Exhibit 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMONG
CALIFORNIA AMPLIFIER, INC.
MOBILE ACQUISITION SUB, INC.,
AND
VYTEK CORPORATION
Dated as of December 23, 2003
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
ARTICLE I THE MERGER
Section 1.1 The Merger.
Section 1.2 Effective Time.
Section 1.3 Effects of the Merger.
Section 1.4 Charter and Bylaws; Directors and Officers.
Section 1.5 Conversion of Securities.
Section 1.6 Payment of Merger Consideration.
Section 1.7 Dividends; Transfer Taxes; Withholding.
Section 1.8 No Fractional Securities.
Section 1.9 Working Capital Adjustment.
Section 1.10 No Further Ownership Rights in Company Common
Stock.
Section 1.11 Closing of Company Transfer Books.
Section 1.12 Lost Certificates.
Section 1.13 Return of Exchange Fund.
Section 1.14 Further Assurances.
Section 1.15 Dissenters' Rights.
Section 1.16 Closing.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Section 2.1 Organization, Standing and Power.
Section 2.2 Capital Structure.
Section 2.3 Authority.
Section 2.4 Consents and Approvals; No Violation.
Section 2.5 Parent Common Stock to be Issued in the Merger.
Section 2.6 Information Supplied.
Section 2.7 Absence of Certain Changes or Events.
Section 2.8 Actions and Proceedings.
Section 2.9 Liabilities; Products.
Section 2.10 Required Vote of Parent Stockholders.
Section 2.11 Compliance with Applicable Law.
Section 2.12 SEC Documents and Other Reports; ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Matters.
Section 2.13 Brokers.
Section 2.14 Opinion of Financial Advisor.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power.
Section 3.2 Capital Structure.
Section 3.3 Authority.
Section 3.4 Consents and Approvals; No Violation.
Section 3.5 Financial Statements.
Section 3.6 Information Supplied.
Section 3.7 Absence of Certain Changes or Events.
Section 3.8 Tax Matters.
Section 3.9 Actions and Proceedings.
Section 3.10 Certain Agreements.
Section 3.11 ERISA.
Section 3.12 Liabilities; Products.
Section 3.13 Labor Matters.
Section 3.14 Intellectual Property.
Section 3.15 State Anti-Takeover Laws.
Section 3.16 Required Vote of Company Stockholders.
Section 3.17 Compliance with Applicable Law.
Section 3.18 Accounts Receivable.
Section 3.19 Inventories.
Section 3.20 Environmental Matters.
Section 3.21 Suppliers and Customers.
Section 3.22 Insurance.
Section 3.23 Transactions with Affiliates.
Section 3.24 Title to and Sufficiency of Assets.
Section 3.25 Real Property.
Section 3.26 Brokers.
Section 3.27 Warranties.
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company and Parent Pending
the Merger.
Section 4.2 Other Acquirors.
Section 4.3 Third Party Confidentiality Agreements.
ARTICLE V ADDITIONAL AGREEMENTS
Section 5.1 Preparation of the Joint Proxy Statement/Prospectus and
the Registration Statement.
Section 5.2 Stockholder Votes.
Section 5.3 Ancillary Agreements.
Section 5.4 Access to Information.
Section 5.5 Termination of Agreements.
Section 5.6 Fees and Expenses.
Section 5.7 Commercially Reasonable Efforts.
Section 5.8 Public Announcements; Confidentiality.
Section 5.9 State Takeover Laws.
Section 5.10 Indemnification; Directors and Officers Insurance.
Section 5.11 Notification of Certain Matters.
Section 5.12 Company 401(k) Plans.
Section 5.13 Employee Benefits.
Section 5.14 Section 16 Relief.
Section 5.15 S-8 Registration Statement.
Section 5.16 Acceleration of Unvested Securities.
Section 5.17 Collection and Sales Efforts Post-Closing
ARTICLE VI INDEMNITY
Section 6.1 General Survival.
Section 6.2 Indemnification.
Section 6.3 Manner of Indemnification.
Section 6.4 Stockholder Representative.
Section 6.5 Third-Party Claims.
Section 6.6 Exclusive Remedy.
Section 6.7 Waiver of Defenses.
Section 6.8 Treatment of Indemnity Payments.
ARTICLE VII CONDITIONS PRECEDENT TO THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger.
Section 7.2 Conditions to Obligation of the Company to Effect the
Merger.
Section 7.3 Conditions to Obligations of Parent and Acquisition Sub.
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination.
Section 8.2 Effect of Termination.
Section 8.3 Amendment.
Section 8.4 Waiver.
ARTICLE IX GENERAL PROVISIONS
Section 9.1 Notices.
Section 9.2 Interpretation.
Section 9.3 Counterparts.
Section 9.4 Entire Agreement; No Third-Party Beneficiaries.
Section 9.5 Governing Law.
Section 9.6 Assignment.
Section 9.7 Severability.
Section 9.8 Defined Terms.
LIST OF EXHIBITS
Description
Exhibit A - List of Company Stockholders Executing
Voting Agreements and Lock-Ups ................. Preamble
Exhibit B - Form of Irrevocable Proxy and Voting
Agreement ...................................... Preamble
Exhibit C - Certificate Amendment ........................... Preamble
Exhibit D - Certificate of Incorporation .................... Section 1.4(a)
Exhibit E - Form of Escrow Agreement ........................ Section 1.6(b)
Exhibit F - Form of Lock-up Agreement ....................... Section 5.3(a)
Exhibit G - Significant Stockholders ........................ Section 5.3(a)
Exhibit H - Form of Registration Rights Agreement ........... Section 7.2(c)
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of December
23, 2003 (this "Agreement"), is among California Amplifier, Inc., a Delaware
corporation ("CAMP" or "Parent"), Mobile Acquisition Sub, Inc., a Delaware
corporation and a direct wholly-owned subsidiary of Parent ("Acquisition
Sub") and Vytek Corporation, a Delaware corporation (the "Company")
(Acquisition Sub and the Company being hereinafter collectively referred to
as the "Constituent Corporations"), and, solely with respect to Section 6.4,
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, a natural person, as agent for the stockholders of the
Company (the "Stockholder Representative").
RECITALS:
A. WHEREAS, Parent, the Company and Acquisition Sub intend to effect the
merger of Acquisition Sub with and into the Company with the Company
surviving as a wholly-owned subsidiary of Parent upon the terms and subject
to the conditions of this Agreement (the "Merger");
B. WHEREAS, the Board of Directors of Acquisition Sub has determined that
this Agreement is advisable and has approved this Agreement, the Merger and
the other transactions contemplated by this Agreement;
C. WHEREAS, the Board of Directors of the Company (i) has determined that
the Merger is advisable and consistent with and in furtherance of the long-
term business strategy of the Company and fair to, and in the best interests
of, the Company and its stockholders, (ii) has determined that this
Agreement is advisable and has approved this Agreement, the Merger and the
other transactions contemplated by this Agreement, and (iii) has determined
to recommend that the stockholders of the Company adopt this Agreement;
D. WHEREAS, the Board of Directors of Parent (i) has determined that the
Merger is advisable and consistent with and in furtherance of the long-term
business strategy of Parent and is fair to, and in the best interests of,
Parent and its stockholders, (ii) has approved this Agreement, the Merger
and the other transactions contemplated by this Agreement, and (iii) has
determined to recommend that the stockholders of Parent approve the issuance
of shares of Parent Common Stock in connection with the Merger (the "Share
Issuance");
E. WHEREAS, certain stockholders of the Company listed on Exhibit A have
agreed to vote their shares (i) in favor of the adoption of this Agreement
and the approval of the transactions contemplated hereby pursuant to the
Irrevocable Proxy and Voting Agreement in substantially the form attached
hereto attached as Exhibit B and (ii) to amend the provisions governing the
liquidation preferences of the Company Preferred Stock and provisions
governing distributions to the Company Common Stock currently contained in
the Company's Amended and Restated Certificate of Incorporation (the
"Company Certificate"), as set forth in the form Amendment to the Company
Certificate attached as Exhibit C hereto (the "Certificate Amendment");
F. WHEREAS, as of the date hereof, certain employees of the Company have
executed employment agreements with Parent; and
G. WHEREAS, for federal income tax purposes, it is intended by the parties
hereto that the Merger shall qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and the parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Code.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger.
Upon the terms and subject to the conditions hereof, and in accordance with
the Delaware General Corporation Law (the "DGCL"), Acquisition Sub shall be
merged with and into the Company at the Effective Time (as defined in
Section 1.2). Following the Merger, the separate corporate existence of
Acquisition Sub shall cease and the Company shall continue as the surviving
corporation (hereinafter sometimes referred to as the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations
of the Company in accordance with the DGCL.
Section 1.2 Effective Time.
The Merger shall become effective when the certificate of merger (the
"Certificate of Merger"), executed in accordance with the relevant
provisions of the DGCL, is filed with the Secretary of State of the State of
Delaware; provided, however, that upon mutual consent of the Constituent
Corporations, the Certificate of Merger may provide for a later date of
effectiveness of the Merger not more than 30 days after the date the
Certificate of Merger is filed. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Certificate of
Merger is accepted for filing or such later time established by the
Certificate of Merger. The filing of the Certificate of Merger shall be
made on the date of the Closing (as hereinafter defined).
Section 1.3 Effects of the Merger.
The Merger shall have the effects set forth in this Agreement and the
applicable provisions of the DGCL.
Section 1.4 Charter and Bylaws; Directors and Officers.
(a) The Certificate of Incorporation of the Surviving Corporation shall
automatically, and without further action, be amended as necessary at the
Effective Time to read the same as the Certificate of Incorporation attached
hereto as Exhibit D. The Bylaws of the Surviving Corporation shall without
further action by the Company or its stockholders be amended as necessary at
the Effective Time to read the same as the Bylaws of Acquisition Sub in
effect at the Effective Time until thereafter changed or amended as provided
therein and in accordance with applicable law.
(b) The directors of Acquisition Sub at the Effective Time shall without
further action by the Company or its stockholders be the directors of the
Surviving Corporation, until the earlier of their resignation, death or
removal or until their respective successors are duly elected and qualified,
as the case may be. The officers of Acquisition Sub at the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of
their resignation, death, removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 1.5 Conversion of Securities.
(a) Conversion of Stock. As of the Effective Time, subject to Section
1.5(b), Section 1.6(b) and Section 1.6(e), by virtue of the Merger and
without any action on the part of Acquisition Sub, the Company or the
holders of any securities of the Constituent Corporations, each of the
shares of Company Capital Stock (as hereinafter defined) held by any of the
stockholders of the Company (collectively, the "Company Stockholders") shall
be automatically converted into the right to receive a portion of the Merger
Consideration (as hereinafter defined) as described below and as provided in
the Certificate Amendment the following:
(i) each share of Series A Convertible Participating Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock") of the Company issued
and outstanding immediately prior to the Effective Time shall be converted
into the right to receive the number of shares of Common Stock, par value
$0.01 per share of Parent ("Parent Common Stock"), equal to the quotient of
(A) the Series A Share Allocation (as hereinafter defined) and (B) the sum
of (1) the total number of shares of Series A Preferred Stock outstanding
immediately prior to the Effective Time and (2) the total number of shares
of Series A Preferred Stock issuable upon exercise of the in-the-money
Company Warrants (as hereinafter defined) exercisable for shares of Series A
Preferred Stock outstanding immediately prior to the Effective Time (the
quotient of (A) and (B), the "Series A Exchange Ratio");
(ii) each share of Series B Convertible Participating Preferred Stock,
par value $0.01 per share (the "Series B Preferred Stock"), of the Company
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the number of shares of Parent Common
Stock equal to the quotient of (A) the Series B Share Allocation (as
hereinafter defined) and (B) the total number of shares of Series B
Preferred Stock outstanding immediately prior to the Effective Time;
(iii) each share of common stock, par value $0.01 per share, of the
Company (the "Company Common Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive the
number of shares of Parent Common Stock equal to the quotient of (A) the
Common Share Allocation (as hereinafter defined) and (B) the sum of (1) the
total number of shares of Company Common Stock outstanding immediately prior
to the Effective Time, and (2) the total number of shares of Company Common
Stock issuable upon the exercise of the in-the-money Company Options (as
hereinafter defined) and the in-the-money Company Warrants exercisable for
shares of Common Stock outstanding immediately prior to the Effective Time
(the quotient of (A) and (B), the "Common Stock Exchange Ratio"); and
(iv) each share of Series Junior Preferred Stock, par value $0.01 per
share (the "Junior Preferred Stock"), of the Company issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive the number of Parent Common Stock), equal to the quotient of (A) the
Junior Share Allocation (as hereinafter defined) and (B) the total number of
shares of Junior Preferred Stock outstanding immediately prior to the
Effective Time.
(b) Each share of Company Common Stock held by the Company (or held in the
treasury of the Company) immediately prior to the Effective Time shall be
canceled and extinguished and shall cease to exist, and no consideration
shall be delivered in exchange therefor. Each share of Company Common Stock
held by Parent, Acquisition Sub or any other wholly-owned Subsidiary of
Parent immediately prior to the Effective Time shall be cancelled and
extinguished and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Each share of the common stock, $0.01 par value per share, of
Acquisition Sub outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Surviving Corporation.
(d) Certain Definitions. For the purposes of this Agreement:
(i) "Common Share Allocation" shall mean 1,230,000.
(ii) "Junior Share Allocation" shall mean 4,744.
(iii) "Merger Consideration" shall mean (A) the number of shares of
Parent Common Stock issued pursuant to Section 1.5(a), (B) the right to
receive shares of Parent Common Stock out of the Escrow Funds pursuant to
the terms of the Escrow Agreement, and (C) the cash in lieu of fractional
shares paid to stockholders pursuant to Section 1.6.
(iv) "Series A Share Allocation" shall mean 5,831,470.
(v) "Series B Share Allocation" shall mean 1,133,786.
(vi) "Shares" shall mean all shares of Company Common Stock and Company
Preferred Stock issued and outstanding at the Effective Time.
(vii) "Total Merger Shares" shall mean eight million two hundred thousand
(8,200,000) shares of Parent Common Stock.
(e) Stock Options.
At the Effective Time, all rights with respect to Company Common Stock under
each option issued by the Company then outstanding (each, a "Company
Option") shall be converted into and become rights with respect to Parent
Common Stock, and Parent shall assume each such Company Option in accordance
with the terms and conditions (as in effect as of the date of this
Agreement) of the stock option plan under which it was issued and the terms
and conditions of the stock option agreement by which it is evidenced. From
and after the Effective Time, (i) each Company Option assumed by Parent may
be exercised solely for shares of Parent Common Stock, (ii) except that the
number of shares of Parent Common Stock subject to each such Company Option
shall be equal to the number of shares of Company Common Stock subject to
such Company Option immediately prior to the Effective Time multiplied by
the Common Stock Exchange Ratio, rounding down to the nearest whole share,
(iii) the per share exercise price under each such Company Option shall be
adjusted by dividing the per share exercise price under such Company Option
by the Common Stock Exchange Ratio and rounding up to the nearest cent, (iv)
each Company Option shall be fully vested and immediately exercisable and
(v) any restriction on the exercise of any such Company Option, other than
any vesting provisions as provided in clause (iv), shall continue in full
force and effect and the term and other provisions of such Company Option
shall otherwise remain unchanged; provided, however, that each Company
Option assumed by Parent in accordance with this Section 1.5(f) shall, in
accordance with its terms, be subject to further adjustment as appropriate
to reflect any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction effected
subsequent to the Effective Time. Each Company Option which is an incentive
stock option within the meaning of Code Section 422(b) shall be adjusted as
required by Section 424 of the Code, and the Treasury Regulations
promulgated thereunder (including Proposed Treasury Regulations published in
June of 2003), so as to continue as an incentive stock option under Section
424(a) of the Code, and so as not to constitute a modification, extension,
or renewal of the option within the meaning of Section 424(h) of the Code.
Parent has reserved and shall continue to reserve adequate shares of Parent
Common Stock for delivery upon exercise of any assumed Company Options. As
provided in Section 5.15, Parent shall file a registration statement on Form
S-8 with respect to the shares of Parent Common Stock subject to assumed
Company Options and shall use commercially reasonable efforts to maintain
the effectiveness of such registration statement for so long as such assumed
Company Options remain outstanding. As soon as practicable after the
Effective Time, Parent shall issue to each Person who immediately prior to
the Effective Time was a holder of an outstanding Company Option a document
evidencing Parent's assumption of the Company Option. For purposes of this
Agreement, "in-the-money Company Options" shall mean all Company Options
with an exercise price less than $1.00 per share of Company Common Stock.
(f) Termination. All shares of Company Capital Stock, when so converted
pursuant to Section 1.5(a) above, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive any dividends and other distributions,
if any, in accordance with Section 1.7, certificates representing the shares
of Parent Common Stock into which such shares are converted, and any cash,
without interest, in lieu of fractional shares to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance
with Section 1.8.
