AGREEMENT AND PLAN OF MERGER among STMICROELECTRONICS N.V., SOPHIA ACQUISITION CORP. and GENESIS MICROCHIP INC. Dated as of December 10, 2007
EXECUTION
COPY
AGREEMENT
AND PLAN OF MERGER
among
STMICROELECTRONICS
N.V.,
SOPHIA
ACQUISITION CORP.
and
GENESIS
MICROCHIP INC.
Dated
as
of December 10, 2007
TABLE
OF CONTENTS
|
Page
|
||||
|
DEFINITIONS
|
||||
|
SECTION
1.01.
|
Definitions
|
1
|
||
|
ARTICLE
II
|
|
|||
|
THE
OFFER
|
|
|||
|
SECTION
2.01.
|
The
Offer
|
7
|
||
|
SECTION
2.02.
|
Company
Action
|
9
|
||
|
ARTICLE
III
|
|
|||
|
THE
MERGER
|
|
|||
|
SECTION
3.01.
|
The
Merger
|
11
|
||
|
SECTION
3.02.
|
Effective
Time; Closing
|
11
|
||
|
SECTION
3.03.
|
Effect
of the Merger
|
11
|
||
|
SECTION
3.04.
|
Certificate
of Incorporation; By-Laws
|
11
|
||
|
SECTION
3.05.
|
Directors
and Officers
|
11
|
||
|
SECTION
3.06.
|
Conversion
of Securities
|
12
|
||
|
SECTION
3.07.
|
Stock
Options and Stock Awards
|
12
|
||
|
SECTION
3.08.
|
Employee
Stock Purchase Plan
|
13
|
||
|
SECTION
3.09.
|
Dissenting
Shares
|
13
|
||
|
SECTION
3.10.
|
Surrender
of Shares; Stock Transfer Books
|
14
|
||
|
SECTION
3.11.
|
Adjustments
|
15
|
||
|
SECTION
3.12.
|
Further
Assurances
|
15
|
||
|
ARTICLE
IV
|
|
|||
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
|
|||
|
SECTION
4.01.
|
Organization
and Qualification; Subsidiaries
|
16
|
||
|
SECTION
4.02.
|
Certificate
of Incorporation and By-Laws
|
16
|
||
|
SECTION
4.03.
|
Capitalization
|
17
|
||
|
SECTION
4.04.
|
Authority
Relative to This Agreement
|
18
|
||
|
SECTION
4.05.
|
No
Conflict; Required Filings and Consents
|
18
|
||
|
SECTION
4.06.
|
Permits;
Compliance
|
19
|
||
|
SECTION
4.07.
|
SEC
Filings; Financial Statements
|
19
|
||
|
SECTION
4.08.
|
Absence
of Certain Changes or Events
|
22
|
||
|
SECTION
4.09.
|
Absence
of Litigation
|
22
|
||
|
SECTION
4.10.
|
Employee
Benefit Plans
|
23
|
||
|
SECTION
4.11.
|
Labor
and Employment Matters
|
25
|
||
|
SECTION
4.12.
|
Offer
Documents; Schedule 14D-9; Proxy Statement
|
26
|
||
|
SECTION
4.13.
|
Real
Property; Title to Assets
|
26
|
||
|
SECTION
4.14.
|
Intellectual
Property
|
27
|
||
i
|
SECTION
4.15.
|
Taxes
|
29
|
||
|
SECTION
4.16.
|
Environmental
Matters
|
30
|
||
|
SECTION
4.17.
|
Amendment
to Rights Agreement
|
30
|
||
|
SECTION
4.18.
|
Material
Contracts
|
31
|
||
|
SECTION
4.19.
|
Customers
and Suppliers
|
32
|
||
|
SECTION
4.20.
|
Company
Products and Services
|
32
|
||
|
SECTION
4.21.
|
Insurance
|
33
|
||
|
SECTION
4.22.
|
Certain
Business Practices
|
33
|
||
|
SECTION
4.23.
|
Interested
Party Transactions
|
33
|
||
|
SECTION
4.24.
|
Brokers;
Schedule of Fees and Expenses
|
33
|
||
|
SECTION
4.25.
|
No
Existing Discussions
|
33
|
||
|
SECTION
4.26.
|
Required
Vote of the Company Stockholders
|
33
|
||
|
SECTION
4.27.
|
Opinion
of Financial Advisor
|
34
|
||
|
ARTICLE
V
|
|
|||
|
REPRESENTATIONS
AND WARRANTIES OF PARENT AND PURCHASER
|
|
|||
|
SECTION
5.01.
|
Corporate
Organization
|
34
|
||
|
SECTION
5.02.
|
Authority
Relative to This Agreement
|
34
|
||
|
SECTION
5.03.
|
No
Conflict; Required Filings and Consents
|
34
|
||
|
SECTION
5.04.
|
Financing
|
35
|
||
|
SECTION
5.05.
|
Offer
Documents; Proxy Statement
|
35
|
||
|
SECTION
5.06.
|
Brokers
|
36
|
||
|
ARTICLE
VI
|
|
|||
|
CONDUCT
OF BUSINESS PENDING THE MERGER
|
|
|||
|
SECTION
6.01.
|
Conduct
of Business by the Company Pending the Merger
|
36
|
||
|
ARTICLE
VII
|
|
|||
|
ADDITIONAL
AGREEMENTS
|
|
|||
|
SECTION
7.01.
|
Stockholders’
Meeting
|
38
|
||
|
SECTION
7.02.
|
Proxy
Statement
|
39
|
||
|
SECTION
7.03.
|
Company
Board Representation; Section 14(f)
|
39
|
||
|
SECTION
7.04.
|
Access
to Information; Confidentiality
|
41
|
||
|
SECTION
7.05.
|
No
Solicitation of Transactions
|
41
|
||
|
SECTION
7.06.
|
Employee
Benefits Matters
|
44
|
||
|
SECTION
7.07.
|
Directors’
and Officers’ Indemnification and Insurance
|
44
|
||
|
SECTION
7.08.
|
Notification
of Certain Matters
|
46
|
||
|
SECTION
7.09.
|
Further
Action; Reasonable Best Efforts
|
47
|
||
|
SECTION
7.10.
|
Public
Announcements
|
47
|
||
|
SECTION
7.11.
|
Section
16 Matters
|
47
|
||
|
SECTION
7.12.
|
State
Takeover Statute
|
48
|
||
|
SECTION
7.13.
|
Rights
Agreement
|
48
|
||
|
SECTION
7.14.
|
Fairness
Opinion
|
48
|
||
ii
|
ARTICLE
VIII
|
||||
|
CONDITIONS
TO THE MERGER
|
||||
|
SECTION
8.01.
|
Conditions
to the Merger
|
48
|
||
|
ARTICLE
IX
|
|
|||
|
TERMINATION,
AMENDMENT AND WAIVER
|
|
|||
|
SECTION
9.01.
|
Termination
|
48
|
||
|
SECTION
9.02.
|
Effect
of Termination
|
50
|
||
|
SECTION
9.03.
|
Fees
and Expenses
|
50
|
||
|
SECTION
9.04.
|
Amendment
|
52
|
||
|
SECTION
9.05.
|
Waiver
|
52
|
||
|
ARTICLE
X
|
|
|||
|
GENERAL
PROVISIONS
|
|
|||
|
SECTION
10.01.
|
Notices
|
52
|
||
|
SECTION
10.02.
|
Severability
|
53
|
||
|
SECTION
10.03.
|
Entire
Agreement; Assignment
|
54
|
||
|
SECTION
10.04.
|
Parties
in Interest
|
54
|
||
|
SECTION
10.05.
|
Specific
Performance
|
54
|
||
|
SECTION
10.06.
|
No
Survival of Representations and Warranties
|
54
|
||
|
SECTION
10.07.
|
Governing
Law
|
54
|
||
|
SECTION
10.08.
|
Headings
|
55
|
||
|
SECTION
10.09.
|
Counterparts
|
55
|
||
|
SECTION
10.10.
|
Waiver
of Jury Trial
|
55
|
||
|
|
||||
| ANNEX A | Conditions to the Offer |
|
||
| ANNEX B | Employment Agreement | |||
iii
AGREEMENT
AND PLAN OF MERGER, dated as of December 10, 2007 (this “Agreement”),
among
STMICROELECTRONICS N.V., a limited liability company organized under the Laws
of
the Netherlands, with its corporate seat in Amsterdam, the Netherlands
(“Parent”),
SOPHIA ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary
of Parent (“Purchaser”),
and
GENESIS MICROCHIP INC., a Delaware corporation (the “Company”).
WHEREAS,
the Managing Board of Parent with the approval of Parent’s Supervisory Board and
the Boards of Directors of each of Purchaser and the Company have each
determined that it is in the best interests of their respective shareholders
and
stockholders for Parent to acquire the Company upon the terms and subject to
the
conditions set forth herein;
WHEREAS,
in furtherance of such acquisition, it is proposed that Purchaser shall make
a
cash tender offer (the “Offer”)
to
acquire all the shares of common stock, par value $0.001 per share, of the
Company (together with the associated Rights (as defined in
Section 4.03(a)) (“Shares”)
for
$8.65 per Share in cash (such amount, or any greater amount per Share paid
pursuant to the Offer, being the “Per
Share Amount”)
upon
the terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS,
also in furtherance of such acquisition, the Managing Board of Parent and the
Boards of Directors of Purchaser and the Company have each approved this
Agreement and declared its advisability and approved the merger (the
“Merger”)
of
Purchaser with and into the Company in accordance with the General Corporation
Law of the State of Delaware (the “DGCL”),
following the consummation of the Offer and upon the terms and subject to the
conditions set forth herein;
WHEREAS,
the Board of Directors of the Company (the “Board”)
has
unanimously approved the making of the Offer and resolved to unanimously
recommend that holders of Shares tender their Shares pursuant to the Offer
and,
if applicable, vote their Shares in favor of the Merger; and
WHEREAS,
concurrently with the execution of this Agreement, with the approval of the
Compensation Committee of the Board, Parent has entered into an employment
agreement with the Chief Executive Officer of the Company, to be in effect
as of
the Effective Time (the “Employment
Agreement”),
a
copy of which is attached as Annex B to this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, Parent,
Purchaser and the Company hereby agree as follows:
ARTICLE
I
DEFINITIONS
SECTION
1.01. Definitions.
(a)
For
purposes of this Agreement:
“affiliate”
of
a
specified person means a person who, directly or indirectly through one or
more
intermediaries, controls, is controlled by, or is under common control with,
such specified person.
“beneficial
owner”,
with
respect to any Shares, has the meaning ascribed to such term under Rule 13d-3(a)
of the Exchange Act.
“business
day”
means
any day, other than Saturday, Sunday or a United States federal
holiday.
“Company
IT Assets”
means
Software, systems, servers, computers, hardware, firmware, middleware, networks,
data communications lines, routers, hubs, switches and all other information
technology equipment, and all associated documentation, used by the Company
or
its Subsidiaries in the operation of their business.
“Company
Owned Intellectual Property”
means
Intellectual Property owned by the Company or a Subsidiary.
“Company
Licensed Intellectual Property”
means
each item of Intellectual Property licensed to the Company or a Subsidiary
pursuant to a License.
“Company
Software”
means
Software distributed, sold, licensed to third parties or marketed by the Company
or any Subsidiary as, or in connection with, a product of the
Company.
“control”
(including the terms “controlled
by”
and
“under
common control with”)
means
the possession, directly or indirectly, or as trustee or executor, of the power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or executor,
by
contract or credit arrangement or otherwise;
“Environmental
Laws”
means
any United States federal, state, local or non-United
States Laws relating to (i) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (ii) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; or (iii) pollution, protection
of
the environment, worker safety, natural resources or the exposure of any
individual to Hazardous Substances.
“ERISA
Affiliate”
means
any trade or business (whether or not incorporated) under common control with
the Company or any Subsidiary and which, together with the Company or any
Subsidiary, is treated as a single employer within the meaning of Section
414(b), (c), (m) or (o) of the Code.
“Fully
Diluted Basis”
means
after taking into account all outstanding Shares and assuming the exercise,
conversion or exchange of all options, warrants, convertible or exchangeable
securities and similar rights (other than, unless exercisable, the Rights)
and
the issuance of all Shares that the Company is obligated to issue thereunder,
excluding, however, any Shares issuable upon the exercise of any Company Stock
Option (i) not exercisable on or prior to May 15, 2008 or (ii) with an
exercise price greater than $10.50 per Share.
2
“Hazardous
Substances”
means
(i) those substances defined in or regulated under the following United States
federal statutes and their state counterparts, as each may be amended from
time
to time, and all regulations thereunder: the Hazardous Materials Transportation
Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking
Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and
Rodenticide Act and the Clean Air Act; (ii) petroleum and petroleum products,
including crude oil and any fractions thereof; (iii) natural gas, synthetic
gas,
and any mixtures thereof; (iv) polychlorinated biphenyls, asbestos and radon;
and (v) any other contaminant, substance, material or waste regulated by any
Governmental Authority pursuant to any Environmental Law.
“Intellectual
Property”
means
(i) United States and non-United States patents, patent applications and
invention registrations of any type, (ii) trademarks, service marks, domain
names, trade dress, logos, trade names, corporate names and other source
identifiers, and registrations and applications for registration thereof, (iii)
copyrightable works, copyrights, mask works and registrations and applications
for registration thereof, (iv) Software, (v) confidential and proprietary
information, including trade secrets and know-how, and (vi) rights of privacy,
publicity and endorsement, and all other rights associated therewith in any
jurisdiction.
“knowledge
of the Company”
means
the actual knowledge of any director or executive officer of the Company and
such knowledge that any such individual would obtain after reasonable inquiry
of
those employees of the Company with primary responsibility for the subject
matter with respect to which knowledge is being attributed.
“Licenses”
mean
(i) licenses of Intellectual Property by the Company or a Subsidiary to third
parties, (ii) licenses of Intellectual Property by third parties to the Company
or a Subsidiary, and (iii) agreements between the Company or a Subsidiary and
third parties relating to the development or use of Intellectual
Property.
“Material
Adverse Effect”
means,
when used in connection with the Company or any Subsidiary, any event,
circumstance, change or effect that, individually or in the aggregate with
any
other events, circumstances, changes, and effects, is or is reasonably likely
to
(i) be materially adverse to the business, financial condition, assets,
liabilities or results of operations of the Company and its Subsidiaries taken
as a whole or (ii) prevent or materially delay the ability of the Company to
perform its obligations under this Agreement or to consummate the Transactions;
provided,
however,
that
the foregoing shall not include any event, circumstance, change or effect
resulting from (A) changes, after the date of this Agreement, in general
economic or political conditions or the conditions of the financial markets
in
the United States or in any other country, (B) general changes, after the date
of this Agreement, in the industries in which the Company and its Subsidiaries
operate, (C) the public announcement of this Agreement or the pendency or
consummation of the transactions contemplated hereby, (D) changes, after the
date of this Agreement, in Law or in GAAP (or the interpretation thereof by
any
Governmental Authority), (E) acts of terrorism or war, earthquakes, fires
or other force majeure events, (F) any failure by the Company to take any
action prohibited by this Agreement or the taking by the Company of any action
that Parent has approved in advance or requested in writing, (G) any
change, in and of itself, in the Company’s stock price or the trading volume of
the Company’s stock or (H) any failure, in and of itself, by the Company to
meet any published analyst estimates of the Company’s revenue, earnings or
results of operations for any period or any failure, in and of itself, by the
Company to meet its internal budgets, plans or forecasts of its revenues,
earnings or results of operations (it being understood and hereby agreed that
with respect to clauses (G) and (H) hereof the facts or occurrences giving
rise
or contributing to any such change or failure that are not otherwise excluded
from the definition of a “Material Adverse Effect” may be deemed to constitute,
or be taken into account in determining whether there has been, is or would
be a
Material Adverse Effect), or (I) any legal proceedings made or brought by any
of
the current or former stockholders of the Company (on their own behalf or on
behalf of the Company) resulting from, relating to or arising out of this
Agreement or any of the Transactions, except in each of clauses (A), (B), (D)
and (E) above to the extent that such changes adversely affect the Company
and
its Subsidiaries, taken as a whole, in a disproportionate manner relative to
other entities operating in the industries or businesses in which the Company
and its Subsidiaries operate.
3
“person”
means
an individual, corporation, partnership, limited partnership, limited liability
company, syndicate, person (including, without limitation, a “person” as defined
in Section 13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government.
“Public
Software”
means
any Software that contains, or is derived in any manner from, in whole or in
part, any Software that is distributed as freeware, shareware, open source
Software (e.g., Linux) or similar licensing or distribution models that
(i) require the licensing or distribution of source code to licensees,
(ii) prohibit or limit the receipt of consideration in connection with
sublicensing or distributing any Software, (iii) except as specifically
permitted by applicable Law, allow any person to decompile, disassemble or
otherwise reverse-engineer any Software, or (iv) require the licensing of
any Software to any other person for the purpose of making derivative works.
For
the avoidance of doubt, “Public Software” includes, without limitation, Software
licensed or distributed under any of the following licenses or distribution
models (or licenses or distribution models similar thereto): (i) GNU’s
General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the
Artistic License (e.g., PERL); (iii) the Mozilla Public License;
(iv) the Netscape Public License; (v) the Sun Community Source License
(SCSL); (vi) the Sun Industry Standards License (SISL); (vii) the BSD
License; (viii) Red Hat Linux; (ix) the Apache License; and
(x) any other license or distribution model described by the Open Source
Initiative as set forth on ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇.
“Software”
means
computer software, programs and databases in any form, including Internet web
sites, web content and links, all versions, updates, corrections, enhancements,
and modifications thereof, and all related documentation.
“subsidiary”,
when
used with respect to any party, shall mean any corporation or other
organization, whether incorporated or unincorporated, at least a majority of
the
board of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries.
4
“Taxes”
shall
mean any and all taxes, fees, levies, duties, tariffs, imposts and other similar
charges of any kind (together with any and all interest, penalties, additions
to
tax and additional amounts imposed with respect thereto) imposed by any
Governmental Authority or taxing authority, including, without limitation:
taxes
or other charges on or with respect to income, franchise, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers’ compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value-added or gains taxes; license, registration
and
documentation fees; and customers’ duties, tariffs and similar
charges.
