions
required to be made to any Company Employee Benefit Plan have been made or the
amount of such payment or contribution obligation has been reflected in the
Available Company SEC Documents which are publicly available prior to the date
of this Agreement.
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(e) Neither
the Company nor any Company Subsidiary has engaged in any prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, as a fiduciary or party in interest with respect to any Company Employee
Benefit Plan. To the knowledge of the Company, no prohibited
transaction has occurred with respect to any Company Employee Benefit
Plan.
(f) Neither
the Company nor any Company ERISA Affiliate has, at any time during the last six
years, sponsored, contributed to or been obligated to contribute to any pension
plan subject to Title IV of ERISA, any “multiemployer plan” (as defined in
Section 3(37) of ERISA) or a plan that has two or more contributing sponsors at
least two of whom are not under common control (within the meaning of Section
4063 of ERISA).
(g) No
Company Employee Benefit Plan that is a welfare plan within the meaning of
Section 3(1) of ERISA, other than a severance or termination pay plan or
arrangement, provides benefits or coverage following retirement or other
termination of employment other than as required by Part 6 of Subtitle 13 of
Title 1 of ERISA or Section 4980B of the Code or under a similar state Law, or
claims incurred on or before the end of the month on or immediately following
the termination date of any employee.
(h) Other
than as set forth in Exhibit B or Section 3.10(h) of
the Company Disclosure Letter, neither the execution and delivery of this
Agreement nor the consummation of the Transactions will (i) result in any
material payment (including without limitation severance, unemployment
compensation, bonus or otherwise) becoming due to any director, officer or
employee of the Company under any Company Employee Benefit Plan or otherwise,
(ii) result in a payment or benefit becoming due to any director, officer or
employee of the Company under any Plan or otherwise which will be characterized
as an “excess parachute payment” within the meaning of Section 280G(b)(1) of the
Code that is subject to the imposition of an excise tax under section 4999 of
the Code, (iii) materially increase any benefits otherwise payable under any
Company Employee Benefit Plan, (iv) result in the acceleration of the time of
payment, funding or vesting of any such benefits to any material extent, or (v)
result in a deduction limitation under Section 162(m) of the Code.
(i) As
used in this Agreement, “ERISA” means the Employee
Retirement Income Securities Act of 1974, as amended; and the rules and
regulations promulgated thereunder.
(j) Section 3.10(j) of
the Company Disclosure Letter sets forth each Employee Benefit Plan that is
subject to Section 409A of the Code (“Non-Qualified Deferred Compensation
Plan”). Each Non-Qualified Deferred Compensation Plan has been
maintained and operated on a good-faith, reasonable basis under Section 409A of
the Code.
SECTION
3.11 Opinion of Financial
Advisors. The
Company Board has received from the Company Financial Advisor an opinion to the
effect that, as of the date of the opinion and subject to the assumptions,
procedures, factors, qualifications and limitations set forth therein, the Offer
Price is fair, from a financial point of view, to holders of the Shares (other
than parties to the Support Agreements) in connection with the
Transactions. The Company has provided complete and correct copies of
such opinions to Parent (for informational purposes only) and has obtained
authorization from the Company Financial Advisors for the Company’s inclusion of
such opinions in the Schedule 14D-9. Such opinion has not been
amended or rescinded.
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SECTION
3.12 Taxes.
(a) Except
as set forth on Section 3.12 of the
Company Disclosure Letter, each of the Company and each Company Subsidiary has
timely filed all material Tax Returns required to be filed by it in
the manner prescribed by applicable Law and all such Tax Returns are true,
complete and correct in all material respects. Except as set forth on
Section 3.12 of
the Company Disclosure Letter, all material Taxes due and owing by the Company
and the Company Subsidiaries (whether or not shown or required to be shown as
due on such Tax Returns) have been timely paid in full and the Company and each
Company Subsidiary has made adequate provision on the Company Financial
Statements for all accrued Taxes not yet due and payable. The
accruals and reserves for Taxes reflected in the Company’s Form 10-K for the
fiscal year ended December 31, 2008 are adequate to cover all Taxes accruing
through such date. There are no Liens on any of the assets, rights or
properties of the Company or any Company Subsidiary with respect to Taxes, other
than Liens for real and personal property Taxes not yet due and
payable.
(b) The
Company and each Company Subsidiary have withheld and paid all Taxes required to
have been withheld and paid, including sales and use Taxes and Taxes required to
be withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party, and all
Forms W-2 and 1099 (or any other applicable form) required with respect thereto
have been properly completed and timely filed.
(c) There
is no claim, assessment, audit, action, suit, proceeding or investigation
currently in progress or pending, or to the Company’s knowledge, proposed or
threatened, against or with respect to the Company or any Company Subsidiary in
respect of any material Tax or material Tax asset, and neither the Company nor
any Company Subsidiary has entered into a closing agreement pursuant to Section
7121 of the Code (or similar provision of state, local or foreign
Law). No written claim has ever been made by any Governmental
Authority that the Company or any of its Subsidiaries is or may be subject to
any material Tax in a jurisdiction in which it does not file Tax
Returns.
(d) Neither
the Company nor any Company Subsidiary has been a party to or otherwise
participated in a “reportable transaction” within the meaning of Treas.
Reg. Sec. 1.6011-4(b).
(e) Neither
the Company nor any Company Subsidiary is a party to any Tax sharing or
allocation agreement, Tax indemnity obligation or similar agreement, plan,
arrangement or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any
taxing authority).
(f) The
Federal income Tax Returns of the Company and the Company Subsidiaries have been
examined by and settled with the United States Internal Revenue Service or have
expired or otherwise have been closed by virtue of the expiration of the
relevant statute of limitations for all taxable periods ending on or before
December 31, 2004 and neither the Company or any Company Subsidiary has given
nor been requested in writing to give waivers or extensions of any statute of
limitations relating to the payment of Taxes.
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(g) Neither
the Company nor any Company Subsidiary has (a) been a member of an affiliated
group filing a consolidated Federal income Tax Return (other than a group the
common parent of which was the Company) or (b) any liability for the Taxes of
any Person (other than the Company or the Company Subsidiaries) under Treas.
Reg. Sec. 1.1502-6 (or any similar provision of state, local or foreign Law), or
as a transferee or successor, by Contract, Law or otherwise.
(h) Within
the past two years, neither the Company nor any Company Subsidiary has been a
“distributing corporation” or a “controlled corporation” in a distribution
qualifying or intended to qualify under Section 355(a) of the Code.
(i) The
Company is not a “United States real property holding corporation” as defined in
Section 897(c)(2) of the Code.
(j) As
used in this Agreement “Taxes” means all taxes,
levies or other like assessments, charges or fees (including estimated taxes,
charges and fees), including income, franchise, 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 or other governmental taxes or charges, imposed by any
Federal, state, county, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions to tax applicable or
related thereto. As used in this Agreement, “Tax Return” means any report,
return, statement, declaration or other written information supplied or required
to be supplied to a taxing or other Governmental Authority in connection with
Taxes, including all schedules, exhibits and other attachments
thereto.
SECTION
3.13 Environmental
Matters.
(a) Except
as, individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect:
(i) The
Company and the Company Subsidiaries have been and are otherwise in compliance
with all applicable Environmental Laws and there are no pending or, to the
knowledge of the Company, threatened demands, claims, information requests or
notices of non-compliance or violation regarding the Company or any Company
Subsidiary relating to any liability under any Environmental Law.
(ii) To
the knowledge of the Company, there are no conditions on any real property
owned, leased or operated by the Company or any Company Subsidiary that would
reasonably be expected to give rise to any violation of or result in any
liability under any Environmental Laws.
(iii) All
permits, notices, approvals and authorizations, if any, required to be obtained
or filed in connection with the operation of the Company’s and the Company
Subsidiaries’ businesses and the operation or use of any real property owned,
leased or operated by the Company or any Company Subsidiary have been duly
obtained or filed, are currently in effect, and the Company and the Company
Subsidiaries are in compliance with the terms and conditions of all such
permits, notices, approvals and authorizations.
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(b) As
used in this Agreement, (i) “Environmental Laws” means any
Federal, foreign, state and local Law or legal requirement, including
regulations, orders, permits, licenses, approvals, ordinances, directives and
the common Law, pertaining to pollution, the environment, the protection of the
environment or human health and safety, including the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive
Environmental Response, Compensation, and Liability Act (“CERCLA”), the Occupational
Safety and Health Act, the Toxic Substances Control Act, the Hazardous Materials
Transportation Act, the Safe Drinking Water Act, the Federal Insecticide,
Fungicide, and Rodenticide Act, the Emergency Planning and Community
Right-to-Know Act and any similar Federal, foreign, state or local Law and (ii)
“Hazardous Substance”
means (a) any “hazardous substance,” as defined by CERCLA, (b) any “hazardous
waste,” as defined by RCRA, and (c) any pollutant, contaminant, waste or
hazardous, dangerous or toxic chemical, material or substance, including
asbestos, radiation and radioactive materials, polychlorinated biphenyls,
petroleum and petroleum products and by-products, lead, pesticides, natural gas,
and nuclear fuel, all within the meaning of any applicable Law of any applicable
Governmental Authority relating to or imposing liability or standards of conduct
pertaining thereto.
SECTION
3.14 Compliance with
Laws.
(a) The
Company and each of the Company Subsidiaries is in compliance in all material
respects with any Law applicable to the Company or the Company Subsidiaries or
by which any of their respective properties are bound or any regulation issued
under any of the foregoing or has been notified in writing by any Governmental
Authority of any violation, or any investigation with respect to any such
Law.
(b) The
Company and the Company Subsidiaries have all material registrations,
franchises, applications, licenses, requests for approvals, exemptions, permits
and other regulatory’ authorizations (“Authorizations”) from
Governmental Authorities required to conduct their respective businesses as now
being conducted. All Authorizations are in full force and effect, the
Company and its Subsidiaries are in compliance in all material respects with the
terms of each Authorization.