(g) Average Parent Share Price. The "Average Parent Share Price" as of any
date (the "Relevant Date") means the average of the daily volume-weighted
sales prices per share of Parent Common Stock on the NASDAQ for each of the
5 consecutive trading days ending on the trading day that is two calendar
days prior to the Relevant Date, or, if such ending date does not fall on a
trading day, then the trading day immediately preceding the second calendar
day prior to the Relevant Date (the "Valuation Period").
(h) Warrants. Following the Effective Time, all warrants to purchase
Company Common Stock or Company Preferred Stock ("Company Warrants") shall
remain in effect in accordance with their terms (as in effect as of the date
of this Agreement) except that: (i) each Company Warrant shall be a warrant
to purchase Parent Common Stock; (ii) the number of shares of Parent Common
Stock subject to such Company Warrant shall be equal to the number of shares
of Company Common Stock or Company Preferred Stock, as applicable,
immediately prior to the Effective Time multiplied by the Series A Exchange
Ratio or Common Stock Exchange Ratio, as applicable, rounding down to the
nearest whole share; and (iii) the per share exercise price under each such
Company Warrant shall be adjusted by dividing the per share exercise price
under such Company Warrant by the Series A Exchange Ratio or Common Stock
Exchange Ratio, as applicable, and rounding up to the nearest cent. For
purposes of this Agreement, "in-the-money Company Warrants" shall mean all
Company Warrants, except for the Company Warrants listed on Schedule 1.5(h)
of the Company Disclosure Schedule.
Section 1.6 Payment of Merger Consideration.
(a) Exchange of Certificates. Parent shall authorize American Stock
Transfer Trust Agent or such other bank, trust company, or other person or
persons as shall be reasonably acceptable to Parent and the Company, to act,
at Parent's expense, as Exchange Agent hereunder (the "Exchange Agent"). At
least one calendar day prior to the Effective Time, Parent shall deposit
with the Exchange Agent, in trust for the holders of shares of Company
Capital Stock converted in the Merger, certificates representing the shares
of Parent Common Stock issuable pursuant to Section 1.5 in exchange for
outstanding shares of Company Capital Stock (net of shares deposited with
the Escrow Agent pursuant to Section 1.6(b)) and cash, as required to make
payments in lieu of any fractional shares pursuant to Section 1.8 (such cash
and shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). At the Closing, the Exchange Agent shall deliver to the
Stockholders the shares of Parent Common Stock to be issued pursuant to
Section 1.5(a) out of the Exchange Fund. Except as contemplated by Section
1.9, the Exchange Fund shall not be used for any other purpose.
(b) Escrow Accounts. At the Closing, Parent shall deposit 854,700 shares
of Parent Common Stock to be issued to the Company Stockholders pursuant to
Section 1.5 (such number of shares of Parent Common Stock, the "Escrow
Fund") in an account with an escrow agent selected by Parent, subject to the
consent of the Stockholder Representative (as hereinafter defined), such
consent not to be unreasonably withheld, as escrow agent (the "Escrow
Agent") in accordance with the provisions of an Escrow Agreement in
substantially the form of Exhibit E (the "Escrow Agreement"). The portion
of the Escrow Fund that shall be deposited with respect to each Company
Stockholder shall equal the total number of shares of Parent Common Stock
included in the Escrow Fund multiplied by a fraction calculated by dividing
(i) the number of shares of Parent Common Stock that such Stockholder is
entitled to receive pursuant to Section 1.5 divided by (ii) the total number
of shares of Parent Common Stock to be distributed to the Company
Stockholders pursuant to Section 1.5 (such percentage shall hereinafter be
referred to as the "Pro Rata Portion"). The Escrow Fund shall be held in
the escrow account until 5:00 p.m., California time, on that date which is
the same date of the month as the Closing Date in the month which is the
three-year anniversary of the Closing Date and shall be used as the sole and
exclusive source of payment for the payment of any indemnification rights to
which the Indemnitees may be entitled under Article VI, and for the payment
of any obligation arising out of the Working Capital Adjustment in Section
1.9 hereof, and shall be maintained and used strictly in accordance with the
terms of this Agreement and the Escrow Agreement. At the fifteen-month
anniversary of the Closing Date (the "Fifteenth-Month Release Date"), all
shares of Parent Common Stock, except for that number of shares of Parent
Common Stock in the Escrow Fund equal to the quotient of (A) $2,000,000 and
(B) the Average Parent Share Price as of the Fifteenth-Month Release Date
shall be distributed to the Stockholders of Company in accordance with their
Pro Rata Portion. At the two-year anniversary of the Closing Date, all
shares of Parent Common Stock remaining in the Escrow Fund shall be
distributed to the Stockholders of the Company in accordance with their Pro
Rata Portion.
(c) Exchange Procedures. At least two calendar days prior to the Effective
Time, Parent shall cause the Exchange Agent to mail to each record holder of
a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Capital Stock being converted in
the Merger (the "Certificates"), a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to
the Exchange Agent, and shall contain instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
shares of Parent Common Stock and cash in lieu of fractional shares).
Subject to the provisions of this Section 1.6 regarding the Escrow Fund,
upon surrender for cancellation to the Exchange Agent of a Certificate held
by any record holder of a Certificate, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate (a "Parent Certificate")
representing that number of whole shares of Parent Common Stock into which
the shares represented by the surrendered Certificate shall have been
converted at the Effective Time pursuant to this Article I, cash in lieu of
any fractional share in accordance with Section 1.8 and certain dividends
and other distributions in accordance with Section 1.7, and any Certificate
so surrendered shall forthwith be canceled.
(d) Certificate Name. If any certificate for shares of Parent Common Stock
is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of
the issuance thereof that the Certificate so surrendered will be properly
endorsed, accompanied by all documents required to evidence and effect such
transfer and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by
it any applicable transfer taxes required by reason of the issuance of a
certificate for shares of Parent Common Stock in any name other than that of
the registered holder of the Certificate surrendered, or shall provide
evidence that any applicable transfer taxes have been paid.
(e) Dissenting Shares. Notwithstanding the foregoing, no amounts shall be
payable at the Effective Time with respect to any Dissenting Shares (as
hereinafter defined) or any shares of Company Capital Stock with respect to
which dissenters' rights have not terminated. In the case of Dissenting
Shares, payment shall be made in accordance with Section 1.15 and the DGCL.
In the case of any shares of Company Common Stock or Company Preferred Stock
with respect to which dissenters' rights have not terminated as of the
Effective Time, if such Shares become Dissenting Shares, payment shall be
made in accordance with Section 1.15 and the DGCL, and if, instead, the
dissenters' rights with respect to such Dissenting Shares irrevocably
terminate after the Effective Time, such Dissenting Shares shall be entitled
to receive the Merger Consideration.
Section 1.7 Dividends; Transfer Taxes; Withholding.
No dividends or other distributions that are declared on or after the
Effective Time on Parent Common Stock, or are payable to the holders of
record thereof on or after the Effective Time, will be paid to any person
entitled by reason of the Merger to receive a certificate representing
Parent Common Stock until such person surrenders the related Certificate or
Certificates, as provided in Section 1.6, and no cash payment in lieu of
fractional shares will be paid to any such person pursuant to Section 1.8
until such person shall so surrender the related Certificate or Certificates.
Subject to the effect of Applicable Law (as hereinafter defined), there
shall be paid to each record holder of a new certificate representing such
Parent Common Stock: (i) at the time of such surrender or as promptly as
practicable thereafter, the amount of any dividends or other distributions
theretofore paid with respect to the shares of Parent Common Stock
represented by such new certificate and having a record date on or after the
Effective Time and a payment date prior to such surrender; (ii) at the
appropriate payment date or as promptly as practicable thereafter, the
amount of any dividends or other distributions payable with respect to such
shares of Parent Common Stock and having a record date on or after the
Effective Time but prior to such surrender and a payment date on or
subsequent to such surrender; and (iii) at the time of such surrender or as
promptly as practicable thereafter, the amount of any cash payable with
respect to a fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 1.8. In no event shall the person entitled to
receive such dividends or other distributions be entitled to receive
interest on such dividends or other distributions. If any cash or
certificate representing shares of Parent Common Stock is to be paid to or
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of certificates for such shares of Parent Common
Stock in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable. Parent or the Exchange
Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Capital Stock such amounts as Parent or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment
under the Code or under any provision of state, local or foreign tax law.
To the extent that amounts are so withheld by Parent or the Exchange Agent
and duly paid to the applicable taxing authority, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the holder of the shares of Company Capital Stock in respect of which such
deduction and withholding was made by Parent or the Exchange Agent.
Section 1.8 No Fractional Securities.
No certificates or scrip representing fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of Certificates
pursuant to this Article I, and no Parent dividend or other distribution or
stock split shall relate to any fractional share, and no fractional share
shall entitle the owner thereof to vote or to any other rights of a security
holder of Parent. In lieu of any such fractional share, each holder of
Company Capital Stock who would otherwise have been entitled to a fraction
of a share of Parent Common Stock upon surrender of Certificates for
exchange pursuant to this Article I will be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying (i) the
Average Parent Share Price as of the Closing Date by (ii) the fractional
interest to which such holder would otherwise be entitled. As promptly as
practicable after the determination of the amount of cash, if any, to be
paid to holders of fractional share interests, the Exchange Agent shall so
notify Parent and Parent shall deposit such amount with the Exchange Agent
and shall cause the Exchange Agent to forward payments to such holders of
fractional share interests subject to and in accordance with the terms of
Section 1.6 and this Section 1.8.
Section 1.9 Working Capital Adjustment.
(a) As promptly as practicable after the Closing but in no event later than
thirty (30) Business Days (as hereinafter defined) following the Closing
Date, Parent shall prepare and deliver to the Stockholder Representative (i)
a consolidated statement of assets and liabilities of the Company as at the
Closing Date immediately prior to the Effective Time (the "Closing Balance
Sheet"), and (ii) a statement setting forth the difference, if any, of the
Specified Assets over the Specified Liabilities (each as defined below)
(such difference shall be referred to herein as the "Working Capital"), as
determined by reference to the Closing Balance Sheet (and such statement
shall be referred to herein as the "Working Capital Statement"). The
Closing Balance Sheet and Working Capital Statement shall be prepared in
conformity with United States generally accepted accounting principles
("GAAP"), subject only to the agreed upon modifications set forth on
Schedule 1.9, and shall present fairly the balance of the Specified Assets
and Specified Liabilities at the Closing Date immediately prior to the
Effective Time. "Specified Assets" shall mean the sum of the following
balance sheet line items: (i) cash and cash equivalents, (ii) restricted
cash , which will not, without the consent of Parent, exceed one million
eight hundred thousand dollars ($1,800,000), (iii) accounts receivable, (iv)
costs and estimated earnings in excess of ▇▇▇▇▇▇▇▇, (v) inventories, (vi)
prepaid expenses and (vii) other assets required to be classified as
"current assets" under GAAP consistently applied. "Specified Liabilities"
shall mean the sum of the following balance sheet line items: (i) accounts
payable, (ii) accrued expenses, (iii) accrued payroll, bonuses and vacation,
(iv) current portion of capital leases, (v) deferred revenue, (vi) customer
deposits, (vii) line of credit, (viii) current portion of restructure
reserve and (ix) other liabilities required to be classified as "current
liabilities" under GAAP consistently applied, including, without limitation,
any severance, termination, commission or other fees or expenses payable by
the Company or its Subsidiaries in connection with the transactions
contemplated by this Agreement.
(b) After the delivery to the Stockholder Representative of the Closing
Balance Sheet and the Working Capital Statement in accordance herewith,
Parent shall provide reasonable access to the Stockholder Representative and
its advisors (including, without limitation, accountants) during normal
business hours to the work papers, schedules, memoranda and other documents
and information and data necessary to prepare the Closing Balance Sheet and
Working Capital Statement for a period of twenty (20) Business Days after
receipt by the Stockholder Representative of the Working Capital Statement
and Closing Balance Sheet (the "Review Period").
(c) Prior to the expiration of the Review Period, the Stockholder
Representative shall notify Parent of any objections or proposed changes to
the Working Capital Statement or the Closing Balance Sheet. If the
Stockholder Representative fails to so notify Parent of any objections or
proposed changes within the Review Period, if the Stockholder Representative
notifies Parent that he has no objections or proposed changes to any of such
items, or if the Stockholder Representative and Parent agree in writing on
the resolution of all such objections or changes within ten (10) Business
Days following delivery to Parent of such objections or proposed changes,
the Closing Balance Sheet and the Working Capital Statement, with any
changes as may be agreed upon in writing, shall be final and binding. If
the Stockholder Representative and Parent shall fail to reach an agreement
with respect to any objection or proposed change within ten (10) Business
Days of delivery to Parent of any such objections or proposed changes (the
"Dispute Period"), then all such disputed objections or changes shall, not
later than five (5) Business Days after the end of the Dispute Period, be
submitted for resolution to the Los Angeles office of PricewaterhouseCoopers
or any other "Big Four" accounting firm mutually acceptable to Parent and
the Stockholder Representative (the "Auditor"). The Stockholder
Representative and Parent shall use reasonable efforts to cause the report
of the Auditor to be rendered within twenty (20) Business Days after its
appointment, and the Auditor's determination as to the resolution of all
such disputed objections or changes to any of such statements will be final
and binding. The Parent, on the one hand, and the Stockholders, on the
other, shall bear the costs and expenses of the Auditor equally.
(d) If the Working Capital as finally determined pursuant to Section 1.9(c)
hereof (the "Final Working Capital ") is less than $4,000,000 (the "Target
Working Capital"), Parent shall be entitled to instruct the Escrow Agent to
return to Parent from the Escrow Fund that number of shares of Parent Common
Stock (valued at the Average Parent Share Price as of the date that the
Working Capital Statement became final and binding pursuant to Section
1.9(c)) equal to the dollar amount of such deficiency. Any adjustment made
pursuant to this Section 1.9(d) shall be referred to herein as the "Working
Capital Adjustment".
Section 1.10 No Further Ownership Rights in Company Common Stock.
All shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof, together with any cash
paid pursuant to Sections 1.7 and 1.8 shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to the shares of
Company Capital Stock represented by such Certificates.
Section 1.11 Closing of Company Transfer Books.
At the Effective Time, the stock transfer books of the Company shall be
closed and no transfer of shares of Company Common Stock or Company
Preferred Stock shall thereafter be made on the records of the Company. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, such Certificates shall be canceled and, if appropriate,
exchanged as provided in this Article I.
Section 1.12 Lost Certificates.
If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by Parent or the Exchange
Agent, the posting by such person of a bond, in such reasonable amount as
Parent or the Exchange Agent may direct as indemnity against any claim that
may be made against them with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate
the shares of Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock to which the holders thereof are entitled pursuant to
Section 1.8 and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 1.7.
Section 1.13 Return of Exchange Fund.
Any portion of the Exchange Fund that remains undistributed to the former
stockholders of the Company for six (6) months after the Effective Time
shall be delivered to Parent, upon demand of Parent, and any such former
stockholders who have not theretofore complied with this Article I shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock. Neither
Parent nor the Surviving Corporation shall be liable to any former holder of
Company Capital Stock for any such shares of Parent Common Stock, cash and
dividends and distributions held in the Exchange Fund which is delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 1.14 Further Assurances.
If at any time after the Effective Time the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments or
assurances or any other acts or things are necessary, desirable or proper
(a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of either of the
Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors
or their designees shall be authorized to execute and deliver, in the name
and on behalf of either of the Constituent Corporations, all such deeds,
bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as
may be necessary, desirable or proper to vest, perfect or confirm the
Surviving Corporation's right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of such
Constituent Corporation and otherwise to carry out the purposes of this
Agreement.
Section 1.15 Dissenters' Rights.
Shares of Company Common Stock and Company Preferred Stock that have not
been voted for approval of this Agreement or consented thereto in writing
and with respect to which a demand for payment and appraisal have been
properly made in accordance with the DGCL ("Dissenting Shares") will not be
converted into the right to receive the Merger Consideration otherwise
payable with respect to such shares of Company Common Stock or Company
Preferred Stock at or after the Effective Time, but will be converted into
the right to receive from the Surviving Corporation such consideration as
may be determined to be due with respect to such Dissenting Shares pursuant
to the laws of the State of Delaware. If a holder of Dissenting Shares (a
"Dissenting Stockholder") withdraws his or her demand for such payment and
appraisal or becomes ineligible for such payment and appraisal, then, as of
the Effective Time or the occurrence of such event of withdrawal or
ineligibility, whichever last occurs, such holder's Dissenting Shares will
cease to be Dissenting Shares and will be converted into the right to
receive, and will be exchangeable for, the Merger Consideration in
accordance with this Agreement. The Company will give Parent prompt notice
of any demand received by the Company from a Dissenting Stockholder for
appraisal of shares of Company Common Stock or Company Preferred Stock, and
Parent shall have the right to participate in all negotiations and
proceedings with respect to such demand. The Company agrees that, except
with the prior written consent of Parent, or as required under the DGCL, it
will not voluntarily make any payment with respect to, or settle or offer or
agree to settle, any such demand for appraisal. Each Dissenting Stockholder
who, pursuant to the provisions of the DGCL, becomes entitled to payment of
the value of the Dissenting Shares will receive payment therefor but only
after the value therefor has been agreed upon or finally determined pursuant
to such provisions. Any portion of the Merger Consideration that would
otherwise have been payable with respect to Dissenting Shares if such shares
of Company Common Stock or Company Preferred Stock were not Dissenting
Shares will be retained by Parent.