(b) The
following terms have the meaning set forth in the Sections set forth
below:
|
Defined
Term
|
Location
of Definition
|
|
|
2007
Balance Sheet
|
§
4.07(c)
|
|
|
Acceptance
Time
|
§
7.05(c)
|
|
|
Action
|
§
4.09
|
|
|
Agreement
|
Preamble
|
|
|
Appointment
Time
|
§
7.03(c)
|
|
|
Blue
Sky Laws
|
§
4.05(b)
|
|
|
Board
|
Recitals
|
|
|
Certificate
of Merger
|
§
3.02
|
|
|
Certificates
|
§
3.10(b)
|
|
|
Change
of Recommendation
|
§
7.05(c)
|
|
|
Code
|
§
4.10(a)
|
|
|
Company
|
Preamble
|
|
|
Company
Data
|
§
7.04(a)
|
|
|
Company
Preferred Stock
|
§
4.03(a)
|
|
|
Company
Stock Award
|
§
3.07(a)
|
|
|
Company
Stock Option
|
§
3.07(a)
|
|
|
Company
Stock Plans
|
§
3.07(a)
|
|
|
Confidentiality
Agreement
|
§
7.04(b)
|
|
|
Continuing
Directors
|
§
7.03(a)
|
|
|
DGCL
|
Recitals
|
|
|
Disclosure
Letter
|
§
4.01(b)
|
|
|
Dissenting
Shares
|
§
3.09(a)
|
|
|
Effective
Time
|
§
3.02
|
|
|
Eligible
Options
|
§
3.07(b)
|
|
|
Employment
Agreements
|
Preamble
|
|
|
Environmental
Permits
|
§
4.16
|
|
|
Exchange
Offer
|
§
3.07(b)
|
|
|
Exclusivity
Agreement
|
§
7.05(b)
|
5
|
Defined
Term
|
Location
of Definition
|
|
|
ERISA
|
§
4.10(a)
|
|
|
ESPP
|
§
3.08
|
|
|
ESPP
Date
|
§
3.08
|
|
|
Exchange
Act
|
§
2.01(a)
|
|
|
Exchange
Offer
|
§
3.07(c)
|
|
|
Exchange
Ratio
|
§
3.07(b)
|
|
|
Extended
Termination Date
|
§
9.01(b)
|
|
|
Fairness
Opinion
|
§
4.27
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Fee
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§
9.03(a)
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Foreign
Antitrust Laws
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§
4.05(b)
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GAAP
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§
4.07(b)
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Governmental
Authority
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§
4.05(b)
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HSR
Act
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§
4.05(b)
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Independent
Directors
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§
7.03(a)
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Initial
Expiration Date
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§
2.01(a)
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Initial
Termination Date
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§
9.01(b)
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IRS
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§
4.10(a)
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Law
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§
4.05(a)
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Lease
Documents
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§
4.13(b)
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Material
Contracts
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§
4.18(a)
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Merger
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Recitals
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Merger
Consideration
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§
3.06(a)
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Merger
Option
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§
2.02(d)
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Merger
Option Shares
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§
2.02(d)
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Minimum
Condition
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§
2.01(a)
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NASDAQ
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§
4.07(a)
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Non-U.S.
Benefit Plan
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§
4.10(h)
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Notice
of Superior Proposal
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§
7.05(c)
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Offer
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Recitals
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Offer
Documents
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§
2.01(b)
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Offer
to Purchase
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§
2.01(b)
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Parent
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Preamble
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Parent
Shares
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§
3.07(b)
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Parent
Stock Award
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§
3.07(c)
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Paying
Agent
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§
3.10(a)
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Permits
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§
4.06
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Per
Share Amount
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Recitals
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Plans
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§
4.10(a)
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Proxy
Statement
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§
4.12
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Purchaser
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Preamble
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Replacement
Stock Option
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§
3.07(b)
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Representatives
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§
7.05(a)
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Rights
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§
4.03(a)
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Rights
Agreement
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§
4.03(a)
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Schedule
14D-9
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§
2.02(b)
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6
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Defined
Term
|
Location
of Definition
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Schedule
TO
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§
2.01(b)
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SEC
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§
2.01(a)
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SEC
Reports
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§
4.07(a)
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Securities
Act
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§
4.07(a)
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Shares
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Recitals
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SOX
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§
4.07(a)
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Stockholders’
Meeting
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§
7.01(a)
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Subsidiary
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§
4.01(a)
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Superior
Proposal
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§
7.05(d)
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Surviving
Corporation
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§
3.03
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Transaction
Proposal
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§
7.05(d)
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Transactions
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§
2.02(a)
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ARTICLE
II
THE
OFFER
SECTION
2.01. The
Offer.
(a)
Provided
that this Agreement shall not have been terminated in accordance with Section
9.01 and that none of the events set forth in clauses (a) through (i) of
Annex A hereto shall have occurred or be continuing, Purchaser shall
commence the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than five (5) business days after the initial public
announcement of Purchaser’s intention to commence the Offer. The obligation of
Purchaser to accept for payment Shares tendered pursuant to the Offer shall
be
subject to (i) the condition (the “Minimum
Condition”)
that
at least the number of Shares that shall constitute a majority of the then
outstanding Shares on a Fully Diluted Basis shall have been validly tendered
and
not withdrawn prior to the expiration of the Offer and (ii) the satisfaction
of
each of the other conditions set forth in Annex A hereto. Purchaser expressly
reserves the right to waive any such condition, to increase the price per Share
payable in the Offer, and to make any other changes in the terms and conditions
of the Offer; provided,
however,
that
unless previously approved by the Company in writing no change may be made
that
(i) amends or waives the Minimum Condition, (ii) decreases the price per Share
payable in the Offer, (iii) changes the form of consideration to be paid in
the
Offer, (iv) reduces the maximum number of Shares to be purchased in the Offer,
(v) imposes conditions to the Offer in addition to those set forth in Annex
A
hereto, (vi) amends the conditions to the Offer set forth in Annex A so as
to broaden the scope of such conditions to the Offer, (vii) extends, except
as
provided for below, the Offer or (viii) makes any other change to any of the
terms and conditions of the Offer that is adverse to the holders of Shares.
Notwithstanding the foregoing, Purchaser shall from time to time, (i) extend
the
Offer, until such time as either (A) all of the conditions to the Offer
have been satisfied or waived or (B) this Agreement is terminated pursuant
to Section 9.01, for one or more periods of not more than ten (10) business
days
each beyond the scheduled expiration date, which initially shall be 20 business
days (calculated in accordance with Rule 14d-1(g)(3) promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”))
following the commencement (within the meaning of Rule 14d-2 promulgated
under the Exchange Act) of the Offer (the “Initial
Expiration Date”),
if,
at the Initial Expiration Date or any subsequent scheduled expiration of the
Offer, any of the conditions to Purchaser’s obligation to accept for payment
Shares, shall not be satisfied or waived or (ii) extend the Offer for any period
required by any rule, regulation, position or interpretation of the Securities
and Exchange Commission (the “SEC”),
or
the staff thereof or of the NASDAQ, applicable to the Offer. The Per Share
Amount shall, subject only to applicable withholding of taxes, be net to the
seller in cash, upon the terms and subject to the conditions of the Offer.
Purchaser shall, and Parent shall cause Purchaser to, pay for all Shares validly
tendered and not withdrawn as promptly as practicable following the acceptance
of Shares for payment pursuant to the Offer. Notwithstanding the immediately
preceding sentence and subject to the applicable rules of the SEC and the terms
and conditions of the Offer, Purchaser expressly reserves the right to delay
payment for Shares solely in order to comply in whole or in part with applicable
Laws. Any such delay shall be effected in compliance with Rule 14e--1(c)
promulgated under the Exchange Act. Purchaser may, and the Offer Documents
(as
defined below) shall reserve the right to, extend the Offer after the acceptance
of Shares thereunder for a further period of time by means of a subsequent
offering period under Rule 14d-11 promulgated under the Exchange Act of not
less
than three nor more than 20 business days to meet the objective that there
be
validly tendered, in accordance with the terms of the Offer, prior to the
expiration of the Offer (as so extended), and not withdrawn a number of Shares
which, together with Shares then owned by Parent and Purchaser, represents
at
least 90% of the then outstanding Shares on a Fully Diluted Basis. If the
payment equal to the Per Share Amount in cash is to be made to a person other
than the person in whose name the surrendered certificate formerly evidencing
Shares is registered on the stock transfer books of the Company, it shall be
a
condition of payment that the certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes required
by
reason of the payment of the Per Share Amount to a person other than the
registered holder of the certificate surrendered, or shall have established
to
the reasonable satisfaction of Purchaser that such taxes either have been paid
or are not applicable. The Company agrees that no Shares held by the Company
or
any Subsidiary shall be tendered in the Offer.
7
(b) As
promptly as reasonably practicable on the date of commencement of the Offer,
Parent shall cause Purchaser to (i) file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the “Schedule
TO”)
with
respect to the Offer and (ii) cause the Offer Documents to be disseminated
to all holders of Shares in accordance with Rule 14d-4 promulgated under
the Exchange Act. The Schedule TO shall contain or shall incorporate by
reference an offer to purchase (the “Offer
to Purchase”)
and
forms of the related letter of transmittal and any related summary advertisement
(the Schedule TO, the Offer to Purchase and such other documents, together
with
all supplements and amendments thereto, being referred to herein collectively
as
the “Offer
Documents”).
The
Company shall promptly furnish to Parent and Purchaser in writing all
information concerning the Company that may be required by applicable securities
Laws or reasonably requested by Parent for inclusion in the Schedule TO or
the Offer Documents. Each of Parent, Purchaser and the Company agrees to correct
promptly any information provided by it for use in the Offer Documents that
shall have become false or misleading in any material respect, and Parent and
Purchaser further agree to take all steps necessary to cause the Schedule TO,
as
so corrected, to be filed with the SEC, and the other Offer Documents, as so
corrected, to be disseminated to holders of Shares, in each case as and to
the
extent required by applicable U.S. federal securities Laws. Parent and Purchaser
shall give the Company and its counsel a reasonable opportunity to review and
comment on the Offer Documents prior to such documents being filed with the
SEC
or disseminated to holders of Shares. Parent and Purchaser shall provide the
Company and its counsel with any comments that Parent, Purchaser or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and, subject to providing
the Company and its counsel with a reasonable opportunity to participate in
the
response of Parent or Purchaser, shall respond to any such comments from the
SEC
regarding the Offer Documents.
8
SECTION
2.02. Company
Action.
(a)
The
Company hereby approves of and consents to the Offer and represents that the
Board, at a meeting duly called and held on December 10, 2007, has unanimously
(i) determined that this Agreement and the transactions contemplated by this
Agreement, including each of the Offer and the Merger (collectively, the
“Transactions”),
are
fair to, and in the best interests of, the holders of Shares, (ii) approved,
adopted and declared advisable this Agreement and the Transactions (such
approval and adoption having been made in accordance with the DGCL, including,
without limitation, Section 203 thereof) and (iii) resolved to recommend that
the holders of Shares accept the Offer and tender their Shares pursuant to
the
Offer, and adopt this Agreement and the Transactions. The Company hereby
consents, except to the extent withdrawn or modified in accordance with Section
7.05(c), to the inclusion in the Offer Documents of the recommendation of the
Board described in this Section 2.02(a), and the Company shall not withdraw
or
modify such recommendation in any manner adverse to Purchaser or Parent except
to the extent permitted by Section 7.05(c). The Company has been advised by
its
directors and executive officers that they intend to tender all Shares
beneficially owned by them to Purchaser pursuant to the Offer, except to the
extent that the tender of Shares would result in liability under
Section 16(b) of the Exchange Act or the rules and regulations promulgated
thereunder.
(b) As
promptly as reasonably practicable on the date of commencement of the Offer,
the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
“Schedule
14D-9”)
containing the Fairness Opinion and, except as provided in Section 7.05(c),
the
recommendation of the Board described in Section 2.02(a), and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act, and any other applicable U.S. federal securities Laws. Each of
Parent and Purchaser shall promptly furnish to the Company in writing all
information concerning Parent and Purchaser that may be required by applicable
securities Laws or reasonably requested by the Company for inclusion in the
Schedule 14D-9. Each of the Company, Parent and Purchaser agrees to correct
promptly any information provided by it for use in the Schedule 14D-9 which
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
so
corrected, to be filed with the SEC and disseminated to holders of Shares,
in
each case as and to the extent required by applicable federal securities Laws.
The Company shall give Parent and its counsel a reasonable opportunity to review
and comment on the Schedule 14D-9 prior to such document being filed with the
SEC or disseminated to holders of Shares. The Company shall provide Parent
and
its counsel with any comments that the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and, subject to providing Parent and its counsel with
a
reasonable opportunity to participate in the response of the Company, shall
respond to any such comments from the SEC regarding the
Schedule 14D-9.
9
(c) (i) The
Company shall promptly furnish Parent and Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of
a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders
and
beneficial owners of Shares. The Company shall promptly furnish Parent and
Purchaser with such additional information, including, without limitation,
updated listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance in disseminating the Offer
Documents to holders of Shares as Parent or Purchaser may reasonably request.
(ii) Subject to the requirements of applicable Law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall hold in confidence the information contained in such labels, listings
and
files, shall use such information only in connection with the Transactions,
and,
if this Agreement shall be terminated in accordance with Section 9.01, shall
deliver (and shall use their respective reasonable efforts to cause their agents
to deliver) to the Company all copies and any extracts or summaries of such
information then in their possession or control.
(d) The
Company grants to Parent and Purchaser an irrevocable option (the “Merger
Option”)
to
purchase up to that number of newly issued Shares (the “Merger
Option Shares”)
equal
to the number of Shares that, when added to the number of Shares owned by Parent
and Purchaser immediately following the consummation of the Offer, shall
constitute one share more than 90% of the Shares then outstanding on a Fully
Diluted Basis (after giving effect to the issuance of the Merger Option Shares)
for consideration per Merger Option Share equal to the Per Share Amount. Neither
Parent, nor Purchaser shall exercise the Merger Option unless following such
exercise Parent and Purchaser shall own at least 90% of the outstanding Shares.
In the event that Parent or Purchaser exercises the Merger Option and the
resulting issuance of the Merger Option Shares by the Company would cause the
Company to be in breach of its listing agreement with the Nasdaq Global Market,
Parent shall, as soon as practicable following the issuance of the Merger Option
Shares, cause the Merger to be consummated in accordance with the terms of
this
Agreement.
(e) The
Merger Option shall be exercisable only after the purchase of and payment for
Shares pursuant to the Offer by Parent or Purchaser as a result of which Parent
and Purchaser own beneficially at least 71% of the Shares on a Fully Diluted
Basis.
(f) In
the
event that Parent or Purchaser wish to exercise the Merger Option, Parent shall
give the Company one (1) business day's prior written notice specifying the
number of Shares that are owned by Parent and Purchaser immediately following
consummation of the Offer and specifying a place and a time for the closing
of
the purchase. The Company shall, as soon as practicable following receipt of
such notice, deliver written notice to Purchaser specifying the number of Merger
Option Shares. At the closing of the purchase of the Merger Option Shares,
Parent or Purchaser shall pay to the Company an amount equal to the product
of
(i) the number of Shares purchased pursuant to the Merger Option, multiplied
by
(ii) the Per Share Amount, which amount shall be paid in cash (by wire transfer
or cashier's check) or, at the election of Parent or Purchaser, through a
combination of cash and delivery of a promissory note having full recourse
to
Parent, so long as the cash portion of the consideration for each Merger Option
Share is at least $0.001.
10
ARTICLE
III
THE
MERGER
SECTION
3.01. The
Merger.
Upon
the terms and subject to the conditions set forth in Article VIII, and in
accordance with the DGCL, Purchaser shall be merged with and into the Company
at
the Effective Time (as defined in Section 3.02).
SECTION
3.02. Effective
Time; Closing.
As
promptly as practicable after the satisfaction or, if permissible, waiver of
the
conditions set forth in Article VIII, the parties hereto shall cause the Merger
to be consummated by filing this Agreement or a certificate of merger or
certificate of ownership and merger (in any such case, the “Certificate
of Merger”)
with
the Secretary of State of the State of Delaware, in such form as is required
by,
and executed in accordance with, the relevant provisions of the DGCL (the date
and time of such filing of the Certificate of Merger (or such later time as
may
be agreed by each of the parties hereto and specified in the Certificate of
Merger) being the “Effective
Time”).
Immediately prior to such filing of the Certificate of Merger, a closing shall
be held at the offices of Shearman & Sterling LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the parties shall
agree, for the purpose of confirming the satisfaction or waiver, as the case
may
be, of the conditions set forth in Article VIII.
SECTION
3.03. Effect
of the Merger.
As a
result of the Merger, the separate corporate existence of Purchaser shall cease
and the Company shall continue as the surviving corporation of the Merger (the
“Surviving
Corporation”).
At
the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Purchaser shall vest in
the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of the Company and Purchaser shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION
3.04. Certificate
of Incorporation; By-Laws.
(a)
At the
Effective Time, subject to Section 7.07(a), the Certificate of Incorporation
of
the Surviving Corporation shall be amended and restated in its entirety to
be
identical to the Certificate of Incorporation of Purchaser in effect immediately
prior to the Effective Time, except that Article I thereof shall read as
follows: “The name of the corporation is Genesis Microchip Inc.”, until
thereafter amended as provided by Law and such Certificate of
Incorporation.
(b) Unless
otherwise determined by Parent prior to the Effective Time, and subject to
Section 7.07(a), at the Effective Time, the By-Laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation, until thereafter amended as provided by Law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION
3.05. Directors
and Officers.
The
directors of Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified
or
until the earlier of their death, resignation or removal.
11
SECTION
3.06. Conversion
of Securities.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
Purchaser, the Company or the holders of any of the following
securities:
(a) Each
Share issued and outstanding immediately prior to the Effective Time (other
than
any Shares to be canceled pursuant to Section 3.06(b) and any Dissenting Shares
(as hereinafter defined)) shall be canceled and cease to exist and shall be
converted automatically into the right to receive an amount equal to the Per
Share Amount in cash, without interest (the “Merger
Consideration”)
payable to the holder of such Share, upon surrender, in the manner provided
in
Section 3.10, of the certificate that formerly evidenced such Share (or in
the
case of a lost, stolen or destroyed certificate, upon delivery of an affidavit
in the manner provided in Section 3.10);
(b) Each
Share held in the treasury of the Company and each Share owned by Purchaser,
Parent or any direct or indirect wholly owned subsidiary of Parent or of the
Company immediately prior to the Effective Time shall be canceled without any
conversion thereof and cease to exist and no payment or distribution shall
be
made with respect thereto; and
(c) Each
share of common stock, par value $0.01 per share, of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into
and
exchanged for one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation, which shall
constitute the only outstanding shares of the Surviving
Corporation.
SECTION
3.07. Stock
Options
and
Stock Awards.
(a)
Effective as of the Effective Time, the Company shall take all necessary action
to terminate the Company’s 2007 Equity Incentive Plan, 2003 Stock Plan, 2001
Nonstatutory Stock Option Plan, 2000 Nonstatutory Stock Option Plan, 1997
Employee Stock Option Plan, 1997 Non-Employee Stock Option Plan, 1997 Paradise
Stock Option Plan and 1997 Sage Stock Plan, each as amended through the date
of
this Agreement (the “Company
Stock Plans”).
