Exhibit (d)(1)
AGREEMENT AND PLAN OF MERGER
AMONG:
BEI TECHNOLOGIES, INC.,
A DELAWARE CORPORATION;
OPTO ACQUISITION SUB, INC.,
A DELAWARE CORPORATION; AND
OPTICNET, INC.,
A DELAWARE CORPORATION
DATED AS OF JULY 1, 2003
TABLE OF CONTENTS
PAGE
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SECTION 1. The Offer................................................... 1
1.1 Conduct of the Offer........................................ 1
1.2 Company Actions............................................. 3
1.3 Top-Up Option............................................... 4
SECTION 2. Merger Transaction.......................................... 4
2.1 Merger of Acquisition Sub into the Company.................. 4
2.2 Effect of the Merger........................................ 4
2.3 Closing; Effective Time..................................... 4
2.4 Certificate of Incorporation and Bylaws; Directors and
Officers.................................................... 5
2.5 Conversion of Shares........................................ 5
2.6 Surrender of Certificates; Stock Transfer Books............. 6
2.7 Shares Subject to Appraisal Rights.......................... 7
2.8 Further Action.............................................. 7
SECTION 3. Representations and Warranties of the Company............... 7
3.1 Capitalization, Etc. ....................................... 7
3.2 SEC Filings; Financial Statements........................... 8
3.3 Title to Assets............................................. 9
3.4 Intellectual Property....................................... 9
3.5 Liabilities................................................. 10
3.6 Compliance with Legal Requirements.......................... 10
3.7 Legal Proceedings; Orders................................... 10
3.8 Authority; Inapplicability of Anti-takeover Statutes;
Binding Nature of Agreement................................. 10
3.9 Vote Required............................................... 10
3.10 Non-Contravention; Consents................................. 10
3.11 Advisor..................................................... 11
3.12 Disclosure.................................................. 11
SECTION 4. Representations and Warranties of Parent and Acquisition
Sub......................................................... 11
4.1 Valid Existence............................................. 11
4.2 Authority; Binding Nature of Agreement...................... 11
4.3 Non-Contravention; Consents................................. 12
4.4 Disclosure.................................................. 12
SECTION 5. Certain Covenants of the Company............................ 12
5.1 Access and Investigation.................................... 12
5.2 No Solicitation............................................. 12
SECTION 6. Additional Covenants of the Parties......................... 13
6.1 Stockholder Approval; Proxy Statement....................... 13
6.2 Regulatory Approvals........................................ 14
6.3 Stock Options............................................... 14
6.4 Indemnification of Officers and Directors................... 14
6.5 Additional Agreements....................................... 14
6.6 Disclosure.................................................. 14
6.7 Section 16 Matters.......................................... 15
6.8 Resignation of Officers and Directors....................... 15
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PAGE
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SECTION 7. Conditions Precedent to the Merger.......................... 15
7.1 Stockholder Approval........................................ 15
7.2 No Restraints............................................... 15
7.3 Consummation of Offer....................................... 15
SECTION 8. Termination................................................. 15
8.1 Termination................................................. 15
8.2 Effect of Termination....................................... 16
8.3 Expenses.................................................... 17
SECTION 9. Miscellaneous Provisions.................................... 17
9.1 Amendment................................................... 17
9.2 Waiver...................................................... 17
9.3 No Survival of Representations and Warranties............... 17
9.4 Entire Agreement; Counterparts.............................. 17
9.5 Applicable Law; Jurisdiction................................ 17
9.6 Assignability; Third-Party Beneficiaries.................... 17
9.7 Notices..................................................... 18
9.8 Cooperation................................................. 18
9.9 Severability................................................ 18
9.10 Enforcement................................................. 18
9.11 Construction................................................ 19
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ANNEXES
Annex I -- Certain Definitions
Annex II -- Conditions to the Offer
Annex III -- Form of Certificate of Incorporation of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into as
of July 1, 2003, by and among: BEI TECHNOLOGIES, INC., a
Delaware corporation
("Parent"); OPTO ACQUISITION SUB, INC., a
Delaware corporation and a wholly
owned direct or indirect subsidiary of Parent ("Acquisition Sub"); and OPTICNET,
INC., a
Delaware corporation (the "Company"). Certain capitalized terms used in
this Agreement are defined in Annex I.
RECITALS
A. The board of directors of each Parent, Acquisition Sub and the Company
has determined that it is in the best interests of their respective stockholders
for Parent to acquire the Company upon the terms and subject to the conditions
set forth in this Agreement.
B. In furtherance of the acquisition of the Company by Parent, it is
proposed that: (i) Acquisition Sub make a cash tender offer for any and all of
the outstanding shares of Company Common Stock at a price of $0.04 per share
(such amount, or any greater amount per share paid pursuant to the Offer,
subject to adjustment pursuant to Section 1.1(e), being referred to in this
Agreement as the "Offer Price"), net to the seller in cash, upon the terms and
subject of the conditions set forth in this Agreement (such cash tender offer,
as it may be amended from time to time, being referred to in this Agreement as
the "Offer"); and (ii) after acquiring shares of Company Common Stock pursuant
to the Offer, Acquisition Sub merge with and into the Company upon the terms and
subject to the conditions set forth in this Agreement (the merger of Acquisition
Sub into the Company being referred to in this Agreement as the "Merger").
C. The board of directors of the Company has: (i) unanimously determined
that this Agreement and the transactions contemplated by this Agreement,
including the Offer and the Merger, are fair to and in the best interests of the
Company's stockholders; and (ii) unanimously resolved to recommend that the
stockholders of the Company accept the Offer, tender their shares pursuant to
the Offer and (if required by applicable law) adopt this Agreement and approve
the principal terms of the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. The Offer
1.1 Conduct of the Offer.
(a) Provided that each of the conditions set forth in clauses "(b)," '(c),"
"(d)," "(g)," "(h)" and "(i)" of Annex II are satisfied as of the commencement
of the Offer, Acquisition Sub shall commence (within the meaning of Rule 14d-2
under the Exchange Act) the Offer as promptly as reasonably practicable after
the date of this Agreement.
(b) The obligation of Acquisition Sub to accept for payment and to pay for
any shares of Company Common Stock validly tendered pursuant to the Offer shall
be subject to (i) the condition that there shall be validly tendered (and not
withdrawn) a number of shares of Company Common Stock that, together with any
shares of Company Common Stock owned by Parent or any wholly-owned Subsidiary of
Parent ("Parent Owned Shares") immediately prior to the acceptance for payment
of shares of Company Common Stock pursuant to the Offer, represents no less than
80% of the Adjusted Outstanding Share Number (the "Minimum Condition") and (ii)
the other conditions set forth in Annex II. (The Minimum Condition and the other
conditions set forth in Annex II are referred to collectively in this Agreement
as the "Offer Conditions.") Acquisition Sub expressly reserves the right, in its
sole discretion, to increase the Offer Price and to waive or make any other
changes to the terms and conditions of the Offer; provided, however, that
without the prior written consent of the Company: (i) the Minimum Condition may
not be amended or waived; and (ii) no change may be made to the Offer that (A)
changes the form of consideration to be paid pursuant to the Offer, (B)
decreases the Offer Price or the number of shares of Company Common Stock
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sought to be purchased in the Offer, (C) imposes conditions to the Offer in
addition to the Offer Conditions or, (D) except as provided in Section 1.1(c),
extends the expiration date of the Offer beyond the initial expiration date of
the Offer. Subject to the terms and conditions of the Offer and this Agreement,
Acquisition Sub shall accept for payment all shares of Company Common Stock
validly tendered pursuant to the Offer (and not withdrawn) as soon as
practicable after it is permitted to do so under applicable Legal Requirements
and shall pay for such shares promptly thereafter. Notwithstanding the
foregoing, to the extent the number of Parent Owned Shares is less than 90% of
the Adjusted Outstanding Share Number and Parent is unable to exercise the
Top-Up Option or the Company is unable to fulfill the Top-Up Option, despite the
best efforts of Parent and Company to be able either to exercise or fulfill the
Top-Up Option, as the case may be, Acquisition Sub will not be obligated to
accept for payment and to pay for any shares of Company Common Stock validly
tendered pursuant to the Offer.
(c) The Offer shall initially be scheduled to expire 20 business days
following the date of the commencement thereof. Notwithstanding anything to the
contrary contained in this Agreement: (i) if, on any date as of which the Offer
is scheduled to expire, any Offer Condition has not been satisfied or waived,
Acquisition Sub may, in its discretion, subject to the consent of the Company,
extend the Offer from time to time for such period of time as Acquisition Sub
reasonably determines to be necessary to permit such Offer Condition to be
satisfied; (ii) Acquisition Sub may, in its discretion (and without the consent
of the Company or any other Person), extend the Offer from time to time for any
period of time required by any rule or regulation of the SEC applicable to the
Offer; (iii) if, on any date as of which the Offer is scheduled to expire, the
Minimum Condition has been satisfied but the sum of the number of shares of
Company Common Stock that have been validly tendered pursuant to the Offer (and
not withdrawn) plus the number of Parent Owned Shares as of such date is less
than 90% of the Adjusted Outstanding Share Number, then Acquisition Sub may, in
its discretion, subject to the consent of the Company, extend the offer for an
additional period of not more than 20 business days; and (iv) Acquisition Sub
may, in its discretion, subject to the consent of the Company, elect to provide
for a subsequent offering period (and one or more extensions thereof) in
accordance with Rule 14d-11 under the Exchange Act.