Section 1.16 Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") and all actions specified in this Agreement to occur at the
Closing shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., local time, no later
than the second Business Day following the date on which the last of the
conditions set forth in Article VII shall have been fulfilled or waived (if
permissible) (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions) or at such other time and place as Parent, Acquisition Sub and
the Company shall agree (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB
Each representation and warranty set forth below is qualified by any
exception or disclosure set forth in the disclosure schedule dated the date
hereof and delivered on the date hereof by Parent to the Company (the
"Parent Disclosure Schedule"). Any exception or disclosure set forth in the
Parent Disclosure Schedule is deemed to be given only with respect to the
Section in which it appears and any other Section expressly cross-referenced
therein or in which such exception or disclosure would be appropriate and
reasonably apparent. Parent and Acquisition Sub, jointly and severally,
represent and warrant to the Company as follows:
Section 2.1 Organization, Standing and Power.
Each of Acquisition Sub and Parent is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation
and has the requisite corporate power and authority to carry on its business
as now being conducted. Each of Parent and Acquisition Sub is duly
qualified to do business, and is in good standing, in each jurisdiction
where the character of its properties owned or held under lease or the
nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not, individually or in the aggregate,
have a Material Adverse Effect on the Parent. For purposes of this
Agreement, "Material Adverse Effect on the Parent" means any event,
circumstance or change (i) that is or could reasonably be expected to be
materially adverse to the business, operations, assets, liabilities,
capitalization, condition or results of operation of Parent and its
Subsidiaries, taken as a whole, or (ii) that could reasonably be expected to
prevent or materially delay or impair the ability of the Parent or
Acquisition Sub to consummate the transactions contemplated by this
Agreement, the Escrow Agreement or the Registration Rights Agreement or to
perform any of its obligations under this Agreement, the Escrow Agreement or
the Registration Rights Agreement; provided, however, that any adverse
change, effect, occurrence, state of facts or development attributable to
conditions affecting the industries in which Parent and its Subsidiaries
participate, the U.S. economy as a whole or foreign economies in any
locations where Parent or its Subsidiaries has material operations or sales,
shall not be taken into account in determining whether there has been or
will be a Material Adverse Effect on Parent. Except as specifically set
forth in this Agreement, all references to Material Adverse Effect on the
Parent contained in this Agreement shall be deemed to refer solely to the
Parent and its Subsidiaries without including its ownership of the Company
after the Merger. Acquisition Sub has been formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and, prior to
the Effective Time, will not have engaged in any other business activities.
Section 2.2 Capital Structure.
(a) As of the date hereof, the authorized capital stock of Parent (the
"Parent Capital Stock") consists of 3,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Parent Preferred Stock") and 30,000,000 shares
of Parent Common Stock, par value $0.01 per share. As of the date hereof,
(i) 14,853,512 shares of Parent Common Stock are outstanding, all of which
were validly issued, fully paid and nonassessable, and free of preemptive
rights; (ii) no shares of Parent Preferred Stock are outstanding; (iii)
727,138 shares were reserved for issuance to employees pursuant to the 1989
Key Employee Stock Option Plan; (iv) 1,969,250 shares were reserved for
issuance to employees pursuant to the 1999 Stock Option Plan (together with
the 1989 Key Employee Stock Option Plan, the "Parent Incentive Plans"); and
(v) no shares were reserved for issuance pursuant to warrants. As of the
date hereof, no shares of Parent Capital Stock are held in Parent's treasury.
Stock options granted by Parent pursuant to Parent Incentive Plans are
collectively referred to herein as "Parent Options". To Parent's knowledge,
there is no basis for any claim against Parent or Acquisition Sub by any
current or former holder of Parent Capital Stock with respect to the
transactions contemplated by this Agreement, the Escrow Agreement or the
Registration Rights Agreement.
(b) Except as set forth in Section 2.2(b) or the Parent SEC Documents filed
prior to the date hereof, there is no (i) option, warrant, call, right or
similar agreement to which Parent is a party or by which Parent is bound
obligating Parent to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of Parent Capital Stock or other
securities of Parent or obligating Parent to grant, extend or enter into any
such option, warrant, call, right or similar agreement; (ii) outstanding
security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of Parent Capital Stock or other securities of
Parent; (iii) rights agreement, stockholder rights plan (or similar plan
commonly referred to as a "poison pill"); or (iv) condition or circumstance
that may give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares of Parent Capital Stock or other securities of Parent. All
outstanding Parent Options, all outstanding shares of Parent Capital Stock
and all outstanding shares of capital stock of each Subsidiary of Parent
have been granted and issued, and all Parent Options and shares of Parent
Capital Stock to be granted and issued pursuant to the Parent Incentive
Plans prior to the Closing will be granted and issued, in compliance with
(i) all applicable securities laws and other applicable legal requirements,
and (ii) all requirements set forth in applicable contracts.
(c) Except as set forth in Section 2.2(c) or the Parent SEC Documents filed
prior to the date hereof, of the Parent Disclosure Schedule, Parent does not
have any outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or are convertible into or
exercisable for securities having the right to vote) with the stockholders
of Parent on any matter.
Section 2.3 Authority.
On or prior to the date of this Agreement, the Board of Directors of Parent
(at a meeting duly called and held) have declared the Merger advisable and
fair to and in the best interests of Parent and its stockholders, approved
the Share Issuance and recommended for approval the Share Issuance to
Parent's stockholders. Each of Parent and Acquisition Sub has all requisite
corporate power and authority to enter into and to perform its obligations
under this Agreement, the Registration Rights Agreement and the Escrow
Agreement and to consummate the transactions contemplated hereby and thereby,
subject, in the case of the Share Issuance, to the Parent Stockholder
Approval (as defined hereinafter). The execution and delivery of this
Agreement, the Escrow Agreement and the Registration Rights Agreement by
each of Parent and Acquisition Sub and the consummation by Parent and
Acquisition Sub of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action (including all Board
of Directors' action) on the part of Acquisition Sub and Parent, subject to
(a) the filing of the Certificate of Merger as required by the DGCL and (b)
the Parent Stockholder Approval. This Agreement has been duly executed and
delivered by Acquisition Sub and Parent and (assuming the valid
authorization, execution and delivery of this Agreement by the Company and
the validity and binding effect of the Agreement on the Company) constitutes
the legal, valid and binding obligation of Acquisition Sub and Parent
enforceable against each of them in accordance with its terms, subject to
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally or
to general principles of equity. The Registration Rights Agreement and the
Escrow Agreement will be duly executed and delivered by Parent at the
Effective Time and (assuming the valid authorization, execution and delivery
of this Agreement by the Company and the validity and binding effect of the
Registration Rights Agreement on the Escrow Agreement on the other parties
thereto) constitutes the legal, valid and binding obligation of Parent
enforceable against it in accordance with its terms, subject to any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally or
to general principles of equity. The filing of a registration statement on
Form S-4 with the Securities and Exchange Commission (the "SEC") by Parent
under the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), for the purpose
of registering shares of Parent Common Stock, which include those shares of
Parent Common Stock to be issued in the Merger (together with any amendments
or supplements thereto, whether prior to or after the effective date thereof,
the "Registration Statement") has been duly authorized by Parent's Board of
Directors.
Section 2.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 2.4 have been obtained and all filings and
obligations described in this Section 2.4 have been made, except as set
forth in Section 2.4 of the Parent Disclosure Schedule, the execution,
delivery and performance of this Agreement, the Escrow Agreement and the
Registration Rights Agreement do not, and, subject to the Parent Stockholder
Approval, the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof will not
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination, cancellation
or acceleration of any obligation or result in the loss of a material
benefit under, or result in the creation of any Lien (other than Permitted
Liens (as defined below)), security interest, charge or encumbrance upon any
of the material properties or assets of Parent or any of its Subsidiaries
under, any provision of (i) the Certificate of Incorporation or the Bylaws
of Parent, each as amended to date, or any resolution adopted by the
Stockholders of Parent, the Board of Directors of Parent, or any committee
of the Board of Directors of Parent, (ii) any provision of the comparable
charter or organization documents of any of Parent's Subsidiaries, or any
resolution adopted by the Stockholders of such Subsidiary, the Board of
Directors of such Subsidiary, or any committee of the Board of Directors of
such Subsidiary, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license binding on Parent or any of its Subsidiaries or
(iv) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii),
(iii) or (iv), any such violations, defaults, rights, losses, liens,
security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent. No filing or
registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission,
governmental body, regulatory agency, authority or tribunal (a "Governmental
Entity") or any other Person is required by or with respect to Parent or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent or Acquisition Sub or is necessary for the consummation
of the Merger and the other transactions contemplated by this Agreement,
except for (i) in connection, or in compliance, with the provisions of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Act and the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act"), (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with
the relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings and consents as
may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by
the Merger or by the transactions contemplated by this Agreement, (iv) such
filings, authorizations, orders and approvals as may be required by state
takeover laws (the "State Takeover Approvals"), (v) applicable requirements,
if any, of state securities or "blue sky" laws ("Blue Sky Laws") and the
Nasdaq National Market System (the "NASDAQ"), (vi) any of such items as may
be required under foreign laws and (vii) such other consents, orders,
authorizations, registrations, declarations, approvals and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes of this
Agreement, "Permitted Liens" shall mean (i) Liens (as hereinafter defined)
for Taxes, assessments and governmental charges due and being contested in
good faith; (ii) any imperfections of title or similar Liens, that
individually or in the aggregate, are not substantial in character or amount
or do not materially detract from the value of the assets subject thereto;
(iii) Liens for Taxes either not due and payable or due but for which notice
of assessment has not been given, or which may thereafter be paid without
penalty; and (iv) any statutory Liens claimed or held by any Governmental
Entity that have not at the time been filed or registered against title to
the assets subject thereto or that relate to obligations that are not due or
delinquent.
Section 2.5 Parent Common Stock to be Issued in the Merger.
Subject to the Parent Stockholder Approval, all of the shares of Parent
Common Stock issuable in exchange for Company Capital Stock at the Effective
Time in accordance with this Agreement and upon exercise of Company Options
and Company Warrants after the Effective Time will be, when so issued, (i)
duly authorized, validly issued, fully paid and nonassessable, (ii) free of
preemptive rights created by statute, Parent's Certificate of Incorporation
or Bylaws or any agreement to which Parent is a party or by which Parent is
bound, (iii) the subject of an effective Registration Statement under the
Securities Act or issued in a transaction exempt from registration under the
Securities Act, (iv) registered under the Exchange Act and (v) registered or
exempt from registration under applicable Blue Sky Laws.
Section 2.6 Information Supplied.
None of the information supplied or to be supplied by Parent or Acquisition
Sub for inclusion or incorporation by reference in: (i) the Registration
Statement will, at the time it becomes effective under the Securities Act,
contain any untrue statement of 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 misleading or (ii) the Joint Proxy Statement/Prospectus (as hereinafter
defined) will, at the date mailed to stockholders and at the times of the
meetings of stockholders of the Company and Parent to be held in connection
with the Merger and the approval of the Share Issuance, contain any untrue
statement of 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 misleading. If
at any time prior to the Effective Time an event with respect to Parent, its
officers and directors or any of its Subsidiaries shall occur which is
required to be described in the Registration Statement, such event shall be
so described, and an appropriate amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the stockholders
of the Company. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act. The Joint
Proxy Statement/Prospectus will comply as to form in all material respects
with the Exchange Act.
Section 2.7 Absence of Certain Changes or Events.
Except as set forth in Section 2.7 of the Parent Disclosure Schedule from
August 31, 2003 (the "Parent Balance Sheet Date") until the date hereof, (i)
Parent and its Subsidiaries have not incurred any material liability or
obligation (indirect, direct or contingent), or entered into any material
oral or written agreement or other transaction, that is not in the ordinary
course of business consistent with past practices, (ii) Parent and its
Subsidiaries have not sustained any loss or interference with their business
or properties from fire, flood, windstorm, accident or other calamity
(whether or not covered by insurance), (iii) there has been no dividend or
distribution of any kind declared, paid or made in respect of any class of
stock of Parent or any of its Subsidiaries or any repurchase, redemption or
other acquisition by Parent or any of its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests
in, Parent or any of its Subsidiaries, (iv) there has been no creation or
assumption by Parent or any of its Subsidiaries of any Lien (as hereinafter
defined), except Permitted Liens, on any material asset, (v) there has been
no transaction or commitment made, or any contract or agreement entered into,
by Parent or any of its Subsidiaries outside of the ordinary course of
business relating to its assets or business (including the acquisition or
disposition of any assets) or any relinquishment by Parent or any of its
Subsidiaries of any contract, agreement or other right, in either case,
material to Parent and any of its Subsidiaries outside of the ordinary
course of business, taken as a whole, (vi) there has been no change by
Parent or any of its Subsidiaries in any of its accounting principles,
practices or methods, (vii) there has not been any material change in the
amount or terms of the indebtedness of Parent or any of its Subsidiaries
from Parent Balance Sheet Date, (viii) there has been no event causing a
Material Adverse Effect on Parent, and (ix) there has been no amendment to
the Certificate of Incorporation or Bylaws of Parent.
Section 2.8 Actions and Proceedings.
Except as set forth in the Parent SEC Documents filed prior to the date
hereof and except as would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against
or involving Parent or its Subsidiaries, or, to the knowledge of Parent,
against or involving any of the present or former directors, officers,
employees, consultants, agents or stockholders of Parent or its Subsidiaries,
as such, any of their respective properties, assets or business or any
Parent Plan that would reasonably be expected to result in any loss, expense,
charge, assessment, levy, fine or other liability being imposed upon or
incurred by Parent or its Subsidiaries. Except as set forth in the Parent
SEC Documents filed prior to the date hereof and except as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations (including claims for workers'
compensation) pending or, to the knowledge of Parent, threatened against or
affecting Parent, its Subsidiaries, any present or former directors,
officers, employees, consultants, agents or stockholders or Parent or its
Subsidiaries, or any of their respective properties, assets or business or
any Parent Plan.
Section 2.9 Liabilities; Products.
(a) Except as fully reflected or reserved against in the Parent's most
recent financial statements or disclosed in the footnotes thereto, Parent
and its Subsidiaries at the Parent Balance Sheet Date (i) had no material
liabilities, absolute or contingent (including Tax liabilities) that would
have been required to be reflected on the Parent Balance Sheet in accordance
with GAAP and (ii) had no liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type in excess of one
hundred fifty thousand dollars ($150,000), whether or not required to be
reflected on the Parent Balance Sheet in accordance with GAAP.
(b) Except as disclosed in the Parent SEC Documents filed prior to the date
hereof, neither Parent nor any of its Subsidiaries has received a claim for
or based upon breach of product or service warranty or guaranty or similar
claim, strict liability in tort, negligent design of product, negligent
provision of services or any other allegation of liability, including or
arising from the materials, design, testing, manufacture, packaging,
labeling (including instructions for use), or sale of its products or from
the provision of services; and there is no basis for any such claim that,
individually or in the aggregate, would have a Material Adverse Effect on
the Parent
Section 2.10 Required Vote of Parent Stockholders.
The affirmative vote of the holders of a majority of the outstanding shares
of the Parent Common Stock is required to approve the Share Issuance. No
other vote of the security holders of Parent is required by law, Parent's
Certificate of Incorporation or the Bylaws of Parent or otherwise in order
for Parent to consummate the Merger and the transactions contemplated hereby.
Section 2.11 Compliance with Applicable Law.
Except as set forth in Section 2.11 of the Parent Disclosure Schedule,
Parent and its Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the conduct of their businesses except where the failure to hold such
permits, licenses, variances, exemptions, orders and approvals would not
have a Material Adverse Effect on Parent (the "Parent Permits"). Except as
set forth in Section 2.11 of the Parent Disclosure Schedule, Parent and its
Subsidiaries are in compliance with the terms of Parent Permits, except
where non-compliance would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Except as set forth in Section 2.11 of
the Parent Disclosure Schedule, the businesses of Parent and its
Subsidiaries have been and are being conducted in compliance with all
applicable federal, state, local and foreign laws, rules and regulations,
orders, decrees, judgments, permits and licenses ("Applicable Law"), except
where non-compliance would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Except as set forth in Section 2.11 of
the Parent Disclosure Schedule, no investigation or review by any
Governmental Entity with respect to Parent or its Subsidiaries is pending.
To the knowledge of Parent, no Governmental Entity has indicated an
intention to conduct any such investigation or review.
Section 2.12 SEC Documents and Other Reports; ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Matters.