Neither Parent nor Purchaser nor the Surviving Corporation shall assume any
options to purchase Shares (each, a “Company
Stock Option”)
or
restricted stock units (each, a “Company
Stock Award”)
granted under the Company Stock Option Plans in connection with the
Transactions. At the Effective Time, each outstanding Company Stock Option
that
is unexercised and each outstanding Company
Stock Award,
whether
or not vested or exercisable as of such date, shall be cancelled without any
action on the part of the holder thereof. Each holder of a Company Stock Option
that is outstanding and unexercised at the Effective Time, whether or not vested
or exercisable, and that has an exercise price per Share that is less than
the
Per Share Amount and each holder of a Company Stock Award that is outstanding
at
the Effective Time, whether or not vested, shall be entitled (subject to the
provisions of this Section 3.07) to be paid by the Surviving Corporation, with
respect to each Share subject to the Company Stock Option, an amount in cash
equal to the excess, if any, of the Per Share Amount over the applicable per
share exercise price of such Company Stock Option, and, with respect to each
Share subject to the Company Stock Award, an amount in cash equal to the Per
Share Amount. Any such payment shall be subject to all applicable federal,
state
and local tax withholding requirements.
12
(b) Each
holder of one or more Company Stock Options that are outstanding and unexercised
at the Effective Time and that were eligible for exchange (“Eligible
Options”)
in
accordance with the terms of the Company’s Offer to Exchange Certain Outstanding
Options for Restricted Stock Units, dated October 18, 2007 (the “Exchange
Offer”)
shall
be entitled to be paid by the Surviving Corporation an amount in cash equal
to
the Per Share Amount for each Share subject to or otherwise issuable pursuant
to
the restricted stock unit award such holder would have received had he or she
tendered all of his or her Eligible Options in the Exchange Offer and been
granted restricted stock unit awards in exchange therefor pursuant to the terms
of the Exchange Offer. The cash amounts payable pursuant to this paragraph
shall
be paid at the same time or times the corresponding restricted stock unit awards
would have otherwise vested pursuant to the Exchange Offer, subject to the
same
vesting requirements set forth in the Exchange Offer, it being understood that
service with Parent, the Surviving Corporation or any of their respective
subsidiaries shall constitute the provision of services for the purposes of
vesting in the right to receive the cash payments contemplated hereby.
SECTION
3.08. Employee
Stock Purchase Plan.
The
Company shall take all actions necessary to shorten any pending Offering Period
(as such term is defined in the Company’s 2007 Employee Stock Purchase Plan (the
“ESPP”))
and
establish a New Exercise Date (as contemplated in Section 19(c) of the ESPP)
prior to the expiration of the Offer, as of a date selected by Parent (which
date shall be the last day of a regular payroll period of the Company) (the
“ESPP
Date”).
After
the ESPP Date, all offering and purchase periods pending under the ESPP shall
be
terminated and no new offering or purchasing periods shall be commenced. In
addition, the Company shall take all actions as may be necessary in order to
freeze the rights of the participants in the ESPP, effective as of the date
of
this Agreement, to existing participants and (to the extent permissible under
the ESPP) existing participation levels.
SECTION
3.09. Dissenting
Shares.
(a)
Notwithstanding any provision of this Agreement to the contrary, Shares that
are
outstanding immediately prior to the Effective Time and that are held by
stockholders who shall have neither voted in favor of the Merger nor consented
thereto in writing and who shall have demanded properly in writing appraisal
for
such Shares in accordance with Section 262 of the DGCL (collectively, the
“Dissenting
Shares”)
shall
not be converted into, or represent the right to receive, the Merger
Consideration. At the Effective Time, such Dissenting Shares shall no longer be
outstanding and shall automatically be canceled and cease to exist, and such
stockholders shall cease to have any rights with respect thereto.
Notwithstanding the foregoing sentence, such stockholders shall be entitled
to
receive payment of the appraised value of such Shares held by them in accordance
with the provisions of such Section 262, except that all Dissenting Shares
held
by stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 or who shall be determined by a court of competent jurisdiction to not
be
entitled to the relief provided by Section 262 shall thereupon be deemed to
have been converted into, and to have become exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 3.10, of
the
certificate or certificates that formerly evidenced such Shares (or in the
case
of a lost, stolen or destroyed certificate, upon delivery of an affidavit in
the
manner provided in Section 3.10).
13
(b) The
Company shall give Parent (i) prompt notice of any demands for appraisal
received by the Company, withdrawals of such demands, and any other instruments
served pursuant to the DGCL and received by the Company and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not, except with the prior written consent
of
Parent, offer to make or make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
SECTION
3.10. Surrender
of Shares; Stock Transfer Books.
(a)
Prior to
the Effective Time, Purchaser shall designate a bank or trust company reasonably
satisfactory to the Company to act as agent (the “Paying
Agent”)
for
the holders of Shares to receive the funds to which holders of Shares shall
become entitled pursuant to Section 3.06(a). Promptly after the Effective Time,
Parent or Purchaser shall deposit with the Paying Agent, for payment to the
holders of Shares pursuant to the provisions of this Article III, an amount
of cash equal to the product obtained by multiplying (i) the Merger
Consideration and (ii) the aggregate number of Shares issued and
outstanding immediately prior to the Effective Time (excluding Shares then
owned
by Parent, Purchaser, the Company, or any direct or indirect, wholly-owned
Subsidiary of Parent, Purchaser or the Company immediately prior to the
Effective Time (whether pursuant to the Offer or otherwise)) (such cash amount
being referred to herein as the “Exchange
Fund”).
The
Exchange Fund shall be invested by the Paying Agent as directed by Parent;
provided
that no
such investment or loss thereon shall affect the amounts payable to holders
of
Shares pursuant to this Article III. Any interest and other income
resulting from such investment shall become a part of the Exchange Fund, and
any
amounts in excess of the amounts payable to holders of Shares pursuant to this
Article III shall promptly be paid to Parent.
(b) Promptly
after the Effective Time (but in no event more than five business days
thereafter), the Surviving Corporation shall cause to be mailed to each person
who was, at the Effective Time, a holder of record of Shares entitled to receive
the Merger Consideration pursuant to Section 3.06(a) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk
of
loss and title to the certificates evidencing such Shares (the “Certificates”)
shall
pass, only upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificates pursuant
to
such letter of transmittal. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal, duly completed and validly executed
in
accordance with the instructions thereto, and such other documents as may be
reasonably required by the Paying Agent pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor
the
Merger Consideration to which such holder is entitled pursuant to this
Article III for each Share formerly evidenced by such Certificate, and such
Certificate shall then be canceled. No interest shall accrue or be paid on
the
Merger Consideration payable upon the surrender of any Certificate for the
benefit of the holder of such Certificate. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective Time, for all corporate
purposes, to evidence the right to receive the Merger Consideration payable
in
respect thereof pursuant to this Article III. If the payment equal to the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered certificate formerly evidencing Shares is registered on
the
stock transfer books of the Company, it shall be a condition of payment that
the
certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the certificate
surrendered, or shall have established to the satisfaction of Purchaser that
such taxes either have been paid or are not applicable. If any holder of Shares
is unable to surrender such holder’s Certificates because such Certificates have
been lost, mutilated or destroyed, such holder may deliver in lieu thereof
an
affidavit and indemnity bond in form and substance and with surety reasonably
satisfactory to the Paying Agent. Each of Parent, Purchaser, the Surviving
Corporation and the Paying Agent shall be entitled to deduct and withhold from
any amounts otherwise payable pursuant to this Agreement in respect of Shares
such amount as it is required to deduct and withhold with respect to the making
of such payment under the Code or any Law. To the extent that such amounts
are
so withheld, such withheld amounts shall be treated for purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made.
14
(c) At
any
time following the ninth month after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it
any
funds which had been made available to the Paying Agent and not disbursed to
holders of Shares (including, without limitation, all interest and other income
received by the Paying Agent in respect of all funds made available to it),
and,
thereafter, such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat and other similar Laws) only as general
creditors thereof with respect to any Merger Consideration that may be payable
upon due surrender of the Certificates held by them. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Share for any Merger Consideration delivered in
respect of such Share to a public official pursuant to any abandoned property,
escheat or other similar Law.
(d) At
the
close of business on the day of the Effective Time, the stock transfer books
of
the Company shall be closed and thereafter there shall be no further
registration of transfers of Shares on the records of the Company. From and
after the Effective Time, the holders of Shares outstanding immediately prior
to
the Effective Time shall cease to have any rights with respect to such Shares
except as otherwise provided herein or by applicable Law.
SECTION
3.11. Adjustments.
Notwithstanding
any provision of this Article III to the contrary, if between the date of this
Agreement and the Effective Time the outstanding Shares shall have been changed
into a different number of Shares or a different class by reason of the
occurrence or record date of any stock dividend, subdivision, reclassification,
recapitalization, stock split (including a reverse stock split), combination,
exchange of shares or similar transaction, the Merger Consideration shall be
equitably adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, stock split (including a reverse stock
split), combination, exchange of shares or similar transaction.
SECTION
3.12. Further
Assurances.
At and
after the Effective Time, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver in the name and on behalf
of the Company or the Purchaser, as the case may be, any documents or
instruments, and to take any other actions and do any other things, in the
name
and on behalf of the Company or the Purchaser, reasonably necessary to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any
and
all right, title and interest in, to and under any of the rights, properties
or
assets of the Company acquired or to be acquired by the Surviving Corporation
as
a result of, or in connection with, the Merger and to otherwise accomplish
the
purpose and intent of this Agreement and the Transactions.
15
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as
set forth in the disclosure letter that has been prepared by the Company and
delivered by the Company to Parent prior to the execution and delivery of this
Agreement (the “Disclosure
Letter”)
(it
being agreed that disclosure of any item in any section of the Disclosure Letter
shall also be deemed disclosure with respect to any other section of this
Article IV if it is readily apparent that the disclosure contained in such
section of the Disclosure Letter contains enough information regarding the
subject matter of other representations and warranties contained in this Article
IV as to clearly qualify or otherwise clearly apply to such other
representations and warranties), the Company hereby represents and warrants
to
Parent and Purchaser that:
SECTION
4.01. Organization
and Qualification; Subsidiaries.
(a)
Each of
the Company and each subsidiary of the Company (each a “Subsidiary”)
is a
corporation, limited partnership or other similar type of entity duly organized,
validly existing and in good standing under the Laws of the jurisdiction of
its
incorporation and has the requisite power and authority (corporate or otherwise)
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not have a Material
Adverse Effect. The Company and each Subsidiary is duly qualified or licensed
as
a foreign corporation, limited partnership or other similar type of entity
to do
business, and is in good standing, in each jurisdiction where the character
of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to
be
so qualified or licensed and in good standing that would not have a Material
Adverse Effect.
(b) A
true
and complete list of all the Subsidiaries, together with the jurisdiction of
incorporation of each Subsidiary, the percentage of the outstanding capital
stock or other type of equity interests of each Subsidiary owned by the Company
and each other Subsidiary, and the names of the directors and officers of each
Subsidiary, is set forth in Section 4.01(b) of the Disclosure Letter. Except
as
disclosed in Section 4.01(b) of the Disclosure Letter, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION
4.02. Certificate
of Incorporation and By-Laws.
The
Company has heretofore made available to Parent a complete and correct copy
of
the Certificate of Incorporation and the By-Laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-Laws or equivalent organizational documents
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its Certificate of Incorporation, By-Laws
or equivalent organizational documents.
16
SECTION
4.03. Capitalization.
(a)
The
authorized capital stock of the Company consists of 100,000,000 Shares and
5,000,000 shares of preferred stock, par value $0.001 per share (“Company
Preferred Stock”).
As of
December 7, 2007, (i) 38,012,846 Shares are issued and outstanding,
all of which are validly issued, fully paid and nonassessable. As of December
10, 2007, (i) 67,000 Shares are held in the treasury of the Company. As of
December 8, 2007, (i) no Shares are held by the Subsidiaries and (ii) 6,628,083
Shares are reserved for future issuance pursuant to outstanding Company Stock
Options and Company Stock Awards granted pursuant to the Company Stock Plans
and
the ESPP. As of the date of this Agreement, no shares of Company Preferred
Stock
are issued and outstanding. Except as set forth in this Section 4.03, and except
for the Merger Option and the rights (the “Rights”)
issued
pursuant to the Preferred Stock Rights Agreement, dated as of June 27, 2002
(the “Rights
Agreement”),
as
amended on March 16, 2003, between the Company and Mellon Investor
Services, L.L.C., as rights agent, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to
the
issued or unissued capital stock or other type of equity interests of the
Company or any Subsidiary or obligating the Company or any Subsidiary to issue
or sell any shares of capital stock of, or other type of equity interests in,
the Company or any Subsidiary. Section 4.03 of the Disclosure Letter sets forth
the following information with respect to each Company Stock Option and Company
Stock Award outstanding as of December 8, 2007: (i) the state or country in
which the recipient resides; (ii) the particular plan pursuant to which the
award was granted; (iii) the number of Shares subject to the award; (iv) the
exercise or purchase price of the award, if any; (v) the date on which the
award
was granted; (vi) the applicable vesting schedule; (vii) the date on which
the
award expires; and (viii) whether the vesting, exercisability of or right to
repurchase of such award will be accelerated in any way by the transactions
contemplated by this Agreement.
(b) The
Company has made available to Parent accurate and complete copies of all Company
Stock Plans pursuant to which the Company has granted the Company Stock Options
and Company Stock Awards that are currently outstanding and the form of all
award agreements evidencing such awards. All Shares subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Shares or any capital stock or other type of equity
interests of any Subsidiary or to provide funds to, or make any investment
(in
the form of a loan, capital contribution or otherwise) in, any Subsidiary or
any
other person. Except as set forth in Section 4.03(b) of the Disclosure Letter,
there are no commitments or agreements of any character to which the Company
is
bound obligating the Company to accelerate the vesting of any Company Stock
Option as a result of the Offer or the Merger. All outstanding Shares, all
outstanding Company Stock Options and Company Stock Awards and all outstanding
shares of capital stock or other type of equity interests of each Subsidiary
have been issued and granted in material compliance with (i) all applicable
securities Laws and other applicable Laws and (ii) all requirements set forth
in
applicable contracts.
17
(c) Each
outstanding share of capital stock or other type of equity interests of each
Subsidiary is duly authorized, validly issued, fully paid and nonassessable,
and
each such share is owned by the Company or another Subsidiary free and clear
of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Company’s or any Subsidiary’s voting
rights, charges and other encumbrances of any nature whatsoever.
SECTION
4.04. Authority
Relative to This Agreement.
The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of the Company, and
no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the adoption of this Agreement by the holders of a
majority of the then-outstanding Shares, if and to the extent required by
applicable Law, and the filing and recordation of appropriate merger documents
as required by the DGCL). This Agreement has been duly and validly executed
and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Purchaser, constitutes legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
its terms. Prior to the execution of this Agreement, the Board has taken all
action necessary to exempt under or make not subject to the provisions of
Section 203 of the DGCL or any provision of the Certificate of Incorporation
and
the By-Laws of the Company that would require any corporate approval other
than
that otherwise required by the DGCL: (i) the execution of this Agreement,
(ii) the Offer, (iii) the Merger and (iv) the other transactions contemplated
by
this Agreement. Prior to the execution of this Agreement, the Board has
unanimously approved this Agreement and the Transactions and such approvals
are
sufficient so that the restrictions on business combinations set forth in
Section 203(a) of the DGCL shall not apply to any of the
Transactions.
SECTION
4.05. No
Conflict; Required Filings and Consents.
(a)
The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, and the consummation
of
the Transactions by the Company will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws or any equivalent organizational
documents of the Company or any Subsidiary, (ii) assuming that all consents,
approvals and other authorizations described in Section 4.05(b) have been
obtained and that all filings and other actions described in Section 4.05(b)
have been made or taken, conflict with or violate any United States or
non-United States national, state, provincial, municipal or local statute,
law,
ordinance, regulation, rule, code, executive order, injunction, judgment, decree
or other order (“Law”)
applicable to the Company or any Subsidiary or by which any material property
or
material asset of the Company or any Subsidiary is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which, with notice
or lapse of time or both, would become a default) under, or give to others
any
right of termination, amendment, acceleration or cancellation of, or result
in
the creation of a lien or other encumbrance on any property or asset of the
Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or
obligation to which the Company or any Subsidiary is a party or by which the
Company or a Subsidiary or any property or asset of the Company or any
Subsidiary is bound or affected, except, with respect to clause (iii), for
any
such breaches, defaults or other occurrences that would not have a Material
Adverse Effect.
18
(b) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
United States or non-United States (including European Union) national, state,
provincial, municipal or local government, governmental, regulatory or
administrative authority, agency, instrumentality or commission or any court,
tribunal, or judicial or arbitral body (a “Governmental
Authority”),
except for (i) applicable requirements, if any, of the Exchange Act, state
securities or “blue sky” Laws (“Blue
Sky Laws”)
and
state takeover Laws, (ii) the pre-merger notification requirements of the ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the “HSR
Act”)
and
any applicable foreign Laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or restraint
of trade or significant impediments or lessening of competition or the creation
or strengthening of a dominant position through merger or acquisition
(“Foreign
Antitrust Laws”),
(iii)
the filing and recordation of appropriate merger documents as required by the
DGCL, and (iv) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would
not
have a Material Adverse Effect.
SECTION
4.06. Permits;
Compliance.
Each of
the Company and the Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary
for
each of the Company or the Subsidiaries to own, lease and operate its properties
or to carry on its business as it is now being conducted or presently
contemplated to be conducted (the “Permits”),
except where the failure to have, or the suspension or cancellation of, any
of
the Permits would not have a Material Adverse Effect. No suspension or
cancellation of any of the Permits is pending or, to the knowledge of the
Company, threatened, except where the suspension or cancellation of any of
the
Permits would not have a Material Adverse Effect. Neither the Company nor any
Subsidiary is in conflict with, or in default, breach or violation of, (a)
any
Law applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (b) any note,
bond, mortgage, indenture, contract, agreement, lease, license, Permit,
franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound, except for, with respect
to
clauses (a) and (b) of this sentence, any such conflicts, defaults,
breaches or violations that would not have a Material Adverse Effect. Neither
the Company nor any Subsidiary holds or is required to hold any security
clearance issued by a Governmental Authority or is required to be a party to
any
special security arrangement with a Governmental Authority to conduct any
material portion of its business.
SECTION
4.07. SEC
Filings; Financial Statements.