(c) Except
for the matters that, individually or in the aggregate, would not have a Company
Material Adverse Effect, neither the Company, the Company Subsidiaries, nor, to
the knowledge of the Company, any director, officer, agent, employee or other
Person acting on behalf of the Company or any of the Company Subsidiaries has,
in the course of its actions for, or on behalf of, any of them (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended (including the rules and regulations
promulgated thereunder, the “FCPA”); or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee. During the
last three (3) years, neither the Company nor any of the Company Subsidiaries
has received any communication that alleges that the Company or any of the
Company Subsidiaries, or any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, or may be, in
violation of, or has, or may have, any material liability under, the FCPA which
has not been resolved.
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SECTION
3.15 Intellectual
Property. Except
as would not, individually or in the aggregate, have had or reasonably be
expected to have a Company Material Adverse Effect, either the Company or a
Company Subsidiary owns free and clear of all Liens except Permitted Liens (as
defined in Section
3.19(a)), or is licensed to use and transfer, subject to any existing
licenses or other grants to third parties, all Intellectual Property used in
their respective businesses as currently conducted (collectively, the “Company Intellectual Property
Rights”). Except as would not, individually or in the
aggregate, have had or reasonably be expected to have a Company Material Adverse
Effect, (a) there are no pending or to the knowledge of the Company, threatened,
(i) claims by any Person, alleging infringement, misappropriation, unauthorized
use, violation or dilution by the Company or the Company Subsidiaries of any
Intellectual Property of a third party or challenging the validity,
enforceability, ownership or use of any of the Company Intellectual Property
Rights and (ii) claims by the Company or its Subsidiaries alleging infringement,
misappropriation, unauthorized use, violation or dilution by a third party of
any Company Intellectual Property Rights; (b) no Company Intellectual Property
Right will terminate or cease to be a valid right of the Company or the Company
Subsidiaries by reason of the execution and delivery of this Agreement by the
Company, the performance of the Company of its obligations hereunder, or the
consummation by the Company of the Merger; and (c) the Company has not granted
any license, sublicenses or any other rights in, to or under the Company
Intellectual Property Rights. As used in this Agreement, “Intellectual Property” means
all patents, inventions, copyrights, software, trademarks, service marks, domain
names, trade dress, trade secrets and all other intellectual property and
intellectual property rights of any kind or nature, including any applications
or registrations therefor.
SECTION
3.16 Employment
Matters. Neither
the Company nor any Company Subsidiary is a party to or otherwise bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is any such contract or agreement
presently being negotiated, nor, to the knowledge of the Company, is there, a
representation campaign respecting any of the employees of the Company or any of
the Company Subsidiaries. As of the date of this Agreement, there is
no pending or, to the knowledge of the Company, threatened, labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving the Company or
any of the Company Subsidiaries. Each individual
providing services to the Company has been properly characterized and treated as
being either an employee or an independent contractor.
SECTION
3.17 Insurance. The
Company and the Company Subsidiaries maintain insurance coverage adequate and
customary in the industry for the operation of their respective businesses
(taking into account the cost and availability of such
insurance). All such insurance policies are in full force and effect
and all related premiums have been paid to date.
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SECTION
3.18 Material
Contracts.
(a) Except
for this Agreement and except as disclosed in Section 3.2 or Section 3.18 of the
Company Disclosure Letter, none of the Company or any of the Company
Subsidiaries is a party to or bound by (i) any Contract that would be required
to be filed by the Company as a “material contract” pursuant to Item 601(b)(10)
of Regulation S-K promulgated by the SEC; (ii) any Contract containing covenants
binding upon the Company or any Company Subsidiary that materially restricts the
ability of the Company or any Company Subsidiary (or which, following the
consummation of the Offer or Merger, could materially restrict the ability of
the Parent or the Surviving Corporation) to compete in any business that is
material to the Company and the Company Subsidiaries, taken as a whole, as of
the date of this Agreement, or with any person or in any geographic area, except
for any such Contract that may be canceled without penalty by the Company or any
Company Subsidiary upon notice of 60 days or less; (iii) any Contract with
respect to a material joint venture or material partnership agreement (excluding
information technology Contracts); (iv) any Contract with any director, officer
or affiliate of the Company or any Company Subsidiary (other than any Company
Employee Benefit Plan); (v) any Contract for the acquisition, disposition, sale
or lease of material properties or assets (by merger, purchase or sale of stock
or assets or otherwise); (vi) any employment, deferred compensation, severance,
bonus, retirement or other similar agreement entered into by the Company or any
Company Subsidiary, on the one hand, and any director or officer of the Company
or any other employee of the Company or any Company Subsidiary receiving annual
cash compensation of $50,000 or more, on the other hand; (vii) any Contract,
other than Leases, contemplating payments by the Company or any Subsidiary of
more than $50,000 in any calendar year; (viii) any Contract relating to
indebtedness for borrowed money, the deferred purchase price of property or
service, any credit agreement, note, bond, mortgage, debenture or other similar
instrument, any letter of credit or similar facilities or any obligation to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock or any Warrants, rights or options to acquire such capital stock, or any
guarantee with respect to an obligation of any other person; and (ix) each
amendment, supplement or modification in respect of any of the foregoing
Contracts or any commitment or agreement to enter into any of the foregoing
contracts. Each such Contract described in clauses (i) through (ix)
is referred to herein as a “Company Material
Contract.” “Contract” means any
agreement, contract, obligation, arrangement, undertaking or other commitment
that is legally binding (whether written or oral).
(b) The
Company has made available to Parent true, correct and complete copies of all
Company Material Contracts. Each Company Material Contract is valid
and binding on the Company and each Company Subsidiary party thereto and, to the
knowledge of the Company, each other party thereto and is in full force and
effect, except for such failures to be valid and binding or to be in full force
and effect that would not, individually or in the aggregate, be material to the
Company and the Company Subsidiaries, taken as a whole. There is no
default under any Company Material Contract by the Company or any Company
Subsidiary or, to the knowledge of the Company, each other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder by the Company or any Company Subsidiary
or, to the knowledge of the Company, each other party thereto, in each case
except as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
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SECTION
3.19 Properties.
(a) The
Company or one of its Subsidiaries has good title to all the properties and
assets reflected in the latest audited balance sheet included in the Company SEC
Reports as being owned by the Company or one of its Subsidiaries or acquired
after the date thereof that are material to the Company’s business on a
consolidated basis (except properties sold or otherwise disposed of since the
date thereof in the ordinary course of business), free and clear of all Liens
other than Permitted Liens. “Permitted Liens” means (i)
such Liens as are set forth in Section 3.19(a) of
the Company Disclosure Letter, (ii) mechanics’, carriers’, workmen’s,
repairmen’s or other like Liens arising or incurred in the ordinary course of
business, (iii) Liens arising under original purchase price conditional sales
Contracts and equipment leases with third parties entered into in the ordinary
course of business, (iv) Liens for Taxes and other governmental charges that are
not due and payable or are being contested in good faith, (v) Liens disclosed in
the Company Financial Statements or the notes thereto, (vi) recorded or
unrecorded easements, covenants, restrictions, rights-of-way, zoning, building
restrictions and other similar matters, (vii) landlord’s or lessor’s liens under
leases to which the Company or a Company Subsidiary is a party, and (viii) other
imperfections of title, licenses or Liens, if any, which do not materially
impair the continued use and operation of the assets to which they relate in the
conduct of the business of the Company and its Subsidiaries as currently
conducted.
(b) Each
material lease or license pursuant to which the Company and the Company
Subsidiaries leases or licenses any real property (collectively, the “Leases”) is valid and binding
on the Company and each of its Subsidiaries party thereto and, to the knowledge
of the Company, each other party thereto and is in full force and
effect. There is no material breach or default under any Lease by the
Company or any of its Subsidiaries or, to the knowledge of the Company, any
other party thereto. To the knowledge of the Company, no event has
occurred that with or without the lapse of time or the giving of notice or both
would constitute a material breach or default under any Lease by the Company or
any of its Subsidiaries or, to the knowledge of the Company, any other party
thereto. The Company or one of its Subsidiaries that is either the
tenant or licensee named under the Lease has a good and valid leasehold interest
in each parcel of real property which is subject to a Lease and is in possession
of the properties purported to be leased or licensed thereunder.
(c) Neither
the Company’ nor any of the Company Subsidiaries owns in fee any real
property.
SECTION
3.20 State Takeover
Statutes. The
Company Board has taken all actions necessary so that no anti-takeover statute
or regulation under the DGCL or other applicable Laws of the State of Delaware
shall be applicable to the execution, delivery or performance of this Agreement,
the consummation of the Offer, the Merger and the Transactions.
SECTION
3.21 Required Vote of the Company
Stockholders. The
affirmative vote of the holders of the outstanding Shares, voting together as a
single class, representing at least a majority of all the votes then entitled to
be cast at a meeting of stockholders, is the only vote of holders of any class
of securities of the Company which is required to approve and adopt this
Agreement, the Merger and the Transactions.
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SECTION
3.22 Interested Party
Transactions. Except for employment-related Contracts filed or
incorporated by reference as an exhibit to a Company SEC Report or Company
benefit plans, Section 3.22 of
the Company Disclosure Letter sets forth a correct and complete list of the
contracts or arrangements that are in existence as of the date of this Agreement
under which the Company or any Company Subsidiary has any existing or future
material liabilities between the Company or any of its Subsidiaries, on the one
hand, and, on the other hand, any (i) present executive officer (as defined
pursuant to Section 16 of the Exchange Act) or director of either the Company or
any of its Subsidiaries or any Person that has served as such an executive
officer (as defined pursuant to Section 16 of the Exchange Act) or director
within the last two (2) years or any of such officer’s or director’s immediate
family members or any affiliate of any such officer, director or any immediate
family member of any such officer or director, (ii) record or beneficial owner
of more than 5% of the Shares as of the date hereof or any of such owner’s
immediate family members or any affiliate of any such owner or any such owner’s
immediate family member.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PARENT AND MERGER SUB
Parent
and Merger Sub hereby jointly and severally represent and warrant to the
Company, as of the date hereof and as of the Closing Date, as
follows:
SECTION
4.1 Organization. Each
of Parent and Merger Sub is a corporation organized, validly existing and in
good standing under the laws of the jurisdiction of its
organization. Each of Parent and Merger Sub has all requisite power
and authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, operate and lease
its properties and to carry on its business as now conducted, except for such
franchises, licenses, permits, authorizations and approvals, the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. A “Parent Material Adverse
Effect” means a material adverse effect on the ability of either Parent
or Merger Sub to perform its obligations under this Agreement or to consummate
the Offer, the Merger and the other Transactions. The copies of the
certificate of incorporation and bylaws of Parent and Merger Sub that have been
provided to the Company are complete and correct copies of such documents and
contain all amendments thereto as in effect on the date of this
Agreement.
