Item 1.01. Entry into a Material Definitive Agreement
The Merger
On September 28, 2009, Sunair Services Corporation (the "Company"), Massey
Services, Inc. ("Massey) and Buyer Acquisition Company, Inc., a wholly-owned
subsidiary of Massey ("Merger Sub"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which Merger Sub will merge with and
into the Company, the Company will become a wholly-owned subsidiary of Massey
(the "Merger"), and all outstanding shares of common stock of the Company (other
than shares held by the Massey, Merger Sub or their affiliates) will be
converted into the right to receive an amount per share in cash of $2.75.
The Company agreed to call and hold a special shareholder meeting as soon as
reasonably practical for the purpose of voting on the approval of the Merger
Agreement. Consummation of the Merger is subject to customary conditions,
including, among other things, (a) approval of the Merger Agreement by the
holders of a majority of the outstanding shares of the Company's common stock,
(b) Massey having sufficient funds at closing to (i) satisfy its obligations
under the Merger Agreement, (ii) refinance the outstanding indebtedness of the
Company, to the extent necessary and (iii) pay any and all of its fees and
expenses in connection with the Merger and the financing thereof, (c) the
absence of certain laws or orders prohibiting the consummation of the Merger,
(d) performance in all material respects of each party of its obligations under
the Merger Agreement, and (e) receipt of all applicable regulatory approvals or
governmental consents.
The Merger Agreement contains customary representations and warranties
between the Company, Massey and Merger Sub. The Merger Agreement also contains
customary covenants and agreements, including covenants relating to (a) the
conduct of the Company's business between the date of the signing of the Merger
Agreement and the closing of the Merger, (b) non-solicitation of competing
acquisition proposals and (c) the efforts of the parties to cause the Merger to
be completed.
The Merger Agreement contains provisions addressing the circumstances under
which the Company or Massey may terminate the Merger Agreement. The Company is
required to pay Massey a termination fee of $2.75 million if it terminates the
Merger Agreement on or before November 15, 2009, because the Company has
received a superior acquisition proposal. If the Company terminates the Merger
Agreement after November 15, 2009, because it has received a superior
acquisition proposal, the amount of the termination fee is equal to
$2.75 million plus the actual cost of lender's fees paid by Massey to extend the
termination date of the financing letters beyond November 15, 2009, or to close
on such financing, up to a maximum of $3.5 million. We are required to pay this
termination fee within six months after the date of the termination of the
Merger Agreement. Massey will pay us a termination fee of $4 million if (i) the
Company terminates the Merger Agreement because the Merger has not closed on or
before February 25, 2010, due to the failure of Massey to satisfy any of its
obligations under the Merger Agreement, or (ii) Massey has breached its
covenants and obligations under the Merger Agreement, and these matters can not
be cured, if curable, with 30 days notice, provided that in both situations the
Company can not be in breach of any of our obligations under the Merger
Agreement.
The foregoing description of the Merger Agreement is qualified in its
entirety by reference to the full text of the Merger Agreement, which is
attached as Exhibit 2.1 to this report and is incorporated in this report by
reference. The Merger Agreement has been attached to provide investors with
information regarding its items. It is not intended to provide any other factual
information about the Company, Merger Sub or Massey. In particular, the
assertions embodied in the representations and warranties contained in the
Merger Agreement are qualified by information in confidential disclosure
schedules provided by the Company to Massey and Merger Sub in connection with
the signing of the Merger Agreement. These disclosure schedules contain
information that modifies, qualifies and creates exceptions to the
representations and warranties set forth in the Merger Agreement. Moreover,
certain representations and warranties in the Merger Agreement were used for the
purpose of allocating risk between the Company and Massey and Merger Sub, rather
than establishing matters as facts. Accordingly, you should not rely on the
representations and warranties in the Merger Agreement as characterizations of
the actual state of facts about the Company, Massey or Merger Sub.
Additional Information and Where to Find It.
In connection with the Merger, the Company intends to file proxy materials
and other relevant documents with the Securities and Exchange Commission (the
"SEC"). Shareholders are urged to read the proxy statement (and any other
relevant documents filed) with the SEC when they become available, because they
will contain important information about the Merger. The Company will mail the
definitive proxy statement to the Company's shareholders. In addition,
shareholders may obtain free copies of the final proxy statement, as well as the
Company's other filings, without charge, at the SEC's web site (www.sec.gov)
when they become available. Copies of the filings may also be obtained without
charge from the
Company by directing a request to: 1350 E. Nerwport Center Drive, Suite 201,
Deerfield Beach, Florida 33442, Chief Financial Officer (telephone: 561
208-7400).
Participants in the Solicitation.
The Company's directors, executive officers and other members of management
and employees may be deemed to be participants in the solicitation of proxies
from shareholders in respect of the proposed transaction. Information regarding
the Company's directors and executive officers is available in the Company's
proxy statement for its 2009 annual meeting of shareholders, filed with the SEC
on January 28, 2009. Additional information regarding the interests of such
potential participants will be included in the proxy statement and the other
relevant documents filed with the SEC when they become available.
Item 8.01 Other Events.
The Company issued a press release on September 29, 2009 announcing the
execution of the Merger Agreement. A copy of the press release is included as
Exhibit 99.1 to this report and is incorporated in this report by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
2.1 Agreement and Plan of Merger, dated as of September 28, 2009, among
Sunair Services Corporation, Massey Services, Inc. and Buyer Acquisition
Company, Inc.*
99.1 Press release of Sunair Services Corporation dated September 28, 2009*
* Filed herewith