(d) On the date of commencement of the Offer, Parent and Acquisition Sub
shall (i) file with the SEC a Tender Offer Statement on Schedule TO with respect
to the Offer, which will contain or incorporate by reference the offer to
purchase shares of Company Common Stock pursuant to the Offer (the "Offer to
Purchase") and the form of related letter of transmittal and (ii) cause the
Offer to Purchase and related documents to be disseminated to holders of shares
of Company Common Stock. (Said Tender Offer Statement on Schedule TO and all
exhibits, statements and supplements thereto are referred to collectively in
this Agreement as the "Offer Documents.") Parent and Acquisition Sub shall cause
the Offer Documents to comply in all material respects with the Exchange Act and
the rules and regulations thereunder. Each of Parent, Acquisition Sub and the
Company shall use all reasonable efforts to respond promptly to any comments of
the SEC or its staff with respect to the Offer Documents or the Offer, to
correct promptly 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 to take all steps necessary to cause the Offer
Documents, as supplemented or amended to correct such information, to be filed
with the SEC and to be disseminated to holders of shares of Company Common Stock
to the extent required by applicable federal securities laws. The Company shall
promptly furnish to Parent and Acquisition Sub all information concerning the
Company and the Company's stockholders that may be required or reasonably
requested in connection with any action contemplated by this Section 1.1(d). The
Company and its counsel shall be given sufficient opportunity to review and
comment on the Offer Documents (and any amendments thereto) prior to the filing
thereof with the SEC. Parent and Acquisition Sub shall provide the Company and
its counsel with any comments Parent, Acquisition Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after receipt of such comments.
(e) If, between the date of this Agreement and the date on which any
particular share of Company Common Stock is accepted for payment pursuant to the
Offer, the outstanding shares of Company Common Stock are changed into a
different number or class of shares by reason of any stock split, division or
subdivision
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of shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the Offer
Price applicable to such share shall be appropriately adjusted.
1.2 Company Actions.
(a) The Company hereby consents to the Offer and represents that its board
of directors, upon the unanimous recommendation of the Special Committee of the
board of directors of the Company (the "Special Committee"), at a meeting duly
called and held, has by the unanimous vote of all directors of the Company (i)
determined that this Agreement and the transactions contemplated by this
Agreement, including the Offer and the Merger, are fair to and in the best
interests of the Company's stockholders, (ii) approved this Agreement and the
transactions contemplated by this Agreement, including the Offer and the Merger,
in accordance with the requirements of the
Delaware General Corporation Law (the
"DGCL") and the California General Corporation Law (the "CGCL"), as applicable,
(iii) declared that this Agreement is advisable and (iv) resolved to recommend
that stockholders of the Company accept the Offer, tender their shares of
Company Common Stock pursuant to the Offer and (if required by applicable law)
adopt this Agreement and approve the principal terms of the Merger (the
recommendation of the Company's board of directors that the stockholders of the
Company accept the Offer, tender their shares of Company Common Stock pursuant
to the Offer and (if required by applicable law) adopt this Agreement and
approve the principal terms of the Merger being referred to as the "Company
Board Recommendation"). The Company further represents and warrants to Parent
and Acquisition Sub that American Appraisal Associates (the "Special Committee
Advisor") has delivered to the board of directors of the Company and the Special
Committee the Special Committee Advisor's written opinion, dated the date of
this Agreement, to the effect that as of such date the Offer Price and the
Merger Consideration is fair, from a financial point of view, to the holders of
Shares. Subject to Section 1.2(b): (A) the Company consents to the inclusion of
the Company Board Recommendation in the Offer Documents; and (B) the Company
Board Recommendation shall not be withdrawn or modified in a manner adverse to
Parent or Acquisition Sub, and no resolution by the board of directors of the
Company or any committee thereof to withdraw or modify the Company Board
Recommendation in a manner adverse to Parent or Acquisition Sub shall be adopted
or proposed (it being understood that the Company Board Recommendation shall be
deemed to have been modified in a manner adverse to Parent if the Company Board
Recommendation is no longer unanimous).
(b) Notwithstanding anything to the contrary contained in Section 1.2(a),
at any time prior to the Acceptance Date, the Company Board Recommendation may
be withdrawn or modified in a manner adverse to Parent and Acquisition Sub if:
(i) an unsolicited, bona fide written offer to purchase all of the outstanding
shares of Company Common Stock is made to the Company and is not withdrawn; (ii)
the Company provides Parent with at least one business day's prior notice of any
meeting of the Company's board of directors or any committee thereof at which
such board of directors or such committee will consider or determine whether
such offer is a Superior Offer; (iii) the Company's board of directors and the
Special Committee each determines in good faith (based, in the case of the
Special Committee's determination, upon a written opinion of the Special
Committee Advisor) that such offer constitutes a Superior Offer; (iv) the
Company's board of directors and the Special Committee each determines in good
faith, after having taken into account the advice of outside legal counsel,
that, in light of such Superior Offer, the withdrawal or modification of the
Company Board Recommendation in a manner adverse to Parent or Acquisition Sub is
required in order for the Company's board of directors to comply with its
fiduciary obligations to the Company's stockholders under applicable Legal
Requirements; and (v) no Representative of the Company shall have breached or
taken any action inconsistent with any of the provisions set forth in Section
5.2.
(c) On the date of commencement of the Offer, the Company shall file with
the SEC and (following or contemporaneously with the dissemination of the Offer
to Purchase and related documents) disseminate to holders of shares of Company
Common Stock a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") that, subject
only to Section 1.2(b), shall reflect the Company Board Recommendation. The
Company shall cause the Schedule 14D-9 to comply in all material respects with
the Exchange Act and the rules and regulations thereunder. The Company shall
also cause all communications with stockholders to comply with all applicable
Legal Requirements. Each of Parent, Acquisition Sub and the Company agrees
promptly to correct any information
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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 further agrees to take all steps necessary to cause the Schedule
14D-9, as supplemented or amended to correct such information, to be filed with
the SEC and to be disseminated to holders of shares of Company Common Stock to
the extent required by applicable federal securities laws. The Company shall
give Parent and its counsel sufficient opportunity to review and comment on the
Schedule 14D-9 (including any amendment thereto) prior to the filing thereof
with the SEC. The Company shall provide Parent and its counsel 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 receipt of such comments.
(d) The Company shall (i) ensure Parent is furnished with an accurate and
complete list of its stockholders as of the most recent practicable date,
mailing labels and an accurate and complete copy of the most recent available
listing or computer file containing the names and addresses of all record
holders of shares of Company Common Stock and lists of securities positions of
shares of Company Common Stock held in stock depositories, and (ii) provide to
Parent such additional information (including updated lists of stockholders,
mailing labels and lists of securities positions) and such other assistance as
Parent may reasonably request in connection with the Offer and the Merger.
Except as required by applicable Legal Requirements or legal process, and except
as necessary to disseminate the Offer Documents, Parent and Acquisition Sub
shall hold in confidence the information contained in any such listings and
files.
1.3 Top-Up Option.
(a) Contingent on the number of Parent Owned Shares being equal to at least
80% of the Adjusted Outstanding Share Number, the Company hereby grants to
Parent and Acquisition Sub an irrevocable option (the "Top-Up Option") to
purchase at a price per share equal to the Offer Price a number of shares of
Company Voting Common Stock (the "Top-Up Option Shares") that, when added to the
number of shares of Company Common Stock included in the Parent Owned Shares at
the time of exercise of the Top-Up Option, constitutes one share of Company
Common Stock more than 90% of the number of shares of Company Common Stock then
outstanding on a fully diluted basis (after giving effect to the issuance of the
Top-Up Option Shares). The Top-Up Option may be exercised by Parent or
Acquisition Sub, in whole but not in part, at any time on or after the
Acceptance Date.
(b) In the event Parent or Acquisition Sub wishes to exercise the Top-Up
Option, Parent shall so notify the Company and shall set forth in such notice
(i) the number of Parent Owned Shares that are expected to be owned immediately
preceding the purchase of the Top-Up Option Shares and (ii) a place and time for
the closing of the purchase of the Top-Up Option Shares. The Company shall, as
soon as practicable following receipt of such notice, notify Parent of the
number of Top-Up Option Shares. At the closing of the purchase of the Top-Up
Option Shares, Parent or Acquisition Sub, as the case may be, shall pay the
Company the aggregate price required to be paid for the Top-Up Option Shares
(such payment to be made by (i) check, (ii) wire transfer of immediately
available funds, (iii) cancellation of indebtedness or (iv) check or wire
transfer of immediately available funds for the aggregate par value of the
Top-Up Option Shares and the delivery of a promissory note for the balance of
the aggregate price required to be paid for the Top-Up Option Shares), and the
Company shall cause to be issued to Parent or Acquisition Sub a certificate
representing the Top-Up Option Shares.
SECTION 2. Merger Transaction
2.1 Merger of Acquisition Sub into the Company. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time,
Acquisition Sub shall be merged with and into the Company, and the separate
existence of Acquisition Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
2.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the DGCL.
2.3 Closing; Effective Time. The consummation of the Merger (the
"Closing") shall take place at the offices of ▇▇▇▇▇▇ Godward LLP, One Maritime
Plaza, 20th Floor, San Francisco, California, at 10:00 a.m. on
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a date to be designated by Parent (the "Closing Date"), which shall be no later
than the fifth business day after the satisfaction or waiver of the last to be
satisfied or waived of the conditions set forth in Section 7. Subject to the
provisions of this Agreement, a certificate of merger satisfying the applicable
requirements of the DGCL shall be duly executed by the Surviving Corporation
and, concurrently with or as soon as practicable following the Closing,
delivered to the Secretary of State of the State of
Delaware for filing. The
Merger shall become effective upon the date and time of the filing of such
certificate of merger with the Secretary of State of the State of
Delaware (the
"Effective Time").
2.4 Certificate of Incorporation and Bylaws; Directors and Officers.
(a) The Certificate of Incorporation of the Surviving Corporation shall be
amended and restated immediately after the Effective Time to conform to Annex
III.
(b) Unless otherwise determined by Parent prior to the Effective Time:
(i) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Acquisition
Sub as in effect immediately prior to the Effective Time; and
(ii) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals
who are directors and officers of Acquisition Sub immediately prior to the
Effective Time.