SECTION
4.2 Merger Sub:
Ownership of Shares. Merger
Sub is a direct, wholly-owned subsidiary of Parent that was formed solely for
the purpose of engaging in the Transactions. Since the date of its
incorporation and prior to the Effective Time, Merger Sub has not carried, and
will not carry, on any business or conduct any operations other than the
execution of this Agreement, the performance of its obligations hereunder and
matters ancillary thereto. Neither Parent, nor Merger Sub, nor any of
their affiliates (including the investment funds providing the Equity Commitment
Letter described in Section 4.6 but
excluding any portfolio companies), owns (directly or indirectly) any Shares or
holds any rights to acquire any Shares except pursuant to this
Agreement.
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SECTION
4.3 Authorization: No
Conflict.
(a) Each
of Parent and Merger Sub has the requisite corporate power and authority to
enter into and deliver this Agreement and all other agreements and documents
contemplated hereby to which it is a party and to carry out its obligations
hereunder and thereunder. The execution and delivery of this
Agreement by Parent and Merger Sub, the performance by Parent and Merger Sub of
their respective obligations hereunder and the consummation by Parent and Merger
Sub of the Transactions have been duly authorized by the respective boards of
directors of Parent and Merger Sub, and no other corporate proceedings on the
part of Parent or Merger Sub (including any vote of any class or series of
outstanding capital stock) are necessary to authorize the execution and delivery
of this Agreement, the performance by Parent and Merger Sub of their respective
obligations hereunder and the consummation by Parent and Merger Sub of the
Transactions. This Agreement has been duly executed and delivered by
Parent and Merger Sub and constitutes a valid and binding obligation of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms, subject to bankruptcy, insolvency or similar Laws affecting the
enforcement of creditors rights generally and equitable principles of general
applicability.
(b) Neither
the execution and delivery of this Agreement by Parent or Merger Sub nor the
consummation by Parent or Merger Sub of the Transactions nor compliance by
Parent or Merger Sub with any of the provisions herein will (i) result in a
violation or breach of or conflict with the certificate or articles of
incorporation or bylaws or other similar organizational documents of Parent,
Merger Sub or any subsidiary of Parent other than Merger Sub (the “Parent Subsidiaries”), (ii)
result in a violation or breach of or conflict with any provisions of or result
in the loss of any benefit under, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination, cancellation of, or give rise to a right of purchase
under, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Lien upon
any of the properties or assets owned or operated by Parent, Merger Sub or any
of the Parent Subsidiaries, under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, contract, lease,
agreement or other instrument or obligation of any kind to which Parent, Merger
Sub or any of the Parent Subsidiaries is a party or by which Parent or any of
the Parent Subsidiaries or any of their respective properties or assets may be
bound or (iii) subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in paragraph
(c) below, violate any Judgment or Law applicable to Parent, Merger Sub or any
of the Parent Subsidiaries or any of their respective properties or assets other
than any such event described in items (ii) or (iii) which, individually or in
the aggregate, has not had and would not reasonably be expected to have a Parent
Material Adverse Effect.
(c) No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority is necessary to be obtained or made by
Parent, any Parent Subsidiary or Merger Sub in connection with Parent’s or
Merger Sub’s execution, delivery and performance of this Agreement or the
consummation by Parent or Merger Sub of the Transactions, except for (i)
compliance with the DGCL, with respect to the filing of the Certificate of
Merger, (ii) the filing with the SEC of the Offer Documents and such reports
under Sections 13 or 16 of the Exchange Act, as may be required in connection
with this Agreement and the Transactions, and (iii) such consents, approvals,
orders, authorizations, registrations, declarations or filings, the lack of
which, individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
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SECTION
4.4 Information
Supplied. None of the information supplied or to be supplied
by Parent or Merger Sub specifically for inclusion or incorporation by reference
in (i) the Offer Documents, the Schedule 14D-9 or the Information Statement
will, at the time such document is filed with the SEC, at any time it is amended
or supplemented or at the time it is first published, sent or given to the
holders of Shares, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, not misleading and (ii) the Proxy Statement will, at the
date it is first mailed to the holders of Shares or at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading. The Offer Documents will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder. No representation or warranty is made by
Parent or Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company in writing
specifically for inclusion or incorporation by reference in the Offer
Documents.
SECTION
4.5 Absence of
Litigation. There
are no (i) suits, actions or legal, administrative, arbitration or other
proceedings or governmental investigations pending or, to the knowledge of
Parent, threatened, to which Parent or Merger Sub is a party or (ii) Judgments
of any Governmental Authority or arbitrator outstanding against Parent or Merger
Sub, which individually or in the aggregate, are material to Parent and Merger
Sub, taken as a whole.
SECTION
4.6 Availability of
Funds. Parent
has delivered to the Company a true and complete copy of the Equity Commitment
Letter. The Equity Commitment Letter has not been amended or
modified, no such amendment or modification is contemplated, and the commitments
contained in the Equity Commitment Letter have not been withdrawn or rescinded
in any respect. The Equity Commitment Letter is in full force and
effect and is the valid, binding and enforceable obligations of Parent and the
other parties thereto. There are no conditions precedent or other
contingencies relating to the funding of the full amount of the Commitment,
other than as set forth in or contemplated by the Equity Commitment
Letter. Subject to the terms and conditions of the Equity Commitment
Letter, and subject to the terms and conditions of this Agreement, the aggregate
proceeds contemplated by the Equity Commitment Letter will be sufficient to
accept for payment and pay for any Shares pursuant to the Offer and consummate
the Merger and the other Transactions, to make all other payments contemplated
under this Agreement and to pay all fees and expenses associated therewith
unless otherwise provided in this Agreement.
SECTION
4.7 Other Agreements
or Understandings. Parent
has disclosed to the Company all contracts, arrangements or understandings (and,
with respect to those that are written, Parent has furnished to the Company
correct and complete copies thereof) between or among Parent, Merger Sub, or any
affiliate of Parent, on the one hand, and any member of the Board of Directors
or management of the Company or any person that owns 5% or more of the shares or
of the outstanding capital stock of the Company, on the other
hand.
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SECTION
4.8 No Additional
Representations. Parent acknowledges that it and its
representatives have received access to such books and records, facilities,
equipment, contracts and other assets of the Company that it and its
representatives have desired or requested to review, and that it and its
representatives have had full opportunity to meet with the management of the
Company and to discuss the business and assets of the Company. Parent
acknowledges that neither the Company nor any person has made any representation
or warranty, express or implied, as to the accuracy or completeness of any
information regarding the Company furnished or made available to Parent and its
representatives except as expressly set forth in Article III (which includes the
Company Disclosure Letter and the Available Company SEC Documents), and, in the
absence of fraud, neither the Company nor any other person shall be subject to
any liability to Parent or any other person resulting from the Company’s making
available to Parent or Parent’s use of such information or any information,
documents or material made available to Parent in the due diligence materials
provided to Parent, including in any virtual or actual data room, management
presentations or in any other form in connection with
Transaction. Without limiting the foregoing, the Company makes no
representation or warranty to Parent with respect to any financial projections
or forecasts relating to the Company or any of its Subsidiaries.