(a)
The
Company has filed all forms, reports and documents required to be filed by
it
with the SEC since March 31, 2005, including (i) its Annual Reports on
Form 10-K for the fiscal years ended March 31, 2005, 2006 and 2007,
respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended
June 30, 2007 and September 30, 2007, (iii) all proxy statements
relating to the Company’s meetings of stockholders (whether annual or special)
held since March 31, 2005 and (iv) all other forms, reports and other
registration statements (other than Quarterly Reports on Form 10-Q not referred
to in clause (ii) above) filed by the Company with the SEC since March 31,
2005 (the forms, reports and other documents referred to in clauses (i),
(ii), (iii) and (iv) above being, collectively, the “SEC
Reports”).
At
the time they were filed (or, if amended or supplemented, as of the date of
such
amendment or supplement), the SEC Reports (i) were prepared in accordance with
either the requirements of the Securities Act of 1933, as amended (the
“Securities
Act”),
or
the Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder, (ii) complied in all material respects with applicable Laws,
including the Securities Act, the Exchange Act and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 (including its rules and regulations, “SOX”),
and
(iii) did not contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were
made, not misleading. No Subsidiary is required to file any form, report or
other document with the SEC. The Company is in compliance in all material
respects with the applicable listing and corporate governance rules and
regulations of the NASDAQ Global Market (“NASDAQ”).
19
(b) Each
of
the consolidated financial statements (including, in each case, any notes
thereto) contained in the SEC Reports was prepared in accordance with United
States generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods indicated (except as may
be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, for normal and recurring year-end adjustments and as may be
permitted by the SEC on Form 10-Q or Form 8-K or any successor form under
the Exchange Act) and complied as to form in all material respects with the
requirements of Regulation S-X of the SEC, and each fairly presented, in all
material respects, the consolidated financial position, results of operations
and cash flows of the Company and its consolidated Subsidiaries as at the
respective dates thereof and for the respective periods indicated
therein.
(c) As
of the
date hereof, except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at March 31,
2007, including the notes thereto (the “2007
Balance Sheet”),
neither the Company nor any Subsidiary has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations, incurred in the ordinary course of business
consistent with past practice since March 31, 2007 and liabilities incurred
pursuant to this Agreement, which, individually or the aggregate, would not
have
a Material Adverse Effect.
(d) The
Company has heretofore made available to Parent complete and correct copies
of
all amendments and modifications that have not been filed by the Company with
the SEC to all agreements, documents and other instruments that previously
had
been filed by the Company with the SEC and are currently in effect.
(e) The
Company has made available to Parent all comment letters received by the Company
from the SEC or the staff thereof since March 31, 2005 and all responses to
such comment letters filed by or on behalf of the Company.
(f) To
the
Company’s knowledge, each director and executive officer of the Company has
filed with the SEC on a timely basis all statements required by Section 16(a)
of
the Exchange Act and the rules and regulations thereunder since March 31, 2005,
except as disclosed in the SEC Reports.
20
(g) 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 timely made all certifications required by Rule 13a-14 or 15d-14
under the Exchange Act and Sections 302 and 906 of SOX with respect to the
SEC
Reports, and the statements contained in such certifications were complete
and
correct on the date such certifications were made. For purposes of
this Agreement, "principal executive officer" and "principal financial officer"
shall have the meanings given to such terms in SOX. The Company maintains
disclosure controls and procedures that comply with Rule 13a-15 or Rule 15d-15
under the Exchange Act; such controls and procedures are effective to ensure
that all material information concerning the Company and its Subsidiaries is
made known on a timely basis to the individuals responsible for the preparation
of the Company’s SEC filings. Section 4.07(g) of the Disclosure Letter lists,
and the Company has made available to Parent, complete and correct copies of,
all written descriptions of, and all policies, manuals and other documents
promulgating, such disclosure controls and procedures. The Company is not aware
of (i) any significant deficiencies or material weaknesses in the design or
operation of internal controls over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) or (ii) any fraud, whether or not material,
that
involves management or other employees who have a significant role in the
Company's internal controls over financial reporting.
(h) The
Company maintains a standard system of accounting established and administered
in accordance with GAAP. The Company and its Subsidiaries maintain a system
of
internal accounting controls sufficient to provide reasonable assurance that
(i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
The
Company has made available to Parent complete and correct copies of, all written
descriptions of, and all policies, manuals and other documents promulgating,
such internal accounting controls.
(i) Since
March 31, 2005, neither the Company nor any Subsidiary nor, to the
Company’s knowledge, any director, officer, employee, auditor, accountant or
representative of the Company or any Subsidiary, has received or otherwise
had
or obtained knowledge of any complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any Subsidiary or their respective
internal accounting controls, including any complaint, allegation, assertion
or
claim that the Company or any Subsidiary has engaged in questionable accounting
or auditing practices. No attorney representing the Company or any Subsidiary,
whether or not employed by the Company or any Subsidiary, has reported evidence
of a material violation of securities Laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Board or any committee thereof or to any director or officer of the
Company. Since March 31, 2005, there have been no internal investigations
regarding accounting or revenue recognition discussed with, reviewed by or
initiated at the direction of the chief executive officer, chief financial
officer, general counsel, the Board or any committee thereof.
21
(j) To
the
knowledge of the Company, no employee of the Company or any Subsidiary has
provided or is providing information to any Law enforcement agency regarding
the
commission or possible commission of any crime or the violation or possible
violation of any applicable Law. Neither the Company nor any Subsidiary nor
any
officer, employee, contractor, subcontractor or agent of the Company or any
such
Subsidiary has discharged, demoted, suspended, threatened, harassed or in any
other manner discriminated against
an employee of the Company or any Subsidiary in the terms and conditions of
employment because of any act of such employee described in 18 U.S.C. §
1514A(a).
(k) All
accounts receivable of the Company and its Subsidiaries reflected on the 2007
Balance Sheet or arising thereafter have arisen from bona fide transactions
in
the ordinary course of business consistent with past practices and in accordance
with SEC regulations and GAAP applied on a consistent basis and are not subject
to valid defenses, setoffs or counterclaims. The Company’s reserve for
contractual allowances and doubtful accounts is adequate and has been calculated
in a manner consistent with past practices. Since the date of the 2007 Balance
Sheet, neither the Company nor any of its Subsidiaries has modified or changed
in any material respect its sales practices or methods including, without
limitation, such practices or methods in accordance with which the Company
or
any of its Subsidiaries sell goods, fill orders or record sales.
(l) All
accounts payable of the Company and its Subsidiaries reflected on the 2007
Balance Sheet or arising thereafter are the result of bona fide transactions
in
the ordinary course of business and have been paid or are not yet due or
payable. Since the date of the 2007 Balance Sheet, the Company and its
Subsidiaries have not altered in any material respects their practices for
the
payment of such accounts payable, including the timing of such
payment.
SECTION
4.08. Absence
of Certain Changes or Events.
Since
March 31, 2007 and through the date hereof, except as set forth in Section
4.08 of the Disclosure Letter, or as expressly contemplated by this Agreement
(a) the Company and the Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice, (b) there
has not been any Material Adverse Effect, and (c) none of the Company or any
Subsidiary has taken any action that, if taken after the date of this Agreement,
would constitute a breach of any of the covenants set forth in Section
6.01.
SECTION
4.09. Absence
of Litigation.
Except
as set forth in Section 4.09 of the Disclosure Letter, (i) there is no
litigation, suit, claim, action, proceeding or, to the knowledge of the Company,
investigation (an “Action”)
pending or, to the knowledge of the Company, threatened against the Company
or
any Subsidiary, or any property or asset of the Company or any Subsidiary,
before any Governmental Authority and (ii) neither the Company nor any
Subsidiary nor any property or asset of the Company or any Subsidiary is subject
to any continuing order of, consent decree, settlement agreement or similar
written agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Authority, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental
Authority.
22
SECTION
4.10. Employee
Benefit Plans.
(a)
Section
4.10(a) of the Disclosure Letter lists (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”))
and
all material bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, and
all
employment, termination, severance or other contracts or agreements, whether
legally enforceable or not, to which the Company or any Subsidiary is a party,
with respect to which the Company or any Subsidiary has any obligation or which
are maintained, contributed to or sponsored by the Company or any Subsidiary
for
the benefit of any current or former employee, officer or director of, or any
current or former consultant to, the Company or any Subsidiary, (ii) each
employee benefit plan for which the Company or any Subsidiary could incur
liability under Section 4069 of ERISA in the event such plan has been or were
to
be terminated, and (iii) any plan in respect of which the Company or any
Subsidiary could incur liability under Section 4212(c) of ERISA (collectively,
the “Plans”).
The
Company has made available to Parent a true and complete copy of each Plan
and
has delivered to Parent a true and complete copy of each material document,
if
any, prepared in connection with each such Plan, including, without limitation,
(i) a copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the most recently
filed
Internal Revenue Service (“IRS”)
Form
5500, (iv) the most recently received IRS determination letter for each such
Plan, and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. Neither the Company nor any
Subsidiary has any commitment (i) to create, incur liability with respect
to or cause to exist any new Plan, or (ii) to modify or terminate any Plan
except as required by ERISA or the Internal Revenue Code of 1986, as amended
(the “Code”).
(b) None
of
the Plans is subject to Title IV of ERISA. None of the Plans (i) provides for
the payment of separation, severance, termination or similar-type benefits
to
any person, (ii) obligates the Company or any Subsidiary to pay separation,
severance, termination or similar-type benefits solely or partially as a result
of any transaction contemplated by this Agreement, or (iii) obligates the
Company or any Subsidiary to make any payment or provide any benefit as a result
of a “change in ownership or control”, within the meaning of such term under
Section 280G of the Code. Each Plan that is a nonqualified deferred compensation
plan under Section 409A of the Code has been operated since January 1, 2005
in
good faith compliance with Section 409A of the Code and IRS guidance issued
with
respect thereto. None of the Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director of the Company or any Subsidiary.
(c) Each
Plan
is now and always has been operated in all material respects in accordance
with
its terms and the requirements of all applicable Laws including, without
limitation, ERISA and the Code. The Company and the Subsidiaries have performed
in all material respects the obligations required to be performed by them under,
are not in any material respect in default under or in violation of, and have
no
knowledge of any default or violation by any party to, any Plan. No material
Action is pending or, to the knowledge of the Company, threatened with respect
to any Plan (other than claims for benefits in the ordinary course) and no
fact
or event exists that could reasonably be expected to give rise to any such
Action.
23
(d) Each
Plan
that is intended to be qualified under Section 401(a) of the Code or Section
401(k) of the Code has received a favorable determination or opinion letter
from
the IRS covering all of the provisions applicable to the Plan for which such
letters are currently available that the Plan is so qualified and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination or opinion letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such letter or letters from the IRS
to
adversely affect the qualified status of any such Plan or the exempt status
of
any such trust.
(e) Neither
the Company nor any Subsidiary has incurred any liability under, arising out
of
or by operation of Title IV of ERISA and no fact or event exists which could
give rise to any such liability.
(f) All
contributions, premiums or payments required to be made with respect to any
Plan
have been made on or before their due dates. All such contributions have been
fully deducted for income tax purposes and to the knowledge of the Company
no
such deduction has been challenged or disallowed by any Governmental Authority
and no fact or event exists which could give rise to any such challenge or
disallowance.
(g) In
addition to the foregoing, with respect to each Plan that is not subject to
United States Law (a “Non-U.S.
Benefit Plan”):
(i) all
employer and employee contributions to each Non-U.S. Benefit Plan required
by
Law or by the terms of such Non-U.S. Benefit Plan have been made, or, if
applicable, accrued in accordance with normal accounting practices, and a pro
rata contribution for the period prior to and including the date of this
Agreement has been made or accrued;
(ii) the
fair
market value of the assets of each funded Non-U.S. Benefit Plan, the liability
of each insurer for any Non-U.S. Benefit Plan funded through insurance or the
book reserve established for any Non-U.S. Benefit Plan, together with any
accrued contributions, is sufficient to procure or provide for the benefits
determined on any ongoing basis (actual or contingent) accrued to the date
of
this Agreement with respect to all current and former participants under such
Non-U.S. Benefit Plan according to the actuarial assumptions and valuations
most
recently used to determine employer contributions to such Non-U.S. Benefit
Plan,
and no Transaction shall cause such assets or insurance obligations to be less
than such benefit obligations; and
(iii) each
Non-U.S. Benefit Plan required to be registered has been registered and has
been
maintained in good standing with applicable regulatory authorities. Each
Non-U.S. Benefit Plan has been operated in full compliance with all applicable
non-United States Laws.
24
(h) The
Compensation Committee of the Board has approved the terms of the Employment
Agreement and each Plan pursuant to which consideration is payable to any
officer, director or employee as an “employment compensation, severance or other
employee benefit arrangement”, within the meaning of Rule 14d-10(d)(2) under the
Exchange Act, and taken all other actions reasonably necessary or advisable
to
satisfy the requirements of the non-exclusive safe harbor with respect to such
Compensation Arrangement in accordance with Rule 14d-10(d)(2) under the Exchange
Act, and the Board has determined that the Compensation Committee is composed
solely of “independent directors” in accordance with the requirements of Rule
14d-10(d)(2) under the Exchange Act and the instructions thereto.
SECTION
4.11. Labor
and Employment Matters.
(a)
There
are no controversies pending or, to the knowledge of the Company, threatened
between the Company or any Subsidiary and any of their respective employees,
other than controversies which would not have a Material Adverse Effect. Neither
the Company nor any Subsidiary is a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by the Company
or
any Subsidiary, nor, to the knowledge of the Company, are there any activities
or proceedings of any labor union to organize any such employees.
(b) The
Company and the Subsidiaries are in compliance in all material respects with
all
applicable Laws relating to the employment of labor, including those related
to
wages, hours, immigration and naturalization, collective bargaining and the
payment and withholding of taxes and other sums as required by the appropriate
Governmental Authority and, in all material respects, have withheld and paid
to
the appropriate Governmental Authority all amounts required to be withheld
from
employees of the Company or any Subsidiary and are not liable for any arrears
of
wages, taxes, penalties or other sums for failure to comply with any of the
foregoing. The Company and the Subsidiaries have, in all material
respects, paid in full to all employees or adequately accrued for in accordance
with GAAP consistently applied all wages, salaries, commissions, bonuses,
benefits and other compensation due to or on behalf of such employees and,
to
the knowledge of the Company, there is no claim with respect to payment of
wages, salary or overtime pay that has been asserted or is now pending or
threatened before any Governmental Authority with respect to any persons
currently or formerly employed by the Company or any Subsidiary. Neither
the Company nor any Subsidiary is a party to, or otherwise bound by, any consent
decree with, or material citation by, any Governmental Authority relating to
employees or employment practices. To the knowledge of the Company, there
is no charge or proceeding with respect to a violation of any occupational
safety or health standards that has been asserted or is now pending or
threatened with respect to the Company. To the knowledge of the Company, there
is no charge of discrimination in employment or employment practices, for any
reason, including, without limitation, age, gender, race, religion or other
legally protected category, which has been asserted or is now pending or
threatened before the United States Equal Employment Opportunity Commission,
or
any other Governmental Authority in any jurisdiction in which the Company or
any
Subsidiary has employed or employ any person.
(c) To
the
knowledge of the Company, substantially all current and past employees of the
Company and its Subsidiaries have entered into a confidentiality and assignment
of inventions agreement with the Company, a form of which has previously been
made available to Parent. To the knowledge of the Company, no employee of the
Company or any Subsidiary is in violation of any term of any patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the
Company or any Subsidiary because of the nature of the business conducted or
presently proposed to be conducted by the Company or any Subsidiary or to the
use of trade secrets or proprietary information of others, the consequences
of
which would have a Material Adverse Effect. To the knowledge of the Company,
no
key employee or substantial group of employees has any plans to terminate
employment with the Company or any Subsidiary.
25
SECTION
4.12. Offer
Documents; Schedule 14D-9; Proxy Statement.
Neither
the Schedule 14D-9 nor any information supplied by the Company for inclusion
in
the Offer Documents shall, at the times the Schedule 14D-9, the Offer Documents
or any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Neither the proxy statement to be sent to the stockholders of the Company in
connection with the Stockholders’ Meeting (as defined in Section 7.01) (such
proxy statement, as amended or supplemented, being referred to herein as the
“Proxy
Statement”),
shall, at the date the Proxy Statement (or any amendment or supplement thereto)
is first mailed to stockholders of the Company and at the time of the
Stockholders’ Meeting, contain any statement which, at the time and in light of
the circumstances under which it was made, is false or misleading with respect
to any material fact, or which omits to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders’ Meeting which shall have become
false or misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent,
Purchaser or any of Parent’s or Purchaser’s Representatives in writing for
inclusion in the foregoing documents. The Schedule 14D-9 and the Proxy Statement
shall comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder, the rules of NASDAQ
and
any other Laws.
SECTION
4.13. Real
Property; Title to Assets.
(a)
Neither
the Company, nor any Subsidiary currently owns or has previously owned any
real
property.
(b) Section 4.13(b)
of the Disclosure Letter lists each parcel of real property in excess of 10,000
square feet currently leased or subleased by the Company or any Subsidiary,
with
the name of the lessor and the date of the lease, sublease, assignment of the
lease, and any guaranty given (collectively, the “Lease
Documents”).
True,
correct and complete copies of all Lease Documents have been made available
to
Parent. Except as would not have a Material Adverse Effect, all such current
leases and subleases are in full force and effect, are valid and effective
in
accordance with their respective terms (except as such enforceability may be
subject to laws of general application relating to bankruptcy, insolvency,
and
the relief of debtors and rules of law governing specific performance,
injunctive relief, or other equitable remedies), and there is not, under any
of
such leases, any existing material default or event of default (or event which,
with notice or lapse of time, or both, would constitute a default) by the
Company or any Subsidiary or, to the Company’s knowledge, by the other party to
such lease or sublease, or person in the chain of title to such leased
premises.
26
(c) Except
as
would not have a Material Adverse Effect, there are no contractual or legal
restrictions that preclude or restrict the ability to use any real property
leased by the Company or any Subsidiary for the purposes for which it is
currently being used. There are no material latent defects or material adverse
physical conditions affecting the real property, and improvements thereon,
leased by the Company or any Subsidiary other than those that would not have
a
Material Adverse Effect.
(d) Except
as
would not have a Material Adverse Effect, each of the Company and the
Subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold or subleasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business free and clear of all mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances, charges or other
claims of third parties of any kind, including, without limitation, any
easement, right of way or other encumbrance to title, or any option, right
of
first refusal, or right of first offer, except for such imperfections of title,
if any, that do not materially interfere with the use of the subject
property.
SECTION
4.14. Intellectual
Property.
(a)
Section
4.14(a)(1) of the Disclosure Letter sets forth a true and complete list of
(i)
all registered U.S. and foreign patents and patent applications, (ii) all
registered U.S. and foreign trademarks, service marks and trade names in all
countries of the world, (iii) all U.S. and foreign copyright registrations
and
applications for registration of copyrights and (iv) all internet domain names
and applications for registration of internet domain names, in each case, that
are owned or controlled (in the sense of having the exclusive right to license
others) by the Company or any Subsidiary (collectively, the “Company
Registered Intellectual Property”).