2.5 Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and without any further
action on the part of Parent, Acquisition Sub, the Company or any stockholder of
the Company:
(i) any shares of Company Common Stock then held by the Company or any
wholly owned Subsidiary of the Company (or held in the Company's treasury)
shall be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor;
(ii) any shares of Company Common Stock then held by Parent,
Acquisition Sub or any other wholly owned Subsidiary of Parent shall be
canceled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor;
(iii) any shares of Company Preferred Stock then held by Parent,
Acquisition Sub or any other wholly owned Subsidiary of Parent shall remain
outstanding and continue to be shares of Preferred Stock in the Surviving
Corporation;
(iv) except as provided in clauses "(i)" and "(ii)" above and subject
to Sections 2.5(b), 2.5(c) and 2.7, each share of Company Common Stock then
outstanding shall be converted into the right to receive a cash amount
equal to the Offer Price, without interest (the "Merger Consideration");
and
(v) each share of the common stock, $0.0001 par value per share, of
Acquisition Sub then outstanding shall be converted into one share of
common stock of the Surviving Corporation.
(b) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Company Common Stock are changed into a different number
or class of shares by reason of any stock split, division or subdivision of
shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the Merger
Consideration shall be appropriately adjusted to reflect such change.
(c) If any shares of Company Common Stock outstanding prior to the
Effective Time are unvested or are subject to a repurchase option, risk of
forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with the Company or under which the Company has any
rights (such shares, "Unvested Shares"), then the Company shall take all action
following adoption and approval of this Agreement under Section 1.2 to
accelerate and fully vest such Unvested Shares so that such Unvested Shares may
be tendered to Acquisition Sub and Parent on the terms set forth herein.
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2.6 Surrender of Certificates; Stock Transfer Books.
(a) At the Effective Time: (a) all shares of Company Common Stock
outstanding immediately prior to the Effective Time shall automatically be
canceled and retired and shall cease to exist, and all holders of certificates
representing shares of Company Common Stock that were outstanding immediately
prior to the Effective Time shall cease to have any rights as stockholders of
the Company; and (b) the stock transfer books of the Company shall be closed
with respect to all shares of Company Common Stock outstanding immediately prior
to the Effective Time. No further transfer of any such shares of Company Common
Stock shall be made on such stock transfer books after the Effective Time. If,
after the Effective Time, a valid certificate previously representing any shares
of Company Common Stock (a "Company Stock Certificate") is presented to the
Paying Agent (as defined in Section 2.6(b)) or to the Surviving Corporation or
Parent, such Company Stock Certificate shall be canceled and shall be exchanged
as provided in this Section 2.6.
(b) Prior to the Effective Time, Parent shall designate a reputable bank or
trust company to act as agent (the "Paying Agent") for the holders of shares of
Company Common Stock to receive the funds to which holders of such shares shall
become entitled pursuant to Section 2.5. Such funds shall be invested by the
Paying Agent as directed by the Surviving Corporation.
(c) As soon as reasonably practicable after the Effective Time, the Paying
Agent will mail to the record holders of Company Common Stock entitled to
receive the Merger Consideration (i) a letter of transmittal in customary form
and containing such provisions as Parent may reasonably specify (including a
provision confirming that delivery of the Company Stock Certificates shall be
effected, and risk of loss and title to Company Stock Certificates shall pass,
only upon delivery of such Company Stock Certificates to the Exchange Agent),
and (ii) instructions for use in effecting the surrender of Company Stock
Certificates in exchange for the Merger Consideration. Upon surrender of a
Company Stock Certificate to the Exchange Agent for exchange, together with a
duly executed letter of transmittal and such other documents as may be
reasonably required by the Paying Agent or Parent, (1) the holder of such
Company Stock Certificate shall be entitled to receive, in exchange for each
share of Company Common Stock previously represented by such Company Stock
Certificate, the Merger Consideration, and (2) the Company Stock Certificate so
surrendered shall be canceled. Until surrendered as contemplated by this Section
2.6(c), each Company Stock Certificate shall be deemed, from and after the
Effective Time, to represent only the right to receive the Merger Consideration
with respect to each share of Company Common Stock represented by such Company
Stock Certificate. If any Company Stock Certificate shall have been lost, stolen
or destroyed, Parent may, in its discretion and as a condition precedent to the
payment of the Merger Consideration, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against the Paying Agent, Parent or the
Surviving Corporation with respect to such Company Stock Certificate.
(d) At any time following the 180th day after the Effective Time, the
Surviving Corporation may require the Paying Agent to deliver to it any funds
which had been made available to the Paying Agent and not disbursed to the
holders of Company Stock Certificates, and any holder of Company Stock
Certificates who has not theretofore surrendered its Company Stock Certificates
in accordance with this Section 2.6 shall thereafter look only to Parent as a
general creditor of Parent for satisfaction of such holder's claims for the
Merger Consideration that may be payable upon due surrender of the Company Stock
Certificates held by such holder.
(e) Each of the Paying Agent, Parent and the Surviving Corporation shall be
entitled to deduct and withhold from any consideration payable or otherwise
deliverable pursuant to this Agreement to any holder or former holder of Company
Common Stock such amounts as may be required to be deducted or withheld
therefrom under the Code or any provision of state, local or foreign tax law or
under any other applicable Legal Requirement. To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the Person to whom such amounts would otherwise
have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of Company Common Stock or to any other Person with
respect to any Merger Consideration that may be
6
payable upon due surrender of any Company Stock Certificate that is delivered to
any public official pursuant to any applicable abandoned property law, escheat
law or similar Legal Requirement. If any Company Stock Certificate has not been
surrendered by the earlier of (i) the fifth anniversary of the date on which the
Merger becomes effective and (ii) the date immediately prior to the date on
which the cash amount that such Company Common Stock Certificate represents the
right to receive would otherwise escheat to or become the property of any
Governmental Body, then such cash amount shall, to the extent permitted by
applicable Legal Requirements, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto.
2.7 Shares Subject to Appraisal Rights.
(a) Notwithstanding anything to the contrary contained in this Agreement,
to the extent that (i) the provisions of Chapter 13 of the California
Corporations Code are or prior to the Effective Time may become applicable to
the Merger by reason of Section 2115 of the California Corporations Code, or
(ii) the provisions of Section 262 of the DGCL are or prior to the Effective
Time may become applicable to the Merger, any shares of Company Common Stock
that, as of the Effective Time, are or may become "dissenting shares" within the
meaning of Section 1300(b) of the California Corporations Code or may carry
appraisal rights under Section 262 of the DGCL shall not be converted into or
represent the right to receive the Merger Consideration, and the holder or
holders of such shares shall be entitled only to such rights as may be granted
to such holder or holders in Chapter 13 of the California Corporations Code or
Section 262 of the DGCL; provided, however, that if the status of any such
shares as "dissenting shares" or shares carrying appraisal rights shall not be
perfected, or if any such shares shall lose their status as "dissenting shares"
or shares carrying appraisal rights, then, as of the later of the Effective Time
or the time of the failure to perfect such status or the loss of such status,
such shares shall automatically be converted into and shall represent only the
right to receive (upon the surrender of the certificate or certificates
representing such shares) the Merger Consideration.
(b) The Company shall give Parent (i) prompt notice of any written demand
received by the Company prior to the Effective Time to require the Company to
purchase shares of Company Common Stock pursuant to Chapter 13 of the CGCL or
Section 262 of the DGCL and of any other demand, notice or instrument delivered
to the Company prior to the Effective Time pursuant to the CGCL or the DGCL, and
(ii) shall keep Parent informed as to all negotiations and proceedings with
respect to any such demand, notice or instrument.
2.8 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full right,
title and possession of and to all rights and property of Acquisition Sub and
the Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Acquisition Sub, in the name of the
Company and otherwise) to take such action.
SECTION 3. Representations and Warranties of the Company
The Company represents and warrants to Parent and Acquisition Sub as
follows:
3.1 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i) 50,000,000
shares of common stock par value $0.0001 per share, (A) of which 35,000,000
shares are designated as Voting Common Stock ("Company Voting Common Stock"), of
which 3,093,202 shares have been issued and are outstanding as of the date of
this Agreement, and (B) of which 5,000,000 shares are designated as Nonvoting
Common Stock ("Company Nonvoting Common Stock"), of which 2,998,902 shares have
been issued and are outstanding as of the date of this Agreement; and (ii)
22,000,000 shares of preferred stock par value $0.0001 per share, (A) of which
2,000,000 shares are designated Series A Preferred Stock ("Company Series A
Preferred Stock"), of which 2,000,000 shares have been issued and are
outstanding as of the date of this Agreement, and (B) of which 18,146,420 shares
are designated Series B Preferred Stock ("Company Series B Preferred Stock"),
all of which have been issued and are outstanding as of the date of this
Agreement. The Company
7
currently holds 585,866 shares of its capital stock in its treasury, consisting
of 546,484 shares of Company Voting Common Stock and 39,382 shares of Company
Nonvoting Common Stock. All of the outstanding shares of Company Common Stock
and Company Preferred Stock have been duly authorized and validly issued, and
are fully paid and nonassessable. None of the outstanding shares of Company
Common Stock is entitled or subject to any preemptive right, right of
participation, right of maintenance or any similar right. None of the
outstanding shares of Company Common Stock is subject to any right of first
refusal in favor of the Company. There is no Company Contract relating to the
voting or registration of, or restricting any Person from purchasing, selling,
pledging or otherwise disposing of (or granting any option or similar right with
respect to), any shares of Company Common Stock. The Company is not under any
obligation, or bound by any Contract pursuant to which it may become obligated,
to repurchase, redeem or otherwise acquire any outstanding shares of Company
Common Stock.
(b) As of the date of this Agreement, 142,000 shares of Company Common
Stock are subject to issuance pursuant to stock options granted and outstanding
under the Company's 2000 Equity Incentive Plan (the "Company Option Plan").