(a) Parent has filed all required documents with the SEC since December 31,
1999 (together with those documents that Parent is required to or may file
after the date hereof, the "Parent SEC Documents"). As of the respective
dates such documents were filed with the SEC (or, if amended or superceded
by a filing prior to the date of this Agreement, then on the date of such
filing), the Parent SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and, at the respective times they were filed (or if amended or superceded by
a filing prior to the date of this Agreement, then on the date of such
filing), none of the Parent SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of Parent
included in the Parent SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with GAAP (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly presented in all material respects the consolidated financial
position of Parent and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein which will not, individually or in the
aggregate, be material in amount). Except as disclosed in the Parent SEC
Documents filed prior to the date hereof or as required by generally
accepted accounting principles, Parent has not, since September 30, 2003,
made any change in the accounting practices or policies applied in the
preparation of financial statements.
(b) Parent has in place the "disclosure controls and procedures" (as
defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act) required in
order for the Chief Executive Officer and Chief Financial Officer of Parent
to engage in the review and evaluation process mandated by the Exchange Act.
Parent's "disclosure controls and procedures" are reasonably designed to
ensure that all information (both financial and non-financial) required to
be disclosed by Parent in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all such
information is accumulated and communicated to Parent's management as
appropriate to allow timely decisions regarding required disclosure and to
make the certifications of the Chief Executive Officer and Chief Financial
Officer of Parent required under the Exchange Act with respect to such
reports. Neither Parent nor its Subsidiaries is a party to any off-balance
sheet arrangements (as defined in Item 303(c) of Regulation S-K of the SEC).
(c) Parent and its Subsidiaries maintain accurate books and records
reflecting its assets and liabilities and maintain proper and adequate
internal accounting controls.
(d) The Chief Executive Officer and the Chief Financial Officer of Parent
have signed, and Parent has furnished to the SEC, all certifications
required by Section 906 and Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
("SOXA"); such certifications contain no qualifications or exceptions to the
matters certified therein and have not been modified or withdrawn; and
neither Parent nor any of its officers has received notice from any
Governmental Entity questioning or challenging the accuracy, completeness,
form or manner of filing or submission of such certifications.
(e) Neither Parent nor its Subsidiaries has, since July 30, 2002, extended
or maintained credit, arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any director
or executive officer (or equivalent thereof) of Parent. No loan or
extension of credit is maintained by Parent or its Subsidiaries to which the
second sentence of Section 13(k)(1) of the Exchange Act applies.
Section 2.13 Brokers.
Except for ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Inc., no broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement. Parent has furnished to the Company accurate and complete copies
of all agreements under which any such fees are contemplated.
Section 2.14 Opinion of Financial Advisor.
Parent has received the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Inc., dated November
21, 2003, to the effect that, as of such date, the Merger Consideration is
fair to Parent from a financial point of view, a signed copy of which has
been delivered to the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the disclosure schedule dated the date
hereof and delivered on the date hereof by the Company to Parent (the
"Company Disclosure Schedule"), which exceptions specifically reference the
Sections to be qualified. Any exception or disclosure set forth in the
Company Disclosure Schedule is deemed to be given only with respect to the
Section in which it appears and any other Section expressly cross-referenced
therein or in which such exception or disclosure would be appropriate and
reasonably apparent. The Company represents and warrants to Acquisition Sub
and Parent as follows:
Section 3.1 Organization, Standing and Power.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power and authority (i) to carry on its business as now being
conducted. Each Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as now being conducted. The Company and each of its
Subsidiaries are duly qualified to do business, and are in good standing, in
each jurisdiction where the character of their respective properties owned
or held under lease or the nature of their respective activities makes such
qualification necessary, except where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. For purposes of this Agreement, "Material Adverse Effect on the
Company" means any event, circumstance or change (i) that is or could
reasonably be expected to be materially adverse to the business, operations,
assets, condition or results of operation of the Company and its
Subsidiaries, taken as a whole, or (ii) that could reasonably be expected to
prevent or materially delay or impair the ability of the Company to
consummate the transactions contemplated by this Agreement; provided,
however, that any adverse change, effect, occurrence, state of facts or
development attributable to conditions affecting the industries in which the
Company and it Subsidiaries participate, the U.S. economy as a whole or
foreign economies in any locations where the Company or its Subsidiaries has
material operations or sales shall not be taken into account in determining
whether there has been or will be a Material Adverse Effect on the Company.
Except as specifically set forth in this Agreement, all references to
Material Adverse Effect on the Company contained in this Agreement shall be
deemed to refer solely to the Company and its Subsidiaries without including
its ownership by the Parent after the Merger.
Section 3.2 Capital Structure.
(a) As of the date hereof, the authorized capital stock of the Company (the
"Company Capital Stock") consists of 23,200,000 shares of Series A Preferred
Stock, 12,000,000 shares of Series A-DIV Preferred Stock, 6,500,000 shares
of Series B Preferred Stock, 2,800,000 shares of Series B-DIV Preferred
Stock, 23,200,000 shares of Junior Preferred Stock (collectively the Series
A Preferred Stock, the Series A-DIV Preferred Stock, the Series B Preferred
Stock, the Series B-DIV Preferred Stock, and the Junior Preferred Stock, the
"Company Preferred Stock"), and 63,000,000 shares of Company Common Stock.
As of the date hereof, (i) 13,576,150 shares of Company Common Stock are
outstanding, all of which were validly issued, fully paid and nonassessable,
and free of preemptive rights; (ii) 22,950,784 shares of Series A Preferred
Stock are outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights; (iii) no shares of Series A-DIV
Preferred Stock are outstanding; (iv) 4,256,406 shares of Series B Preferred
Stock are outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights; (v) no shares of Series B-DIV
Preferred Stock are outstanding; (vi) 22,790 shares of Junior Preferred
Stock are issued and outstanding, all of which were validly issued, fully
paid and nonassessable, and free of preemptive rights; (vii) 4,052,576
shares of Company Common Stock were reserved for issuance to employees
pursuant to the 2000 Stock Option Plan; (viii) 5,980,000 shares of Company
Common Stock were reserved for issuance to employees pursuant to the 2000
Restricted Stock Plan and 3,700,000 shares of Company Common Stock were
reserved for issuance to employees pursuant to the 2003 Restricted Stock
Plan (together with the 2000 Stock Option Plan, the "Company Incentive
Plans"); and (ix) 202,355 shares were reserved for issuance pursuant to
outstanding warrants. No shares of Company Capital Stock are held by any
Subsidiary of the Company. On the date hereof, the Company Common Stock and
the Company Preferred Stock are held of record by the persons and in the
amounts with the corresponding certificate numbers set forth in Section
3.2(a) of the Company Disclosure Schedule. To the Company's knowledge,
there is no basis for any claim against the Company by any current or former
holder of Company Capital Stock with respect to the transactions
contemplated by this Agreement.
(b) Section 3.2(b) of the Company Disclosure Schedule contains a correct
and complete list as of the date of this Agreement of each outstanding
option, warrant, call, right to acquire or similar agreement with respect to
any shares of Company Capital Stock, including the Company Options, to which
the Company is a party or by which the Company is bound, including the
holder, date of grant, term, acceleration of vesting or exercisability, if
any, exercise price and number of shares of Company Capital Stock subject
thereto. Except as set forth on Section 3.2(b) of the Company Disclosure
Schedule and except for the Company Options, there is no (i) option, warrant,
call, right or similar agreement to which the Company is a party or by which
the Company is bound obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of Company Capital
Stock or other securities of the Company or obligating the Company to grant,
extend or enter into any such option, warrant, call, right or similar
agreement; (ii) outstanding security, instrument or obligation that is or
may become convertible into or exchangeable for any shares of Company
Capital Stock or other securities of the Company; or (iii) rights agreement,
stockholder rights plan (or similar plan commonly referred to as a "poison
pill"). All outstanding Company Options, all outstanding shares of Company
Capital Stock and all outstanding shares of capital stock of each Subsidiary
of the Company have been granted and issued, and all Company Options and
shares of Company Capital Stock to be granted and issued pursuant to the
Company Incentive Plans prior to the Closing will be granted and issued, in
compliance with (i) all applicable securities laws and other applicable
legal requirements, and (ii) all requirements set forth in applicable
contracts. The Company has not breached any of its obligations under that
certain Agreement and Plan of Merger among the Company, Vytek/Stellcom
Acquisition Corp. and Stellcom, Inc., dated as of November 12, 2002.
(c) Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of Company Capital Stock or other securities of the Company or any
capital stock or other securities of any Subsidiary of the Company. Each
outstanding share of capital stock of each Subsidiary of the Company is duly
authorized, validly issued, fully paid and nonassessable and each such share
is owned by the Company or another Subsidiary of the Company, free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever, except Permitted Liens. Except as
set forth in Section 3.2(c) of the Company Disclosure Schedule, the Company
does not have any outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or are convertible into or
exercisable for securities having the right to vote) with the stockholders
of the Company on any matter. Section 3.2(c) of the Company Disclosure
Schedule contains a correct and complete list as of the date of this
Agreement of each of the Company's Subsidiaries. Except as set forth on
Section 3.2(c) of the Company Disclosure Schedule, as of the date hereof,
neither the Company nor any of its Subsidiaries is party to or bound by any
agreement or commitment pursuant to which the Company or any Subsidiary of
the Company is or would be required to register any securities under the
Securities Act.
(d) Section 3.2(d) of the Company Disclosure Schedule contains a correct
and complete list as of the date of this Agreement of each entity in which
the Company owns an equity interest (other than a Subsidiary), including the
number of outstanding shares of the stock of each such entity, the
percentage interest represented by the Company's ownership in the entity,
and the date of acquisition of the ownership interest in any such entity.
(e) Except as set forth in Section 3.2(e) of the Company Disclosure
Schedule, all outstanding shares of Company Preferred Stock are convertible
into shares of Company Common Stock. There are no declared and unpaid
dividends or, except as set forth in Section 3.2(e) of the Company
Disclosure Schedule, registration rights existing with respect to the
Company Preferred Stock or the Company Common Stock.
Section 3.3 Authority.
On or prior to the date of this Agreement, the Board of Directors of the
Company (at a meeting duly called and held) has declared the Merger
advisable and fair to and in the best interest of the Company and its
stockholders, approved and adopted this Agreement in accordance with the
DGCL, and recommended the adoption of this Agreement by the Company's
stockholders. The Company has all requisite corporate power and authority
to enter into and perform its obligations under this Agreement and the
Escrow Agreement and to consummate the transactions contemplated hereby and
thereby, subject, in the case of the consummation of the Merger, to the
Company Stockholder Approval. The execution and delivery of this Agreement
and the Escrow Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of this Agreement, to (a) the Company Stockholder
Approval and (b) the filing of the Certificate of Merger as required by the
DGCL. This Agreement has been duly executed and delivered by the Company
and (assuming the valid authorization, execution and delivery of this
Agreement by Parent and Acquisition Sub and the validity and binding effect
of the Agreement on Parent and Acquisition Sub) constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights generally or to general principles of equity.
Section 3.4 Consents and Approvals; No Violation.
Assuming that all consents, approvals, authorizations and other actions
described in this Section 3.4 have been obtained and all filings and
obligations described in this Section 3.4 have been made, except as set
forth in Section 3.4 of the Company Disclosure Schedule, the execution,
delivery and performance of this Agreement and the Escrow Agreement do not,
and, subject to the Company Stockholder Approval, the consummation of the
transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any
obligation or result in the loss of a material benefit under, or result in
the creation of any Lien (other than Permitted Liens), security interest,
charge or encumbrance upon any of the material properties or assets of the
Company under, any provision of (i) the Company Certificate of Incorporation
or the Bylaws of the Company, (ii) any provision of the comparable charter
or organizational documents of any of the Company's Subsidiaries, (iii) any
loan or credit agreement, note, guarantee, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
binding on the Company or any of its Subsidiaries, or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company, any of its Subsidiaries or any of their respective properties or
assets, other than, in the case of each of clauses (iii) and (iv), any such
violations, defaults, rights, losses, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required
by or with respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement or the Escrow Agreement by
the Company or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement or the Escrow Agreement, except
for (i) in connection, or in compliance, with the provisions of the HSR Act,
the Securities Act and the Exchange Act, (ii) the filing of Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company
or any of its Subsidiaries is qualified to do business, (iii) such filings
and consents as may be required under any environmental, health or safety
law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or by the transactions contemplated by this
Agreement or the Escrow Agreement, (iv) such filings, authorizations, orders
and approvals as may be required to obtain the State Takeover Approvals, (v)
applicable requirements, if any, of Blue Sky Laws, (vi) any of such items as
may be required under foreign laws and (vii) such other consents, orders,
authorizations, registrations, declarations, approvals and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.5 Financial Statements.
(a) The Company has furnished Parent with copies of the following
(collectively, the "Company Financial Statements"): (i) audited
consolidated balance sheets of the Company and its Subsidiaries as of
December 31, 2001 and December 31, 2002, including the separate audited
consolidated balance sheets of Stellcom, Inc., a California corporation
("Stellcom") as of such dates, (ii) the related audited statements of
operations for the years ended December 31, 2001 and December 31, 2002,
including the related audited statements of operations of Stellcom for such
periods, (iii) an unaudited consolidated balance sheet of the Company and
its Subsidiaries as of October 31, 2003, and the related unaudited
statements of operations and cash flows for the ten months ended October 31,
2003. The balance sheet of the Company as of October 31, 2003 is referred
to herein as the "Company Balance Sheet" and the date thereof is referred to
herein as the "Company Balance Sheet Date." The Company Financial
Statements are included as Section 3.5 of the Company Disclosure Schedule.
(b) The Company Financial Statements: (i) have been prepared from the
books and records of the Company and its Subsidiaries; (ii) have been
prepared in accordance with GAAP consistently applied throughout the periods
covered, except as noted in the Company Financial Statements (except that
unaudited Company Financial Statements omit notes thereto); and (iii)
present fairly in all material respects the consolidated financial condition
of the Company and its Subsidiaries at such dates and the consolidated
results of their operations for the fiscal periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments
and to any other adjustments described therein which will not, individually
or in the aggregate, be material in amount).
(c) The Company keeps books, records and accounts that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of
assets of the Company and its Subsidiaries. To the Company's knowledge,
neither the Company nor any of its Subsidiaries has, and no employee, agent
or stockholder of the Company of any of its Subsidiaries (in their capacity
as such as purporting to act in such capacity or on behalf of or in
connection with the business or affairs of the Company and its Subsidiaries),
directly or indirectly has misappropriated any funds of any such entity or
received or retained any misappropriated funds.
Section 3.6 Information Supplied.
None of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (i) the Registration Statement
will, at the time it becomes effective under the Securities Act, contain any
untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading or
(ii) the Joint Proxy Statement/Prospectus will, at the date mailed to
stockholders and at the times of the meetings of stockholders of the Company
and Parent to be held in connection with the Merger and the approval of the
Share Issuance contain any untrue statement of 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 misleading. If at any time prior to the Effective Time
an event with respect to the Company, its officers and directors or any of
its Subsidiaries shall occur which is required to be described in the
Registration Statement, the Company shall notify Parent of such event as
soon as possible after the occurrence of said event and shall reasonably
cooperate with Parent's efforts to prepare and promptly file an appropriate
amendment or supplement with the SEC and, as required by law, disseminate
such amendment or supplement to the stockholders of the Company. The
Company makes no representation, warranty or covenant with respect to any
information supplied or required to be supplied by any Person other than the
Company and its Subsidiaries and their respective officers, directors and
stockholders that is contained in or omitted from any of the foregoing
documents.
Section 3.7 Absence of Certain Changes or Events.
Except as set forth in Section 3.7 of the Company Disclosure Schedule, from
the Company Balance Sheet Date until the date hereof, (i) the Company and
its Subsidiaries have not incurred any liability or obligation (indirect,
direct or contingent), or entered into any material oral or written
agreement or other transaction, in excess of one hundred thousand dollars
($100,000), that is not in the ordinary course of business consistent with
past practices, (ii) the Company and its Subsidiaries have not sustained any
loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance),
(iii) there has been no change in the capital stock of the Company and no
dividend or distribution of any kind has been declared, paid or made in
respect of any class of stock of the Company or any of its Subsidiaries or
any repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities
of, or other ownership interests in, the Company or any of its Subsidiaries,
(iv) there has been no creation or assumption by the Company or any of its
Subsidiaries of any material Lien (as hereinafter defined) on any material
asset, (v) there has been no transaction or commitment made, or any contract
or agreement entered into, by the Company or any of its Subsidiaries outside
of the ordinary course of business relating to its assets or business
(including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract,
agreement or other right, in either case, material to the Company and its
Subsidiaries outside of the ordinary course of business, taken as a whole,
(vi) there has been no change by the Company or any of its Subsidiaries in
any of its accounting principles, practices or methods, (viii) there has not
been (A) any adoption of a new Company Plan (as hereinafter defined), (B)
any amendment to a Company Plan increasing benefits thereunder, (C) any
granting by the Company or any of its Subsidiaries to any executive officer
or other key employee of the Company or any of its Subsidiaries of any
increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment
agreements in effect as of the Company Balance Sheet Date, (D) any granting
by the Company or any of its Subsidiaries to any such executive officer or
other key employee of any increase in severance or termination agreements in
effect as of the Company Balance Sheet Date, other than routine increases
consistent with past practices, (E) any payment of bonuses or other
incentive compensation by the Company or any of its Subsidiaries to any
employees, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the
Company Balance Sheet Date or (F) any entry by the Company or any of its
Subsidiaries into any employment, severance or termination agreement with
any such executive officer or other key employee, (ix) there has not been
any material change in the amount or terms of the indebtedness of the
Company or any of its Subsidiaries from the Company Balance Sheet Date, (x)
there has been no event causing a Material Adverse Effect on the Company,
and (xi) there has been no amendment to the Certificate of Incorporation or
Bylaws of the Company.