ARTICLE
V
CONDUCT
OF BUSINESS PENDING THE MERGER
SECTION
5.1 Conduct of
Business by the Company Pending the Merger. The
Company covenants and agrees that, prior to the Effective Time, unless Parent
shall otherwise consent in writing with respect to the actions
specified in clause (a) below or except as expressly permitted or required
pursuant to this Agreement:
(a) The
businesses of the Company and the Company Subsidiaries shall be conducted only
in the ordinary and usual course of business and consistent with past practices,
and the Company and the Company Subsidiaries shall use their respective
reasonable best efforts to maintain and preserve intact their respective
business organizations and to maintain their significant beneficial business
relationships with suppliers, contractors, distributors, customers, licensors,
licensees and others having material business relationships with them,
and
(b) Without
limiting the generality of the foregoing Section 5.1(a),
except as set forth in Section 5.1 of the
Company Disclosure Letter and as contemplated by this Agreement, the Company
shall not, and shall not permit any of the Company Subsidiaries to, do any of
the following without Parent’s prior written consent:
(i)
Other than inventory sold in the usual and ordinary course of business and
consistent with past practice (A) acquire, sell, lease, transfer or dispose of,
or subject to any Lien other than a Permitted Lien, any assets, rights or
securities that are material to the Company and the Company Subsidiaries,
considered as a single enterprise, or (B) terminate, cancel, materially modify
or enter into any material commitment, transaction, line of business or other
agreement;
(ii) acquire
by merging or consolidating with or by purchasing an equity interest in or a
substantial portion of the assets of, or by any other manner, any business,
corporation, partnership, association or other business organization or division
thereof;
(iii) amend
or propose to amend its certificate of incorporation or bylaws or, in the case
of the Company Subsidiaries, their respective constituent documents, except for
such amendments to its certificate of incorporation, bylaws and other comparable
charter or organizational documents that would not have an adverse effect on the
Offer, the Merger and the other Transactions;
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(iv) declare,
set aside or pay any dividend or other distribution payable in cash, capital
stock, property or otherwise with respect to any shares of its capital
stock;
(v) purchase,
redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire,
any shares of its capital stock, other equity securities, other ownership
interests or any options, Warrants or rights to acquire any such stock,
securities or interests, other than in connection with (x) the relinquishment of
shares by former or current employees and directors of the Company in payment of
withholding Tax upon the vesting of Restricted Stock or (y) the cashless or net
exercise of Options or Warrants;
(vi) split,
combine or reclassify any outstanding shares of its capital stock;
(vii) except
for the Shares issuable upon exercise or conversion of Options or Warrants
outstanding on the date hereof (or granted after the date hereof as permitted by
this Agreement), and the vesting of Restricted Stock awards granted prior to the
execution of this Agreement, issue, sell, dispose of or authorize, propose or
agree to the issuance, sale or disposition by the Company or any of the Company
Subsidiaries of, any shares of, or any options, Warrants or rights of any kind
to acquire any shares of, or any securities convertible into or exchangeable for
any shares of, its capital stock of any class, or any other securities in
respect of, in lieu of, or in substitution for any class of its capital stock
outstanding on the date hereof;
(viii) incur
any indebtedness for borrowed money, guarantee any such indebtedness of another
Person or issue or sell any debt securities other than drawings under that
certain Credit and Security Agreement dated as of November 20, 2007 between GVI
Security Inc. and Wells Fargo Bank, National Association, as amended by First
Amendment dated May 5, 2008, Second Amendment dated January 30, 2009, and Third
Amendment dated July 31, 2009, in the ordinary course of business in amounts and
timing consistent with past practice;
(ix) make
any loans or advances, except to or for the benefit of the Company
Subsidiaries;
(x) except
to the extent required in a written contract or agreement in existence as of the
date of this Agreement or contemplated by Exhibit B, (A) grant
or increase any severance or termination pay to any current or former director,
executive officer or employee of the Company or any Company Subsidiary, (B)
execute any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any such director, executive
officer or employee of the Company or any Company Subsidiary, (C) increase the
benefits payable under any existing severance or termination pay policies or
employment agreements, (D) increase the compensation, bonus or other benefits of
current or former directors, executive officers or employees of the Company or
any Company Subsidiary, (E) adopt or establish any new employee benefit plan or
amend in any material respect any existing employee benefit plan, (F) provide
any material benefit to a current or former director, executive officer or
employee of the Company or any Company Subsidiary not required by any existing
agreement or employee benefit plan, or (G) take any action that would result in
its incurring any obligation for any payments or benefits described in
subsections (i), (ii) or (iii) of Section 3.10(h)
(without regard to whether the Transactions are consummated) except to the
extent required in a written contract or agreement in existence as of the date
of this Agreement;
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(xi) execute
or amend in any material respect any material employment, consulting, severance
or indemnification agreement between the Company or any of the Company
Subsidiaries and any of their respective directors, officers, agents,
consultants or employees, or any collective bargaining agreement or other
obligation to any labor organization or employee incurred or entered into by the
Company or any of the Company Subsidiaries (in each case, other than as required
by existing employee benefit plans or employment agreements or by applicable
Law);
(xii) make
any changes in its reporting for Taxes or accounting methods other than as
required by GAAP or applicable Law; make, change or rescind any Tax election;
make any change to its method of reporting income, deductions, or other Tax
items for Tax purposes; settle or compromise any Tax liability, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment, surrender the right to any refund of Taxes or enter into any
transaction with an affiliate outside the ordinary course of business if such
transaction would give rise to a material Tax liability;
(xiii) settle,
compromise or otherwise resolve any litigation or other legal proceedings
outside the ordinary course of business consistent with past practice as would
result in any liability in excess of the amount reserved therefor or reflected
on the balance sheets included in the Company Financial Statements;
(xiv) other
than in the ordinary and usual course of business and consistent with past
practices, pay or discharge any claims, Liens or liabilities involving more than
$50,000 in the aggregate, which are not reserved for or reflected on the balance
sheets included in the Company Financial Statements;
(xv) make
or commit to make capital expenditures exceeding by $50,000 or more the
aggregate budgeted amount set forth in the Company’s fiscal 2009 capital
expenditure plan previously provided to Parent;
(xvi) (A)
enter into, extend, terminate or amend any Company Material Contract or (B)
enter into any agreement, arrangement or commitment that materially limits or
otherwise materially restricts the Company or any Company Subsidiary, or that
would reasonably be expected to after the Effective Time, materially limit or
restrict the Parent or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, from engaging or competing in any line of
business in which it is currently engaged or in any geographic area material to
the business or operations of Parent or any of its Subsidiaries;
(xvii) adopt
a plan or agreement or complete or partial liquidation, dissolution,
restructuring, recapitalization, merger, consolidation or other
reorganization;
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(xviii) enter
into any new line of business outside of its existing business segments;
or
(xix) take
or agree in writing or otherwise to take any of the actions precluded by Sections 5.1 (a) or
(b).
SECTION
5.2 Consultation
Rights. It
being understood that the Company wants to preserve the marketability, viability
and competitiveness of the businesses of the Company and the Company
Subsidiaries, subject to Section 5.3 and
applicable Law (including the U.S. antitrust Laws), the Company
agrees that, after the date of this Agreement and until the Acceptance Time, the
Company shall consult with the representative(s) that Parent identifies
regarding the Company’s significant strategic and operational initiatives,
including buying, merchandising, marketing, sourcing, and planning, and consider
in good faith any proposals made by Parent’s representative(s).
SECTION
5.3 No Right to
Control Company Pre-Acceptance Time. Nothing contained in this Agreement
is intended to give Parent, directly or indirectly, the right to control or
direct the Company’s or any Company Subsidiary’s operations prior to the
Acceptance Time Prior to the Acceptance Time, the Company’ and the Company
Subsidiaries shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over their respective businesses,
assets and properties.
SECTION
5.4 Restricted
Actions. From
and after the date hereof and prior to the earlier of the Effective Time or the
Termination Date, and except (i) as may be otherwise required by applicable Law
or (ii) as expressly contemplated or permitted by this Agreement, no party shall
take, or permit any of its affiliates to take, any action which is intended to
or which would reasonably be expected to materially adversely affect or
materially delay the ability of such party from obtaining any necessary
approvals of any Governmental Authority required for the Transactions,
performing its covenants and agreements under this Agreement or consummating the
Transactions or otherwise materially delay or prohibit consummation of the
Merger or the other Transactions.
ARTICLE
VI
ADDITIONAL
AGREEMENTS
SECTION
6.1 Preparation of
Proxy Statement, Stockholders Meetings.
(a) If
the adoption of this Agreement by the holders of Shares is required by Law, the
Company shall, at Parent’s request, as soon as practicable following the
expiration of the Offer, prepare and file with the SEC the Proxy Statement in
preliminary form, and each of the Company and Parent shall use its reasonable
best efforts to respond as promptly as practicable to any comments of the SEC
and its staff with respect thereto. Parent and its counsel shall be
given reasonable opportunity to review and comment upon the Proxy Statement and
any amendments thereto prior to filing such documents with the SEC or
dissemination of such documents to the stockholders of the
Company. The Company shall notify Parent promptly of the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all correspondence between
the Company, or any of its representatives, on the one hand, and the SEC or its
staff on the other hand, with respect to the Proxy Statement. If at
any time prior to receipt of the Required Company Stockholder Vote there shall
occur any event that should be set forth in an amendment or supplement to the
Proxy Statement, the Company shall promptly prepare and mail to its stockholders
such an amendment or supplement. The Company shall use its reasonable
best efforts to cause the Proxy Statement to be mailed to the holders of Shares
as promptly as practicable after filing with the SEC.
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(b) If
the adoption of this Agreement by the holders of Shares is required by Law, the
Parent shall cause the stockholders of the Company to take action by written
consent of the holders of a majority of the Shares to obtain the Required
Company Stockholder Vote, provided that if the Required Company Stockholder Vote
can not be effected in such manner, then at Parent’s request, as soon as
practicable following the expiration of the Offer, the Company shall duly call,
give notice of, convene and hold a meeting of its stockholders (the “Company Stockholders
Meeting”) for the purpose of seeking the Required Company Stockholder
Vote, regardless of whether the Company Board shall have withdrawn or modified
its approval or recommendation of this Agreement, the Merger or the other
Transactions. The Company shall, through the Company Board, recommend
to its stockholders that they give the Required Company Stockholder Vote; provided that the Company
Board may withdraw or modify such recommendation to the extent permitted under
Section
6.7(b). Unless the Company Board has withdrawn its
recommendation of this Agreement, the Merger or the other Transactions in
compliance with Section 6.7(b), the
Company shall use its commercially reasonable efforts to solicit from
stockholders of the Company proxies in favor of the adoption of this Agreement
and shall take all other action necessary or advisable to secure the vote or
consent of the holders of Shares required by applicable Law to effect the Merger
(including retaining, at its sole expense, a proxy solicitation firm selected by
Parent to act as a proxy solicitor). Once the Company Stockholders
Meeting has been called and noticed, the Company shall not postpone or adjourn
the Company Stockholders Meeting without the consent of Parent, which shall not
be unreasonably withheld or delayed (other than (i) for the absence of a quorum
or (ii) to allow reasonable additional time for the filing and mailing of any
supplemental or amended disclosure which it believes in good faith is necessary
under applicable Law and for such supplemental or amended disclosure to be
disseminated and reviewed by the holders of Shares prior to the Company
Stockholders Meeting). Notwithstanding the foregoing, if Parent,
Merger Sub and any other Parent Subsidiary shall collectively acquire at least
90% of the outstanding Shares, the parties shall take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a stockholders meeting in
accordance with Section 253 of the DGCL.
(c) Parent
shall cause all Shares purchased pursuant to the Offer and all other Shares
owned by Parent, Merger Sub or any Parent Subsidiary to be voted in favor of the
adoption of this Agreement.
(d) Without
limiting any other provision of this Agreement, whenever any party hereto
becomes aware of any event or change that is required to be set forth in an
amendment or supplement to the Offer Documents, the Schedule 14D-9 and/or the
Proxy Statement, such party shall promptly inform the other parties thereof and
each of the parties shall cooperate in the preparation, filing with the SEC and
(as and to the extent required by applicable Federal securities Laws)
dissemination to the Company’s stockholders of such amendment or
supplement.