Section 4.14(a)(2) of the Disclosure Letter sets forth a true and complete
list of all Company Software.
(b) Section
4.14(b) of the Disclosure Letter sets forth a list of all Licenses relating
to
patents, patent applications, inventions, know-how, technology, or the like
that
are material to the conduct of the business of the Company and the Subsidiaries
as currently conducted and a list of all Licenses relating to trademarks,
service marks, trade names, copyrights, domain names, Software and other
Intellectual Property that are material to the conduct of the business of the
Company and the Subsidiaries as currently conducted, in each case, to which
the
Company or a Subsidiary is a party, other than (i) nondisclosure agreements
entered into in the ordinary course of business, (ii) licenses of
commercially available, off-the-shelf or shrink-wrap computer software having
a
value of less than $500,000, and (iii) agreements entered into with the
Company’s customers or prospective customers that do not materially differ from
Company’s standard form agreements attached to Section 4.14(b) of the
Disclosure Letter.
(c) Except
as
set forth in Section 4.14(c) of the Disclosure Letter:
(i) Except
as
would not have a Material Adverse Effect, the conduct of the business of the
Company and the Subsidiaries as currently conducted, the use of the Company
Owned Intellectual Property and the Company Licensed Intellectual Property
in
connection therewith do not conflict with, infringe upon, misappropriate or
otherwise violate the Intellectual Property rights of any third party. Other
than claims that are not material to the business of the Company and the
Subsidiaries as currently conducted, no claim has been asserted in writing
(or,
to the knowledge of the Company, otherwise) to the Company or any Subsidiary
that the conduct of the business of the Company and the Subsidiaries as
currently conducted or as currently contemplated to be conducted conflicts
with,
infringes upon or may infringe upon, misappropriates or otherwise violates
the
Intellectual Property rights of any third party;
27
(ii) With
respect to each item of Company Owned Intellectual Property, the Company or
a
Subsidiary is the exclusive owner of the entire unencumbered right, title and
interest in and to such Company Owned Intellectual Property and is entitled
to
use such Company Owned Intellectual Property in the continued operation of
its
respective business, subject to the terms of Licenses under which rights to
Company Owned Intellectual Property are granted to third parties;
(iii) With
respect to each item of Company Licensed Intellectual Property, the Company
or a
Subsidiary has the valid right to use such Company Licensed Intellectual
Property in the continued operation of its respective business pursuant to
the
terms of the License governing such Company Licensed Intellectual
Property;
(iv) To
the
knowledge of the Company, the Company Registered Intellectual Property that
is
issued or registered is valid and enforceable, and has not been adjudged invalid
or unenforceable in whole or in part;
(v) To
the
knowledge of the Company and except as would not have a Material Adverse Effect,
no person is engaging in any activity that infringes upon or misappropriates
the
Company Owned Intellectual Property;
(vi) To
the
knowledge of the Company, each License of material Company Licensed Intellectual
Property is valid and enforceable, is binding on all parties to such License,
and is in full force and effect;
(vii) None
of
the Company, any Subsidiary or, to the knowledge of the Company, any other
party
to any License of material Company Licensed Intellectual Property is in material
breach thereof or default thereunder;
and
(viii) Neither
the execution of this Agreement nor the consummation of any Transaction shall
adversely affect any of the material rights of the Company or any Subsidiary
with respect to the Company Owned Intellectual Property or the Company Licensed
Intellectual Property.
28
(d) The
Company and the Subsidiaries have taken reasonable steps in accordance with
normal industry practice to maintain the confidentiality of their trade secrets
and other material confidential Intellectual Property.
(e) Other
than Intellectual Property in the public domain which the Company may freely
use, except as would not have a Material Adverse Effect, the Company Owned
Intellectual Property and Company Licensed Intellectual Property include all
of
the Intellectual Property used or held for use in connection with the operation
of the business of the Company as currently conducted and there are no other
items of Intellectual Property that are necessary for the operation of the
business of the Company as currently conducted.
(f) The
Merger, including the assignment by operation of Law or otherwise of any License
or Material Contract to the Surviving Corporation, will not result in: (i)
Parent or any subsidiary of Parent (other than the Company and its Subsidiaries,
but only to the extent existing prior to this Agreement) being bound by any
non-compete or other material restriction on the operation of any business
of
Parent or any subsidiary of Parent, (ii) Parent or any subsidiary of Parent
(other than the Company and its Subsidiaries, but only to the extent existing
prior to this Agreement) granting any rights or licenses to any Intellectual
Property of Parent or any subsidiary of Parent (including a covenant not to
▇▇▇)
or (iii), to the knowledge of the Company, the termination or breach of any
contract to which Parent or any of its subsidiaries is a party.
(g) The
Company IT Assets are adequate for, and operate and perform in all material
respects in accordance with their documentation and functional specifications
and otherwise as required in connection with, the operation of the business
of
the Company and its Subsidiaries. Except as would not be material to the
business of the Company and the Subsidiaries as currently conducted, the Company
IT Assets have not materially malfunctioned or failed within the past three
(3)
years and do not contain any viruses, worms, Trojan horses, bugs, faults or
other devices, errors, contaminants or effects that (i) significantly disrupt
or
adversely affect the functionality of any Company IT Assets or other Software
or
systems, except as disclosed in their documentation, or (ii) enable or assist
any person to access without authorization any Company IT Assets. The Company
and its Subsidiaries have implemented reasonable backup, security and disaster
recovery technology consistent with industry practices, and except as would
not
be material to the business of the Company and the Subsidiaries as currently
conducted, no person has gained unauthorized access to any Company IT
Assets.
(h) Except
as
would not have a Material Adverse Effect, no Public Software is, forms part
of,
has been used in connection with the development of, is incorporated into or
has
been distributed with, in whole or in part, any Company Software.
SECTION
4.15. Taxes.
The
Company and the Subsidiaries have filed all material United States federal,
state, local and non-United States Tax returns and reports required to have
been
filed by them and have paid and discharged or reserved for in accordance with
GAAP in the SEC Reports all material Taxes required to have been paid or
discharged, other than such payments as are not yet due or being contested
in
good faith by appropriate proceedings. All such Tax returns are in all material
respects true, accurate and complete. Neither the IRS nor any other United
States or non-United States taxing authority or agency is now asserting or,
to
the knowledge of the Company, threatening to assert against the Company or
any
Subsidiary any deficiency or claim for any material Taxes or interest thereon
or
penalties in connection therewith. Neither the Company nor any Subsidiary has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any material Tax. The accruals
and
reserves for Taxes reflected in the financial statements contained in the SEC
Reports (including the Latest Balance Sheet) have been made in accordance with
GAAP. There are no Tax liens upon any property or assets of the Company or
any
of the Subsidiaries except liens for current Taxes not yet due or being
contested in good faith by appropriate proceedings. Neither the Company nor
any
of the Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by the Company or any of the Subsidiaries, and
the
IRS has not initiated or proposed in writing any such adjustment or change
in
accounting method, in either case which adjustment or change would have a
Material Adverse Effect.
29
SECTION
4.16. Environmental
Matters.
Except
as described in Section 4.16 of the Disclosure Letter or as would not have
a Material Adverse Effect, (a) none of the Company nor any of the Subsidiaries
has violated or is in violation of any Environmental Law; (b) none of the
properties currently or formerly owned, leased or operated by the Company or
any
Subsidiary (including, without limitation, soils and surface and ground waters)
are contaminated with any Hazardous Substance; (c) none of the Company or any
of
the Subsidiaries is actually, potentially or allegedly liable for any off-site
contamination by Hazardous Substances; (d) none of the Company or any of the
Subsidiaries has received any written notice of a claim that it is actually,
potentially or allegedly liable under any Environmental Law (including, without
limitation, pending or threatened liens); (e) each of the Company and each
Subsidiary has all permits, licenses and other authorizations required under
any
Environmental Law (“Environmental
Permits”);
(f)
each of the Company and each Subsidiary is in compliance with its Environmental
Permits; and (g) neither the execution of this Agreement nor the consummation
of
the Transactions will require any investigation, remediation or other action
with respect to Hazardous Substances, or any notice to or consent of
Governmental Authorities or third parties, pursuant to any applicable
Environmental Law or Environmental Permit, including, without limitation, the
Connecticut Transfer Act or the New Jersey Industrial Site Recovery
Act.
SECTION
4.17. Amendment
to Rights Agreement.
The
Company has amended, and the Board has taken all necessary action to amend,
the
Rights Agreement so that (a) none of the execution or delivery of this
Agreement, the making of the Offer, the acceptance for payment of Shares by
Purchaser pursuant to the Offer, the consummation of the Merger or the
consummation of any other Transaction will result in (i) the occurrence of
the
“flip-in event” described under Section 11 of the Rights Agreement, (ii) the
occurrence of the “flip-over event” described in Section 13 of the Rights
Agreement, (iii) the Rights becoming evidenced by, and transferable pursuant
to,
certificates separate from the certificates representing Shares, or becoming
exercisable, (iv) Parent or Purchaser being an Acquiring Person (as such term
is
defined in the Rights Agreement) or (v) the occurrence of the Distribution
Date
(as such term is defined in the Rights Agreement) and (b) the Rights will expire
pursuant to the terms of the Rights Agreement at the Effective
Time.
30
SECTION
4.18. Material
Contracts .
(a)
Subsections (i) through (xii) of Section 4.18(a) of the Disclosure Letter lists
the following types of contracts and agreements to which the Company or any
Subsidiary is a party (such contracts and agreements as are required to be
set
forth in Section 4.18(a) of the Disclosure Letter being the “Material
Contracts”):
(i) each
“material contract” (as such term is defined in Item 610(b)(10) of Regulation
S-K of the SEC) with respect to the Company and its Subsidiaries;
(ii) each
contract and agreement, whether or not made in the ordinary course of business,
that contemplates an exchange of consideration with a value of more than
$500,000, in the aggregate, over the term of such contract or
agreement;
(iii) all
contracts and agreements evidencing indebtedness for borrowed
money;
(iv) all
joint
venture, partnership, and business acquisition or divestiture
agreements
(v) all
agreements relating to issuances of securities of the Company or any Subsidiary,
other than agreements relating to the issuance of awards under the Company
Stock
Plans;
(vi) all
contracts and agreements that obligate the Company or any Subsidiary to
indemnify any third party for amounts that could be material to the
Company;
(vii) all
exclusive distribution contracts to which the Company or any Subsidiary is
a
party;
(viii) all
Licenses (other than (1) nondisclosure agreements entered into in the
ordinary course of business, (2) licenses of commercially available,
off-the-shelf or shrink-wrap computer software having a value less than
$500,000, and (3) agreements entered into with the Company’s customers or
prospective customers that do not materially differ from Company’s standard form
agreements attached to Section 4.14(b) of the Disclosure
Letter);
(ix) all
broker, distributor, dealer, manufacturer’s representative, franchise, agency,
sales promotion, market research, marketing consulting and advertising contracts
and agreements to which the Company or any Subsidiary is a party and any other
contract that compensates any person based on any sales by the Company or a
Subsidiary;
(x) all
management contracts and contracts with other consultants (excluding contracts
for employment or service), including any contracts involving the payment of
royalties or other amounts calculated based upon the revenues or income of
the
Company or any Subsidiary or income or revenues related to any product of the
Company or any Subsidiary to which the Company or any Subsidiary is a
party;
31
(xi) all
contracts and agreements with any Governmental Authority to which the Company
or
any Subsidiary is a party; and
(xii) all
contracts and agreements that limit, or purport to limit, the ability of the
Company or any Subsidiary to compete in any line of business or with any person
or entity or in any geographic area or during any period of time.
(b) Except
as
would not have a Material Adverse Effect, (i) each Material Contract is a legal,
valid and binding agreement except to the extent they have previously expired
in
accordance with their terms, (ii) none of the Company or any Subsidiary has
received any claim of default under or cancellation of any Material Contract
and
none of the Company or any Subsidiary is in breach or violation of, or default
under, any Material Contract; (iii) to the Company’s knowledge, no other party
is in breach or violation of, or default under, any Material Contract; and
(iv)
neither the execution of this Agreement nor the consummation of any Transaction
shall constitute a default under, give rise to cancellation rights under, or
otherwise adversely affect any of the rights of the Company or any Subsidiary
under any Material Contract. The Company has made available to Parent true and
complete copies of all Material Contracts, including any amendments
thereto.
SECTION
4.19. Customers
and Suppliers .
Section
4.19 of the Disclosure Letter sets forth a true and complete list of the
Company’s top ten customers (based on the revenue from such customer during the
12-month period preceding the date of this Agreement). As of the date of this
Agreement, no customer that accounted for more than five percent of the
Company’s consolidated revenues during the 12-month period preceding the date of
this Agreement and no material supplier of the Company and its Subsidiaries,
(i)
has cancelled or otherwise terminated any contract with the Company or any
Subsidiary prior to the expiration of the contract term, (ii) has returned,
or
threatened to return, a substantial amount of any of the products, equipment,
goods and services purchased from the Company or any Subsidiary, or (iii) to
the
Company’s knowledge, has threatened, or indicated its intention, to cancel or
otherwise terminate its relationship with the Company or its Subsidiaries or
to
reduce substantially its purchase from or sale to the Company or any Subsidiary
of any products, equipment, goods or services. Neither the Company nor any
Subsidiary has (i) breached, in any material respect, any agreement with or
(ii) engaged in any fraudulent conduct with respect to, any such customer
or supplier of the Company or a Subsidiary.
SECTION
4.20. Company
Products and Services.
Each
product manufactured, sold, leased or delivered by the Company or any Subsidiary
has been in conformity in all material respects with all applicable contractual
commitments and all express warranties, and neither the Company nor any
Subsidiary has any material liabilities or obligations for replacement or repair
thereof or other damages in connection therewith except as set forth on the
2007
Balance Sheet. Neither the Company nor any Subsidiary has any material
liabilities or obligations arising out of any injury to persons or damage to
tangible property as a result of the ownership, possession or use of any product
manufactured, sold, leased or delivered by the Company or any
Subsidiary.
32
SECTION
4.21. Insurance.
Section
4.21 of the Disclosure Letter sets forth, with respect to each insurance policy
under which the Company or any Subsidiary is insured, a named insured or
otherwise the principal beneficiary of coverage which is currently in effect,
(i) the names of the insurer, the principal insured and each named insured,
(ii)
the policy number, (iii) the period, scope and amount of coverage and (iv)
the
premium charged.
SECTION
4.22. Certain
Business Practices.
None of
the Company, any Subsidiary or, to the Company’s knowledge, any directors or
officers, agents or employees of the Company or any Subsidiary, has (i) used
any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iii) made any payment in the nature
of
criminal bribery.
SECTION
4.23. Interested
Party Transactions.
No
director, officer or other affiliate of the Company or any Subsidiary has or
has
had, directly or indirectly, (i) an economic interest in any person that has
furnished or sold, or furnishes or sells, services or products that the Company
or any Subsidiary furnishes or sells, or proposes to furnish or sell; (ii)
an
economic interest in any person that purchases from or sells or furnishes to,
the Company or any Subsidiary, any goods or services; (iii) a beneficial
interest in any contract or agreement disclosed in Section 4.18 of the
Disclosure Letter; or (iv) any contractual or other arrangement with the Company
or any Subsidiary; provided,
however,
that
ownership of no more than one percent (1%) of the outstanding voting stock
of a
publicly traded corporation shall not be deemed an “economic interest in any
person” for purposes of this Section 4.23.
SECTION
4.24. Brokers;
Schedule of Fees and Expenses.
No
broker, finder or investment banker (other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.) is
entitled to any brokerage, finder’s or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company. The Company has heretofore made available to Parent a complete and
correct copy of all agreements between the Company and ▇▇▇▇▇▇▇, Sachs & Co.,
pursuant to which such firm would be entitled to any payment relating to the
Transactions. A good faith estimate, as of the date of this Agreement, of all
third party fees and expenses of any accountant, broker, financial advisor,
consultant, legal counsel or other person retained by the Company in connection
with this Agreement or the Transactions incurred or to be incurred or expected
to be incurred by the Company or any Subsidiary in connection with this
Agreement and the Transactions is set forth in Section 4.24 of the Disclosure
Letter.
SECTION
4.25. No
Existing Discussions.
As of
the date of this Agreement, neither the Company nor any Subsidiary is engaged,
directly or indirectly, in any discussions or negotiations with any other party
with respect to a Transaction Proposal or a Superior Proposal.
SECTION
4.26. Required
Vote of the Company Stockholders.
The
affirmative vote of the holders of a majority of the outstanding Shares is
the
only vote or consent of holders of securities of the Company which may be
required to adopt this Agreement and the Transactions.
33
SECTION
4.27. Opinion
of Financial Advisor.
The
Board has received the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., dated the date of
this Agreement, to the effect that, as of such date and based upon and subject
to the matters and limitations set forth therein, the $8.65 per Share to be
received in the Offer and the Merger by the holders of the Shares, is fair
from
a financial point of view to the holders of such Shares (the “Fairness
Opinion”).
The
Fairness Opinion has not been withdrawn or revoked or otherwise modified in
any
material respect.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PARENT AND PURCHASER
As
an
inducement to the Company to enter into this Agreement, Parent and Purchaser
hereby, jointly and severally, represent and warrant to the Company
that:
SECTION
5.01. Corporate
Organization.
Each of
Parent and Purchaser is a corporation duly organized, validly existing and
in
good standing under the Laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority and governmental
approvals would not, individually or in the aggregate, prevent or materially
delay consummation of any of the Transactions or otherwise prevent Parent or
Purchaser from performing its obligations under this Agreement. Purchaser was
formed solely for the purpose of engaging in the transactions contemplated
by
this Agreement and has not engaged in any business activities or conducted
any
operations other than in connection with the Transactions. All the issued and
outstanding shares of capital stock of Purchaser are owned of record and
beneficially by Parent.
SECTION
5.02. Authority
Relative to This Agreement.
Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of Parent and Purchaser, and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize this Agreement
or
to consummate the Transactions (other than, with respect to the Merger, the
filing and recordation of appropriate merger documents as required by the DGCL).
This Agreement has been duly and validly executed and delivered by Parent and
Purchaser and, assuming due authorization, execution and delivery by the
Company, constitutes legal, valid and binding obligation of each of Parent
and
Purchaser enforceable against each of Parent and Purchaser in accordance with
its terms.
SECTION
5.03. No
Conflict; Required Filings and Consents.