Section 3.8 Tax Matters.
Except as otherwise set forth in Section 3.8 of the Company Disclosure
Schedule (i) the Company and each of its Subsidiaries have timely filed
(taking account of extensions to file that have been properly obtained) all
Tax Returns (as hereinafter defined) that they are required to have filed,
and all Tax Returns filed by the Company and its Subsidiaries are true,
correct, and complete; (ii) the Company and each of its Subsidiaries has
timely paid all Taxes that have become due and payable (whether or not shown
on a Tax Return) and have adequately reserved in the Company Financial
Statements in accordance with GAAP for all Taxes (whether or not shown on
any Tax Return) that have accrued but are not yet due or payable as of the
dates thereof; (iii) the Company and each of its Subsidiaries have complied
in all respects with all rules and regulations relating to the withholding
of Taxes and the remittance of withheld Taxes; (iv) the Company and its
Subsidiaries have no present or contingent liability for Taxes, other than
Taxes incurred in the ordinary course of business since the Company Balance
Sheet Date in amounts consistent with prior years adjusted to reflect
changes in operating results of the Company and its Subsidiaries;
(v) neither the Company nor any of its Subsidiaries has waived any statute
of limitations in respect of its Taxes, which remains open; (vi) no claim
for assessment or collection of Taxes is presently being asserted against
the Company or any of its Subsidiaries, there is no presently pending audit,
examination, refund claim, litigation, proceeding, proposed adjustment or
matter in controversy with respect to any Taxes of or with respect to the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries has knowledge that any such action or proceeding is being
contemplated; (vii) all deficiencies asserted or assessments made as a
result of any examination of such Tax Returns by any taxing authority have
been paid in full or otherwise resolved, and the Company has no knowledge of
any basis upon which any additional material Tax deficiency could be
asserted; (viii) no federal income Tax Return that was filed by the Company
or its Subsidiaries contains, or was required to contain (in order to avoid
a penalty, and determined without regard to the effect of post-filing
disclosure), a disclosure statement under Section 6662 of the Code;
(ix) neither the Company nor any of its Subsidiaries is or has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (x) neither the Company nor any of its
Subsidiaries is a party to or bound by any closing or other agreement with
any Governmental Entity with respect to Taxes; (xi) neither the Company nor
any of its Subsidiaries has agreed, and none is required to, make any
adjustments pursuant to Section 481(a) of the Code or any similar provision
of other law; (xii) neither the Company nor any of its Subsidiaries has been
a member of an affiliated group of corporations (within the meaning of
Section 1504(a) of the Code) filing a consolidated federal income tax return
(or a group of corporations filing a consolidated, combined, or unitary
income tax return under comparable provisions of any other law) for any
taxable period, other than a group the common parent of which is the
Company; (xiii) neither the Company nor any of its Subsidiaries has any
obligation under any agreement or arrangement with any other person to pay
any amount with respect to Taxes of such other person (including pursuant to
Treasury Regulations Section 1.1502-6 or any comparable provision of state,
local or foreign tax law) including any liability for Taxes of any
predecessor entity; (xiv) neither the Company nor any of its Subsidiaries is
a party to any agreement, contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in connection with this
Agreement or any change of control of the Company or any of its Subsidiaries,
in the payment of any "excess parachute payments" within the meaning of
Section 280G of the Code; (xv) neither the Company nor any of its
Subsidiaries has in effect an election under prior Section 341(f) of the
Code; (xvi) there are no Liens for Taxes on any assets of the Company or any
of its Subsidiaries, other than Liens for Taxes not yet due and payable;
(xvii) neither the Company nor any of its Subsidiaries has distributed stock
of another person, or has had its stock distributed by another person, in a
transaction purported or intended to be governed in whole or in part by
Section 355 or 361 of the Code; (xviii) neither the Company nor any of its
Subsidiaries has disposed of property in a transaction being accounted for
under the installment method pursuant to Section 453 of the Code (or similar
provisions of other laws), and neither the Company nor any of its
Subsidiaries has taken any action inconsistent with its practices in prior
years that would have the effect of deferring a liability for Taxes from a
period prior to the Effective Time to a period following the Effective Time;
(xix) valid elections under Section 83(b) of the Code are in effect with
respect to all each share of Company Capital Stock that is subject to a risk
of forfeiture or subject to a right of repurchase by the Company and is
issued and outstanding as of the Effective Time; (xx) neither the Company
nor any of its Subsidiaries is a party to any joint venture, partnership or
other arrangement or contract that could be treated as a partnership for
federal income tax purposes; (xxi) Section 3.8(a)(xxi) of the Company
Disclosure Schedule sets forth (A) all elections pursuant to Treas. Reg.
Section 301.7701-3 that have been made by business entities in which the
Company or any Subsidiary owns an equity interest and (B) with respect to
the Company and each of its Subsidiaries, whether such entity is engaged in
business, has a permanent establishment (as defined in an applicable tax
treaty between the United States and such other jurisdiction) or is
otherwise subject to Tax in a jurisdiction other than the United States, and
identifies such jurisdiction with respect to each such entity; (xxii)
neither the Company nor any of its Subsidiaries has owned or currently owns
an interest in an entity that is not a United States person (as defined in
the Code); and (xxiii) to the knowledge of the Company, there are no facts
relating to the Company or the Stockholders that would prevent the Merger
from qualifying as a "reorganization" within the meaning of Section 368(a)
of the Code. For purposes of this Agreement: (i) "Taxes" means any federal,
state, local, foreign or provincial income, gross receipts, property, sales,
use, license, franchise, employment, payroll, withholding, alternative or
added minimum, ad valorem, value-added, transfer, excise, capital, or net
worth tax, or estimated tax, or other tax, custom, duty or other like
assessment or charge of any kind whatsoever, together with any interest
thereon or penalty imposed with respect thereto by any Governmental Entity,
whether computed on a separate, consolidated, unitary, combined, or any
other basis, and shall include any transferee or secondary liability in
respect of any tax (whether imposed by law, contractual agreement, or
otherwise), and (ii) "Tax Return" means any return, report or similar
statement (including the attached schedules) required to be filed with
respect to any Tax, including any information return, claim for refund,
amended return or declaration of estimated Tax.
Section 3.9 Actions and Proceedings.
Except as set forth in Section 3.9 of the Company Disclosure Schedule and
except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or
involving the Company or any of its Subsidiaries, or against or involving
any of the present or former directors, officers, employees, consultants,
agents or stockholders of the Company or any of its Subsidiaries, as such,
any of their respective properties, assets or business or any Company Plan
that would reasonably be expected to result in any loss, expense, charge,
assessment, levy, fine or other liability being imposed upon or incurred by
the Company or any of its Subsidiaries. Except as set forth in Section 3.9
of the Company Disclosure Schedule and except as would not, individually or
in the aggregate, have a Material Adverse Effect on the Company, there are
no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations (including claims for workers' compensation)
pending or, to the knowledge of the Company, threatened against or affecting
the Company, any of its Subsidiaries, any present or former directors,
officers, employees, consultants, agents or stockholders or the Company or
any of its Subsidiaries, or any of their respective properties, assets or
business or any Company Plan.
Section 3.10 Certain Agreements.
(a) Except as set forth in Section 3.10(a) of the Company Disclosure
Schedule, no officer or employee of the Company or any of its Subsidiaries
has an employment agreement, severance agreement or similar arrangement,
whether oral or written that is not terminable on notice by the Company or
such Subsidiary without cost or other liability to the Company in excess of
ten thousand dollars ($10,000). Except as set forth in Section 3.10(a) of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan relating to
the compensation of employees of the Company or any of its Subsidiaries,
including any employment agreement, severance agreement, stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
pension plan (as defined in Section 3(2) of ERISA) or welfare plan (as
defined in Section 3(1) of ERISA) (collectively the "Company Compensation
Agreements"), any of the benefits of which will be increased, or the vesting
of the benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option to purchase shares
of Company Capital Stock, or shares of Company Capital Stock granted in
connection with the performance of services for the Company or any of its
Subsidiaries, is or will be entitled to receive cash from the Company or any
of its Subsidiaries in lieu of or in exchange for such option or shares as a
result of the transactions contemplated by this Agreement. Section 3.10(a)
of the Company Disclosure Schedule sets forth (i) for each officer, director
or employee who is a party to, or will receive benefits under, any Company
Compensation Agreement as a result of the transactions contemplated herein,
the total amount that each such person may receive, or is eligible to
receive, assuming that the transactions contemplated by this Agreement are
consummated on the date hereof, and (ii) the total amount of any
indebtedness owed to the Company and its Subsidiaries from each officer or
director and any indebtedness in excess of ten thousand dollars ($10,000)
owed to the Company and its Subsidiaries from each non-officer employee of
the Company or any of its Subsidiaries.
(b) Set forth in Section 3.10(b) of the Company Disclosure Schedule is a
list, as of the date hereof, of all contracts (including all distribution
contracts, supply contracts, any indenture, mortgage, loan agreement, note
or other agreement or instrument for borrowed money, any guarantee of any
agreement or instrument for borrowed money or any lease, contractual license
or other agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the properties, assets or operations
of the Company is subject) which provide for payments to the Company in
excess of two hundred fifty thousand dollars ($250,000) and that: (i)
contain non-competition restrictions, including restrictions relating to the
conduct of the Company's and its Subsidiaries' business, the sale of the
Company's and its Subsidiaries' products or geographic restrictions, in any
case that would prohibit or restrict Parent or any of its Subsidiaries from
conducting the business of the Company and its Subsidiaries' as presently
conducted or that require any consent or other action by any Person for, or
will be subject to default, termination, repricing or other renegotiation,
or cancellation because of, the transactions contemplated hereby; (ii)
relate to indebtedness for borrowed money or the deferred purchase price of
property (whether incurred, assumed, guaranteed or secured by any asset);
(iii) are partnership, joint venture or distribution, joint marketing or
development agreements or other similar contracts, arrangements or
agreements, directly affecting the Company or any of its Subsidiaries; (iv)
require the Company or any of its Subsidiaries to grant "most favored
customer" pricing to any other person; (v) provide for liquidated damages
upon failure to meet performance or quality milestones; (vi) involve any
lease of personal property having a value individually in excess of one
hundred thousand dollars ($100,000); (vii) any agreement of indemnification
or guaranty; (viii) any agreement relating to the disposition or acquisition
of assets, property or any interest in any business enterprise outside the
ordinary course of the Company's or its Subsidiaries' business; or (ix) are
otherwise material to the Company and its Subsidiaries, taken as a whole.
Prior to the date hereof, the Company has provided or made available true
and complete copies of all such contracts (each a "Company Significant
Contract" and, collectively, "Company Significant Contracts") to Parent.
(c) Each Company Significant Contract is a legal, valid and binding
agreement of the Company and, to the knowledge of the Company, each other
party thereto. To the knowledge of the Company, none of such Company
Significant Contracts has been canceled by the other party thereto. To the
knowledge of the Company, no event of default or event that, but for the
giving of notice or the lapse of time or both, would constitute an event of
default exists or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any Company Significant
Contract to which the Company or any of its Subsidiaries is a party or by
which the Company or any such Subsidiary is bound or to which any of the
properties, assets or operations of the Company or any such Subsidiary is
subject. The Company is not in receipt of any claim of default under any
Company Significant Contract. There are no contracts or agreements of the
Company having covenants not to compete that materially impair the ability
of the Company to conduct its business as currently conducted or, to the
knowledge of the Company, would impair Parent's ability to conduct its
business.
Section 3.11 ERISA.
(a) Each Company Plan is listed in Section 3.11(a) of the Company
Disclosure Schedule. With respect to each Company Plan, the Company has
made available to Parent a true and correct copy of (i) the three most
recent annual reports (Form 5500) filed with the IRS, (ii) each such Company
Plan that has been reduced to writing and all amendments thereto, (iii) each
trust agreement, insurance contract or administration agreement relating to
each such Company Plan, (iv) a written summary of each unwritten Company
Plan, (v) the most recent summary plan description or other written
explanation of each Company Plan provided to participants, (vi) the most
recent actuarial report for any Company Plan subject to Title IV of ERISA,
(vii) the most recent determination letter, if any, issued by the IRS with
respect to any Company Plan intended to be qualified under Section 401(a) of
the Code, (viii) any request for a determination currently pending before
the IRS, (ix) all correspondence with the IRS, the Department of Labor, or
Pension Benefit Guaranty Corporation relating to any outstanding controversy
and (ix) the most recent forms and certificate samples used to comply with
Sections 4980, 9801 and 9802 of the Code. Each Company Plan has been
operated in accordance with its terms and in compliance in all material
respects with ERISA, the Code and all other applicable statutes and
governmental rules and regulations. Except as set forth in Section 3.11(a)
of the Company Disclosure Schedule, no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any Company
Plan for which the 30-day notice requirement has not been waived. None of
the Company Plans is subject to Section 412 of the Code or Title IV of ERISA,
nor does the Company have any liability (contingent or otherwise) pursuant
to Section 412 of the Code or Title IV of ERISA. Neither the Company nor
any ERISA affiliate has or had any obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA), nor could the
Company have any liability with respect to any such plan.
(b) Except as listed in Section 3.11(b) of the Company Disclosure Schedule,
with respect to the Company Plans, no event has occurred and there exists no
condition or set of circumstances in connection with which the Company, any
of its Subsidiaries or any ERISA Affiliate or Company Plan fiduciary could
be subject to any material liability under the terms of such Company Plans,
ERISA, the Code or any other Applicable Law (except with respect to
contributions required under the terms of any Company Plan). All Company
Plans that are intended to be qualified under Section 401(a) of the Code
have been determined by the IRS to be so qualified, or a timely application
for such determination is now pending, and nothing has occurred that could
reasonably be expected to result in the loss of each such Company Plan's
qualified status. Except as disclosed in Section 3.11(b) of the Company
Disclosure Schedule, none of the Company, any of its Subsidiaries nor any of
its ERISA Affiliates has any liability or obligation under any welfare plan
to provide benefits after termination of employment to any employee or
dependent other than as required by Section 4980B of the Code or state
continuation coverage law.
(c) As used herein, (i) "Company Plan" means a "pension plan" (as defined
in Section 3(2) of ERISA, a "welfare plan" (as defined in Section 3(1) of
ERISA), or any other written or oral bonus, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, restricted stock, stock appreciation right, holiday
pay, vacation, severance, medical, dental, vision, disability, death benefit,
sick leave, fringe benefit, personnel policy, insurance or other plan,
arrangement or understanding, in each case established or maintained by the
Company, any of its Subsidiaries or any of its ERISA Affiliates or as to
which the Company, any of its Subsidiaries or any of its ERISA Affiliates
has contributed or otherwise may have any liability, and (ii) "ERISA
Affiliate" means any trade or business (whether or not incorporated) which
would be considered a single employer with the Company pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated under
these sections or pursuant to Section 4001(b) of ERISA and the regulations
promulgated thereunder.
(d) Section 3.11(d) of the Company Disclosure Schedule contains a list of
all (i) severance and employment agreements with employees of the Company,
each of its Subsidiaries and each ERISA Affiliate, (ii) severance programs
and policies of the Company and each ERISA Affiliate with or relating to its
employees and (iii) plans, programs, agreements and other arrangements of
the Company, each of its Subsidiaries and each ERISA Affiliate with or
relating to its employees containing change of control or similar provisions.
(e) There is no Company Plan that is maintained outside the United States.
Section 3.12 Liabilities; Products.
(a) Except as fully reflected or reserved against in the Company Financial
Statements or disclosed in the footnotes thereto, or as disclosed in Section
3.12(a) of the Company Disclosure Schedule, the Company and its Subsidiaries
at the Company Balance Sheet Date (i) had no material liabilities (including
Tax liabilities), absolute or contingent, that would have been required to
be reflected on the Company Balance Sheet in accordance with GAAP and (ii)
had no liability, indebtedness, obligation, expense, claim, deficiency,
guaranty or endorsement of any type in excess of fifty thousand dollars
($50,000), whether or not required to be reflected on the Company Balance
Sheet in accordance with GAAP.
(b) Neither the Company nor any of its Subsidiaries has received a claim
for or based upon breach of product or service warranty or guaranty or
similar claim, strict liability in tort, negligent design of product,
negligent provision of services or any other allegation of liability,
including or arising from the materials, design, testing, manufacture,
packaging, labeling (including instructions for use), or sale of its
products or from the provision of services; and there is no basis for any
such claim.
(c) The Company has provided in Section 3.12(c) of the Company Disclosure
Schedule a schedule of products in development as of the date hereof.
Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, the product and service engineering,
development, manufacturing and quality control processes which have been and
are being followed by the Company and its Subsidiaries are reasonably
designed to produce products and services which (i) are consistent with the
claims made about them in the sales brochures of the Company and its
Subsidiaries, (ii) comply with applicable regulatory requirements and (iii)
avoid claims of the type described in Section 3.12(b). Section 3.12(c) of
the Company Disclosure Schedule contains a list of the countries in which
the Company's products have received or are in the process of receiving
regulatory clearance.
Section 3.13 Labor Matters.
Except as set forth on Section 3.13 of the Company Disclosure Schedule:
(a) No collective bargaining agreement exists that is binding on the
Company or any Subsidiary, and no organizing activity has been undertaken
with respect to any employees, and no petition has been filed or proceeding
instituted by an employee or group of employees of the Company or any
Subsidiary with any labor relations board seeking recognition of a
bargaining representative. To the knowledge of the Company, no
organizational effort is currently being made or threatened on behalf of any
labor union to organize any of their respective employees of the Company or
any Subsidiary.
(b) There is no labor strike, dispute, slow down or stoppage pending or, to
the Company's knowledge, threatened against the Company or any Subsidiary,
and neither the Company nor any Subsidiary has received any notice or has
any knowledge of any pending or threatened labor, wage and hour, workers'
compensation, wrongful termination, discrimination, breach of contract or
other employment-related claim, dispute, controversy, grievance or
proceeding with respect to claims of, or obligations to, any current or
former employee or group of employees of the Company or any Subsidiary.
(c) Except as would not result in a Material Adverse Effect on the Company,
all individuals who are performing or have performed consulting or other
services for the Company, any Subsidiary or any Affiliate thereof, whether
as consultants, independent contractors, agents or otherwise, are or were
correctly classified by the Company as either "independent contractors" or
"employees" as the case may be, and, at the Closing Date, will qualify for
such classification under all applicable laws. There are no pending or, to
the knowledge of the Company, threatened claims against the Company or any
Subsidiary by or on behalf of any such individual, or investigation, audit
or other proceeding relating to such an individual or individuals, by any
Governmental Entity. There is no labor union representing any such
individuals or, to the knowledge of the Company, any organizational effort
currently being made by or on behalf of any labor organization to organize
any such individuals.
(d) The Company has made available to Parent a complete and accurate list
of the name of each officer, employee and consultant of the Company and its
subsidiaries, together with such person's position or function, annual base
salary or wages and any incentives or bonus arrangement with respect to such
person. Except as set forth on Section 3.13(d) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary has received notice that
any such person will or may cease to be engaged by the Company for any
reason, including because of the consummation of the transactions
contemplated by this Agreement.
(e) The Company and its Subsidiaries are in compliance with all Applicable
Laws respecting employment, employment practices, and terms and conditions
of employment, except to the extent that non-compliance would not,
individually or in the aggregate, result in a Material Adverse Effect on the
Company.
(f) The Company and its Subsidiaries have withheld and reported all amounts
required by law or by agreement to be withheld and reported with respect to
wages, salaries and other payments to employees.
Section 3.14 Intellectual Property.
(a) As used herein, the term "Intellectual Property" means all intellectual
property rights arising from or associated with the following, whether
protected, created or arising under the laws of the United States or any
other jurisdiction: (i) trade names, trademarks and service marks
(registered and unregistered), domain names and other Internet addresses or
identifiers, trade dress and similar rights and applications (including
intent to use applications) to register any of the foregoing and
registrations therefor (collectively, "Marks"); (ii) patents and patent
applications, including continuation, divisional, continuation-in-part,
reexamination and reissue patent applications and any patents issuing
therefrom, and rights in respect of utility models or industrial designs
(collectively, "Patents"); (iii) copyrights and registrations and
applications therefor (collectively, "Copyrights"); (iv) non-public know-how,
inventions, discoveries, improvements, concepts, ideas, methods, processes,
designs, plans, schematics, drawings, formulae, technical data,
specifications, research and development information, technology and product
roadmaps, data bases and other proprietary or confidential information,
including customer lists, but excluding any Copyrights or Patents that may
cover or protect any of the foregoing (collectively, "Trade Secrets"); and
(v) moral rights, publicity rights and any other proprietary, intellectual
or industrial property rights of any kind or nature that do not comprise or
are not protected by Marks, Patents, Copyrights or Trade Secrets. "Company
Intellectual Property" shall mean all Intellectual Property owned (in whole
or in part) by the Company or any of its Subsidiaries that is used in the
business as currently conducted by the Company or any of its Subsidiaries.
Section 3.14(a) of the Company Disclosure Schedule sets forth an accurate
and complete list, as of the date hereof, of all registered Company
Intellectual Property.
(b) Each of the Company and its Subsidiaries has taken commercially
reasonable steps, consistent with applicable industry standards, to protect
its rights in the Company Intellectual Property. Without limiting the
foregoing, the Company has and enforces a policy requiring each of the
employees (other than non-technical employees who have not contributed in
any way to the development or creation of any Company Intellectual Property),
consultants and contractors of the Company or any of its Subsidiaries to
enter into proprietary information, confidentiality and assignment
agreements substantially in the Company's standard forms and all current and
former employees (other than non-technical employees who have not
contributed in any way to the development or creation of any Company
Intellectual Property), consultants and contractors of the Company or any of
its Subsidiaries have executed such an agreement. Except as set forth in
Section 3.14(b) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries has disclosed, nor is the Company or any of its
Subsidiaries under any contractual or other obligation to disclose, to
another person any of its Trade Secrets, except pursuant to an enforceable
confidentiality agreement or undertaking, and, to the Company's knowledge,
no person has materially breached any such agreement or undertaking.
(c) Except as set forth in Section 3.14(c) of the Company Disclosure
Schedule, the Company owns exclusively all right, title and interest in and
to all of the Company Intellectual Property, free and clear of any and all
Liens, except Permitted Liens, encumbrances or other adverse ownership
claims (other than licenses granted by the Company or a Subsidiary of the
Company to another person in the ordinary course of business), and neither
the Company nor any Subsidiary has received any notice or claim challenging
the Company's or any of its Subsidiaries' ownership of the Company
Intellectual Property or asserting that any other person has any claim of
legal or beneficial ownership with respect thereto, nor, to the Company's
knowledge, is there a reasonable basis for any claim that the Company or any
of its Subsidiaries does not so own or license any of such Company
Intellectual Property.
(d) To the Company's knowledge, the Company Intellectual Property is valid,
enforceable and subsisting. Neither the Company nor any of its Subsidiaries
has received any notice or claim challenging or questioning the validity or
enforceability of any of the Company Intellectual Property or indicating an
intention on the part of any person to bring a claim that any of the Company
Intellectual Property is invalid or unenforceable or has been misused, and,
with respect to the Patents contained within the Company Intellectual
Property, the Company has disclosed material prior art, of which the Company
had knowledge, in the prosecution of its Patents in accordance with its
obligations pursuant to 37 C.F.R. Section 1.56.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure
Schedule: (i) neither the Company nor any of its Subsidiaries has taken any
action or failed to take any action (including the manner in which it has
conducted its business, or used or enforced, or failed to use or enforce,
any of the Company Intellectual Property) that would result in the
abandonment, cancellation, forfeiture, relinquishment, invalidation or
unenforceability of any of the Company Intellectual Property; and (ii) all
Company Intellectual Property has been either registered or obtained in
accordance with all applicable legal requirements (including, in the case of
the Company's Marks, the timely post-registration filing of affidavits of
use and incontestability and renewal applications). The Company has timely
paid all filing, examination, issuance, post registration and maintenance
fees, annuities and the like associated with or required with respect to any
of the registered Company Intellectual Property, including any Company
Intellectual Property for which applications have been made or registration
is pending.
(f) Section 3.14(f)(1) of the Company Disclosure Schedule sets forth a
complete and accurate list as of the date hereof of all material agreements
currently in effect granting to the Company or any of its Subsidiaries any
right under or with respect to any Intellectual Property, other than
standard desktop software applications used generally in the Company's or
any of its Subsidiaries' operations. Section 3.14(f)(2) of the Company
Disclosure Schedule sets forth a complete and accurate list as of the date
hereof of all license agreements currently in effect under which the Company
or any of its Subsidiaries licenses or grants any other rights under any
Company Intellectual Property to another person, excluding non-exclusive
internal use licenses granted by the Company or any of its Subsidiaries to
end-user customers that have purchased or licensed products.
(g) (intentionally omitted)
(h) To the Company's knowledge, none of the products, processes, services
or other technology or materials, or any Intellectual Property developed,
used, leased, licensed, sold, imported or otherwise distributed or disposed
of, or otherwise commercially exploited by or for the Company or any
Subsidiary, nor any other activities or operations of the Company or any
Subsidiary, infringes upon, misappropriates, violates, dilutes or
constitutes the unauthorized use of any Intellectual Property of any third
party, and, except as set forth in Section 3.14(h) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary has received any notice or
claim asserting that any such infringement, misappropriation, violation,
dilution or unauthorized use is or may be occurring or has or may have
occurred, nor, to the Company's knowledge, is there any reasonable basis
therefor. No Company Intellectual Property is subject to any outstanding
order, judgment, decree or stipulation restricting the use thereof by the
Company or any Subsidiary or, in the case of any Company Intellectual
Property licensed to others, restricting the sale, transfer, assignment or
licensing thereof by the Company or any Subsidiary to any person. To the
Company's knowledge, no third party is misappropriating, infringing,
diluting or violating in any material respect any Company Intellectual
Property. To the Company's knowledge, no product, technology, service or
publication of the Company or any of its Subsidiaries violates any law or
regulation.
(i) To the Company's knowledge, no employee or independent contractor of
the Company or any of its Subsidiaries is obligated under any agreement or
subject to any judgment, decree or order of any court or administrative
agency, or any other restriction that would or may materially interfere with
such employee or contractor carrying out his or her duties for the Company
or that would materially conflict with the Company's business as presently
conducted.
Section 3.15 State Anti-Takeover Laws.
The Board of Directors of the Company has, to the extent such statute is
applicable, taken all action (including appropriate approvals of the Board
of Directors of the Company) necessary to render any applicable anti-
takeover provisions of the DGCL inapplicable to the Merger, this Agreement,
and the transactions contemplated hereby. No other state takeover statute
or similar charter or bylaw provisions is applicable to the Merger, this
Agreement, and the transactions contemplated hereby.
Section 3.16 Required Vote of Company Stockholders.
The affirmative vote of (i) the holders of a majority of the outstanding
shares of the Company Common Stock and the Company Preferred Stock, voting
together as a single class, and (ii) the holders of a majority of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
voting together as a single class, is required to adopt this Agreement. The
affirmative vote of (i) the holders of a majority of the outstanding shares
of the Company Common Stock and the Company Preferred Stock, voting together
as a single class, (ii) the holders of a majority of the outstanding shares
of each of Series A Preferred Stock and Series B Preferred Stock, voting
separately as a single class and (iii) the required vote pursuant to Section
242 of the DGCL is required to approve the Certificate Amendment. No other
vote of the security holders of the Company, including without limitation
the holders of preferred stock, is required by law, the Company Certificate
or the Bylaws of the Company or otherwise in order for the Company to
consummate the Merger and the transactions contemplated hereby.
Section 3.17 Compliance with Applicable Law.
Except as set forth in Section 3.17 of the Company Disclosure Schedule, the
Company and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the conduct of their businesses except where the failure to hold such
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the conduct of their businesses would
not have a Material Adverse Effect on the Company (the "Company Permits").
Except as set forth in Section 3.17 of the Company Disclosure Schedule, the
Company and its Subsidiaries are in material compliance with the terms of
the Company Permits. Except as set forth in Section 3.17 of the Company
Disclosure Schedule, the businesses of the Company and its Subsidiaries have
been and are being conducted in material compliance with all Applicable Law.
Except as set forth in Section 3.17 of the Company Disclosure Schedule, no
investigation or review by any Governmental Entity with respect to the
Company or its subsidiaries is pending. To the knowledge of the Company, no
Governmental Entity has indicated an intention to conduct any such
investigation or review.
Section 3.18 Accounts Receivable.
All of the accounts and notes receivable of the Company and its Subsidiaries
set forth on the books and records of the Company (net of the applicable
reserves reflected on the books and records of the Company and in the
Company Financial Statements) (i) represent sales actually made or
transactions actually effected in the ordinary course of business for goods
or services delivered or rendered to unaffiliated customers in bona fide
arm's length transactions, (ii) to the knowledge of the Company, constitute
valid claims, and (iii) are good and collectible (provided at the aggregate
recorded amounts thereof (net of such reserves) and are not subject to any
valid recourse, defense, deduction, return of goods, counterclaim, or offset,
except in the case of a bankruptcy, insolvency, liquidation or winding-up of
the applicable customers.
Section 3.19 Inventories.
Except as set forth in Section 3.19 of the Company Disclosure Schedule, all
inventories of the Company and its Subsidiaries consist of items of
merchantable quality and quantity usable (in the case of raw materials or
work in progress) or saleable (in the case of finished goods) in the
ordinary course of business, are not in excess of a twelve month usage of
such items and are saleable with a value (net of reserves) at prevailing
market prices not to exceed one hundred thousand dollars ($100,000). Except
as set forth in Section 3.19 of the Company Disclosure Schedule, to the
Company's knowledge, the quantities of all inventories, materials, and
supplies of the Company and its Subsidiaries (net of the obsolescence
reserves therefor shown in the Company Financial Statements and determined
in the ordinary course of business consistent with past practice) are not
obsolete, damaged, slow-moving, defective, or excessive, and are reasonable
and balanced in the circumstances of the Company and its Subsidiaries as of
the date hereof.
Section 3.20 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Hazardous Substances" means (A) petroleum and
petroleum products, by-products or breakdown products, radioactive materials,
asbestos containing materials and polychlorinated biphenyls, and (B) any
other chemicals, materials or substances regulated as toxic or hazardous or
as a pollutant, contaminant or waste under any applicable Environmental Law;
(ii) "Environmental Law" means any law, past, present or future (up until
the Effective Time) and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree or judgment, or common law, relating to pollution or
protection of the environment, health or safety or natural resources,
including those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Substances; and (iii)
"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any applicable Environmental
Law. Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, the Company and its Subsidiaries are and have
been in compliance with all applicable Environmental Laws, have obtained all
Environmental Permits necessary for the operation of the business of the
Company and the Subsidiaries, and are in compliance with their requirements,
and have resolved all past known non-compliance with Environmental Laws and
Environmental Permits without any pending, on-going or future obligation,
cost or liability.
(b) Except as set forth in Section 3.20(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has (i) placed,
held, located, released, transported or disposed of any Hazardous Substances
on, under, from or at any of the Company's properties or any other
properties, (ii) any knowledge of the presence of any Hazardous Substances
on, under, emanating from, or at any of the Company's or its Subsidiaries'
properties or any other property but arising from the Company's or its
Subsidiaries' current or former properties or operations, or (iii) any
knowledge , nor has it received any written notice (A) of any violation of
or liability under any Environmental Laws, (B) of the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any such violation
or liability, (C) requiring the investigation of, response to or remediation
of Hazardous Substances at or arising from any of the Company's or its
Subsidiaries' current or former properties or operations or any other
properties, (D) alleging noncompliance by the Company or any of its
Subsidiaries with the terms of any Environmental Permit in any manner
reasonably likely to require material expenditures or to result in liability
or (E) demanding payment for response to or remediation of Hazardous
Substances at or arising from any of the Company's or its Subsidiaries'
current or former properties or operations or any other properties.
(c) No Environmental Law imposes any obligation upon the Company or any of
its Subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement, including any requirement to modify or to
transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Entity, the placement of any notice,
acknowledgment or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree.
(d) Except as disclosed in Section 3.20(d) of the Company Disclosure
Schedule, there are no environmental assessments or audit reports or other
similar studies or analyses in the possession or control of the Company or
any of its Subsidiaries relating to any real property currently or formerly
owned, leased or occupied by the Company or any of its Subsidiaries.
Section 3.21 Suppliers and Customers.
During the last twelve (12) months, neither the Company nor any of its
Subsidiaries has received any notice of termination or written threat of
termination from any of the twenty (20) largest suppliers or any of the
twenty (20) largest distributors or customers of the Company and its
Subsidiaries disclosed in Section 3.21 of the Company Disclosure Schedule,
or to the knowledge of the Company, any information that any such customer,
distributor or supplier intends to materially decrease the amount of
business that it does with the Company or any of its Subsidiaries. Section
3.21 of the Company Disclosure Schedule sets forth a list of the twenty (20)
largest suppliers and twenty (20) largest distributors or customers of the
Company and its Subsidiaries for the first ten (10) months of fiscal 2003.
Section 3.22 Insurance.