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SECTION
6.2 Employee Benefit
Matters.
(a) Parent
agrees to honor in accordance with their terms all Company Employee Benefit
Plans and all employment and severance agreements in each case listed in Section 6.2 of the
Company Disclosure Letter or filed as exhibits to the Available Company SEC
Documents and all accrued benefits vested thereunder; it being understood and
agreed that, subject to Section 6.2(b),
nothing in this Section 6.2(a) shall
prevent Parent from amending or terminating any Company Employee Benefit Plan or
other agreement in accordance with its terms and applicable Law.
(b) For
six months following the Effective Time, Parent agrees to provide employees of
the Company and the Company Subsidiaries with employee benefits in the aggregate
no less favorable than those benefits currently provided by the Company and the
Company Subsidiaries to such employees; provided, however, any
equity-based plan, stock purchase plan, defined benefit pension plan, or retiree
health and welfare plan shall be excluded for purposes of comparability
hereunder; provided
further notwithstanding the foregoing, nothing herein shall require the
continuation of any Employee Benefit Plan or prevent the amendment or
termination thereof if otherwise required in accordance with its terms and
applicable Law (subject to the maintenance, in the aggregate, of the benefits as
provided herein); provided
further that Parent shall be under no obligation to retain any employee
or group of employees of the Company or the Company Subsidiaries other than as
required by applicable Law or an employment agreement listed in Section 6.2 of the
Company Disclosure Letter or filed as an exhibit to the Available Company SEC
Documents.
SECTION
6.3 Public
Statements. Subject
to Section 6.7,
the Company, Parent and Merger Sub shall consult with each other prior to
issuing, and provide each other with the opportunity to review and comment upon,
any public announcement, statement or other disclosure with respect to this
Agreement or the Transactions and shall not issue any such public announcement
or statement prior to such consultation, except as may be required by Law or any
listing agreement with a national securities exchange or trading
market.
SECTION
6.4 Standard of
Efforts. Subject to the terms and conditions provided herein,
each of the Company, Parent and Merger Sub agrees to use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective in the most
expeditious manner practicable, the Offer, the Merger and the other
Transactions, including (i) obtaining all consents, approvals, authorizations
and actions or nonactions required for or in connection with the consummation by
the parties hereto of the Offer, the Merger and the other Transactions, (ii) the
taking of all steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by a Governmental Authority, (iii) the
obtaining of all necessary consents from third parties, (iv) contesting and
resisting of any action, including any legislative, administrative or judicial
action, and seeking to have vacated, lifted, reversed or overturned, any
Judgment (whether temporary, preliminary or permanent) that restricts, prevents
or prohibits the consummation of the Offer, the Merger or the other Transactions
and (v) the execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of this
Agreement. The Company shall have the right to review and approve in
advance all characterizations of the information relating to the Company; Parent
shall have the right to review and approve in advance all characterizations of
the information relating to Parent or Merger Sub; and each of the Company and
Parent shall have the right to review and approve in advance all
characterizations of the information relating to the Transactions, in each case
which appear in any material filing (including the Offer Documents, the Schedule
14D-9 and the Proxy Statement) made in connection with the
Transactions. The Company, Parent and Merger Sub agree that they
shall consult with each other with respect to the obtaining of all such
necessary permits, consents, approvals and authorizations of all third parties
and Governmental Authorities. Notwithstanding the foregoing, the
Company and the Company Board shall not be restricted from taking any action
permitted by Section 6.7(b) or
(c).
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SECTION
6.5 Notification of
Certain Matters. The
Company agrees to give prompt notice to Parent and Merger Sub of (i) any written
notice received from any Person alleging that the consent of such Person is
required in connection with the Transactions or (ii) any notice from any
Governmental Authority in connection with the Transactions. Each of
Parent and Merger Sub agrees to give prompt notice to the Company of (i) any
written notice received from any Person alleging that the consent of such Person
is required in connection with the Transactions or (ii) any notice from any
Governmental Authority in connection with the Transactions. In no
event shall the delivery of a notice by a party pursuant to this Section 6.5 limit or
otherwise affect the respective rights, obligations, representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION
6.6 Access to
Information, Confidentiality.
(a) The
Company shall, and shall cause the Company Subsidiaries and the officers,
directors, employees and agents of the Company and the Company Subsidiaries, to,
afford the officers, employees and agents of Parent and Merger Sub, at their
sole cost and risk, reasonable access during normal business hours from the date
hereof through the Effective Date to its officers, employees, agents,
properties, facilities, books, records, contracts and other assets and shall
furnish Parent and Merger Sub all financial, operating and other data and
information as Parent and Merger Sub through their officers, employees or
agents, may reasonably request. Parent and Merger Sub, at their sole
cost and risk, shall have the right to make such due diligence investigations as
Parent and Merger Sub shall deem necessary or reasonable, upon reasonable notice
to the Company; provided,
however, that any such investigations shall be conducted under the
supervision of appropriate personnel of the Company and in a manner as not to
unreasonably interfere with or disrupt the normal operation of the business of
Company.
(b) The
provisions of the Confidentiality Agreement dated May 8, 2009, between GenNx360
Management Company, LLC and the Company (the “Confidentiality Agreement”)
shall remain in full force and effect in accordance with its
terms.
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SECTION
6.7 No
Solicitation.
(a) Immediately
following the execution of this Agreement, the Company shall, and shall cause
each of the Company Subsidiaries to, and shall cause each officer, director and
employee of the Company or of any of the Company Subsidiaries to, and shall
cause each financial advisor, attorney and other advisor or representative of
the Company or any of the Company Subsidiaries to, cease any solicitations,
discussions and negotiations with any Person (other than Parent and Merger Sub)
that has made or has indicated an intention to make a Takeover Offer (as
hereinafter defined) with respect thereto, and the Company shall request the
prompt return or destruction of all confidential information previously
furnished to such Person in connection therewith. From the date of
this Agreement until the Effective Time or, if earlier, the termination of this
Agreement in accordance with its terms, the Company shall not, nor shall it
permit any of the Company Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of the Company or of any of the Company
Subsidiaries to nor shall it authorize any financial advisor, attorney or other
advisor or representative of the Company or any of the Company Subsidiaries to
directly or indirectly, (i) solicit, initiate, or knowingly encourage the
submission of, any Takeover Proposal, (ii) approve or recommend any Takeover
Proposal, enter into any agreement, agreement–in–principle or letter of intent
with respect to or accept any Takeover Proposal (or resolve to or publicly
propose to do any of the foregoing), (iii) participate or engage in or continue
any discussions or negotiations regarding, or furnish to any Person any
information with respect to, or knowingly take any action to facilitate any
inquiries or the making of any proposal that constitutes, or would reasonably be
expected to lead to, any Takeover Proposal (other than to state that they are
not permitted to have such discussions and refer to this Agreement); (iv)
release any Person from, fail to enforce to the fullest extent possible, or
modify or waive any applicable provision of any applicable confidentiality,
standstill or similar agreement; or (v) resolve to propose or agree to do any of
the foregoing; provided, however, that prior
to the Acceptance Time, in response to an unsolicited written Takeover Proposal
from a third party that did not result from a breach of this Agreement or any
standstill or similar agreement and that the Company Board determines in good
faith (after receiving the advice of its financial advisor and outside counsel)
is, or could reasonably be expected to result in or lead to, a Superior Proposal
and that the failure to take such action would be inconsistent with the Company
Board’s obligations under applicable Law, including its fiduciary duties to the
Company’s stockholders, the Company and its representatives may, after providing
at least forty-eight (48) hours advance written notice to Parent, (x) furnish
information with respect to the Company and the Company Subsidiaries to the
Person making such Takeover Proposal and its representatives pursuant to a
confidentiality agreement in customary form that is no less favorable to the
Company than the Confidentiality Agreement (except that such confidentiality
agreement shall contain additional provisions that expressly permit the Company
to comply with the provisions of this Section 6.7); provided that such
confidentiality agreement shall include standstill provisions and other
covenants at least as restrictive as the provisions and covenants in the
Confidentiality Agreement, such confidentiality agreement shall not include any
provision calling for an exclusive right to negotiate with the Company and the
Company shall concurrently provide to Parent all non-public information
delivered to such Person that was not previously provided to Parent; and (y)
conduct such additional discussions as the Company Board shall determine
(including solicitation of a revised Takeover Proposal). The Company
shall cause its officers, directors and key employees and its investment
bankers, attorneys and other representatives to abide by the provisions of this
Section 6.7(a),
and any breach thereof by any such persons shall constitute a breach thereof by
the Company.
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(b) Notwithstanding
the provisions of Section 6.7(a), at
any time prior to the Acceptance Time, the Company Board may, after providing at
least twenty-four (24) hours advance written notice to Parent, (i) withdraw (or
amend or modify in a manner adverse to Parent or Merger Sub), or publicly
propose to withdraw (or amend or modify in a manner adverse to Parent or Merger
Sub), the recommendation or declaration of advisability by the Company Board of
this Agreement, the Offer, the Merger or the other Transactions; (ii) approve or
recommend, or publicly propose to approve or recommend, any Takeover Proposal,
or (iii) to the extent permitted pursuant to and in compliance with Section 8.1(e)(i),
authorize and allow the Company to enter into a letter of intent,
agreement-in-principle or binding written agreement concerning a transaction
that constitutes a Superior Proposal; provided that in each case (x) the Company
Board determines in good faith (after receiving the advice of its financial
advisor and outside counsel) that the failure to take such action would be
inconsistent with the Company Board’s obligations under applicable Law,
including its fiduciary duties to the Company’s stockholders, (y) no such action
may be taken in the absence of a Superior Proposal, and (z) during the
twenty-four (24) hour advance notice period referred to above the Company shall
have negotiated in good faith with Parent and Merger Sub (to the extent Parent
and Merger Sub desire to negotiate) to make adjustments to the terms and
conditions of this Agreement so that the Takeover Proposal no longer constitutes
a Superior Proposal.