(a)
The
execution and delivery of this Agreement by Parent and Purchaser do not, and
the
performance of this Agreement by Parent and Purchaser will not, and the
consummation of the Transactions by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws or other
organizational documents of either Parent or Purchaser, (ii) assuming that
all
consents, approvals and other authorizations described in Section 5.03(b) have
been obtained and that all filings and other actions described in Section
5.03(b) have been made or taken, conflict with or violate any Law applicable
to
Parent or Purchaser or by which any material property or material asset of
either of them is affected, or (iii) result in any breach of, or constitute
a
default (or an event which, with notice or lapse of time or both, would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent or Purchaser pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or Purchaser is
a
party or by which Parent or Purchaser or any material property or material
asset
of either of them is bound or affected, except, with respect to clause (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which would not, individually or in the aggregate, prevent or materially delay
consummation of any of the Transactions or otherwise prevent Parent or Purchaser
from performing its obligations under this Agreement.
34
(b) The
execution and delivery of this Agreement by Parent and Purchaser do not, and
the
performance of this Agreement by Parent and Purchaser will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, except for (i) applicable requirements, if
any,
of the Exchange Act, Blue Sky Laws and state takeover Laws, (ii) the pre-merger
notification requirements of the HSR Act, (iii) the filing and recordation
of
appropriate merger documents as required by the DGCL, and (iv) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, individually or in the aggregate,
prevent or materially delay consummation of any of the Transactions, or
otherwise prevent Parent or Purchaser from performing its obligations under
this
Agreement.
SECTION
5.04. Financing.
Parent
has, as of the date hereof, and will have upon the expiration of the Offer
(as
the same may be extended from time to time pursuant to this Agreement) and
at
the Effective Time, and will make available to Purchaser at the expiration
date
of the Offer (as the same may be extended from time to time pursuant to this
Agreement) and at the Effective Time, sufficient funds to permit Purchaser
to
consummate all the Transactions, including, without limitation, acquiring all
the outstanding Shares in the Offer and the Merger.
SECTION
5.05. Offer
Documents; Proxy Statement.
The
Offer Documents shall not, at the time the Offer Documents are filed with the
SEC or are first published, sent or given to stockholders of the Company, as
the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which
they
were made, not misleading. The information supplied by Parent for inclusion
in
the Proxy Statement shall not, at the date the Proxy Statement (or any amendment
or supplement thereto) is first mailed to stockholders of the Company and at
the
time of the Stockholders’ Meeting, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not false or misleading, or necessary to correct
any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders’ Meeting which shall have become false or
misleading. Notwithstanding the foregoing, Parent and Purchaser make no
representation or warranty with respect to any information supplied by the
Company or any of its representatives for inclusion in any of the foregoing
documents or the Offer Documents. The Offer Documents shall comply in all
material respects as to form with the requirements of the Exchange Act and
the
rules and regulations thereunder, the rules of NASDAQ and any other
Laws.
35
SECTION
5.06. Brokers.
No
broker, finder or investment banker (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated) is entitled to any brokerage, finder’s or other fee or commission
in connection with the Transactions based upon arrangements made by or on behalf
of Parent or Purchaser.
ARTICLE
VI
CONDUCT
OF BUSINESS PENDING THE MERGER
SECTION
6.01. Conduct
of Business by the Company Pending the Merger.
The
Company agrees that, between the date of this Agreement and the Appointment
Time
(as defined in Section 7.03(c)), unless Parent shall otherwise agree in writing,
the businesses of the Company and the Subsidiaries shall, except as otherwise
expressly contemplated by this Agreement, be conducted only in, and the Company
and the Subsidiaries shall not take any action except in the ordinary course
of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and the Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers, and other persons with which the Company
or any Subsidiary has significant business relations; provided,
however,
that
(1) the Company shall not be required to take any action pursuant to this
Section 6.01 that would cause any representation or warranty of the Company
set
forth in this Agreement to be or become inaccurate unless Parent shall waive
in
writing such inaccuracy, and (2) no failure by the Company to take any action
otherwise required by this Section 6.01 shall be deemed to constitute a breach
of, or inaccuracy in, any of the representations and warranties of the Company
set forth in this Agreement if and to the extent that Parent shall consent
in
writing to such failure pursuant to this Section 6.01. By way of amplification
and not limitation, except as expressly contemplated by this Agreement and
Section 6.01 of the Disclosure Letter, neither the Company nor any Subsidiary
shall, between the date of this Agreement and the Appointment Time, directly
or
indirectly, do, or propose to do, any of the following without the prior written
consent of Parent:
(a) amend
or
otherwise change its Certificate of Incorporation or By-Laws or equivalent
organizational documents;
(b) issue,
sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of, (i) any shares or units (if
applicable) of any class of capital stock or other type of equity interests of
the Company or any Subsidiary, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares or units (as applicable)
of
such capital stock or other type of equity interests, or any other ownership
interest (including, without limitation, any phantom interest), of the Company
or any Subsidiary (except for the issuance of a maximum of 6,628,083 Shares
issuable pursuant to Company Stock Options and Company Stock Awards outstanding
on the date hereof and the grant of a maximum of 71,310 Company Stock Awards
and
Company Stock Options to new hires) or (ii) any assets (including
Intellectual Property) of the Company or any Subsidiary, except in the ordinary
course of business and in a manner consistent with past practice;
36
(c) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock, except
for dividends by any direct or indirect wholly owned Subsidiary to the Company
or any other Subsidiary;
(d) reclassify,
combine, split, subdivide or redeem, or purchase or otherwise acquire, directly
or indirectly, any of its capital stock, except for the repurchase or
reacquisition of securities in connection with the termination of service of
any
employee, director or consultant of the Company or any Subsidiary;
(e) (i)
acquire (including, without limitation, by merger, consolidation, or acquisition
of stock or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof or acquire
any
material amount of assets (other than (A) any license of Intellectual Property
to the Company and the Subsidiaries that is not material to the business of
the
Company and the Subsidiaries, taken as a whole, as currently conducted and
(B)
acquisitions of inventory and supplies that are consistent with past practice);
(ii) incur any indebtedness for borrowed money or issue any debt securities
or
assume, guarantee or endorse, or otherwise become responsible for, the
obligations of any person, or make any loans or advances (including loans or
advances to any director, officer, employee, agent or consultant of the Company
or any Subsidiary), except for advances of business expenses in the ordinary
course of business and consistent with past practice), or grant any security
interest in any of its assets (including Intellectual Property) except in the
ordinary course of business and consistent with past practice; (iii) enter
into
any contract or agreement other than in the ordinary course of business and
consistent with past practice; (iv) authorize any capital expenditure in
any manner not reflected in the capital budget of the Company attached as
Section 6.01(e)(iv) of the Disclosure Letter; (v) renew or enter into any
noncompete, exclusivity or similar agreement that would restrict or limit,
in
any material respect, the operations of the Company or its Subsidiaries or,
after the Acceptance Time, Parent or its subsidiaries, or (vi) enter into
or amend any contract, agreement, commitment or arrangement with respect to
any
matter set forth in this Section 6.01(e);
(f) hire
additional employees, except hiring in the ordinary course of business and
consistent with past practice, or increase the compensation payable or to become
payable or the benefits provided to its directors, officers or employees, except
for increases in the ordinary course of business and consistent with past
practice in salaries, wages, bonuses, incentives or benefits of employees of
the
Company or any Subsidiary who are not directors or officers of the Company,
or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the Company
or of any Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit-sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except for
such amendments as may be necessary or desirable to cause any such plan,
agreement, trust, fund, policy or arrangement to comply with Section 409A of
the
Code so as to avoid the imposition of additional tax with respect
thereto;
37
(g) take
any
action, other than reasonable and usual actions in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures;
(h) make
any
material tax election or settle or compromise any material United States
federal, state, local or non-United States income tax liability;
(i) pay,
discharge or satisfy any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business and consistent
with past practice, of liabilities reflected or reserved against in the 2007
Balance Sheet or subsequently incurred in the ordinary course of business and
consistent with past practice;
(j) amend,
modify or consent to the termination (which for the avoidance of doubt shall
not
include the expiration of any Material Contract in accordance with its terms)
of
any Material Contract, or amend, waive, modify or consent to the termination
of
any material rights of the Company or any Subsidiary thereunder, in a manner
adverse in any material respect to the Company;
(k) commence
or settle any material Action;
(l) permit
any material item of Company Registered Intellectual Property to lapse or to
be
abandoned, dedicated, or disclaimed, fail to perform or make any applicable
filings, recordings or other similar actions or filings, or fail to pay all
required fees and taxes required or advisable to maintain and protect its
interest in each and every material item of Company Registered Intellectual
Property;
(m) adopt
a
plan of complete or partial liquidation, dissolution, recapitalization or other
reorganization; or
(n) announce
an intention, enter into any formal or informal agreement or otherwise make
a
commitment, to do any of the foregoing.
ARTICLE
VII
ADDITIONAL
AGREEMENTS
SECTION
7.01. Stockholders’
Meeting.
(a)
If
required by applicable Law in order to consummate the Merger, the Company,
acting through the Board, shall, in accordance with applicable Law and the
Company’s Certificate of Incorporation and By-Laws, (i) duly call, give notice
of, convene and hold a special meeting of its stockholders as promptly as
practicable following consummation of the Offer for the purpose of considering
and taking action on this Agreement and the Transactions (the “Stockholders’
Meeting”)
and
(ii) subject to applicable fiduciary obligations, (A) include in the Proxy
Statement the recommendation of the Board that the stockholders of the Company
adopt this Agreement and the Transactions and (B) use its reasonable best
efforts to obtain such adoption. At the Stockholders’ Meeting, Parent and
Purchaser shall cause all Shares then owned by them and their affiliates to
be
voted in favor of the adoption of this Agreement and the Transactions.
38
(b) Notwithstanding
the foregoing, in the event that Purchaser shall acquire at least 90% of the
then outstanding Shares (including pursuant to the Merger Option), the parties
shall take all necessary and appropriate action to cause the Merger to become
effective, in accordance with Section 253 of the DGCL, as promptly as reasonably
practicable after such acquisition, without a meeting of the stockholders of
the
Company.
SECTION
7.02. Proxy
Statement.
If
approval of the Company’s stockholders is required by applicable Law to
consummate the Merger, promptly following consummation of the Offer, the Company
shall, with the assistance and approval of Parent, file the Proxy Statement
with
the SEC under the Exchange Act, and shall use its reasonable best efforts to
have the Proxy Statement cleared by the SEC as promptly as practicable. Parent
and Purchaser, respectively, shall each promptly furnish the Company, in
writing, all information concerning Parent and Purchaser that may be required
by
applicable securities Laws or reasonably requested by the Company for inclusion
in the Proxy Statement. Each of the Company, Parent and Purchaser agrees to
correct promptly any information provided by it for use in the Proxy Statement
which shall have become false or misleading in any material respect. Parent,
Purchaser and the Company shall cooperate with each other in the preparation
of
the Proxy Statement, and the Company shall notify Parent of the receipt of
any
comments of the SEC with respect to the Proxy Statement and of any requests
by
the SEC for any amendment or supplement thereto or for additional information
and shall provide to Parent promptly copies of all correspondence between the
Company or any representative of the Company and the SEC with respect thereto.
The Company shall give Parent and its counsel a reasonable opportunity to review
and comment on the Proxy Statement, including all amendments and supplements
thereto, prior to such documents being filed with the SEC or disseminated to
holders of Shares and shall give Parent and its counsel a reasonable opportunity
to review and comment on all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
Each of the Company, Parent and Purchaser agrees to use its reasonable best
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC and to cause the Proxy Statement
and all required amendments and supplements thereto to be mailed to the holders
of Shares entitled to vote at the Stockholders’ Meeting at the earliest
practicable time.
SECTION
7.03. Company
Board Representation; Section 14(f).
(a)
Promptly
upon the purchase by Purchaser pursuant to the Offer of such number of Shares
satisfying the Minimum Condition and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to
the
next whole number (but in no event more than one less than the total number
of
directors on the Board), on the Board as shall give Purchaser representation
on
the Board equal to the product of the total number of directors on the Board
(giving effect to the directors elected pursuant to this sentence) multiplied
by
the percentage that the aggregate number of Shares owned by Purchaser or any
affiliate of Purchaser following such purchase bears to the total number of
Shares then outstanding, and the Company shall, subject to compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, at
such
time, promptly take all actions reasonably necessary to, upon Purchaser’s
request, cause Purchaser’s designees to be elected or appointed as directors of
the Company, including increasing the size of the Board or seeking and accepting
the resignations of incumbent directors, or both. At such times, the Company
shall use its reasonable best efforts to cause persons designated by Purchaser
to constitute the same percentage as persons designated by Purchaser shall
constitute of the Board of (i) each committee of the Board, (ii) each
board of directors (or other similar body) of each Subsidiary, and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable Law. Notwithstanding the foregoing, until the Effective
Time, (A) the Board shall always have at least two (2) directors who were
directors prior to the consummation of the Offer and who are not affiliated
with
Parent or Purchaser (such directors, the “Continuing
Directors”);
provided,
however,
that,
if any Continuing Director resigns from the Board or is unable to serve due
to
death or disability or any other reason, the remaining Continuing Directors
shall be entitled to elect or designate such resigning director’s successor to
fill the vacancy, and such director shall be deemed to be a Continuing Director
for purposes of this Agreement and (B) the Company shall use its reasonable
best
efforts to ensure that at least two members of each committee of the Board
and
such boards and committees of the Subsidiaries, as of the date hereof, who
are
not employees of the Company, shall remain members of such committee of the
Board and of such boards and committees of the Subsidiaries. If the number
of
Continuing Directors is reduced to fewer than two for any reason prior to the
Effective Time, the remaining and departing Continuing Directors shall be
entitled to designate a person to fill the vacancy or vacancies such that there
shall be at least two Continuing Directors, who shall thereafter be deemed
to be
a Continuing Director for all purposes of and under this Agreement.
39
(b) The
Company shall promptly take all actions required pursuant to Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder to fulfill its
obligations under this Section 7.03, and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors
as
is required under Section 14(f) and Rule 14f-1 to fulfill such obligations.
Parent or Purchaser shall supply in writing to the Company, and be solely
responsible for, any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f)
and
Rule 14f-1.
(c) Following
the date on which a majority of the Company’s directors are designees of
Purchaser (the “Appointment
Time”),
prior
to the Effective Time, any amendment of this Agreement or the Certificate of
Incorporation or By-Laws of the Company, any termination of this Agreement
by
the Company, any agreement or consent to amend this Agreement by the Company,
any extension by the Company of the time for the performance, or any waiver,
of
any of the obligations or other acts of Parent or Purchaser, any waiver of
any
of the Company’s rights, benefits or privileges hereunder, any determination
with respect to any action to be taken or not to be taken by or on behalf of
the
Company relating to this Agreement or the Transactions, or any approval of
any
other action by the Company that is reasonably likely to adversely affect the
interests of the holders of Shares (other than Parent, Purchaser and their
affiliates) with respect to the Transactions shall require the concurrence
of a
majority of the Continuing Directors (or the sole Continuing Director if there
shall be only one (1) Continuing Director).
(d) Following
the Appointment Time and until the Effective Time, Parent and Purchaser shall,
with respect to each Continuing Director, cause the Company to maintain the
policies of the Company in effect as of the date hereof with respect to the
cash
compensation of the Company’s directors, the Company’s directors and officers’
insurance and the reimbursement of travel and other reasonable expenses relating
to or arising out of the performance of their services as Continuing Directors
of the Company.
40
SECTION
7.04. Access
to Information; Confidentiality.
(a)
From the
date hereof until the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of
the
Company and the Subsidiaries to, afford the officers, employees and
Representatives of Parent and Purchaser reasonable access at all reasonable
times to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser with such financial, operating and other data
and
information (“Company
Data”)
as
Parent or Purchaser, through its officers, employees or agents, may reasonably
request (it being agreed that the Company and its Subsidiaries shall not be
required to furnish any Company Data in any format in which such Company Data
did not exist prior to the request therefor by Parent or Purchaser);
provided,
however,
the
Company may restrict such access to the extent that (A) any Law, applicable to
the Company or its Subsidiaries requires the Company or its Subsidiaries to
restrict or prohibit such access, or (B) such access would otherwise be in
breach of any confidentiality obligation in any agreement or contract or other
obligation by which the Company or any of its Subsidiaries is
bound.
(b) All
information obtained by Parent or Purchaser pursuant to this Section 7.04
shall be kept confidential in accordance with a confidentiality agreement,
dated
November 14, 2007 (the “Confidentiality
Agreement”),
between Parent and the Company.
(c) No
investigation pursuant to this Section 7.04 shall affect any representation
or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto or any condition to the Offer.
SECTION
7.05. No
Solicitation of Transactions.
(a)
The
Company agrees that neither it nor any Subsidiary nor any of the directors,
officers or employees of it or any Subsidiary will, and that it will not
authorize or permit its and its Subsidiaries’ agents, advisors and other
representatives (including, without limitation, any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any
Subsidiary (such agents, advisors and other representatives, each, a
“Representative”
and
collectively, “Representatives”))
to,
directly or indirectly, (i) solicit, initiate or knowingly encourage or
knowingly facilitate (including by way of furnishing nonpublic information)
the
making, submission or announcement of any Transaction Proposal or (ii) enter
into or maintain or continue discussions or negotiations with any person or
entity with respect to or in order to obtain a Transaction Proposal, or (iii)
agree to, approve, endorse or recommend any Transaction Proposal or enter into
any letter of intent or other contract, agreement or commitment contemplating
or
otherwise relating to any Transaction Proposal (except, with respect to clause
(iii), to the extent specifically permitted pursuant to the provisions of
Section 7.05(c)). The Company shall notify Parent as promptly as practicable
(and in any event within one (1) business day after the Company attains
knowledge thereof), orally and in writing, if any Transaction Proposal, or
any
inquiry or contact with any person with respect thereto, is made, specifying
the
material terms and conditions thereof and the identity of the party making
such
Transaction Proposal (including any material amendments or proposed material
amendments thereto). The Company shall, and shall direct its Subsidiaries’
directors, officers, employees and Representatives to, immediately cease and
cause to be terminated any discussions or negotiations with any parties that
may
have been conducted heretofore with respect to a Transaction Proposal. The
Company shall not release any third party from, or waive any provision of,
any
confidentiality agreement to which it is a party and the Company shall promptly
request each person that has heretofore executed a confidentiality agreement
in
connection with its consideration of making any Transaction Proposal, if any,
to
return all confidential information heretofore furnished to such person by
or on
behalf of the Company or any Subsidiary and, if requested by Parent, to promptly
enforce such person’s obligation to do so.