(Options to purchase shares of Company Common Stock are referred to in this
Agreement as "Company Options.") Contemporaneously herewith, the Company has
provided Parent with accurate and complete copies of the Company Option Plan and
all data relating to options granted thereunder.
(c) As of the date of this Agreement, 932,072 shares of outstanding Company
Common Stock are subject to forfeiture or a repurchase right in favor of the
Company ("Restricted Stock"). Contemporaneously herewith, the Company has
provided Parent with the following information with respect to each unvested
share of Restricted Stock outstanding as of the date of this Agreement: (i) the
name of the holder; (ii) the date of issue; (iii) the applicable schedule for
the lapsing of the repurchase right in favor of the Company (and the terms of
any right to accelerate the lapsing of such repurchase right).
(d) Except as set forth in this Section 3.1, there is no: (i) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities of
the Company; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of the Company; or (iii) stockholder rights plan (or similar
plan commonly referred to as a "poison pill") or Contract under which the
Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities.
3.2 SEC Filings; Financial Statements.
(a) All statements, reports, schedules, forms, and other documents required
to have been filed by the Company with the SEC ("Company SEC Documents") have
been so filed on a timely basis, giving effect to any extensions granted for the
filing thereof. As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the Company SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be) and, to the extent applicable but not included in the
Exchange Act or the Securities Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"); and (ii) none of the Company SEC Documents when filed
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Each of the principal executive officer of the Company and the
principal financial officer of the Company (or each former principal executive
officer of the Company and each former principal financial officer of the
Company, as applicable) has made the certifications required by Sections 302 and
906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations of the SEC
promulgated thereunder with respect to the Company's filings pursuant to the
Exchange Act. For purposes of the preceding sentence, "principal executive
officer" and "principal financial officer" shall have the meanings given to such
terms in the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(b) Except to the extent stated therein, the financial statements
(including any related notes) contained in the Company SEC Documents: (i) when
filed, complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) when filed, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered
8
(except as may be indicated in the notes to such financial statements or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC, and except
that the unaudited financial statements may not contain footnotes and are
subject to normal and recurring year-end adjustments that will not, individually
or in the aggregate, be material in amount), and (iii) fairly present the
financial position of the Company as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company for the periods
covered thereby (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments that will
not, individually or in the aggregate, be material in amount).
3.3 Title to Assets. The Company owns, and has good and valid title to
(i) the rights and other assets reflected on the Unaudited Interim Balance Sheet
(except for inventory sold or otherwise disposed of in the ordinary course of
business since the date of the Unaudited Interim Balance Sheet); and (ii) all
rights and other assets reflected in the books and records of the Company as
being owned by the Company. All of said rights and other assets are owned by the
Company free and clear of any Encumbrances, except for (1) any lien for current
taxes not yet due and payable and (2) Encumbrances that do not (in any case or
in the aggregate) materially detract from the value of the assets subject
thereto or materially impair the operations of the Company taken as a whole. The
rights and other assets owned by or leased to the Company collectively
constitute all of the properties, rights, interests and other tangible and
intangible assets necessary to enable the Company to conduct its business in the
manner in which such business is currently being conducted and in the manner in
which such business is proposed to be conducted.
3.4 Intellectual Property.
(a) Contemporaneously herewith, the Company has provided Parent with a list
of each Contract pursuant to which any Person has been granted any license
under, or otherwise has received or acquired any right (whether or not currently
exercisable) or interest in, any Company IP.
(b) The Company exclusively owns all right, title and interest to and in
the Company IP (other than Intellectual Property Rights or Intellectual Property
exclusively licensed to the Company) free and clear of any Encumbrances (other
than nonexclusive licenses granted pursuant to the Contracts identified on the
list provided pursuant to Section 3.4(a)). Except for the nonexclusive licenses
and rights granted under the Contracts identified on the list provided pursuant
to Section 3.4(a), the Company is not bound by, and no Company IP is subject to,
any Contract containing any covenant or other provision that in any way limits
or restricts the ability of the Company to use, exploit, assert or enforce any
Company IP anywhere in the world.
(c) Neither the execution, delivery or performance of this Agreement nor
the consummation of any of the transactions contemplated by this Agreement will,
with or without notice or the lapse of time, result in or give any other Person
the right or option to cause or declare: (i) a loss of, or Encumbrance on, any
Company IP; (ii) a breach of any Contract identified on the list provided
pursuant to Section 3.4(a); (iii) the release, disclosure or delivery of any
Company IP by or to any escrow agent or other Person; or (iv) the grant,
assignment or transfer to any other Person of any license or other right or
interest under, to or in any of the Company IP.
(d) To the Knowledge of the Company, no Person has infringed,
misappropriated, or otherwise violated, and no Person is currently infringing
(directly, contributorily, by inducement or otherwise), misappropriating or
otherwise violating, any Company IP.
(e) The Company is not currently infringing (directly, contributorily, by
inducement or otherwise), misappropriating or otherwise violating any
Intellectual Property Right of any other Person.
(f) No claim or Proceeding involving any Intellectual Property or
Intellectual Property Right owned by or licensed to the Company is pending or,
to the Knowledge of the Company, has been threatened, except for any such claim
or Proceeding that, if adversely determined, would not adversely affect the use
or exploitation of such Intellectual Property or Intellectual Property Right by
the Company.
9
3.5 Liabilities. The Company does not have any accrued, contingent or
other liabilities of any nature, either matured or unmatured, except for: (a)
liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; and (b) normal and recurring current liabilities that
have been incurred by the Company since December 28, 2002 in the ordinary course
of business and consistent with past practices.
3.6 Compliance with Legal Requirements. The Company is in compliance in
all material respects with all applicable Legal Requirements.
3.7 Legal Proceedings; Orders.
(a) There is no pending Legal Proceeding, and (to the Knowledge of the
Company) no Person has threatened to commence any Legal Proceeding: (i) that
involves the Company or any of the assets owned or used by the Company; or (ii)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the Offer, the Merger or any of the other
transactions contemplated by this Agreement. To the Knowledge of the Company, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that could reasonably be expected to give rise to or serve as a basis
for the commencement of any such Legal Proceeding.
(b) There is no order, writ, injunction, judgment or decree to which the
Company, or any of the assets owned or used by the Company, is subject.
3.8 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature
of Agreement. The Company has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement. The
board of directors of the Company (at a meeting duly called and held) has, upon
the unanimous recommendation of the Special Committee and by the unanimous vote
of all directors of the Company, (a) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the Company's stockholders, (b) approved and
adopted this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, in accordance with the requirements of the DGCL and the
CGCL, (c) declared that this Agreement is advisable and (d) resolved to
recommend that the stockholders of the Company accept the Offer and tender their
shares of Company Common Stock pursuant to the Offer and (if required under
applicable law) adopt this Agreement and approve the principal terms of the
Merger. This Agreement constitutes the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with its terms
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and equitable remedies. No state takeover statute or similar
Legal Requirement applies or purports to apply to this Agreement, the Offer, the
Merger or any of the other transactions contemplated by this Agreement.
3.9 Vote Required. If required under applicable Legal Requirements, the
affirmative vote of (a) the holders of a majority of the shares of Company
Common Stock outstanding on the record date for the Company Stockholders'
Meeting and Company Preferred Stock outstanding on the record date for the
Company Stockholders' Meeting, voting together as a single class, and (b) the
holders of a majority of the shares of Company Common Stock outstanding on the
record date for the Company Stockholders' Meeting, the holders of a majority of
the shares of Company Preferred Stock outstanding on the record date for the
Company Stockholders' Meeting and the holders of a majority of the shares of
Company Series A Preferred Stock outstanding on the record date for the Company
Stockholders' Meeting, voting as separate classes (the "Required Company
Stockholder Vote"), are the only votes of the holders of any class or series of
the Company's capital stock necessary to adopt this Agreement, approve the
principal terms of the Merger or consummate any of the other transactions
contemplated by this Agreement.
3.10 Non-Contravention; Consents. Neither (1) the execution, delivery or
performance by the Company of this Agreement, nor (2) the consummation by the
Company of any of the transactions contemplated by this Agreement, will directly
or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the certificate of incorporation or bylaws, or (ii) any
resolution adopted by the stockholders, the board of directors or any
committee of the board of directors of the Company;
10
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body the right to challenge the Offer, the Merger or any of
the other transactions contemplated by this Agreement;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
business of the Company or to any of the assets owned or used by the
Company;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any material Contract, or
give any Person the right to (i) declare a default or exercise any remedy
under any material Contract or (ii) cancel, terminate or modify any term of
any material Contract;
(e) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by the Company (except for minor
liens that will not, in any case or in the aggregate, materially detract
from the value of the assets subject thereto or materially impair the
operations of the Company); or
(f) result in the transfer of any material asset of the Company to any
Person.
Except as identified in writing by the Company to the Parent contemporaneously
herewith or as may be required by the Exchange Act, the DGCL and any antitrust
law or regulation, the Company was not, is not or will not be required to make
any filing with or give any notice to, or to obtain any Consent from, any Person
in connection with (x) the execution, delivery or performance of this Agreement
by the Company, or (y) the consummation by the Company of the Offer, the Merger
or any of the other transactions contemplated by this Agreement. At the
Effective Time, there will be no restrictions on the transfer of Company Common
Stock in the certificate of incorporation or bylaws of the Company that are
applicable to the tender of shares of Company Common Stock pursuant to the Offer
or the consummation of the Merger.
3.11 Advisor. Except for the Special Committee Advisor, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Offer, the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has furnished to Parent accurate and
complete copies of all agreements under which any such fees, commissions or
other amounts have been paid or may become payable and all indemnification and
other agreements related to the engagement of the Special Committee Advisor. The
Special Committee Advisor has delivered to the board of directors of the Company
and the Special Committee the Special Committee Advisor's written opinion, dated
the date of this Agreement, to the effect that as of such date the Offer Price
and the Merger Consideration are fair, from a financial point of view, to the
holders of Shares.