(c) Nothing
contained in this Section 6.7 shall
prohibit the Company or the Company Board from (i) taking and disclosing to the
holders of Shares a position with respect to a tender or exchange offer by a
third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act or (ii) making any disclosure to the holders of Shares, if in the good faith
judgment of the Company Board (after consultation with outside counsel), failure
to do so would be inconsistent with its obligations under applicable Law,
including the Company Board’s duties of good faith and candor to the holders of
Shares; provided that
the Company Board shall not recommend that the stockholders of the Company
tender their Shares in connection with any such tender or exchange offer unless
the Company Board, determines in good faith (after receiving the advice of its
financial advisor) that such Takeover Proposal constitutes a Superior Proposal
and that the failure to take such action would be inconsistent with the Company
Board’s, obligations under applicable Law, including its fiduciary duties to the
Company’s stockholders.
(d) For
purposes of this Agreement:
(i) “Takeover Proposal” shall mean
any inquiry, proposal or offer from any Person or “group” (as defined in Section
13(d) of the Exchange Act) (other than Parent, Merger Sub or any of their
affiliates) relating to any direct or indirect acquisition, merger,
consolidation, reorganization, share exchange, recapitalization, liquidation,
business combination, asset acquisition, tender offer, exchange offer or other
similar transaction (whether in a single transaction or series of related
transactions) involving (A) the assets or businesses that constitute or
represent 20% or more of the total revenue, operating income, or assets of the
Company and its Subsidiaries, taken as a whole, or (B) 20% or more of the
outstanding Shares or any other Company capital stock or capital stock of or
other equity or voting interests in, any of the Company’s Subsidiaries directly
or indirectly holding, individually or taken together, the assets or business
referred to in clause (A) above, in each case other than the
Transactions.
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(ii) “Superior Proposal” means any
bona fide, unsolicited
written offer that is obtained after the date hereof and that did not result
from a breach of this Agreement or any standstill or similar agreement involving
(A)(x) any transaction that results in the holders of Shares immediately before
such transaction ceasing to own directly or indirectly at least 50% of the
voting securities of the ultimate parent entity resulting from such transaction
or (y) any sale of all or substantially all of the assets of the Company, or (B)
a direct or indirect merger, consolidation, reorganization, share exchange,
recapitalization, liquidation, business combination, tender offer, exchange
offer or other similar transaction, that in the case of each of clauses (A) and
(B), provides for consideration to the holders of Shares immediately before such
transaction consisting of cash, securities or both cash and securities (it being
understood that securities retained by the holders of Shares be included for
purposes of this determination), and is on terms that the Company Board
determines in its good faith judgment (after receipt of the advice of its
financial advisor and outside counsel), taking into account all relevant
factors, including the price, form of consideration, closing conditions, the
ability to finance the proposal and other aspects of the proposal that the
Company Board, deems relevant, (1) would, if consummated, result in a
transaction that is more favorable to the holders of Shares from a financial
point of view than the Transactions (including the terms of any proposal by the
Parent to modify the terms of the Transactions) and (2) is reasonably capable of
being completed on the terms proposed.
(e) In
addition to the other obligations of the Company set forth in this Section 6.7, the
Company shall promptly (and in any event within forty-eight (48) hours) advise
Parent orally and in writing of any request for information with respect to any
Takeover Proposal, or any inquiry or request for discussion with respect to, or
which could reasonably be expected to result in, a Takeover Proposal, the
material terms and conditions of such Takeover Proposal, and the identity of the
Person making the same, and thereafter shall promptly keep Parent reasonably
informed of all material developments affecting the status and terms of any such
Takeover Proposal (and the Company shall provide Parent with copies of any
additional written materials received that relate to such Takeover Proposal) and
of the status of any such discussions or negotiations.
SECTION
6.8 Indemnification
and Insurance.
(a) Parent
and Merger Sub agree that all rights to indemnification by the Company now
existing in favor of each person who is now, or has been at any time prior to
the date hereof or who becomes prior to the Effective Time an officer or
director of the Company or any Company Subsidiary or an employee of the Company
or any Company Subsidiary or who acts as a fiduciary under any of the Company
Employee Benefit Plans (each an “Indemnified Party”) as
provided in the Company’s certificate of incorporation or bylaws, in each case
as in effect on the date of this Agreement, or pursuant to any other agreements
in effect on the date hereof and listed on Section 3.18(a)(iv)
of the Company Disclosure Letter, copies of which have been provided to Parent,
including provisions relating to the advancement of expenses incurred in the
defense of any action or suit, shall survive the Merger for a period of not less
than six years after the Effective Time, but only to the extent related to
actions or omissions prior to the Effective Time, and shall remain in full force
and effect during such period (for the avoidance of doubt, nothing in this
Agreement shall require, limit or restrict the Surviving Corporation to provide
indemnification to any person with respect to actions or omissions occurring on
and after the Effective Time).
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(b) For
six years after the Effective Time, to the full extent permitted under
applicable Law, Parent and the Surviving Corporation (the “Indemnifying Parties”) shall
jointly and severally indemnify, defend and hold harmless each Indemnified Party
against all losses, claims, damages, liabilities, fees, expenses, judgments and
fines arising in whole or in part out of actions or omissions in their capacity
as such occurring at or prior to the Effective Time (including in respect of
this Agreement), and shall reimburse each Indemnified Party for any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such losses, claims, damages, liabilities, fees,
expenses, judgments and fines as such expenses are incurred; provided that nothing herein
shall impair any rights to indemnification of any Indemnified Party referred to
in clause (a) above.
(c) Parent
shall cause the Surviving Corporation to maintain the Company’s officers’ and
directors’ liability insurance policies, in effect on the date of this Agreement
(the “D&O
Insurance”), for a period of not less than six years after the Effective
Time, but only to the extent related to actions or omissions prior to the
Effective Time, provided that (i) the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing terms no
less advantageous to such former directors or officers and (ii) such
substitution shall not result in gaps or lapses of coverage with respect to
matters occurring prior to the Effective Time; provided, further, that in no
event shall Parent or the Surviving Corporation be required to expend more than
an amount per year equal to 300% of current annual premiums paid by the Company
for such insurance (the “Maximum Amount”) to maintain
or procure insurance coverage pursuant hereto; provided, further, that if the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Parent and the Surviving Corporation shall
procure and maintain for such six—year period as much coverage as reasonably
practicable for the Maximum Amount. Parent shall have the right to
cause coverage to be extended under the D&O insurance by obtaining a
six—year “tail” policy on terms and conditions no less advantageous than the
D&O Insurance, and such “tail” policy shall satisfy the provisions of this
Section
6.8(c).
(d) The
obligations of Parent and the Surviving Corporation under this Section 6.8 shall
survive the consummation of the Merger and shall not be terminated or modified
in such a manner as to adversely affect any Indemnified Party to whom this Section 6.8 applies
without the consent of such affected Indemnified Party (it being expressly
agreed that the Indemnified Parties to whom this Section 6.8 applies
shall be third party beneficiaries of this Section 6.8, each of
whom may enforce the provisions of this Section
6.8).
(e) If
Parent or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or Surviving Corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in each such case, proper provision shall be made so
that the successors and assigns of Parent or the Surviving Corporation, as the
case may be, shall assume the obligations set forth in this Section
6.8.
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SECTION
6.9 Section 16
Matters. Prior to the Effective Time, Parent, Merger Sub and
the Company shall take all such steps as may be required to cause the
transactions contemplated by Section 2.4 and any
other dispositions of equity securities of the Company (including derivative
securities) in connection with this Agreement by each individual who is subject
to the reporting requirements of Section 16(a) of the Exchange Act with respect
to the Company to be exempt under Rule 16b-3 under the Exchange
Act.
SECTION 6.10 Directors.
(a) Subject
to applicable Law, promptly upon the Acceptance Time and as long as Parent
directly or indirectly beneficially owns not less than a majority of the issued
and outstanding Shares, Merger Sub shall be entitled to designate such number of
directors on the Company Board as will give Merger Sub representation on the
Company Board equal to at least that number of directors, rounded up to the next
whole number, that is the product of (a) the total number of directors on the
Company Board (giving effect to the directors elected pursuant to this sentence)
multiplied by (b) the percentage that (i) the number of Shares beneficially
owned (as defined in Rule 13d-3 under the Exchange Act) by Merger Sub or any
other subsidiary of Parent bears to (ii) the total number of shares of Shares
that are issued and outstanding, and the Company shall, at such time, use its
reasonable best efforts to cause Merger Sub’s designees to be so elected (in
furtherance of the foregoing, if requested by Parent or Merger Sub after the
Acceptance Time but prior to the Effective Time, the Company shall use its
commercially reasonable efforts to cause (x) a corresponding increase in the
size of the Company Board and/or (y) a corresponding number of directors of the
Company to tender their resignations as directors, effective as of date of such
request, and to deliver to Parent written evidence of such resignation); provided, however, that in
the event that Merger Sub’s designees are appointed or elected to the Company
Board, until the Effective Time the Company Board shall have at least two
directors who are directors on the date of this Agreement and who are not
officers of the Company or any Company Subsidiary (the “Independent Directors”); and
provided further that,
in such event, if the number of Independent Directors shall be reduced below two
for any reason whatsoever, the remaining Independent Directors shall be entitled
to designate persons to fill such vacancies who shall be deemed to be
Independent Directors for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate three persons to fill
such vacancies who are not officers, stockholders or affiliates of the Company,
any Company Subsidiary, Parent or Merger Sub, and such persons shall be deemed
to be Independent Directors for purposes of this Agreement. At such
time, the Company shall also, upon request of Parent, cause such persons
designated by Parent to constitute at least the same percentage (rounded up to
the nearest whole number) as is on the Company Board on (i) each committee of
the Company Board, subject to compliance with applicable securities Laws, and
(ii) each board of directors (or similar body) of each Company Subsidiary and
each committee of such board (or similar body). In connection with
the foregoing, the Company shall promptly, at the option of Merger Sub, use its
reasonable best efforts to either increase the size of the Company Board or
obtain the resignation of such number of its current directors as is necessary
to enable Merger Sub’s designees to be elected or appointed to the Company Board
as provided above. The provisions of this Section 6.10(a) are
in addition to, and shall not limit, any rights that Parent or Merger Sub may
have as record holders or beneficial owners of Shares as a matter of applicable
Law with respect to the election of directors or otherwise.