All fire and casualty, general liability, business interruption, product
liability, and sprinkler and water damage insurance policies maintained by
the Company and its Subsidiaries are set forth in Section 3.22 of the
Company Disclosure Schedule ("Insurance Policies"). The Company and its
Subsidiaries have made any and all payments required to maintain the
Insurance Policies in full force and effect. Neither the Company nor any of
its Subsidiaries has received notice of default under any of the Insurance
Policies, and has not received written notice or, to the knowledge of the
Company, oral notice of any pending or threatened termination or
cancellation, coverage limitation or reduction or premium increase with
respect to such policy. Except for the D&O insurance policy of the Company,
none of the Insurance Policies will terminate or lapse (or be affected in
any other materially adverse manner) by reason of the execution and delivery
of, or consummation of any of the transactions contemplated by, this
Agreement.
Section 3.23 Transactions with Affiliates.
(a) For purposes of this Section 3.23, the term "Affiliated Person" means
(i) any stockholder of the Company, (ii) any director, officer or senior
executive of the Company or any of its Subsidiaries, (iii) any person, firm
or corporation that directly or indirectly controls, is controlled by or is
under common control with the Company or any of its Subsidiaries, or (iv)
any member of the immediate family of any of such persons.
(b) Except as set forth in Section 3.23(b) of the Company Disclosure
Schedule, since the Company Balance Sheet Date, to the Company's knowledge,
the Company and its Subsidiaries have not, in the ordinary course of
business or otherwise, (i) purchased, leased or otherwise acquired any
property or assets or obtained any services from, (ii) sold, leased or
otherwise disposed of any property or assets or provided any services to
(except with respect to remuneration for services rendered in the ordinary
course of business as director, officer or employee of the Company or any of
its Subsidiaries), (iii) entered into or modified in any manner any contract
with, or (iv) borrowed any money from, or made or forgiven any loan or other
advance (other than expenses or similar advances made in the ordinary course
of business) to, any Affiliated Person.
(c) To the Company's knowledge, no Affiliated Person of the Company or any
of its Subsidiaries is a party to any contract with any customer or supplier
of the Company or any of its Subsidiaries that affects in any manner the
business, financial condition or results of operation of the Company and its
Subsidiaries.
Section 3.24 Title to and Sufficiency of Assets.
As of the date hereof and except as set forth in Section 3.24(a) of the
Company Disclosure Schedule, the Company and its Subsidiaries own, and as of
the Effective Time the Company and its Subsidiaries will own, good and
marketable title to all of their assets constituting personal property
(excluding, for purposes of this sentence, assets held under leases) (the
"Fixed Assets"), free and clear of any and all mortgages, liens,
encumbrances, charges, claims, restrictions, pledges, security interests or
impositions (collectively, "Liens"), other than Permitted Liens. Each Fixed
Asset, which was, as of November 30, 2003, valued in excess of five thousand
dollars ($5,000) is set forth in Section 3.24(b) of the Company Disclosure
Schedule.
Section 3.25 Real Property.
As of the date hereof, the Company and its Subsidiaries do not own any Real
Estate (as hereinafter defined). The leases to all Real Estate occupied by
the Company and its Subsidiaries are in full force and effect and, to the
Company's knowledge, no event has occurred which with the passage of time,
the giving of notice, or both, would constitute a default or event of
default by the Company or any of its Subsidiaries or any other person who is
a party signatory thereto. For purposes of this Agreement, "Real Estate"
means, with respect to the Company and its Subsidiaries, all of the fee, if
any, or leasehold ownership right, title and interest of such person, in and
to all real estate and improvement owned or leased by any such person and
which is used by any such person in connection with the operation of its
business. To the knowledge of the Company, the Company and its Subsidiaries
are not in violation of any zoning, building or safety ordinance, regulation
or requirement or other law or regulation applicable to the operation of any
Real Estate occupied by the Company and its Subsidiaries, nor has it
received any notice of violation with which it has not complied.
Section 3.26 Brokers.
Except as set forth in Section 3.26 of the Company Disclosure Schedule, no
broker, investment banker or other person is entitled to any broker's,
finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company and its Subsidiaries. Any such fees payable to
any such finder, broker or investment banker or otherwise shall be the sole
responsibility of the Stockholders and in no circumstance shall the Company,
Acquisition Sub, Parent or their Affiliated Persons have any liability
therefor.
Section 3.27 Warranties.
Section 3.27 of the Company Disclosure Schedule sets forth complete and
accurate summaries of the written warranties and guaranties by the Company
or any of its Subsidiaries utilized with respect to its products or services
not in the ordinary course of business. There have not been any material
deviations from such warranties and guaranties, and neither the Company, any
of its Subsidiaries nor any of their respective salespeople, employees,
distributors and agents is authorized by the Company to undertake material
warranty obligations to any customer or to other third parties in excess of
such warranties or guaranties. To the Company's knowledge, neither the
Company nor any of its Subsidiaries has made any oral warranty or guaranty
with respect to its products or services, except for any oral warranties or
guarantees the performance of which would not result in a Material Adverse
Effect on the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company and Parent Pending the
Merger.
(a) Conduct of Business by the Company Pending the Merger. Except as
expressly permitted by clauses (i) through (xx) of this Section 4.1(a),
during the period from the date of this Agreement through the earlier of the
Effective Time or the termination of this Agreement (the "Pre-Closing
Period"), the Company and its Subsidiaries shall, in all material respects,
carry on their business in the ordinary course of business as currently
conducted and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers and others having business dealings
with any of them to the end that their goodwill and ongoing business shall
be unimpaired at the Effective Time. Without limiting the generality of the
foregoing, and except as otherwise expressly contemplated by this Agreement
or as set forth in the Company Disclosure Schedule (with specific reference
to the applicable subSection below), the Company and its Subsidiaries shall
not without the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed):
(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any Company
Capital Stock, or otherwise make any payments to its stockholders in their
capacity as such, (B) split, combine or reclassify any Company Capital Stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Company Capital Stock or (C)
purchase, redeem or otherwise acquire any shares of Company Capital Stock or
any capital stock of any of its Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) except as related to the exercise of any existing stock options set
forth in Section 3.2(b) of the Company Disclosure Schedule, issue, deliver,
sell, pledge, dispose of or otherwise encumber any shares of Company Capital
Stock, any other voting securities or equity equivalents or any securities
convertible into, or any rights, warrants or options to acquire any such
shares, voting securities, equity equivalents or convertible securities;
(iii) except as provided in this Agreement or to the extent required by
the DGCL or other Applicable Law, amend the Company Certificate of
Incorporation or Bylaws;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its material assets, other than sales of
inventory that are in the ordinary course of business consistent with past
practice;
(vi) incur any material indebtedness for borrowed money, guarantee any
such indebtedness or make any material loans, advances or capital
contributions to, or other investments in, any other person, in excess of
ten thousand dollars ($10,000) other than (A) in the ordinary course of
business consistent with past practices, (B) indebtedness, loans, advances,
capital contributions and investments between the Company and any of its
wholly owned Subsidiaries or between any of such wholly owned Subsidiaries,
in each case in the ordinary course of business consistent with past
practice and (C) with the prior written consent of the Parent, not to be
unreasonably withheld or delayed;
(vii) alter (through merger, liquidation, reorganization, restructuring
or otherwise) the corporate structure or ownership of the Company;
(viii) except as may be required by Applicable Law or as contemplated by
this Agreement, enter into or adopt any, or amend any existing, severance
plan, Company Plan, employment or consulting agreement or arrangement;
(ix) except as may be required by Applicable Law, as contemplated by this
Agreement or in the ordinary course of business consistent with prior
practice or as required under any employment or severance agreement in
effect as of the Company Balance Sheet Date, increase the compensation
payable or to become payable to its directors or executive officers or grant
any severance or termination pay to, except for increases in compensation
payable, or the payment of severance or termination pay, that are required
pursuant to written agreements existing as of the date hereof, or enter into
any employment or severance agreement with, any director or officer of the
Company, or establish, adopt, enter into, or amend in any material respect
or take action to enhance in any material respect or accelerate (other than
acceleration of vesting of Company Options) any rights or benefits under,
any labor, 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;
(x) knowingly violate or knowingly fail to perform any obligation or duty
imposed upon it by any applicable material federal, state or local law, rule,
regulation, guideline or ordinance;
(xi) except as may be necessary in connection with the Registration
Statement, make any change to accounting policies or procedures (other than
actions required to be taken as a result of a change in applicable law or in
GAAP);
(xii) (A) prepare or file any Tax Return in a manner that is materially
inconsistent with its past practice in preparing or filing similar Tax
Returns in prior periods or, on any such Tax Return, take any position that
is materially inconsistent with positions taken in preparing or filing
similar Tax Returns in prior periods (except as may be required by
applicable law); (B) make or rescind any material express or deemed election
relating to Taxes; (C) commence any litigation or proceeding with respect to
any Tax liability or settle or compromise any Tax liability; or (D) fail to
file in a timely manner (giving effect to any extension of time to file) all
Tax Returns that become due or fail to pay any Taxes that become due;
(xiii) take any action that could prevent the Merger from qualifying as
a reorganization under Section 368(a) of the Code;
(xiv) commence any litigation or proceedings or settle or compromise any
material claims or litigation, except to the extent that such act would not
have a Material Adverse Effect on the Parent;
(xv) except for customer contracts other than customer contracts with
fixed price arrangements in excess of two hundred fifty thousand dollars
($250,000), enter into, renew, terminate or amend any agreement or contract
material to the Company and its Subsidiaries, including any Company
Significant Contract, purchase any real property or make or agree to make
any new capital expenditure or expenditures which individually are in excess
of one hundred thousand dollars ($100,000);
(xvi) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent financial statements (or the notes thereto) of the Company and its
Subsidiaries included in the Company Financial Statements or incurred in the
ordinary course of business consistent with past practice;
(xvii) except as provided in this Agreement or as may be required by
applicable law, take any action that would alter in any way the terms and
provisions governing the Company Capital Stock;
(xviii) except as set forth in Section 3.26 of the Company Disclosure
Schedule, incur any expenses in connection with the consummation of the
transactions contemplated herein on behalf of any of the Stockholders,
including broker's, finder's or similar fees and fees and expenses of legal
and accounting advisors of any such Stockholder (and in no circumstance
shall the Company, Acquisition Sub, Parent or their Affiliated Persons have
any liability therefor);
(xix) allow any of the Insurance Policies to be amended or terminated
without replacing such policy with a policy providing at least equal
coverage, insuring comparable risks and issued by an insurance company
financially comparable to the prior insurance company; or
(xx) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(b) Conduct of Business by Parent Pending the Merger. Except as expressly
permitted by clauses (i) through (xii) of this Section 4.1(b), during the
Pre-Closing Period, Parent and its Subsidiaries shall use commercially
reasonable efforts to, in all material respects, carry on their business in
the ordinary course of business as currently conducted and, to the extent
consistent therewith, with no less diligence and effort than would be
applied in the absence of this Agreement, seek to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with any of them to the end
that their goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by this Agreement or as set forth
in the Parent Disclosure Schedule (with specific reference to the applicable
subsection below), Parent and its Subsidiaries shall not without the prior
written consent of the Company (which consent shall not be unreasonably
withheld or delayed):
(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any Parent
Capital Stock, or otherwise make any payments to its stockholders in their
capacity as such, (B) split, combine or reclassify any Parent Capital Stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Parent Capital Stock or (C)
purchase, redeem or otherwise acquire any shares of Parent Capital Stock or
any capital stock of any of its Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) except as related to the exercise of any existing stock options set
forth in Section 2.2(a) or the issuance of any additional stock options
pursuant to the existing stock option plans of Parent, issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of Parent Capital Stock,
any other voting securities or equity equivalents or any securities
convertible into, or any rights, warrants or options to acquire any such
shares, voting securities, equity equivalents or convertible securities;
(iii) except to the extent required by the DGCL or other Applicable Law,
amend the Parent Certificate of Incorporation or Bylaws;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof;
(v) except as set forth on Schedule 4.1(b), sell, lease or otherwise
dispose of, or agree to sell, lease or otherwise dispose of, any of its
material assets, other than in the ordinary course of business consistent
with past practice;
(vi) alter (through merger, liquidation, reorganization, or
restructuring) the corporate structure or ownership of Parent;
(vii) knowingly violate or knowingly fail to perform any obligation or
duty imposed upon it by any applicable material federal, state or local law,
rule, regulation, guideline or ordinance;
(viii) make any change to accounting policies or procedures (other than
actions required to be taken as a result of a change in Applicable Law or in
GAAP);
(ix) take any action that could prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code;
(x) commence any litigation or proceedings or settle or compromise any
material claims or litigation, except to the extent that such act would not
have a Material Adverse Effect on Parent;
(xi) except as may be required by Applicable Law, take any action that
would alter in any way the terms and provisions governing the Parent Capital
Stock; or
(xii) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 4.2 Other Acquirors.
(a) The Company, its Subsidiaries and their respective officers and other
employees, directors, representatives and agents shall immediately cease any
and all discussions or negotiations with any persons with respect to any
Third Party Acquisition. The Company shall not, and shall not authorize any
of its affiliates, officers, directors, employees, representatives or agents
to, directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with or provide any non-public information to
any person or group (other than Parent and Acquisition Sub or any designees
of Parent and Acquisition Sub) concerning any Third Party Acquisition. The
Company shall promptly notify Parent in writing in the event the Company or
any of its affiliates and their respective directors, officers, employees,
agents and representatives receives any written or oral proposal or inquiry
concerning a Third Party Acquisition, including the terms and conditions
thereof and the identity of the person or group submitting such proposal,
and shall advise Parent from time to time of the status and any material
developments concerning the same. In the event the Company shall receive a
proposal for a Third Party Acquisition that could result in a Superior
Proposal (as defined herein), then (i) the Company or its representatives
may make such inquiries or have such discussions with respect to such Third
Party Acquisition as the Board of Directors of the Company, after
consultation with outside legal counsel, may deem reasonably necessary to
inform itself for the purpose of avoiding any legal claims for breach of its
fiduciary duties and (ii) if the Board of Directors of the Company by a
majority vote determines in good faith that such proposal for a Third Party
Acquisition is reasonably likely to result in a Superior Proposal, the
Company and its representatives may conduct such additional discussions or
provide such information as the Board of Directors of the Company may
determine, but only if, prior to such additional discussions or such
provision of information: (A) the persons making the proposal for the Third
Party Acquisition shall have entered into a confidentiality agreement no
less favorable to the Company than the Confidentiality Agreement (as defined
hereinafter) and (B) the Board of Directors of the Company by a majority
vote shall have determined in good faith, after consultation with outside
legal counsel, that such actions may be reasonably necessary in order to
avoid legal claims for breach of the fiduciary duties of the Board of
Directors of the Company.
(b) Upon receiving any unsolicited proposal for a Third Party Acquisition
(or any material amendment, material supplement or material change to any
previously submitted Third Party Acquisition proposal), the Company shall
promptly (and in no event later than two (2) Business Days after receipt of
any Third Party Acquisition proposal or material amendment, material
supplement or material change thereto) notify Parent, of the receipt of such
Third Party Acquisition proposal or amendment, supplement or change to any
previously received Third Party Acquisition proposal and the identity of the
Third Party making such proposal or submitting such amendment, supplement or
change.
(c) Except as set forth in this Section 4.2(c), the Board of Directors of
the Company shall not withdraw its recommendation in favor of the
transactions contemplated hereby or approve or recommend, or cause the
Company or any of its subsidiaries to enter into any agreement with respect
to, any Third Party Acquisition. Notwithstanding the foregoing, if the
Board of Directors of the Company by a majority vote determines in its good
faith judgment, after consultation with legal counsel, that it is reasonably
necessary to do so in order to avoid legal claims for breach of its
fiduciary duties, the Board of Directors of the Company may withdraw its
recommendation in favor of this Agreement and the transactions contemplated
hereby or enter into an agreement with respect to a Third Party Acquisition,
but only (i) after providing written notice to Parent (a "Notice of Superior
Proposal") advising Parent that the Board of Directors of the Company has
received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such Superior
Proposal, and (ii) if Parent does not, within two (2) Business Days after
Parent's receipt of the Notice of Superior Proposal, make an offer that the
Board of Directors of the Company by a majority vote determines in its good
faith judgment to be at least as favorable to the stockholders of the
Company as such Superior Proposal; provided, however, that no withdrawal of
the recommendation of this Agreement and the transactions contemplated
hereby by the Board of Directors of the Company shall relieve the Company of
its obligation to submit this Agreement and such transactions to the
Stockholders for approval as provided in Section 5.2. For the elimination
of doubt, nothing in this Section 4.2 shall prohibit the Company from making
any disclosure to its stockholders if, in the good faith judgment of the
Company Board of Directors, based upon advice of legal counsel, such action
may be reasonably necessary in order to avoid legal claims of a breach of
the Board of Directors' fiduciary duties to the Company's Stockholders.