3.12 Disclosure. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion in the Offer Documents or the Schedule
14D-9 will, at the time the Offer Documents and the Schedule 14D-9 are mailed to
the stockholders of the Company or at any time between the time the Offer
Documents and the Schedule 14D-9 are mailed to the stockholders of the Company
and the Acceptance Date, 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.
SECTION 4. Representations and Warranties of Parent and Acquisition Sub
Parent and Acquisition Sub represent and warrant to the Company as follows:
4.1 Valid Existence. Parent and Acquisition Sub are corporations duly
incorporated, validly existing and in good standing under the laws of the State
of
Delaware.
4.2 Authority; Binding Nature of Agreement. Parent and Acquisition Sub
have the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Acquisition Sub of this Agreement have been duly authorized by all
11
necessary action on the part of Parent and Acquisition Sub and their respective
boards of directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Acquisition Sub, enforceable against them in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
4.3 Non-Contravention; Consents. Neither the execution and delivery of
this Agreement by Parent and Acquisition Sub nor the acquisition of shares by
Acquisition Sub in the Offer or the Merger will (a) contravene, conflict with or
result in a violation of any breach of any provisions of the certificate of
incorporation or bylaws of Parent or Acquisition Sub, (b) result in a default by
Parent or Acquisition Sub under any material Contract to which Parent or
Acquisition Sub is a party, or (c) contravene, conflict with or result in a
material violation by Parent or Acquisition Sub of any Legal Requirement, order,
writ, injunction, judgment or decree to which Parent or Acquisition Sub is
subject.
4.4 Disclosure. None of the information supplied or to be supplied by or
on behalf of Parent for inclusion in the Offer Documents will, at the time the
Offer Documents are mailed to the stockholders of the Company or at any time
between the time the Offer Documents are mailed to the stockholders of the
Company and the Acceptance Date, 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.
SECTION 5. Certain Covenants of the Company
5.1 Access and Investigation. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel, facilities and assets and to all existing books, records, tax
returns, work papers and other documents and information relating to the
Company; and (b) provide Parent and Parent's Representatives with such copies of
the existing books, records, tax returns, work papers and other documents and
information relating to the Company, and with such additional financial,
operating and other data and information regarding the Company, as Parent may
reasonably request.
5.2 No Solicitation.
(a) The Company shall not directly or indirectly, and shall not authorize
or permit any Representative of the Company (including any Representative of the
Special Committee) directly or indirectly to, (i) solicit, initiate, encourage,
induce or facilitate the making, submission or announcement of any Acquisition
Proposal or take any action that could reasonably be expected to lead to an
Acquisition Proposal, (ii) furnish any information regarding the Company to any
Person in connection with or in response to an Acquisition Proposal or an
inquiry or indication of interest that could reasonably be expected to lead to
an Acquisition Proposal, (iii) engage in discussions or negotiations with any
Person with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any Contract contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that prior to the adoption of this
Agreement by the Required Company Stockholder Vote, this Section 5.2(a) shall
not prohibit the Company from furnishing nonpublic information regarding the
Company to, or entering into discussions with, any Person in response to a
Superior Offer that is submitted to the Company by such Person (and not
withdrawn) if (1) neither the Company nor any Representative of the Company
(including any Representative of the Special Committee) shall have breached or
taken any action inconsistent with any of the provisions set forth in this
Section 5.2, (2) the board of directors of the Company concludes in good faith,
upon the recommendation of the Special Committee after the Special Committee has
taken into account the written advice of its outside legal counsel, that such
action is required in order for the board of directors of the Company to comply
with its fiduciary obligations to the Company's stockholders under applicable
law, (3) at least one business day prior to furnishing any such nonpublic
information to, or entering into discussions with, such Person, the Company
gives Parent written notice of the identity of such Person and of the Company's
intention to furnish nonpublic information to, or enter into discussions with,
12
such Person, and the Company receives from such Person an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
Person by or on behalf of the Company, and (4) at least one business day prior
to furnishing any such nonpublic information to such Person, the Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously furnished by the Company to Parent). Without
limiting the generality of the foregoing, the Company acknowledges and agrees
that any action inconsistent with any of the provisions set forth in the
preceding sentence taken by any Representative of the Company (including any
Representative of the Special Committee), whether or not such Representative is
purporting to act on behalf of the Company, shall be deemed to constitute a
breach of this Section 5.2 by the Company.
(b) The Company shall, promptly (and in no event later than 24 hours) after
receipt of any Acquisition Proposal, any inquiry or indication of interest that
could lead to an Acquisition Proposal or any request for nonpublic information,
advise Parent orally (with a follow-up confirmation in writing within 72 hours)
of such Acquisition Proposal, inquiry, indication of interest or request
(including the identity of the Person making or submitting such Acquisition
Proposal, inquiry, indication of interest or request, and the terms thereof)
that is made or submitted by any Person during the Pre-Closing Period. The
Company shall keep Parent fully informed with respect to the status of any such
Acquisition Proposal, inquiry, indication of interest or request and any
modification or proposed modification thereto.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
SECTION 6. Additional Covenants of the Parties
6.1 Stockholder Approval; Proxy Statement.
(a) If the adoption of this Agreement and the approval of the principal
terms of the Merger by the Company's stockholders is required by law, the
Company shall, as promptly as practicable following the Acceptance Date, take
all action necessary under all applicable Legal Requirements to call, give
notice of and hold a meeting of the holders of Company Common Stock and Company
Preferred Stock to vote on the adoption of this Agreement and the approval of
the principal terms of the Merger (the "Company Stockholders' Meeting"). The
Company shall ensure that all proxies solicited in connection with the Company
Stockholders' Meeting are solicited in compliance with all applicable Legal
Requirements.
(b) If the adoption of this Agreement and the approval of the principal
terms of the Merger by the Company's stockholders is required by law, the
Company shall, as soon as practicable following the Acceptance Date, prepare and
file with the SEC the Proxy Statement and shall use all reasonable efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company's stockholders, as promptly as practicable. 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 any amendment or
supplement to the Proxy Statement or for additional information, and will 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. The Company shall give Parent an
opportunity to comment on any correspondence with the SEC or its staff or any
proposed material to be included in the Proxy Statement prior to transmission to
the SEC or its staff and shall not transmit any such material to which Parent
reasonably objects. If at any time prior to the Company Stockholders' Meeting
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare such an
amendment or supplement and, after providing Parent the opportunity to review
and comment on such amendment or supplement, shall promptly transmit such
amendment or supplement to the Company's stockholders.
(c) Parent agrees to cause all shares of Company Common Stock and Company
Preferred Stock owned by Parent or any subsidiary of Parent to be voted in favor
of the adoption of the Agreement and the approval of the principal terms of the
Merger at any Company Stockholders' Meeting.
13
6.2 Regulatory Approvals. Each party shall use all reasonable efforts to
file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed by such party with any
Governmental Body with respect to the Offer, the Merger and the other
transactions contemplated by this Agreement, if any, and to submit promptly any
additional information requested by any such Governmental Body. Each of the
Company and Parent shall (1) give the other party prompt notice of the
commencement or threat of commencement of any Legal Proceeding by or before any
Governmental Body with respect to the Offer, the Merger or any of the other
transactions contemplated by this Agreement, (2) keep the other party informed
as to the status of any such Legal Proceeding or threat, and (3) promptly inform
the other party of any communication to or from any Governmental Body regarding
the Offer, the Merger or any of the other transactions contemplated by this
Agreement. Except as may be prohibited by any Governmental Body or by any Legal
Requirement, in connection with any such Legal Proceeding, each of the Company
and Parent will permit authorized Representatives of the other party to be
present at each meeting or conference relating to any such Legal Proceeding and
to have access to and be consulted in connection with any document, opinion or
proposal made or submitted to any Governmental Body in connection with any such
Legal Proceeding.
6.3 Stock Options. The Company shall take such action as is necessary to
terminate the Company Option Plan immediately prior to the Effective Time.
Parent and Acquisition Sub shall not assume outstanding Company Options or
substitute any options for Parent's equity securities for outstanding Company
Options. In accordance with the Company Option Plan, Company Options not
exercised immediately prior to the Effective Time shall be canceled at the
Closing.
6.4 Indemnification of Officers and Directors.
(a) All rights to indemnification by the Company existing in favor of those
Persons who are directors and executive officers of the Company as of the date
of this Agreement (the "Indemnified Persons") for their acts and omissions
occurring prior to the Effective Time, as provided in the Company's bylaws (as
in effect as of the date of this Agreement) and as provided in the
indemnification agreements between the Company and said Indemnified Persons (as
in effect as of the date of this Agreement) in the forms disclosed by the
Company to Parent prior to the date of this Agreement, shall survive the Merger
and shall be observed by the Surviving Corporation to the fullest extent
permissible under Delaware law for a period of six years from the Effective
Time.
(b) From the Effective Time until the sixth anniversary of the Effective
Time, the Surviving Corporation shall maintain in effect, for the benefit of the
Indemnified Persons with respect to their acts and omissions occurring prior to
the Effective Time, the existing policy of directors' and officers' liability
insurance maintained by the Company as of the date of this Agreement in the form
disclosed by the Company to Parent prior to the date of this Agreement (the
"Existing Policy"), on terms and conditions as deemed commercially reasonable by
Parent.
6.5 Additional Agreements. Parent and the Company shall use all reasonable
efforts to take, or cause to be taken, all actions necessary to consummate the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, each party to this Agreement (i) shall make all filings (if any)
and give all notices (if any) required to be made and given by such party in
connection with the Offer and the Merger and the other transactions contemplated
by this Agreement, (ii) shall use all reasonable efforts to obtain each Consent
(if any) required to be obtained (pursuant to any applicable Legal Requirement
or Contract, or otherwise) by such party in connection with the Offer and the
Merger or any of the other transactions contemplated by this Agreement, and
(iii) shall use all reasonable efforts to lift any restraint, injunction or
other legal bar to the Offer, the Merger and each of the other Transactions
contemplated by this Agreement. The Company shall promptly deliver to Parent a
copy of each such filing made, each such notice given and each such Consent
obtained by the Company during the Pre-Closing Period.