41
(b) Notwithstanding
anything to the contrary in this Section 7.05, at any time prior to the
Acceptance Time, the Company and its Subsidiaries’ directors, officers,
employees and their respective Representatives may take any of the following
actions with respect to a person who, after the date of this Agreement, has
made
a written, bona fide Transaction Proposal not solicited in violation of Section
7.05(a) or the exclusivity agreement, dated November 14, 2007 (the “Exclusivity
Agreement”),
between Parent and the Company (it being understood that a Transaction Proposal
made by a person prior to the date of this Agreement without further action
by
such person shall not be considered to be made after the date of this
Agreement), but only if, prior to furnishing such information or entering into
such discussions, the Board has (A) determined, in its good faith judgment
(after having received the advice of a financial advisor of nationally
recognized reputation), that such proposal or offer constitutes, or is
reasonably likely to result in, a Superior Proposal, (B) determined, in its
good
faith judgment after consultation with independent legal counsel (who may be
the
Company’s regularly engaged independent legal counsel), that, in light of such
Transaction Proposal, the failure to take such action would be reasonably likely
to be inconsistent with its fiduciary obligations under applicable Law, (C)
provided written notice to Parent of its intent to furnish information or enter
into discussions with such person at least 24 hours prior to taking any such
action, and (D) obtained from such person an executed confidentiality agreement
on terms with respect to confidential information that are no less favorable
to
the Company than those contained in the Confidentiality Agreement (it being
understood that such confidentiality agreement and any related agreements shall
not include any provision calling for any exclusive right to negotiate with
such
party or having the effect of prohibiting the Company from satisfying its
obligations under this Agreement):
(i) furnish
nonpublic information to such third party making the Transaction Proposal and
its employees and Representatives; provided,
however,
that
the Company shall promptly provide or make available to Parent any non-public
information concerning the Company or any of its Subsidiaries that is provided
to the person making the Transaction Proposal or employee or Representative
thereof if such information was not previously provided or made available to
Parent; and
(ii) engage
in
discussions or negotiations with such third party and its employees and
Representatives with respect to the Transaction Proposal.
(c) Except
as
set forth in this Section 7.05(c), neither the Board nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in any
manner adverse to Parent or Purchaser, the approval or recommendation by the
Board or any such committee of this Agreement, the Offer, the Merger or any
other Transaction, (ii) take any action to make the provisions of Section
203 of the DGCL inapplicable to any transaction other than the Transactions
or
(iii) approve or recommend, or cause or permit the Company to enter into
any letter of intent, agreement or obligation with respect to, any Transaction
Proposal (any such action listed in (i), (ii) or (iii), a “Change
of Recommendation”).
Notwithstanding the foregoing, if the Board determines, in its good faith
judgment prior to the time of acceptance for payment of Shares pursuant to
the
Offer (the “Acceptance
Time”)
and
after consultation with independent legal counsel (who may be the Company’s
regularly engaged independent legal counsel), that the failure to make such
a
Change of Recommendation would be reasonably likely to be inconsistent with
its
fiduciary obligations under applicable Law, the Board may make a Change of
Recommendation, but only if, prior to making such Change of Recommendation,
(i)
the Board provides written notice to Parent (a “Notice
of Change of Recommendation”)
advising Parent that it intends to effect a Change of Recommendation and the
manner in which it intends to do so (it being understood and agreed that the
Company shall not make any such Change of Recommendation unless (A) in the
event
that the Company shall have previously received a Superior Proposal, four (4)
business days shall have elapsed since Parent’s receipt of such Notice of Change
of Recommendation or (B) in the event that the Company shall not have previously
received a Superior Proposal, three (3) business days shall have elapsed since
Parent’s receipt of such Notice of Change of Recommendation) and (ii) if the
Board shall have previously received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal, identifying the person
making such Superior Proposal, providing to Parent copies of the definitive
forms of all agreements pertaining to such Superior Proposal; provided,
however,
that
the Board shall not make any Change of Recommendation unless (i) prior to
making such Change of Recommendation, the Board determines, after taking into
account any modifications to the terms of the Transactions that are proposed
by
Parent within three (3) or four (4) business days of Parent’s receipt of the
Notice of Change of Recommendation, that a failure to make such Change of
Recommendation would be reasonably likely to be inconsistent with its fiduciary
duties under applicable Law and (ii) if the Board shall have previously received
a Superior Proposal, the Company simultaneously terminates this Agreement in
accordance with Section 9.01(d)(ii) (and pays to Parent the Fee in accordance
with Section 9.03 and enters into an agreement with respect to a Superior
Proposal). The Company agrees that during the three (3) or four (4) business
day
period prior to its effecting a Change in Recommendation, the Company and its
employees, officers, directors shall, and the Company shall direct its
Representatives to, negotiate in good faith with Parent and its employees,
officers, directors and Representatives regarding any revisions to the terms
of
the Transactions that are proposed by Parent.
42
(d) For
purposes of this Agreement:
“Transaction
Proposal”
means
any proposal or offer (including, without limitation, any offer or proposal
to
the Company’s stockholders) that relates to any of the following (other than the
Transactions): (i) any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other similar
transaction involving the Company or any Subsidiary; (ii) any sale, lease,
exchange, transfer or other disposition of assets or businesses that constitute
or represent 15% or more of the total revenue, operating income, EBITDA or
assets of the Company and its Subsidiaries, taken as a whole; (iii) any sale,
exchange, transfer or other disposition of 15% or more of any class of equity
securities of the Company or of any Subsidiary; or (iv) any tender offer or
exchange offer that, if consummated, would result in any person beneficially
owning 15% or more of any class of equity securities of the Company or of any
Subsidiary.
43
“Superior
Proposal”
means
an unsolicited written bona fide offer, which did not result from a breach
of
Section 7.05, made by a third party to consummate any Transaction Proposal
(i)
that the Board determines, in its good faith judgment (after having received
the
advice of a financial advisor of nationally recognized reputation), to be (A)
more favorable to the Company’s stockholders from a financial point of view than
the Offer and Merger and (B) reasonably likely to be consummated on the terms
so
proposed, taking into account all relevant financial, regulatory, legal and
other aspects of such proposal, including any conditions, and (ii) for which
financing, to the extent required, is then committed; provided,
however,
that
for purposes of the definition of “Superior Proposal”, the references to “15%”
in the definition of Transaction Proposal shall be deemed to be references
to
“50%”.
(e) Nothing
in this Section 7.05 shall prohibit the Board from taking and disclosing to
the
Company’s stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or
Item 1012(a) of Regulation M-A promulgated under the Exchange Act, if the Board
determines, in its good faith judgment after consultation with independent
legal
counsel (who may be the Company’s regularly engaged independent legal counsel),
that failure to so disclose such position would constitute a violation of
applicable Law; provided
that any
Change of Recommendation shall be governed by the terms of this Agreement,
including Section 7.05(c).
SECTION
7.06. Employee
Benefits Matters.
From
and after the Effective Time, Parent shall cause the Surviving Corporation
and
its subsidiaries to honor in accordance with their terms, all contracts,
agreements, arrangements, policies, plans and commitments of the Company and
the
Subsidiaries as in effect immediately prior to the Effective Time that are
applicable to any current or former employees, consultants, or directors of
the
Company or any Subsidiary. Following the Effective Time, Parent shall give
each
Company employee credit for prior service with the Company or its Subsidiaries,
including predecessor employers, for purposes of (i) eligibility and
vesting under any employee benefit plan of Parent or its applicable subsidiary
in which such employee becomes eligible to participate at or following the
Effective Time, and (ii) determination of benefits levels under any
vacation or severance plan of Parent or its subsidiaries in which such employee
becomes eligible to participate at or following the Effective Time; provided
that in each case under clauses (i) and (ii) above, if the Company or
any of its Subsidiaries maintains a comparable Plan, service shall be credited
solely to the extent that such crediting will not result in the duplication
of
benefits. Parent shall give credit under those of its and its subsidiaries’
welfare benefit plans in which Company employees and their eligible dependents
become eligible to participate at or following the Effective Time, for all
co-payments made, amounts credited toward deductibles and out-of-pocket
maximums, and time accrued against applicable waiting periods, by Company
employees and their eligible dependents, in respect of the plan year in which
the Effective Time occurs or the plan year in which such individuals are
transitioned to such plans from the corresponding Plans, and Parent shall waive
all requirements for evidence of insurability and pre-existing conditions
otherwise applicable, except as would also be applicable under the corresponding
Plans, to Company employees and their eligible dependents under the employee
heath plans of Parent and its subsidiaries, including medical, dental, vision
and prescription drug plans, in which such individuals become eligible to
participate at or following the Effective Time.
SECTION
7.07. Directors’
and Officers’ Indemnification and Insurance.
(a)
From and
after the Effective Time, Parent and the Surviving Corporation will maintain
in
effect in all respects the current obligations of the Company pursuant to any
indemnification agreements between the Company and its directors, officers
and
employees (the “Indemnified Parties”) in effect immediately prior to the
Effective Time and any indemnification provisions under the Certificate of
Incorporation and By-Laws as in effect on the date hereof. The Certificate
of
Incorporation and By-Laws of the Surviving Corporation shall contain provisions
with respect to exculpation and indemnification that are no less favorable
to
the Indemnified Parties than are set forth in the Certificate of Incorporation
and By-Laws of the Company, in each case as in effect on the date hereof, which
provisions shall not be amended, repealed or otherwise modified for a period
of
six years from the Effective Time in any manner that would affect adversely
the
rights thereunder of the Indemnified Parties, unless such modification shall
be
required by applicable Law and then only to the minimum extent required by
applicable Law.
44
(b) Parent
shall cause the Surviving Corporation to maintain in effect for six years from
the Effective Time, if available, the current directors’ and officers’ liability
insurance policies maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions that are no less favorable) with respect to
matters occurring prior to the Effective Time; provided,
however,
that in
no event shall the Surviving Corporation be required to expend pursuant to
this
Section 7.07(b) more than an amount per year equal to 250% of the current annual
premiums paid by the Company for such insurance (which premiums the Company
represents and warrants to be $905,063 in the aggregate); provided,
however,
that,
if the annual premiums for such insurance exceed such amount or in the event
of
an expiration, termination or cancellation of such current policies, the
Surviving Corporation shall be required to obtain as much coverage as is
possible under substantially similar policies for such maximum annual amount
in
aggregate annual premiums; provided,
further
that
Parent and the Surviving Corporation may satisfy its obligations under this
Section 7.07(b) by obtaining, at the Effective Time, prepaid (or “tail”)
directors’ and officers’ liability insurance policy, in each case, the material
terms of which, including coverage, amount and creditworthiness of the issuer,
are no less favorable to such directors and officers than the insurance coverage
otherwise required under this Section 7.07(b). In such event, Parent and the
Surviving Corporation shall maintain such “tail” policy in full force and effect
and continue to honor their respective obligations thereunder, in lieu of all
other obligations of Parent and the Surviving Corporation under the first
sentence of this Section 7.07(b) for such six-year period; provided
that in
no event shall the Surviving Corporation pay a premium for such “tail” policy
that in the aggregate exceeds $2,000,000 (it being understood that the Surviving
Corporation may nevertheless acquire a “tail” policy providing such coverage as
may be obtained for such $2,000,000 amount). In the event that Parent or
Purchaser shall not have purchased any such “tail” policy from an insurance
provider of national reputation that is not affiliated with Parent at least
3
business days prior to the Effective Time, the Company shall be entitled to
purchase, on behalf of the Surviving Corporation, such “tail” policy,
provided
that in
no event shall the Company pay a premium for such “tail” policy that in the
aggregate exceeds $2,000,000.
(c) In
the
event Parent, the Surviving Corporation or any of its respective successors
or
assigns (i) consolidates with or merges into any other person and shall not
be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision shall be made
so
that the successors and assigns of Parent or the Surviving Corporation, as
the
case may be, or, with respect to the Surviving Corporation, at Parent’s option,
Parent, shall assume the obligations set forth in this Section
7.07.
45
(d) Parent
shall cause the Surviving Corporation to perform all of the obligations of
the
Surviving Corporation under this Section 7.07.
(e) This
Section 7.07 is intended to be for the benefit of, and shall be enforceable
by,
the Indemnified Parties and their heirs and personal representatives and shall
be binding on Parent and the Surviving Corporation and their successors and
assigns.
SECTION
7.08. Notification
of Certain Matters.
(a) The
Company shall give prompt notice to Parent, and Parent shall give prompt notice
to the Company, of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which reasonably could be expected to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate, provided that,
solely
in the case of the Company, such notice shall be required to be given only
if as
a result of the matters to be described in such notice the condition set forth
in clause (e) of Annex A would not be satisfied and, solely in the case of
Purchaser and Parent, such notice shall be required to be given only if the
matters to be described in such notice would prevent or materially delay
Purchaser or Parent from consummating any of the Transactions; provided further
that any
such notice by the Company shall not be deemed to have qualified or modified
the
representations and warranties of the Company contained in this Agreement for
the purposes of determining whether the conditions specified in Annex A have
been satisfied and (ii) any failure of the Company, Parent or Purchaser, as
the
case may be, to comply with or satisfy any covenant or agreement to be complied
with or satisfied by it hereunder,
provided that,
solely
in the case of the Company, such notice shall be required to be given only
if as
a result of the matters to be described in such notice the condition set forth
in clause (f) of Annex A would not be satisfied and, solely in the case of
Purchaser and Parent, such notice shall be required to be given only if the
matters to be described in such notice would prevent or materially delay
Purchaser or Parent from consummating any of the Transactions, and (iii) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
which would cause the condition set forth in clause (d) of Annex A to not be
satisfied;
provided,
however,
that
the delivery of any notice pursuant to this Section 7.08 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
(b) Each
party to this agreement shall promptly notify the other party of any
communication it or any of its Affiliates receives from any Governmental
Authority relating to the matters that are the subject of this Agreement and
permit the other party a reasonable opportunity to review in advance any
proposed substantive communication by such party to any Governmental Authority.
Neither party to this Agreement shall agree to participate in any meeting with
any Governmental Authority in respect of any filings, investigation (including
any settlement of the investigation), litigation or other inquiry unless it
consults with the other party in advance and, to the extent permitted by such
Governmental Authority, gives the other party the reasonable opportunity to
attend at such meeting. Subject to the Confidentiality Agreement, the parties
to
this Agreement will coordinate and cooperate reasonably with each other in
exchanging such information and providing such assistance as the other party
may
reasonably request in connection with the foregoing and in seeking early
termination of any applicable waiting periods, including under the HSR Act.
Subject to the Confidentiality Agreement, the parties to this Agreement will
provide each other with copies of all correspondence, filings or communications
between them or any of their representatives, on the one hand, and any
Governmental Authority or members of its staff, on the other hand, with respect
to this Agreement and the transactions contemplated by this
Agreement.
46
SECTION
7.09. Further
Action; Reasonable Best Efforts.
(a)
Upon the
terms and subject to the conditions of this Agreement, each of the parties
hereto shall (i) make promptly its respective filings, and thereafter make
any
other required submissions, under the HSR Act or other applicable foreign,
federal or state antitrust, competition or fair trade Laws with respect to
the
Transactions and (ii) use reasonable best efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws to consummate and make effective
the
Transactions, including, without limitation, using its reasonable best efforts
to obtain all Permits, consents, approvals, authorizations, qualifications
and
orders of Governmental Authorities and parties to contracts with the Company
and
the Subsidiaries as are necessary for the consummation of the Transactions
and
to fulfill the conditions to the Offer and the Merger. In case, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their reasonable best efforts to take all
such
action. Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, in no event shall Parent or Purchaser be obligated to, and
the
Company and its Subsidiaries shall not agree with any Governmental Authority
without the prior written consent of Parent, to divest or hold separate, or
enter into any licensing or similar arrangement with respect to, all or any
portion of the business or assets (whether tangible or intangible) of the
Company, Parent or any of their subsidiaries that is material to either Parent
and its subsidiaries or the Company and the Subsidiaries, in each case, taken
as
a whole.
(b) Each
of
the parties hereto agrees to cooperate and use its reasonable best efforts
to
vigorously contest and resist any Action, including administrative or judicial
Action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or prohibits
consummation of the Transactions, including, without limitation, by vigorously
pursuing all available avenues of administrative and judicial
appeal.
SECTION
7.10. Public
Announcements.
Parent
and the Company shall consult with each other before issuing any press release
or otherwise making any public statements with respect to this Agreement or
any
Transaction and shall not issue any such press release or make any such public
statement prior to such consultation, except as to any statement permitted
by
Section 7.05(c) and as may be required by Law or the rules or regulations of
any
United States or non-United States securities exchange. The parties have agreed
upon the form of a joint press release announcing the Offer and the execution
of
this Agreement.
SECTION
7.11. Section
16 Matters.
Prior
to the Effective Time, the Company shall take all such steps as may be required
and permitted to cause the Transactions, including any dispositions of the
Shares by each individual who is or will be subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company,
to be exempt under Rule 16b-3 promulgated under the Exchange Act.
47
SECTION
7.12. State
Takeover Statute.
The
Company and the Board shall (a) use reasonable best efforts to ensure that
no
state takeover Law or similar Law is or becomes applicable to this Agreement,
the Offer, the Merger or any of the other Transactions contemplated by this
Agreement and (b) if any state takeover Law or similar Law becomes applicable
to
this Agreement, the Offer, the Merger or any of the other Transactions
contemplated by this Agreement, use reasonable best efforts to ensure that
the
Offer, the Merger and the other Transactions contemplated by this Agreement
may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Law on this Agreement,
the Offer, the Merger and the other Transactions contemplated by this
Agreement.
SECTION
7.13. Rights
Agreement.
The
Board shall not, without the prior written consent of Parent, amend, take any
action with respect to, or make any determination under, the Rights Agreement
prior to the termination of this Agreement unless such action is taken in
connection with the termination of this Agreement pursuant to Section
9.01(d)(ii). Prior to the termination of this Agreement pursuant to Section
9.01, the Company shall not amend, and the Board shall not take any action
to
amend, the Rights Plan such that clauses (a) and (b) of Section 4.17 of this
Agreement become untrue.
SECTION
7.14. Fairness
Opinion.
The
Company shall make available to Parent a written copy of the Fairness Opinion
as
promptly as reasonably practicable after the Company receives a written copy
of
the Fairness Opinion from ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
ARTICLE
VIII
CONDITIONS
TO THE MERGER
SECTION
8.01. Conditions
to the Merger.
The
obligations of each party to effect the Merger shall be subject to the
satisfaction, at or prior to the Effective Time, of the following
conditions:
(a) Stockholder
Approval.
If and
to the extent required by the DGCL and the Certificate of Incorporation of
the
Company, this Agreement and the Merger shall have been adopted by the
affirmative vote of the stockholders of the Company;
(b) No
Order.
No
Governmental Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the acquisition
of Shares by Parent or Purchaser or any affiliate of either of them illegal
or
otherwise restricting, preventing or prohibiting consummation of the
Transactions; and
(c) Offer.