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(b) The
Company’s obligations to appoint designees to the Company Board shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly use its reasonable best
efforts to take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 6.10 and
shall include in the Schedule 14D-9 such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
to fulfill its obligations under this Section
6.10. Parent shall supply to the Company in writing and be
solely responsible for any information with respect to itself, Merger Sub and
their respective nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1.
(c) Following
the election or appointment of Parent’s designees pursuant to Section 6.10, the
approval by affirmative vote or written consent of all of the Independent
Directors then in office (or, if there shall be only one Independent Director
then in office, the Independent Director) shall be required to authorize (and
such authorization shall constitute the authorization of the Company Board and
no other action on the part of the Company, including any action by any
committee thereof or any other director of the Company, shall, unless otherwise
required by Law, be required or permitted to authorize) (i) any amendment or
termination of this Agreement by the Company, (ii) any extension of time for
performance of any obligation or action hereunder by Parent or Merger Sub or
(iii) any waiver or exercise of any of the Company’s rights under this
Agreement.
SECTION
6.11 Securityholder
Litigation. The Company shall give Parent the opportunity to
participate in the defense or settlement of any securityholder litigation
against the Company and/or its directors relating to the Transactions, and no
such settlement shall be agreed to without Parent’s prior written consent (which
consent shall not be unreasonably withheld or delayed).
SECTION
6.12 Takeover
Statute. If any takeover statute shall become applicable to
the Offer, the Merger, or the Transactions after the date of this Agreement,
each of the Company and Parent and the members of the Company Board and Parent’s
board of directors shall grant such approvals and take such actions as are
reasonably necessary so that the Offer, the Merger, and the Transactions may be
consummated as promptly as practicable on the terms contemplated herein and
otherwise act to eliminate or minimize the effects of such Law on the Offer, the
Merger, and the Transactions. Nothing in this Section 6.12 shall be
construed to permit Parent or Merger Sub to do any act that would constitute a
violation or breach of, or a waiver of any of the Company's rights under, any
other provision of this Agreement.
SECTION
6.13 Rule 14d-10(d)
Matters. Prior to the Acceptance Time, the Company (acting
through the compensation committee of the Board of Directors) will take all such
steps as may be required to cause each agreement, arrangement or understanding
entered into by the Company or the Company’s Subsidiaries on or after the date
hereof with any of its officers, directors or employees pursuant to which
consideration is to be paid to such officer, director or employee to be approved
as an “employment compensation, severance or other employee benefit arrangement”
within the meaning of Rule 14d-10(d)(1) under the Exchange Act and to satisfy
the requirements of the non-exclusive safe harbor set forth in Rule 14d-10(d)
under the Exchange Act.
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ARTICLE
VII
CONDITIONS
SECTION
7.1 Conditions to Each
Party’s Obligation To Effect the Merger. The respective
obligations of each party to effect the Merger are subject to the satisfaction
or, to the extent permitted by applicable Law, waiver on or prior to the Closing
Date of each of the following conditions:
(a) Stockholder
Approval. If required by Law, this Agreement shall have been
adopted by the Required Company Stockholder Vote.
(b) No injunctions or
Restraints. No Judgment issued by a court of competent
jurisdiction or by a Governmental Authority, nor any Law or other legal
restraint or prohibition, shall be in effect that would make the Merger illegal
or otherwise prevent the consummation thereof; provided that the party
seeking to assert this condition shall have used those efforts required
hereunder to resist, lift or resolve such Judgment, Law or other legal restraint
or prohibition.
SECTION
7.2 Conditions to
Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are further subject to the conditions
that Merger Sub shall have accepted Shares for payment pursuant to the
Offer.
ARTICLE
VIII
TERMINATION,
AMENDMENT AND WAIVER
SECTION
8.1 Termination. This
Agreement may be terminated and the Offer and Merger may be abandoned at any
time prior to the Effective Time, whether before or after this Agreement has
been adopted by the Required Company Stockholder Vote:
(a) by
mutual written consent of Parent, Merger Sub and the Company;
(b) by
either the Company or Parent, if (i) Merger Sub shall not have accepted for
payment the Shares validly tendered and not validly withdrawn pursuant to the
Offer in accordance with the terms thereof on or prior to December 31, 2009 (the
“Outside Date”); or
(ii) the Offer is terminated or withdrawn pursuant to its terms and the terms of
this Agreement without any Shares being purchased thereunder; provided, however, that the
right to terminate this Agreement under either clause of this Section 8.1(b) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the proximate cause of the event specified in such
clause;
(c) by
either the Company or Parent, if any Judgment issued by a court of competent
jurisdiction or by a Governmental Authority, or Law or other legal restraint or
prohibition making the Merger illegal or otherwise preventing the consummation
thereof shall be in effect and shall have become final and nonappealable; provided that the party
seeking to terminate this Agreement pursuant to this Section 8.1(c) shall
have used those efforts required hereunder (including under Section 6.4) to
resist, lift or resolve such Judgment, Law or other legal restraint or
prohibition;
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(d) by
Parent prior to the Acceptance Time, if:
(i) (A)
the Company Board shall have withdrawn (or amended or modified in a manner
adverse to Parent or Merger Sub) the recommendation or declaration of
advisability by the Company Board, of this Agreement, the Offer, the Merger or
the other Transactions, (B) the Company Board shall have failed to recommend to
the holders of Shares that they accept the Offer, or (C) the Company Board shall
have failed to reconfirm the recommendation or declaration of advisability by
the Company Board of this Agreement, the Offer, the Merger or the other
Transactions within three business days after the receipt of a written request
from Parent that it do so if such request is made following the making by any
Person of a Takeover Proposal (which reconfirmation request may be made by
Parent only once with respect to each Takeover Proposal); or
(ii) the
Company shall have breached or failed to perform in any material respect any of
its representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (A) would give rise to the failure
of a condition set forth in Exhibit A and (B) is
incapable of being cured or has not been cured by the Company within 20 business
days after written notice has been given by Parent to the Company of such breach
or failure to perform; or
(e) by
the Company, if
(i) prior
to the Acceptance Time, (A) the Company is in compliance with its obligations
under Section
6.7, (B) the Company Board has received a Superior Proposal, (C) the
Company Board concurrently approves, and the Company concurrently with the
termination of this Agreement enters into, a definitive agreement providing for
the implementation of such Superior Proposal and (D) the Company prior to, or
concurrently with, such termination pays to Parent in immediately available
funds any fees required to be paid pursuant to Section 8.3(a) or
Section 8.3(b);
or
(ii) Parent
shall have breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (A) has had or would reasonably be
expected to have a Parent Material Adverse Effect, and (B) is incapable of being
cured or has not been cured by Parent within 10 business days after written
notice has been given by the Company to Parent of such breach or failure to
perform.
The party
desiring to terminate this Agreement shall give written notice of such
termination to the other party.
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-
SECTION
8.2 Effect of
Termination. Upon
the termination of this Agreement pursuant to Section 8.1 (“Termination Date”), this
Agreement shall forthwith become null and void except for the provisions of (i)
Section 8.3,
(ii) the last sentence of Section 6.5, (iii)
Section 6.6(b),
and (iv) Article
IX, which shall survive such termination; provided that nothing herein
shall relieve any party from liability for any material breach of a covenant of
this Agreement for any and all liabilities and damages incurred or suffered by
the other parties as a result of such breach, which liabilities or damages
incurred or suffered by the Company shall be deemed to include, notwithstanding
Section 9.7 and
without derogation from Section 9.10,
liability to the Company (for the benefit of its stockholders) for amounts that
would have been recoverable by the Company’s stockholders if all such
stockholders brought an action against Parent and were recognized as intended
third party beneficiaries hereunder notwithstanding the failure of the Offer or
Merger to be consummated (as though the Company were its stockholders and
regardless of any sale by any stockholder of any of its Shares), it being
agreed, without limiting the generality of the foregoing, that any failure of
Parent to satisfy the payment obligations hereunder upon satisfaction of the
conditions set forth in Exhibit A or Sections 7.1 and
7.2, as
applicable, will constitute a material breach of a covenant of this
Agreement. The Confidentiality Agreement shall not be affected by the
termination of this Agreement.
SECTION
8.3 Fees and
Expenses.
(a) If
this Agreement is terminated for any reason other than pursuant to Section 8.1(d)(i),
Section
8.1(e)(i), or Section
8.1(e)(ii), then all costs and expenses incurred by Parent and
Merger Sub in connection with this Agreement and the Transactions shall be paid
by the Company (the “Expense
Reimbursement”) not later than one business day after termination of this
Agreement; provided,
however, that the
Expense Reimbursement shall not exceed five-hundred thousand dollars
($500,000).
(b) If
this Agreement is terminated pursuant to Section 8.1(d)(i) or
Section
8.1(e)(i), the Company shall promptly, but in no event later than one
business day after termination of this Agreement, pay Parent or its designated
affiliate a fee in immediately available funds of one-million dollars
($1,000,000).
(c) Except
as set forth in this Section 8.3, all
costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses, whether or not
the Merger is consummated.
SECTION
8.4 Amendment. Subject
to Section
6.10, this Agreement may be amended by the parties hereto, at any time
before or after approval of this Agreement and the Transactions by the
respective boards of directors or stockholders of the parties hereto; provided,
however, that after any such approval by the holders of Shares, no amendment
shall be made that in any way materially adversely affects the rights of such
stockholders (other than a termination of this Agreement in accordance with the
provisions hereof) without the further approval of such
stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
SECTION
8.5 Waiver. Subject
to Section
6.10, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived at any time prior to the
Effective Time by any of the parties entitled to the benefit thereof only by a
written instrument signed by each such party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of or estoppel with respect to, any subsequent or other
failure.