6.6 Disclosure. Parent and the Company shall consult with each other
before making any disclosure, including issuing any press release or otherwise
making any public statement with respect to the Offer, the Merger or any of the
other transactions contemplated by this Agreement. Notwithstanding anything
herein to the contrary, any party to this Agreement (and any employee,
representative, shareholder or other agent of any party to this Agreement) may
disclose to any and all persons, without limitation of any kind, the tax
treatment
14
and tax structure of the transactions contemplated by this Agreement and all
materials of any kind that are provided to it relating to such tax treatment and
tax structure; provided however, that such disclosure may not be made to the
extent reasonably necessary to comply with any applicable federal or state
securities laws; and provided further, that for this purpose, (i) the "tax
treatment" of a transaction means the purported or claimed federal income tax
treatment of the transaction, and (ii) the "tax structure" of a transaction
means any fact that may be relevant to understanding the purported or claimed
federal income tax treatment of the transaction.
6.7 Section 16 Matters. Prior to the Effective Time, the Company shall
take such reasonable steps as may be required to cause the disposition of
Company Common Stock, including Company Common Stock received upon the exercise
or vesting of Company Options or Restricted Stock in connection with the Merger
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 from Section 16(b)
of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act.
6.8 Resignation of Officers and Directors. The Company shall obtain and
deliver to Parent at the Closing (effective as of the Closing) the resignation
of each officer and director of the Company.
SECTION 7. Conditions Precedent to the Merger
The obligations of the parties to effect the Merger are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
7.1 Stockholder Approval. If required by applicable law, this Agreement
shall have been duly adopted and the principal terms of the Merger duly approved
by the Required Company Stockholder Vote.
7.2 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.3 Consummation of Offer. Acquisition Sub shall have accepted for payment
and paid for the shares of Company Common Stock tendered pursuant to the Offer.
SECTION 8. Termination
8.1 Termination. This Agreement may be terminated:
(a) by mutual written consent of Parent and the Company at any time
prior to the Effective Time;
(b) by either Parent or the Company at any time prior to the Effective
Time if a court of competent jurisdiction or other Governmental Body shall
have issued a final and nonappealable order, decree or ruling, or shall
have taken any other action, having the effect of permanently restraining,
enjoining or otherwise prohibiting the acquisition or acceptance for
payment of, or payment for, shares of Company Common Stock pursuant to the
Offer or the Merger or making the purchase of or payment for shares of
Company Common Stock pursuant to the Offer or the consummation of the
Merger illegal;
(c) by either Parent or the Company at any time prior to the
Acceptance Date if the Offer shall have expired without the acceptance for
payment of shares of Company Common Stock; provided, however, that a party
shall not be permitted to terminate this Agreement pursuant to this Section
8.1(c) if the failure to accept shares of Company Common Stock for payment
pursuant to the Offer is attributable to a failure on the part of such
party to perform any covenant in this Agreement required to be performed by
such party at or prior to the Acceptance Date;
(d) by either Parent or the Company at any time prior to the
Acceptance Date if the acceptance for payment of shares of Company Common
Stock pursuant to the Offer shall not have occurred on or prior to the
close of business on September 27, 2003; provided, however, that a party
shall not be permitted to terminate this Agreement pursuant to this Section
8.1(d) if the failure to accept shares of Company
15
Common Stock for payment pursuant to the Offer by the close of business on
September 27, 2003 is attributable to a failure on the part of such party
to perform any covenant in this Agreement required to be performed by such
party at or prior to the Acceptance Date;
(e) by Parent at any time prior to the Acceptance Date if a Triggering
Event shall have occurred;
(f) by Parent at any time prior to the Acceptance Date if (i) any of
the Company's representations and warranties contained in this Agreement
shall be inaccurate as of the date of this Agreement, or shall have become
inaccurate as of a date subsequent to the date of this Agreement (as if
made on such subsequent date), such that the condition set forth in clause
"(b)" of Annex II would not be satisfied (it being understood that, for
purposes of determining the accuracy of such representations and warranties
as of the date of this Agreement or as of any subsequent date, all
materiality qualifications contained in such representations and warranties
shall be disregarded), or (ii) any of the Company's covenants contained in
this Agreement shall have been breached such that the condition set forth
in paragraph "(c)" of Annex II would not be satisfied; provided, however,
that if an inaccuracy in any of the Company's representations and
warranties as of a date subsequent to the date of this Agreement or a
breach of a covenant by the Company is curable by the Company within 15
business days after the date of the occurrence of such inaccuracy or breach
and the Company is continuing to exercise all reasonable efforts to cure
such inaccuracy or breach, then Parent may not terminate this Agreement
under this Section 8.1(f) on account of such inaccuracy or breach during
the 15 business day period commencing on the date on which the Company
receives notice of such inaccuracy or breach from Parent;
(g) by the Company at any time prior to the Acceptance Date if (i) any
of Parent's representations and warranties contained in this Agreement
shall be materially inaccurate as of the date of this Agreement, or shall
have become inaccurate as of a date subsequent to the date of this
Agreement (as if made on such subsequent date), such that the inaccuracy in
Parent's representations and warranties shall have a material adverse
effect on Parent's ability to satisfy its obligations under this Agreement
(it being understood that, for purposes of determining the accuracy of such
representations and warranties as of the date of this Agreement or as of
any subsequent date, all materiality qualifications contained in such
representations and warranties shall be disregarded), or (ii) if any of
Parent's covenants contained in this Agreement shall have been materially
breached; provided, however, that if an inaccuracy in any of Parent's
representations and warranties as of a date subsequent to the date of this
Agreement or a breach of a covenant by Parent is curable by Parent within
10 days after the date of the occurrence of such inaccuracy or breach and
Parent is continuing to exercise all reasonable efforts to cure such
inaccuracy or breach, then the Company may not terminate this Agreement
under this Section 8.1(g) on account of such inaccuracy or breach during
the 10-day period commencing on the date on which Parent receives notice of
such inaccuracy or breach; or
(h) by the Company at any time prior to the Acceptance Date, in order
to accept a Superior Offer if (i) neither the Company nor any
Representative of the Company shall have breached or taken any action
inconsistent with any of the provisions set forth in Section 5.2, (ii) the
board of directors of the Company, after satisfying all of the requirements
set forth in Section 5.2(b) and otherwise causing the Company to comply
with all applicable provisions of this Agreement, shall have authorized the
Company to enter into a binding written definitive acquisition agreement
providing for the consummation of a transaction constituting a Superior
Offer (the "Specified Agreement"), (iii) the Company shall have delivered
to Parent a written notice confirming that the board of directors of the
Company has authorized the execution and delivery of the Specified
Agreement on behalf of the Company, (iv) at least two business days shall
have elapsed since the receipt by Parent of the such notice and (v) Parent
shall not have made an offer to the Company that is at least as favorable
to the Company's stockholders, from a financial point of view, as the
transaction contemplated by the Specified Agreement.
8.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 8.2, Section 8.3 and
Section 9 shall survive the termination of this Agreement and shall remain in
full force and effect, and (ii) no termination of this Agreement shall in any
way affect any of the parties' rights or obligations with
16
respect to any shares of Company Common Stock accepted for payment and paid for
pursuant to the Offer prior to such termination.
8.3 Expenses. Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the Offer, the Merger
and the other transactions contemplated by this Agreement shall be paid by the
party incurring such expenses, whether or not any shares of Company Common Stock
are purchased pursuant to the Offer and whether or not the Merger is
consummated; provided, however, that Parent and the Company shall share equally
all fees and expenses, other than attorneys' fees, incurred in connection with
(A) the filing, printing and mailing of the Offer Documents and the Proxy
Statement and any amendments or supplements thereto and (B) the filing by the
parties of any notice or other document under any applicable antitrust law or
regulation.
SECTION 9. Miscellaneous Provisions
9.1 Amendment. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of Parent and the Company.
9.2 Waiver.
(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any party
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No party shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
9.3 No Survival of Representations and Warranties. None of the
representations and warranties contained in this Agreement shall survive the
Merger.
9.4 Entire Agreement; Counterparts. This Agreement constitutes the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among or between any of the parties with respect to the subject matter
hereof. This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same
instrument.
9.5 Applicable Law; Jurisdiction. 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. In any action between any of the parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each of the parties irrevocably and unconditionally consents and
submits to the jurisdiction and venue of the state and federal courts located in
the State of Delaware. Each of the parties hereby irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above-named courts for any
reason other than the failure to lawfully serve process, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper, and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.
9.6 Assignability; Third-Party Beneficiaries. This Agreement shall be
binding upon, and shall be enforceable by and inure solely to the benefit of,
the parties hereto and their respective successors and assigns; provided,
however, that neither this Agreement nor any of the Company's rights hereunder
may be assigned by the Company without the prior written consent of Parent, and
any attempted assignment of this Agreement or
17
any of such rights by the Company without such consent shall be void and of no
effect. Nothing in this Agreement, express or implied, is intended to or shall
confer upon any Company Employee or stockholder of the Company or any other
Person (other than the parties hereto) any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
9.7 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received upon receipt at the address or
facsimile telephone number set forth beneath the name of such party below (or at
such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
if to Parent or Acquisition Sub:
BEI Technologies, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company:
OpticNet, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Wrench
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ Day
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.8 Cooperation. The Company shall cooperate with Parent and execute and
deliver such further documents, certificates, agreements and instruments and
take such other actions as may be reasonably requested by Parent to evidence or
reflect the transactions contemplated by this Agreement and to carry out the
intent and purposes of this Agreement.