Purchaser or its permitted assignee shall have purchased all Shares validly
tendered and not withdrawn pursuant to the Offer.
ARTICLE
IX
TERMINATION,
AMENDMENT AND WAIVER
SECTION
9.01. Termination.
This
Agreement may be terminated and the Merger and the other Transactions may be
abandoned at any time prior to the Acceptance Time by action taken or authorized
by the Board of the Company or the Supervisory Board of Parent, notwithstanding
any requisite adoption of this Agreement and the Transactions by the
stockholders of the Company:
(a) By
mutual
written consent of each of Parent, Purchaser and the Company duly authorized
by
the Boards of Directors or the Supervisory Board, as the case may be, of Parent,
Purchaser and the Company; or
48
(b) By
any of
Parent, Purchaser or the Company if (i) the Offer shall have expired or been
terminated in accordance with the terms hereof without Purchaser (or Parent
on
Purchaser’s behalf) having accepted for payment any Shares pursuant to the Offer
on or before March 15, 2008 (the “Initial
Termination Date”);
provided,
however,
that in
the event that the condition set forth in clause (ii) of the first
paragraph of Annex A shall not have been satisfied on or prior to the
Initial Termination Date, either Parent or the Company may elect to extend
the
Initial Termination Date, by written notice to the other prior to or on the
Initial Termination Date, until May 15, 2008 (the “Extended
Termination Date”);
and
provided,
further,
that
the right to terminate this Agreement under this Section 9.01(b) shall not
be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date; or (ii) any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any injunction,
order, decree or ruling which is then in effect and has the effect of making
consummation of the Offer or the Merger illegal or otherwise preventing or
prohibiting consummation of the Offer or the Merger, which injunction, order,
decree or ruling is final and nonappealable; or
(c) By
Parent, if
(i) in
the
event (A) of a breach of any covenant or agreement on the part of the
Company set forth in this Agreement, or (B) that any representation or
warranty of the Company set forth in this Agreement shall have been inaccurate
when made or shall have become inaccurate, such that the condition to the Offer
set forth in clauses (e) or (f) of Annex A, respectively, would not be
satisfied and such breach or inaccuracy is not cured by the Company within
45
calendar days following receipt of written notice from Parent of such breach
or
inaccuracy (it being understood that Parent may not terminate this Agreement
pursuant to this Section 9.01(c)(i) if such breach or inaccuracy by the
Company is cured within such period);
or
(ii) prior
to
the Acceptance Time, the Board or any committee thereof shall have approved
or
recommended a Change of Recommendation or resolved to do so; or
(iii) prior
to
the Acceptance Time, the condition to the Offer set forth in clause (d) of
Annex
A would not be satisfied and the failure of such condition to be satisfied
is
not cured by the Company within 45 calendar days following receipt of written
notice from Parent of the failure of such condition to be satisfied (it being
understood that Parent may not terminate this Agreement pursuant to this
Section 9.01(c)(iii) if the Company cures the failure of such condition
within such period); or
49
(d) By
the
Company, if
(i) in
the
event (A) of a breach of any covenant or agreement on the part of Parent or
Purchaser set forth in this Agreement, or (B) that any representation or
warranty of Parent or Purchaser set forth in this Agreement shall have been
inaccurate when made or shall have become inaccurate, but only to the extent
that such breach or inaccuracy (i) would prevent or materially delay the ability
of Parent or Purchaser to consummate the Transactions and (ii) is not cured
by
Parent or Purchaser, as the case may be, within 45 calendar days following
receipt of written notice from the Company of such breach or inaccuracy (it
being understood that the Company may not terminate this Agreement pursuant
to
this Section 9.01(d)(i) if such breach or inaccuracy by Parent or Purchaser
is cured within such period); or
(ii) it
makes
a Change of Recommendation in order to enter into an agreement for a Superior
Proposal; provided
that
it has
theretofore complied with Section 7.05(c).
SECTION
9.02. Effect
of Termination.
In the
event of the termination of this Agreement pursuant to Section 9.01, this
Agreement shall forthwith become void, and there shall be no liability on the
part of any party hereto, except (a) as set forth in Section 9.03 and
(b) nothing herein shall relieve any party from liability for any
intentional and material breach hereof prior to the date of such termination;
provided,
however,
that
Section 2.02(c)(ii) and Article X of this Agreement and the Confidentiality
Agreement shall survive any termination of this Agreement.
SECTION
9.03. Fees
and Expenses.
(a) In
the
event that this Agreement is terminated by the Company pursuant to
Section 9.01(d)(ii) or by Parent or Purchaser pursuant to Section
9.01(c)(ii), the Company shall promptly, but in no event later than two (2)
business days after the date of such termination, pay Parent a fee of
$11,650,000
(the
“Fee”)
by
wire transfer of immediately available fund to an account or accounts designated
in writing by Parent.
(b) In
the
event that:
(i) this
Agreement is terminated by Parent, Purchaser or the Company pursuant to
Section 9.01(b)(i) or by Parent pursuant to Section
9.01(c)(i);
(ii) at
the
time of such termination, the Company shall have breached any of its covenants
or agreements in Section 7.05 or shall have intentionally and materially
breached (A) any other covenant or agreement of the Company in this Agreement
or
(B) any representation or warranty of the Company in this Agreement;
50
(iii) at
the
time of such termination, Parent and Purchaser shall have complied, in all
material respects, with their respective obligations under this Agreement;
(iv) following
the execution and delivery of this Agreement and prior to the termination of
this Agreement, a third party shall make a Transaction Proposal and shall not
have withdrawn such Transaction Proposal; and
(v) within
twelve (12) months following the termination of this Agreement, either a
Transaction Proposal is consummated or the Company enters into a definitive
agreement providing for a Transaction Proposal and such Transaction Proposal
is
later consummated,
then
the
Company shall pay to Purchaser the Fee by wire transfer of immediately available
funds to an account or accounts designated in writing by Purchaser, within
two
(2) business days after demand by Parent.
(c) In
the
event that:
(i) this
Agreement is terminated by Parent, Purchaser or the Company pursuant to
Section 9.01(b)(i);
(ii) at
the
time of such termination, all conditions to the Offer, other than the Minimum
Condition, are satisfied;
(iii) following
the execution and delivery of this Agreement and prior to the termination of
this Agreement, a third party shall publicly make a Transaction Proposal and
shall not have publicly withdrawn such Transaction Proposal;
(iv) within
twelve (12) months following the termination of this Agreement, either a
Transaction Proposal is consummated or the Company enters into a definitive
agreement providing for a Transaction Proposal and such Transaction Proposal
is
later consummated,
then
the
Company shall pay to Purchaser the Fee by wire transfer of immediately available
funds to an account or accounts designated in writing by Purchaser, within
two
(2) business days after demand by Parent.
(d) All
costs
and expenses incurred in connection with this Agreement and the Transactions
shall be paid by the party incurring such expenses, whether or not any
Transaction is consummated.
(e) The
Company acknowledges that the agreements contained in this Section 9.03 are
an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not have entered into this Agreement
and
that any amounts payable pursuant to this Section 9.03 do not constitute a
penalty. Accordingly, if the Company fails promptly to pay the amounts due
pursuant to this Section 9.03 and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the Company for the amounts
set forth in this Section 9.03, the Company shall pay to Parent its reasonable
costs and expenses (including attorneys’ fees and expenses) in connection with
such suit and any appeal relating thereto, together with interest on the amounts
set forth in this Section 9.03 at the prime rate of Citibank, N.A. in effect
on
the date such payment was required to be made. The Company shall not be required
to pay the Fee to Parent and Purchaser more than once.
51
SECTION
9.04. Amendment.
Subject
to Section 7.03, this Agreement may be amended by the parties hereto by action
taken by or on behalf of their boards of directors or Supervisory Board, as
the
case may be, at any time prior to the Effective Time; provided,
however,
that,
after the adoption of this Agreement and the Transactions by the stockholders
of
the Company, no amendment may be made that would reduce the amount or change
the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
SECTION
9.05. Waiver.
Subject
to Section 7.03, at any time prior to the Effective Time, any party hereto
may
to the extent legally allowed (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive any inaccuracy
in
the representations and warranties of any other party contained herein or in
any
document delivered pursuant hereto and (c) waive compliance with any agreement
of any other party or any condition to its own obligations contained herein.
Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE
X
GENERAL
PROVISIONS
SECTION
10.01. Notices.
All
notices, requests, claims, demands and other communications hereunder shall
be
in writing and shall be given (and shall be deemed to have been duly given
upon
receipt) by delivery in person, by overnight courier, by facsimile or email
or
by registered or certified mail (postage prepaid, return receipt requested)
to
the respective parties at the following addresses (or at such other address
for
a party as shall be specified in a notice given in accordance with this Section
10.01):
if
to
Parent or Purchaser:
STMicroelectronics
N.V.
▇▇▇▇▇▇
▇▇
▇▇▇▇▇-▇▇▇-▇▇▇▇▇▇, ▇▇
▇▇▇▇
▇▇▇▇-▇▇▇-▇▇▇▇▇▇
Geneva,
Switzerland
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Group Vice President and General Counsel
Telephone:
+ ▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
Facsimile:
+ 41 22 929 59 06
and
a
copy to (which shall not constitute notice to Parent or Purchaser):
STMicroelectronics
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail
Station 2346
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President, Secretary and General Counsel
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
52
with
a
copy to:
Shearman
& Sterling LLP
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇
if
to the
Company:
Genesis
Microchip Inc
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇, General Counsel
with
a
copy to:
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
1301
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Selim Day
and:
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
SECTION
10.02. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is not affected
in any manner materially adverse to any party. Upon such determination that
any
term or other provision is invalid, illegal or incapable of being enforced,
the
parties hereto shall negotiate in good faith to modify this Agreement so as
to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the Transactions be consummated as originally
contemplated to the fullest extent possible.
53
SECTION
10.03. Entire
Agreement; Assignment.
This
Agreement constitutes the entire agreement among the parties with respect to
the
subject matter hereof and supersedes, except as set forth in Section 7.04(b),
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. This Agreement shall
not be assigned (whether pursuant to a merger, by operation of Law or
otherwise), except that Parent and Purchaser may assign all or any of their
rights and obligations hereunder to any affiliate of Parent, provided that
no
such assignment shall relieve the assigning party of its obligations hereunder
if such assignee does not perform such obligations.
SECTION
10.04. Parties
in Interest.
Except
as expressly provided for in Section 7.07, this Agreement shall be binding
upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement. In the event Parent or the Surviving Corporation or its
successor or assign (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each case, proper provision
shall be made so that the successor and assign of Parent or the Surviving
Corporation, as the case may be, honor the obligations set forth with respect
to
Parent or the Surviving Corporation, as the case may be, in Section 7.07,
respectively.
SECTION
10.05. Specific
Performance.
The
parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at Law or equity.
SECTION
10.06. No
Survival of Representations and Warranties.
The
representations and warranties in this Agreement shall terminate at the
Appointment Time or, except as otherwise provided in Section 9.02, upon the
termination of this Agreement pursuant to Section 9.01, as the case may be.
The
covenants and agreements in this Agreement shall terminate at the Effective
Time; provided
that any
covenant or agreement in this Agreement which contemplates performance after
the
Effective Time, including, without limitation, the covenants contained in
Article III and Sections 7.07 and 9.03, shall survive the Effective Time in
accordance with this Agreement.
SECTION
10.07. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the Laws
of
the State of New York applicable to contracts executed in and to be performed
in
that State (other than those provisions set forth herein that are required
to be
governed by DGCL). All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined exclusively in any New York state
or federal court sitting in the Borough of Manhattan of The City of New York.
The parties hereto hereby (a) submit to the exclusive jurisdiction of any state
or federal court sitting in the Borough of Manhattan of The City of New York
for
the purpose of any Action arising out of or relating to this Agreement brought
by any party hereto, and (b) irrevocably waive, and agree not to assert by
way
of motion, defense, or otherwise, in any such Action, any claim that it is
not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action
is
brought in an inconvenient forum, that the venue of the Action is improper,
or
that this Agreement or the Transactions may not be enforced in or by any of
the
above-named courts.
54
SECTION
10.08. Headings.
The
descriptive headings contained in this Agreement are included for convenience
of
reference only and shall not affect in any way the meaning or interpretation
of
this Agreement.
SECTION
10.09. Counterparts.
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but
all of which taken together shall constitute one and the same
agreement.
SECTION
10.10. Waiver
of Jury Trial.
Each of
the parties hereto hereby waives to the fullest extent permitted by applicable
Law any right it may have to a trial by jury with respect to any litigation
directly or indirectly arising out of, under or in connection with this
Agreement or the Transactions. Each of the parties hereto (a) certifies that
no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation,
seek
to enforce that foregoing waiver and (b) acknowledges that it and the other
hereto have been induced to enter into this Agreement and the Transactions,
as
applicable, by, among other things, the mutual waivers and certifications in
this Section 10.10.
55
IN
WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement
to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
| STMICROELECTRONICS N.V. | ||
| |
|
|
| By | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ |
||
| Title: President and Chief Executive Officer | ||
| SOPHIA ACQUISITION CORP. | ||
| |
|
|
| By | /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
||
| Title: President | ||
| GENESIS MICROCHIP INC. | ||
| |
|
|
| By | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ |
||
| Title: President and Chief Executive Officer | ||
56
ANNEX
A
Conditions
to the Offer
Notwithstanding
any other provision of the Offer, Purchaser shall not be required to
accept for
payment any Shares tendered pursuant to the Offer, and may extend,
terminate or
amend the Offer, if (i) immediately prior to the expiration of the
Offer, the
Minimum Condition shall not have been satisfied, (ii) any applicable
waiting
period under the HSR Act or the Foreign Antitrust Laws set forth on
Schedule A
of the Disclosure Letter shall not have expired or been terminated
prior to the
expiration of the Offer or (iii) at any time on or after the date of this
Agreement and prior to the expiration of the Offer, any of the following
conditions shall exist and be continuing:
(a) there
shall have been instituted or be pending any Action by any Governmental
Authority (i) challenging or seeking to make illegal, materially delay,
or
otherwise, directly or indirectly, restrain or prohibit or make materially
more
costly, the making of the Offer, the acceptance for payment of any
Shares by
Parent, Purchaser or any other affiliate of Parent, the purchase of
Shares
pursuant to the Merger Option or the consummation of any other Transaction,
or
seeking to obtain material damages in connection with any Transaction;
(ii)
seeking to prohibit or limit materially the ownership or operation
by the
Company, Parent or any of their subsidiaries of all or any of the business
or
assets of the Company, Parent or any of their subsidiaries or to compel
the
Company, Parent or any of their subsidiaries, as a result of the Transactions,
to divest or hold separate, or enter into any licensing or similar
arrangement
with respect to, all or any portion of the business or assets (whether
tangible
or intangible) of the Company, Parent or any of their subsidiaries
that is
material to either Parent and its subsidiaries or the Company and the
Subsidiaries, in each case, taken as a whole; (iii) seeking to impose
or confirm
any limitation on the ability of Parent, Purchaser or any other affiliate
of
Parent to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired
by
Purchaser pursuant to the Offer or the Merger Option or otherwise on
all matters
properly presented to the Company’s stockholders, including, without limitation,
the adoption of this Agreement and the Transactions; (iv) seeking to
require
divestiture by Parent, Purchaser or any other affiliate of Parent of
any Shares;
or (v) which otherwise would have a Material Adverse Effect;
(b) any
Governmental Authority or court of competent jurisdiction shall have
issued an
order, decree, injunction or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting or materially delaying
or
preventing the Transactions and such order, decree, injunction, ruling
or other
action shall have become final and non-appealable;
(c) there
shall have been any statute, rule, regulation, legislation or interpretation
enacted, promulgated, amended, issued or deemed applicable to (A) Parent,
the
Company or any subsidiary or affiliate of Parent or the Company or
(B) any
Transaction, by any United States or non-United States legislative
body or
Governmental Authority with appropriate jurisdiction, other than the
routine
application of the waiting period provisions of the HSR Act or Foreign
Antitrust
Laws to the Offer or the Merger, that is reasonably likely to result
in any of
the consequences referred to in clauses (i) through (v) of paragraph
(a)
above;
A-1
(d) any
Material Adverse Effect shall have occurred since the date of this
Agreement;
(e) (i)
the
representations and warranties of the Company contained in Section
4.03(a) shall
not be true and correct (except for inaccuracies regarding the number
of Shares,
Company Stock Options or Company Stock Awards that in the aggregate
are less
than 0.5% of the outstanding Shares on a Fully Diluted Basis as of
the date of
this Agreement) or (ii) the representations and warranties of the Company
contained in Section 4.14 shall not be true and correct in all material
respects
(without giving effect to any qualifications or limitations as to materiality
or
Material Adverse Effect set forth therein) or (iii) the representations
and
warranties of the Company contained in any other Section of the Agreement
shall
not be true and correct (without giving effect to any qualifications
or
limitations as to materiality or Material Adverse Effect set forth
therein), in
each of cases (i), (ii) and (iii), as of the date of the Agreement
and as of the
date of determination as though made on the date of determination (except
to the
extent that such representation or warranty expressly relates to a
specified
date, in which case as of such specified date), except, in the case
of clause
(ii), where the failure of such representations and warranties to be
true and
correct in all material respects as of such dates is not material to
the
business of the Company and the Subsidiaries as currently conducted,
taken as a
whole, and in the case of clause (iii), where the failure of such
representations and warranties to be true and correct as of such dates,
has not
had a Material Adverse Effect;
(f) the
Company shall have failed to perform, in any material respect, any
obligation or
to comply, in any material respect, with any agreement or covenant
of the
Company to be performed or complied with by it under this
Agreement;
(g) this
Agreement shall have been terminated in accordance with its terms;
or
(h) the
Company shall not have furnished Parent immediately prior to the expiration
of
the Offer with a certificate signed on the Company’s behalf by its Chief
Executive Officer or Chief Financial Officer attesting to the conditions
set
forth in items (e) and (f) of this Annex A,
and
which, in the reasonable and good faith judgment of Purchaser in any
such case,
and regardless of the circumstances (including any action or inaction
by Parent
or any of its affiliates) giving rise to any such condition, makes
it
inadvisable to proceed with such acceptance for payment.
The
foregoing conditions are for the sole benefit of Purchaser and Parent
and may be
asserted by Purchaser or Parent regardless of the circumstances giving
rise to
any such condition or may be waived by Purchaser or Parent in whole
or in part
at any time and from time to time in their sole discretion. The failure
by
Parent or Purchaser at any time to exercise any of the foregoing rights
shall
not be deemed a waiver of any such right; the waiver of any such right
with
respect to particular facts and other circumstances shall not be deemed
a waiver
with respect to any other facts and circumstances; and each such right
shall be
deemed an ongoing right that may be asserted at any time and from time
to
time.
A-2