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ARTICLE
IX
GENERAL
PROVISIONS
SECTION
9.1 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, mailed by certified mail
(return receipt requested) or sent by overnight courier or by facsimile (upon
confirmation of receipt) to the parties at the following addresses or at such
other addresses as shall be specified by the parties by like
notice:
(a) if
to the Company:
GVI
Security Solutions, Inc.
2801
Trade Center Drive, Suite 120
Carrollton,
TX 75007
Attention: Steven
E. Walin
Joseph
Restivo
with a
copy (which shall not constitute notice) to:
Cooley
Godward Kronish LLP
1114
Avenue of the Americas
New York,
NY 10036
Attention: Alison
Newman
Zev
Bomrind
Fax: (212)
479-6275
(b) if
to Parent or Merger Sub:
c/o
GenNx360 Capital Partners
590
Madison Avenue
27th
Floor
New York,
New York 10022
Attention: Matthew
Guenther
Fax: (212)
572-6472
with a
copy (which shall not constitute notice) to:
Nixon
Peabody LLP
437
Madison Avenue
New York,
NY 10022
Attention Bradley
C. Vaiana
Bryan C.
Goldstein
Fax: (866)
402-1171
Notice so
given shall (in the case of notice so given by mail or overnight courier) be
deemed to be given when received and (in the case of notice so given by
facsimile or personal delivery) on the date of actual transmission or (as the
case may be) personal delivery.
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SECTION
9.2 Representations
and Warranties. The
representations and warranties contained in this Agreement shall not survive the
Merger.
SECTION
9.3 Knowledge
Qualifiers. For
purposes of this Agreement “to
the knowledge of the Company” and similar phrases means the actual
knowledge of the individuals listed on Section 9.3 of the
Company Disclosure Letter after due inquiry.
SECTION
9.4 Interpretations. When a
reference is made in this Agreement to Sections or Exhibits, such reference
shall be to a Section or Exhibit to this Agreement unless otherwise
indicated. The words “include,” “includes” and “including” when used
herein shall be deemed in each case to be followed by the words “without
limitation.” Any references in this Agreement to “the date hereof” refers to the
date of execution of this Agreement. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The parties hereto agree
that they have been represented by counsel during the negotiation, drafting,
preparation and execution of this Agreement and therefore, waive the application
of any Law or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
SECTION
9.5 Governing Law;
Jurisdiction; Waiver of Jury Trial.
(a)
This Agreement shall be governed by, and construed in accordance with, the Laws
of the State of Delaware regardless of the Laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
(b) Each
of the parties hereto (i) consents to submit itself to the personal jurisdiction
of any state or Federal court located in the State of Delaware or in the Court
of Chancery of the State of Delaware in the event any dispute arises out of this
Agreement, the Offer, the Merger or any of the other Transactions, (ii) agrees
that it shall not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, and (iii) agrees that it shall
not bring any action relating to this Agreement or any of the Transactions in
any court other than a state or Federal court located in the State of Delaware
or the Court of Chancery of the State of Delaware.
(c) Each
of the parties to this Agreement irrevocably waives any and all right to trial
by jury in any legal proceeding arising out of or relating to this Agreement or
the Transactions.
SECTION
9.6 Counterparts;
Facsimile Transmission of Signature. This
Agreement may be executed and by different parties hereto in separate
counterparts, and delivered by means of facsimile transmission or other
electronic transmission, each of which when so executed and delivered shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
SECTION
9.7 Assignment: No
Third Party Beneficiaries.
(a) This
Agreement and all of the provisions hereto shall be binding upon and inure to
the benefit of and be enforceable by, the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations set forth herein shall be assigned by any party
hereto without the prior written consent of the other parties hereto and any
purported assignment without such consent shall be void.
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-
(b) Nothing
in this Agreement shall be construed as giving any Person, other than the
parties hereto and their heirs, successors, legal representatives and permitted
assigns, any right, remedy or claim under or in respect of this Agreement or any
provision hereof except that from and after the Closing each Indemnified Party
is an intended third party beneficiary of Section 6.8, and such Persons may
specifically enforce such provisions.
SECTION
9.8 Severability. If
any provision of this Agreement shall be held to be illegal, invalid or
unenforceable under any applicable Law, then such contravention or invalidity
shall not invalidate the entire Agreement. Such provision shall be
deemed to be modified to the extent necessary to render it legal, valid and
enforceable, and if no such modification shall render it legal, valid and
enforceable, then this Agreement shall be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties
shall be construed and enforced accordingly.
SECTION
9.9 Entire
Agreement. This
Agreement, the Equity Commitment Letter, the Support Agreement and the
Confidentiality Agreement contain all of the terms of the understandings of the
parties hereto with respect to the subject matter hereof
SECTION
9.10 Enforcement. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement (and this right shall include the right of the
Company to cause Parent to fully enforce the terms of the Equity Commitment
Letter against the Fund to the fullest extent permissible pursuant to the Equity
Commitment Letter and applicable Laws and to thereafter cause the Offer and the
Merger to be consummated on the terms and subject to the conditions set forth in
this Agreement), this being in addition to any other remedy to which they are
entitled at law or in equity (including the remedy with respect to the
liabilities and damages specified in the proviso to the first sentence in Section
8.2).
[The remainder of this page intentionally
blank.]
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IN
WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement
to be executed as of the date first written above.
|
Company
|
|
|
GVI
SECURITY SOLUTIONS, INC.
|
|
|
By:
|
/s/ Steven E. Walin
|
|
Name:
|
Steven
E. Walin
|
|
Title:
|
Chief
Executive Officer
|
|
Parent:
|
|
|
GENNX360
GVI HOLDING INC.
|
|
|
By:
|
/s/ Matthew Guenther
|
|
Name:
|
Matthew
Guenther
|
|
Title:
|
Vice
President
|
|
Merger
Sub:
|
|
|
GENNX360
GVI ACQUISITION CORP.
|
|
|
By:
|
/s/ Matthew Guenther
|
|
Name:
|
Matthew
Guenther
|
|
Title:
|
Vice
President
|
Exhibit
A
Conditions of the
Offer
Notwithstanding
any other term of the Offer or this Agreement, Merger Sub shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Merger Sub’s
obligation to pay for or return tendered Shares promptly after the termination
or withdrawal of the Offer) (the “Payment Rules”), to pay for
any Shares tendered pursuant to the Offer unless there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would represent at least a majority of the issued and outstanding
Shares (assuming the exercise of all in-the-money outstanding Options and
Warrants and the issuance of all Shares that the Company is obligated to issue
thereon) (the “Minimum Tender
Condition”). Furthermore, notwithstanding any other term of the
Offer or this Agreement, Merger Sub shall not be required to accept for payment
or, subject to the Payment Rules, to pay for any Shares not theretofore accepted
for payment or paid for, and may terminate or amend the Offer, in accordance
with and subject to the terms of this Agreement if, at the then effective
expiration date for the Offer, any of the following conditions
exists:
(a) any
Judgment issued by a court of competent jurisdiction or by a Governmental
Authority, or any Law or other legal restraint or prohibition, shall be in
effect that would make the Offer or the Merger illegal or otherwise prevent the
consummation thereof; provided that Merger Sub
shall not assert this condition unless Parent and Merger Sub have used those
efforts required under Section 6.4 of this
Agreement to resist, lift or resolve such Judgment, Law or other legal restraint
or prohibition;
(b) since
the date of this Agreement, there shall have occurred any event, change, effect
or development that, individually or in the aggregate, has had or would
reasonably be expected to have, a Company Material Adverse Effect;
(c) (A)
the Company Board shall have withdrawn (or amended or modified in a manner
adverse to Parent or Merger Sub) the recommendation or declaration of
advisability by the Company Board, of this Agreement, the Offer, the Merger or
the other Transactions, (B) the Company Board shall have failed to recommend to
the holders of Shares that they accept the Offer, (C) the Company Board shall
have failed to reconfirm the recommendation or declaration of advisability by
the Company Board, of this Agreement, the Offer, the Merger or the other
Transactions within three business days after the receipt of a written request
from Parent that it do so if such request is made following the making by any
Person of a Takeover Proposal or (D) the Company Board shall have failed to
recommend against any Takeover Proposal;
A-1
(d) (A)
the representations and warranties set forth in Sections 3.2, 3.3 and 3.4,
without giving effect to materiality or Company Material Adverse Effect
qualifications, shall not be true and correct in all material respects; (B) any
representation and warranty of the Company set forth in this Agreement that is
qualified by reference to a Company Material Adverse Effect (except as set forth
in Sections 3.2, 3.3 and 3.4) shall not be true and correct as of the date of
this Agreement and as of such time, except to the extent such representation and
warranty expressly relates to an earlier time (in which case on and as of such
earlier time) or (C) any representation and warranty of the Company set forth in
this Agreement that is not so qualified (except as set forth in Sections 3.2,
3.3 and 3.4) shall not be true and correct as of the date of this Agreement and
as of such time, except to the extent such representation and warranty expressly
relates to an earlier time (in which case on and as of such earlier time), other
than in the case of clause (C) for such failures to be true and correct that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect; provided that for purposes of
determining the satisfaction of clause (C) of this condition, the
representations and warranties of the Company that are not qualified by
reference to a Company Material Adverse Effect shall be deemed not qualified by
any references therein to materiality generally;
(e) the
Company shall have failed to perform in any material respect any obligation or
to comply in any material respect with any agreement or covenant of the Company
to be performed or complied with by it under this Agreement prior to such time;
or
(f) this
Agreement shall have been terminated in accordance with its terms,
which, in
the sole and reasonable judgment of Merger Sub or Parent, in any such case,
makes it inadvisable to proceed with such acceptance for payment or
payment.
The
failure by Parent, Merger Sub or any other affiliate of Parent at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A -
2
Exhibit
B
Employment
Arrangements
Steven E.
Walin
Joseph
Restivo
B-1