9.9 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
9.10 Enforcement. The parties agree that irreparable damage would occur if
any of the provisions of this Agreement was not performed in accordance with its
specific terms. It is accordingly agreed by the parties
18
to this Agreement that they each shall be entitled to specific performance of
the terms of this Agreement in addition to any other remedy to which each party
is entitled at law or in equity.
9.11 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include masculine
and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Annexes" are intended to refer to Sections of this Agreement and
Annexes to this Agreement.
(e) The bold-faced headings contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
[signature page follows]
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
BEI TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Treasurer, Controller and
Secretary
OPTO ACQUISITION SUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Treasurer and Secretary
OPTICNET, INC.
By: /s/ ▇▇▇▇ ▇. WRENCH
------------------------------------
Printed Name: ▇▇▇▇ ▇. Wrench
Title: Chief Financial Officer
20
ANNEX I
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Annex I):
Acceptance Date. "Acceptance Date" shall mean the first date on which
Acquisition Sub accepts any shares of Company Common Stock for payment pursuant
to the Offer.
Acquisition Proposal. "Acquisition Proposal" shall mean any offer or
proposal (other than an offer or proposal made or submitted by Parent)
contemplating or otherwise relating to any Acquisition Transaction.
Acquisition Sub. "Acquisition Sub" shall mean Opto Acquisition Sub, a
Delaware corporation
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) any merger, consolidation, amalgamation, share exchange, business
combination, issuance of securities, acquisition of securities,
recapitalization, tender offer, exchange offer or other similar transaction (i)
in which the Company is a constituent corporation, (ii) in which a Person or
"group" (as defined in the Exchange Act and the rules promulgated thereunder) of
Persons directly or indirectly acquires beneficial or record ownership of
securities representing more than 15% of the outstanding securities of any class
of voting securities of the Company, or (iii) in which the Company issues
securities representing more than 15% of the outstanding securities of any class
of voting securities of the Company;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of any business or businesses or assets that constitute or account
for 15% or more of the consolidated net revenues, net income or assets of the
Company; or
(c) any liquidation or dissolution of the Company.
Adjusted Outstanding Share Number. "Adjusted Outstanding Share Number"
shall mean the sum of: (i) the aggregate number of shares of Company Common
Stock outstanding immediately prior to the acceptance of shares of Company
Common Stock pursuant to the Offer, plus (ii) at the election of Parent, an
additional number of shares up to but not exceeding the aggregate number of
shares of Company Common Stock issuable upon the exercise of any outstanding
option, warrant or other right to acquire capital stock of the Company, or upon
the conversion of any convertible security.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger to
which this Annex I is attached, as it may be amended from time to time.
CGCL. "CGCL" shall mean the California General Corporation Law.
Closing. "Closing" shall have the meaning set forth in Section 2.3 of the
Agreement.
Closing Date. "Closing Date" shall have the meaning set forth in Section
2.3 of the Agreement.
Company. "Company" shall mean OpticNet, Inc., a Delaware corporation.
Company Board Recommendation. "Company Board Recommendation" shall have
the meaning set forth in Section 1.2(a) of the Agreement.
Company Common Stock. "Company Common Stock" shall mean the Common Stock,
$0.0001 par value per share, of the Company, consisting of the Company Voting
Common Stock and the Company Nonvoting Common Stock.
Company Contract. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; (b) by which the Company or any asset of the Company is
bound or under which the Company has, or may become subject to, any obligation;
or (c) under which the Company has or may acquire any right or interest.
21
Company Employee. "Company Employee" shall mean any current or former
employee, independent contractor or director of the Company or any Company
Affiliate.
Company IP. "Company IP" shall mean all Intellectual Property Rights and
Intellectual Property in which the Company has (or purports to have) an
ownership interest or an exclusive license or similar exclusive right.
Company Nonvoting Common Stock. "Company Nonvoting Common Stock" shall
have the meaning set forth in Section 3.1(a) of the Agreement.
Company Option Plan. "Company Option Plan" shall have the meaning set
forth in Section 3.1(b) of the Agreement.
Company Options. "Company Options" shall have the meaning set forth in
Section 3.1(b) of the Agreement.
Company Preferred Stock. "Company Preferred Stock" shall mean the
Preferred Stock, $0.0001 par value per share, of the Company consisting of the
Company Series A Preferred Stock and the Company Series B Preferred Stock.
Company SEC Documents. "Company SEC Documents" shall have the meaning set
forth in Section 3.2(a) of the Agreement.
Company Series A Preferred Stock. "Company Series A Preferred Stock" shall
have the meaning set forth in Section 3.1(a) of the Agreement.
Company Series B Preferred Stock. "Company Series B Preferred Stock" shall
have the meaning set forth in Section 3.1(a) of the Agreement.
Company Stock Certificate. "Company Stock Certificate" shall have the
meaning set forth in Section 2.6(a) of the Agreement.
Company Stockholders Meeting. "Company Stockholders Meeting" shall have
the meaning set forth in Section 6.1(a) of the Agreement.
Company Voting Common Stock. "Company Voting Common Stock" shall have the
meaning set forth in Section 3.1(a) of the Agreement.
Consent. "Consent" shall mean any approval, consent, permission, waiver or
authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any legally binding written, oral or other
agreement, contract, subcontract, lease, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment of any nature.
DGCL. "DGCL" shall mean the Delaware General Corporation Law.
Effective Time. "Effective Time" shall have the meaning set forth in
Section 2.3 of the Agreement.
Encumbrance. "Encumbrance" shall mean any (i) lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right or restriction of
any nature (including any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset) or (ii) obligation to make any royalty payment,
milestone payment success payment or pay any maintenance fee.
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any company
limited by shares, limited liability company or joint stock company), firm,
society or other enterprise, association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
22
Existing Policy. "Existing Policy" shall have the meaning set forth in
Section 6.4(b) of the Agreement.
Governmental Authorization. "Governmental Authorization" shall mean any
permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
Governmental Body. "Governmental Body" shall mean any: (a) federal, state,
commonwealth, local, municipal, foreign or other government; or (b) governmental
or quasi-governmental authority of any nature (including any governmental
division, department, agency, commission, instrumentality, official, ministry,
fund, foundation, center, organization, unit, body or Entity and any court or
other tribunal).
Indemnified Person. "Indemnified Persons" shall have the meaning set forth
in Section 6.4(a) of the Agreement.
Intellectual Property. "Intellectual Property" shall mean algorithms,
apparatus, databases, data collections, diagrams, inventions (whether or not
patentable), know-how, logos, marks (including brand names, product names,
logos, and slogans), methods, network configurations and architectures,
processes, proprietary information, protocols, schematics, specifications,
software, techniques, URLs, web sites, works of authorship and other forms of
technology (whether or not embodied in any tangible form and including all
tangible embodiments of the foregoing, such as instruction manuals, laboratory
notebooks, prototypes, samples, studies and summaries).
Intellectual Property Rights. "Intellectual Property Rights" shall mean
all past, present, and future rights of the following types, which may exist or
be created under the laws of any jurisdiction in the world: (i) rights
associated with works of authorship, including exclusive exploitation rights,
copyrights and moral rights; (ii) trademark and trade name rights and similar
rights; (iii) trade secret rights; (iv) patent and industrial property rights;
(v) other proprietary rights in Intellectual Property; and (vi) rights in or
relating to registrations, renewals, extensions, combinations, divisions and
reissues of, and applications for, any of the rights referred to in clauses
'(i)" through "(v)" above.
Knowledge. The Company shall be deemed to have "Knowledge" of any fact or
other matter if such fact or other matter is within the knowledge of any member
of the Company's board of directors or any executive officer of the Company.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq National Market).
Merger. "Merger" shall have the meaning set forth in the Second Recital of
the Agreement.
Merger Consideration. "Merger Consideration" shall have the meaning set
forth in Section 2.5(a)(iii) of the Agreement.
Minimum Condition. "Minimum Condition" shall have the meaning set forth in
Section 1.1(b)of the Agreement.
Offer. "Offer" shall have the meaning set forth in the Second Recital of
the Agreement.
Offer Expiration Date. "Offer Expiration Date" shall mean the expiration
date of the Offer, as such date may be extended in accordance with the terms of
the Agreement.
Offer Conditions. "Offer Conditions" shall have the meaning set forth in
Section 1.1(b) of the Agreement.
23
Offer Documents. "Offer Documents" shall have the meaning set forth in
Section 1.1(d) of the Agreement.
Offer Price. "Offer Price" shall have the meaning set forth in the Second
Recital of the Agreement.
Offer to Purchase. "Offer to Purchase" shall have the meaning set forth in
Section 1.1(d) of the Agreement.
Parent. "Parent" shall mean BEI Technologies, Inc., a Delaware
corporation.
Parent Owned Shares. "Parent Owned Shares" shall have the meaning set
forth in Section 1.1(b) of the Agreement.
Paying Agent. "Paying Agent" shall have the meaning set forth in Section
2.6(b) of the Agreement.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Pre-Closing Period. "Pre-Closing Period" shall have the meaning set forth
in Section 5.1 of the Agreement.
Proxy Statement. "Proxy Statement" shall mean any proxy statement to be
sent to the Company's stockholders in connection with a Company Stockholders'
Meeting.
Representatives. "Representatives" shall mean executive officers and
directors of a party and any individual or Entity explicitly authorized to take
action on behalf of such party.
Required Company Stockholder Vote. "Required Company Stockholder Vote"
shall have the meaning set forth in Section 3.9 of the Agreement.
Restricted Stock. "Restricted Stock" shall have the meaning set forth in
Section 3.1(c) of the Agreement.
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act" shall have the meaning set forth
in Section 3.2(a) of the Agreement.
Schedule 14D-9. "Schedule 14D-9" shall have the meaning set forth in
Section 1.2(a) of the Agreement.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Special Committee. "Special Committee" shall have the meaning set forth in
Section 1.2(a) of the Agreement.
Special Committee Advisor. "Special Committee Advisor" shall have the
meaning set forth in Section 1.2(a) of the Agreement.
Specified Agreement. "Specified Agreement" shall have the meaning set
forth in Section 8.1(h) of the Agreement.
Superior Offer. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase all of the outstanding shares of
Company Common Stock on terms that the board of directors of the Company
determines, in its reasonable judgment, upon the recommendation of the Special
Committee, to be more favorable to the Company's stockholders than the terms of
the Merger; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not reasonably capable of being obtained by such
third party.
Surviving Corporation. "Surviving Corporation" shall have the meaning set
forth in Section 2.1 of the Agreement.
Top-Up Option. "Top-Up Option" shall have the meaning set forth in Section
1.3(a) of the Agreement.
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Top-Up Option Shares. "Top-Up Option" shall have the meaning set forth in
Section 1.3(a) of the Agreement.
Triggering Event. A "Triggering Event" shall be deemed to have occurred
if: (i) the board of directors of the Company shall have failed to recommend
unanimously that the Company's stockholders accept the Offer and tender their
shares of Company Common Stock pursuant to the Offer or (if required by
applicable law) vote to adopt the Agreement and approve the principal terms of
the Merger, or shall have withdrawn or modified in a manner adverse to Parent
the Company Board Recommendation, or shall have taken any other action which is
reasonably determined by Parent to suggest that the board of directors of the
Company might not unanimously support the Offer or the Merger or might not
believe that the Offer or the Merger is in the best interests of the Company's
stockholders; (ii) the Company shall have failed to include in the Offer
Documents the Company Board Recommendation or a statement to the effect that the
board of directors of the Company has unanimously determined and believes that
the Offer and the Merger are in the best interests of the Company's
stockholders; (iii) the board of directors of the Company fails to reaffirm the
Company Board Recommendation, or fails to reaffirm its unanimous determination
that the Offer and the Merger are in the best interests of the Company's
stockholders, within five business days after Parent requests in writing that
such recommendation or determination be reaffirmed; (iv) the board of directors
of the Company shall have approved, endorsed or recommended any Acquisition
Proposal; (v) the Company shall have entered into any letter of intent or
similar document or any Contract relating to any Acquisition Proposal; (vi) a
tender or exchange offer relating to securities of the Company shall have been
commenced (other than by Parent) and the Company shall not have sent to its
securityholders, within ten business days after the commencement of such tender
or exchange offer, a statement disclosing that the Company recommends rejection
of such tender or exchange offer; (vii) an Acquisition Proposal is publicly
announced, and the Company (A) fails to issue a press release announcing its
opposition to such Acquisition Proposal within five business days after such
Acquisition Proposal is announced or (B) otherwise fails to actively oppose such
Acquisition Proposal; (viii) any Person (other than a Person that beneficially
owns more than 15% of the outstanding shares of Company Common Stock as of the
date of the Agreement) or "group" (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons directly or indirectly acquires or agrees to
acquire, or discloses an intention to acquire, beneficial or record ownership of
any securities of the Company and, as a result of the acquisition thereof, owns
or would own more than 15% of the outstanding securities of any class of voting
securities of the Company; (ix) any Person that beneficially owns more than 15%
of the outstanding shares of Company Common Stock as of the date of this
Agreement acquires or agrees to acquire, or discloses an intention to acquire,
beneficial or record ownership of an additional two percent or more of the
outstanding securities of any class of voting securities of the Company; or (x)
the Company or any Representative of the Company shall have breached or taken
any action inconsistent with any of the provisions set forth in Section 5.2.
Unaudited Interim Balance Sheet. "Unaudited Interim Balance Sheet" shall
mean the unaudited consolidated balance sheet of the Company and its
consolidated subsidiaries as of March 29, 2003, included in the Company's Report
on Form 10-Q for the fiscal quarter ended March 29, 2003, as will be filed with
the SEC on or prior to May 15, 2003.
Unvested Shares. "Unvested Shares" shall have the meaning set forth in
Section 2.5(c) of the Agreement.
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ANNEX II
CONDITIONS OF THE OFFER
Capitalized terms used but not defined in this Annex II shall have the
meanings set forth in the Agreement and Plan of Merger to which this Annex II is
attached (the "Agreement"). Notwithstanding any other provision of the Offer or
the Agreement, Acquisition Sub shall not be required to accept for payment, or
(subject to any applicable rule or regulation of the SEC) pay for, and may delay
the acceptance of payment of, or (subject to any applicable rule or regulation
of the SEC) the payment for, any tendered shares of Company Common Stock, and
may amend the Offer consistent with the terms of the Agreement or terminate the
Offer and not accept for payment any tendered shares of Company Common Stock if
(i) the Minimum Condition shall not have been satisfied on the Offer Expiration
Date or (ii) at any time on or after the date of the Agreement and prior to the
Offer Expiration Date any of the following conditions shall not have been
satisfied:
(a) any waiting period under any applicable antitrust or competition
law or regulation or other Legal Requirement shall have expired or been
terminated; and any Consent required under any applicable antitrust or
competition law or regulation or other Legal Requirement shall have been
obtained;
(b) each of the representations and warranties of the Company
contained in the Agreement shall have been accurate in all material
respects as of the date of the Agreement (except that any representation or
warranty that, by its express terms, speaks only as of an earlier date need
only have been accurate as of such earlier date); provided, however, that
for purposes of determining the accuracy of such representations and
warranties, all materiality qualifications contained in such
representations and warranties shall be disregarded;
(c) each of the representations and warranties of the Company
contained in the Agreement shall be accurate in all respects as of the
Offer Expiration Date as if made on and as of the Offer Expiration Date
(except that any representation or warranty that, by its express terms,
speaks only as of an earlier date need only have been accurate as of such
earlier date); provided, however, that the inaccuracies in such
representations and warranties shall be disregarded for purposes of this
clause "(c)" if all such inaccuracies and the circumstances giving rise
thereto, considered collectively, have not had and could not reasonably be
expected to have or constitute a material adverse effect on the business,
operations, capitalization, assets, liabilities or prospects of the
Company;
(d) each covenant or obligation that the Company is required to comply
with or to perform at or prior to the Offer Expiration Date shall have been
complied with and performed in all material respects;
(e) all material Consents required to be obtained in connection with
the Offer, the Merger and each of the other transactions contemplated by
the Agreement shall have been obtained and shall be in full force and
effect;
(f) Parent and the Company shall have received the following
agreements and documents, each of which shall be in full force and effect:
(i) a certificate executed by the Chief Executive Officer and Chief
Financial Officer of the Company confirming that the conditions set forth
in paragraphs "(b)," "(c)," "(d)," "(g)" and "(h)" of this Annex II have
been duly satisfied; and (ii) the written resignations of all officers and
directors of the Company, effective as of the Acceptance Date;
(g) no temporary restraining order, preliminary or permanent
injunction or other order preventing the purchase of or payment for shares
of Company Common Stock pursuant to the Offer, or preventing consummation
of the Merger or any of the other transactions contemplated by the
Agreement, shall have been issued by any court of competent jurisdiction
and remain in effect, and there shall not be any Legal Requirement enacted
or deemed applicable to the Offer, the Merger or any of the other
transactions contemplated by the Agreement that makes the purchase of or
payment for shares of Company Common Stock pursuant to the Offer, or the
consummation of the Merger or any of the other transactions contemplated by
the Agreement illegal;
26
(h) there shall not be pending or overtly threatened any Legal
Proceeding by or before any Governmental Body: (i) challenging or seeking
to restrain or prohibit the purchase of or payment for shares of Company
Common Stock pursuant to the Offer, or the consummation of the Merger or
any of the other transactions contemplated by the Agreement; (ii) relating
to the Offer, the Merger or any of the other transactions contemplated by
the Agreement and seeking to obtain from Parent or the Company any damages
or other relief that may be material to Parent or the Company; (iii)
seeking to prohibit or limit in any material respect Parent's ability to
vote, receive dividends with respect to or otherwise exercise ownership
rights with respect to the stock of the Surviving Corporation; or (iv) that
could materially and adversely affect the right of Parent or the Company to
own the assets or operate the business of the Company; or
(i) there shall not have occurred: (i) a declaration by a Governmental
Body of a banking moratorium in the United States or any suspension of
payments in respect of banks in the United States, which declaration or
suspension is continuing; or (ii) a war, armed hostilities, an act of
terrorism or any other international or national calamity directly or
indirectly involving the United States, which is (or whose effects are)
continuing, which in any case in the good faith judgment of Parent would
make it inadvisable to proceed with the Offer or the Merger.
The foregoing conditions are for the sole benefit of Parent and Acquisition
Sub and may be waived by Parent or Acquisition Sub, in whole or in part at any
time and from time to time, in the sole discretion of Parent and Acquisition
Sub. The failure by Parent or Acquisition Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
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ANNEX III
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
OPTICNET, INC.
1. The original name of this corporation is OpticNet, Inc. and the date of
filing the original Certificate of Incorporation of this corporation with the
Secretary of State of the State of Delaware is February 23, 2000.
2. He is the duly elected and acting Chief Financial Officer of OpticNet,
Inc., a Delaware corporation.
3. The Certificate of Incorporation of this corporation is hereby amended
and restated to read as follows:
ARTICLE I
The name of this corporation is OpticNet, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of Newcastle, and the
name of the registered agent of the corporation in the State of Delaware at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
ARTICLE IV
This corporation is authorized to issue only one class of stock, to be
designated Common Stock. The total number of shares of Common Stock presently
authorized is one thousand (1,000) shares, each having a par value of
one-hundredth of one cent ($.0001).
ARTICLE V
A. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by the Board
of Directors in the manner provided in the Bylaws.
B. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may be
altered or amended or new Bylaws adopted by the stockholders entitled to vote.
The Board of Directors shall also have the power to adopt, amend or repeal
Bylaws.
ARTICLE VI
A. The liability of the directors for monetary damages shall be eliminated
to the fullest extent under applicable law.
B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
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ARTICLE VII
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this reservation.
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