(d) For purposes of this Agreement, "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the
Company by merger or otherwise by any person (which includes a "person" as
such term is defined in Section 13(d)(3) of the Exchange Act) other than
Parent, Acquisition Sub or any affiliate thereof (a "Third Party"); (ii) the
acquisition by a Third Party of any material portion of the assets of the
Company and its subsidiaries, other than the sale of its products in the
ordinary course of business consistent with past practices; (iii) the
acquisition by a Third Party of fifteen percent (15%) or more of the
outstanding Shares; (iv) the adoption by the Company of a plan of total or
partial liquidation or the declaration or payment of an extraordinary
dividend; (v) the repurchase by the Company or any of its subsidiaries of
more than ten percent (10%) of the outstanding Shares or (vi) the
acquisition by the Company or any of its subsidiaries by merger, purchase of
stock or assets, joint venture or otherwise of a direct or indirect
ownership interest or investment in any business whose annual revenues, net
income or assets is equal or greater than twenty percent (20%) of the annual
revenues, net income or assets of the Company. For purposes of this
Agreement, a "Superior Proposal" means any bona fide proposal to acquire
directly or indirectly more than fifty percent (50%) of the Shares then
outstanding or all or substantially all of the assets of the Company or any
of its subsidiaries, and otherwise on terms that the Board of Directors of
the Company by a majority vote determines in its good faith judgment to be
more favorable to the Stockholders than the Merger.
Section 4.3 Third Party Confidentiality Agreements.
During the period from the date of this Agreement through the Effective Time,
the Company shall not terminate, amend, modify or waive any provision of any
confidentiality agreement to which the Company or any of its Subsidiaries is
a party (other than any involving Parent or Acquisition Sub). During such
period, the Company agrees to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including, but not
limited to, obtaining injunctions to prevent any breaches of such agreements
and to enforce specifically the terms and provisions thereof in any court of
the United States or any state thereof having jurisdiction.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of the Joint Proxy Statement/Prospectus and the
Registration Statement.
As promptly as reasonably practicable following the date hereof, Parent and
the Company shall cooperate in preparing and Parent shall cause to be filed
with the SEC mutually acceptable proxy materials and prospectus relating to
the matters to be submitted to the stockholders of the Company and Parent
for a vote in connection with the Merger and the transactions contemplated
hereby (such proxy materials and prospectus and any amendments or
supplements thereto, the "Joint Proxy Statement/Prospectus") and Parent
shall prepare and file with the SEC the Registration Statement. The Joint
Proxy Statement/Prospectus will be included as a prospectus in and will
constitute a part of the Registration Statement as Parent's prospectus.
Parent shall use its commercially reasonable efforts to have the Joint Proxy
Statement/Prospectus cleared by the SEC and the Registration Statement
declared effective by the SEC as soon after such filing as practicable and
to keep the Registration Statement effective as long as is necessary to
consummate the Merger and the transactions contemplated hereby. Each of
Parent and the Company shall, as promptly as practicable after receipt
thereof, provide the other party with copies of any written comments, and
advise each other of any oral comments, with respect to the Joint Proxy
Statement/Prospectus or Registration Statement received from the SEC. Prior
to the Effective Time, Parent shall use its commercially reasonable efforts
to obtain all necessary state securities law or "blue sky" approvals in
connection with the Merger and to consummate the other transactions
contemplated by this Agreement; provided, however, Parent shall not be
required to qualify to do business in any jurisdiction in which it is now
not so qualified. Each of Parent and the Company shall cooperate with one
another and shall furnish all information concerning itself as the other may
reasonably request in connection with such actions and the preparation of
the Registration Statement and Joint Proxy Statement/Prospectus. Parent
shall provide the Company with a reasonable opportunity to review and
comment on any amendment or supplement to the Joint Proxy
Statement/Prospectus and the Registration Statement prior to Parent filing
such with the SEC and Parent will provide the Company with a copy of all
such filings made with the SEC. Notwithstanding any other provision herein
to the contrary, no amendment or supplement (including by incorporation by
reference) to the Joint Proxy Statement/Prospectus or the Registration
Statement shall be made without the approval of both Parent and the Company,
which approval shall not be unreasonably withheld or delayed; provided, that,
with respect to documents filed by Parent, this right of approval shall
apply only with respect to information relating to the Company or its
business, financial condition or results of operations and with respect to
information which, in the reasonable judgment of the Company could
unreasonably delay or impair the ability of the parties to consummate the
transaction contemplated under this Agreement. Parent will use commercially
reasonable efforts to cause the Joint Proxy Statement/Prospectus to be
mailed to its stockholders, and the Company will use commercially reasonable
efforts to cause the Joint Proxy Statement/Prospectus to be mailed to the
Company stockholders, in each case, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, but
in no event later than three (3) Business Days after the Registration
Statement is declared effective. The Registration Statement shall register
for resale the shares of Parent Common Stock received in the Merger by each
affiliate (within the meaning of Rule 145 of the Securities Act) of the
Company that is not an affiliate (within the meaning of Rule 144 of the
Securities Act) of Parent and each Stockholder of the Company who will be,
immediately following the Effective Time, an affiliate of Parent and shall
include the information required by Item 7 of Form S-4 and Item 507 of
Regulation S-K under the Securities Act for the benefit of such affiliates
as selling stockholders of the number of shares of Parent Common Stock
received in the Merger. Each such selling stockholder shall agree to abide
by the provisions of Section 4 of the Registration Rights Agreement (as
defined herein). If required by applicable law, rules or regulations, after
the Effective Time, Parent shall file a post-effective amendment on Form S-3
to the Registration Statement (the "S-3 Amendment") which shall include a
resale prospectus for the selling stockholders of the number of shares of
Parent Common Stock received by them in the Merger, and Parent shall keep
the S-3 Amendment effective until the earliest of: (i) two (2) years after
the Effective Time, (ii) the date of final sale by the selling stockholders
of all shares of Parent Common Stock registered on the S-3 Amendment
("Registrable Resale Shares") or (iii) the date upon which all selling
stockholders' Registrable Resale Shares become saleable without registration
pursuant to Rule 144 under the Securities Act. If, at any time prior to the
Effective Time, any information relating to Parent or the Company, or any of
their respective affiliates, officers or directors, is discovered by Parent
or the Company and such information should be set forth in an amendment or
supplement to any of the Registration Statement or the Joint Proxy
Statement/Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, the party hereto discovering such
information shall promptly notify the other parties hereto and, to the
extent required by applicable law, rules or regulations, an appropriate
amendment or supplement describing such information shall be promptly filed
by Parent with the SEC and disseminated to the stockholders of Parent and
the Company.
Section 5.2 Stockholder Votes.
(a) The Company shall duly take all lawful action to call, give notice of,
convene and hold a stockholders meeting (the "Company Stockholders'
Meeting") to obtain the Company Stockholder Approval (as hereinafter
defined) as soon as practicable on a date determined in accordance with the
mutual agreement of Parent and the Company for the purpose of obtaining the
Company Stockholder Approval and, subject to Section 4.2, shall take all
lawful action, consistent with its fiduciary duties, to solicit the Company
Stockholder Approval. Subject to Section 4.2, the Board of Directors of the
Company shall recommend the adoption of this Agreement by the Stockholders.
(b) Parent shall duly take all lawful action to call, give notice of,
convene and hold a Parent stockholders meeting to obtain the Parent
Stockholder Approval as soon as practicable on a date determined in
accordance with the mutual agreement of Parent and the Company for the
purpose of obtaining the Parent Stockholder Approval and, shall take all
lawful action, consistent with its fiduciary duties, to solicit such
approval. The Board of Directors of Parent shall recommend the approval of
Share Issuance by the stockholders of Parent.
(c) Parent shall vote, or cause to be voted, all of the shares of capital
stock of Acquisition Sub or shall approve an action by written consent, in
favor of the adoption of this Agreement.
Section 5.3 Ancillary Agreements.
(a) The Company shall use its commercially reasonable efforts to deliver
prior to the Closing, lock-up agreements in connection with the shares of
Parent Common Stock being received by the Stockholders, in substantially the
form attached hereto as Exhibit F, executed by each of those Stockholders
listed on Exhibit G attached hereto (the "Significant Stockholders").
(b) During the Pre-Closing Period, the Company shall provide Parent with a
list identifying all persons who, at the Closing Date, may be deemed to be
"affiliates" of the Company as that term is used in paragraphs (c) and (d)
of Rule 145 under the Securities Act (the "Rule 145 Affiliates"). If
requested by Parent, the Company shall use its commercially reasonable
efforts to deliver to Parent prior to the Closing Date a written agreement,
in the form customary for such transactions, executed by each of the persons
on the list.
Section 5.4 Access to Information.
(a) Subject to currently existing contractual and legal restrictions
applicable to the Company or any of its Subsidiaries, the Company shall, and
shall cause each of its Subsidiaries to, afford to Parent and its
Subsidiaries and each of their accountants, counsel, financial advisors and
other representatives of Parent access during normal business hours, subject
to reasonable advance notice, and permit them to make such inspections as
they may reasonably require of, during the Pre-Closing Period, all of their
respective properties, books, contracts, commitments and records (including
engineering records and Tax Returns and the work papers of independent
accountants, if available and subject to the consent of such independent
accountants) and, during such period, the Company shall, and shall cause its
Subsidiaries to, (i) furnish promptly to Parent a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws,
(ii) consistent with its legal obligations, furnish promptly to Parent all
other information concerning its business, properties and personnel as
Parent may reasonably request, (iii) promptly make available to Parent
during normal business hours, subject to reasonable advance notice, all
personnel of the Company or any of its Subsidiaries knowledgeable about
matters relevant to such inspections as reasonably requested by Parent and
(iv) provide reasonable access during normal business hours, subject to
reasonable advance notice, to the Company's and its Subsidiaries' facilities
and operations to enable Parent to conduct a health and safety review of the
business, including the right to take samples. No investigation pursuant to
this Section 5.4(a) shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the
parties hereto. All information obtained by Parent pursuant to this Section
5.4(a) shall be kept confidential in accordance with that certain
Confidentiality Agreement, dated October 8,2003 between Parent and the
Company (the "Confidentiality Agreement").
(b) Subject to currently existing contractual and legal restrictions
applicable to Parent or any of its Subsidiaries, Parent shall, and shall
cause each of its Subsidiaries to, afford to the Company and its
Subsidiaries and each of their accountants, counsel, financial advisors and
other representatives of the Company access during normal business hours,
subject to reasonable advance notice, and permit them to make such
inspections as they may reasonably require of, during the Pre-Closing Period,
all of their respective properties, books, contracts, commitments and
records (including engineering records and Tax Returns and the work papers
of independent accountants, if available and subject to the consent of such
independent accountants) and, during such period, Parent shall, and shall
cause its Subsidiaries to, (i) furnish promptly to the Company a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state
securities laws, (ii) consistent with its legal obligations, furnish
promptly to the Company all other information concerning its business,
properties and personnel as the Company may reasonably request, (iii)
promptly make available to the Company during normal business hours, subject
to reasonable advance notice, all personnel of Parent or any of its
Subsidiaries knowledgeable about matters relevant to such inspections as
reasonably requested by the Company and (iv) provide reasonable access
during normal business hours, subject to reasonable advance notice, to
Parent's and its Subsidiaries' facilities and operations to enable the
Company to conduct a health and safety review of the business, including the
right to take samples. No investigation pursuant to this Section 5.4(b)
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto. All
information obtained by the Company pursuant to this Section 5.4(b) shall be
kept confidential in accordance with the Confidentiality Agreement.
Section 5.5 Termination of Agreements.
The Company hereby agrees to waive all rights under and use its commercially
reasonable efforts to cause to be terminated, effective in each case
immediately prior to the Effective Time, (a) the Amended and Restated
Stockholders Agreement, dated April 3, 2003, by and among the stockholders
named therein and the Company and (b) the Amended and Restated Registrations
Rights Agreement, dated April 3, 2003, by and among the stockholders named
therein and the Company.
Section 5.6 Fees and Expenses.
Whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants ("Transaction Expenses"), shall be paid by the party incurring
such costs and expenses.
Section 5.7 Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including: (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from,
or to avoid or vigorously defend an action or proceeding by, any
Governmental Entity (including those in connection with the HSR Act and
State Takeover Approvals), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any lawsuits
or other legal proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed, and (iv) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement. Each of the parties shall
use commercially reasonable efforts to respond as promptly as practicable to
(1) any inquiries or requests received from the Federal Trade Commission or
the Department of Justice for additional information or documentation and
(2) any inquiries or requests received from any state attorney general,
foreign antitrust authority or other Governmental Entity in connection with
antitrust or related matters. Each of the parties shall (A) give the other
party prompt notice of the commencement or threat of any legal proceeding by
or before any Governmental Entity with respect to the Merger or any of the
other transactions contemplated by this Agreement, (B) keep the other party
informed as to the status of any such legal proceeding or threat, and (C)
promptly inform the other party of any communication to or from the Federal
Trade Commission, the Department of Justice or any other Governmental Entity
regarding the Merger. No party to this Agreement shall consent to any
voluntary delay of the consummation of the Merger at the behest of any
Governmental Entity without the consent of the other parties to this
Agreement, which consent shall not be unreasonably withheld or delayed.
(b) Each party shall use all commercially reasonable efforts to not take
any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this Agreement,
in connection with any filing or submission required or action to be taken
by either Parent or the Company to effect the Merger and to consummate the
other transactions contemplated hereby, the Company shall not, without
Parent's prior written consent, commit to any divestiture transaction, and
neither Parent nor any of its Affiliates shall be required to divest or hold
separate or otherwise take or commit to take any action that limits its
freedom of action with respect to, or its ability to retain, the Company or
any of the businesses, product lines or assets of Parent or any of its
Subsidiaries or that otherwise would have a Material Adverse Effect on
Parent.
Section 5.8 Public Announcements; Confidentiality.
No party to this Agreement will issue any press release with respect to the
transactions contemplated by this Agreement or otherwise issue any written
public statements with respect to such transactions without prior
consultation with the other parties, except as may be required by Applicable
Law or by obligations pursuant to any listing agreement with or rules of any
national securities exchange. The Confidentiality Agreement shall continue
in full force and effect after the date hereof. Notwithstanding anything to
the contrary set forth herein, the parties to this Agreement acknowledge and
agree that any party to this Agreement (and any employee, shareholder,
representative or other agent of any party hereto) may disclose to any and
all persons without limitation of any kind, the tax treatment and tax
structure of the Merger and all materials of any kind (including opinions or
other tax analyses) that are provided to the party relating to such tax
treatment and tax structure; provided further however, that such disclosure
may not be made to the extent the restrictions on disclosure are reasonably
necessary to comply with any applicable federal or state securities laws;
provided further that (i) the "tax treatment" of the Merger means the
purported or claimed federal income tax treatment of the Merger, and (ii)
the "tax structure" of the Merger means any fact that may be relevant to
understanding the purported or claimed federal income tax treatment of the
Merger. The preceding sentence is intended to cause the Merger to be
treated as not having been offered under conditions of confidentiality for
purposes of Section 1.6011-4(b)(3) (or any successor provision) of the
Treasury Regulations promulgated under Section 6011 of the Code and shall be
construed in a manner consistent with such purpose.
Section 5.9 State Takeover Laws.
If any "fair price," "business combination" or "control share acquisition"
statute or other similar statute or regulation shall become applicable to
the transactions contemplated hereby, Parent and the Company and their
respective Boards of Directors shall use their commercially reasonable
efforts to grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to minimize
the effects of any such statute or regulation on the transactions
contemplated hereby.
Section 5.10 Indemnification; Directors and Officers Insurance.
(a) For a period of six (6) years from and after the Effective Time, Parent
shall, and shall cause the Surviving Corporation, to (i) indemnify and hold
harmless all past and present officers and directors of the Company or any
of its Subsidiaries ("Indemnified D&O's") to the same extent and in the same
manner such persons are indemnified as of the date of this Agreement by the
Company pursuant to the DGCL, the Company Certificate of Incorporation and
the Company's Bylaws and in any agreement with the Company listed in Section
5.10 of the Company Disclosure Schedule (the "Indemnification Agreements"),
for acts or omissions occurring at or prior to the Effective Time (including
indemnifying and holding harmless such persons for acts or omissions
occurring at or prior to the Effective Time in respect of the Merger and the
transactions contemplated thereby), and (ii) pay the expenses of any such
action, suit or proceeding in advance of a final determination thereof to
the same extent and in the same manner as such expenses are to be paid
pursuant to the DGCL and the Company Certificate of Incorporation and
Company Bylaws and the Indemnification Agreements, upon receipt of a written
undertaking reasonably satisfactory to Parent in form and substance to repay
any advanced expenses an indemnitee may receive that as a result of a final
disposition of such matter he or she was not entitled to under the DGCL, the
Company Certificate of Incorporation or the Company's Bylaws.
(b) Nothing contained herein shall make Parent, Acquisition Sub, the
Company or the Surviving Corporation an insurer, a co-insurer or an excess
insurer in respect of any insurance policies for Losses (as hereinafter
defined) addressed by this Section 5.10 in relation to the Indemnified D&O's,
nor shall this Section 5.10 relieve the obligations of any insurer in
respect thereto.
(c) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified D&O's and their respective heirs and
legal representatives.
(d) For a period of six (6) years after the Effective Time, Parent will
maintain or cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those
persons who, as of immediately prior to the Effective Time, are covered by
the Company's directors' and officers' liability insurance policy (the
"Insured Parties") on terms no less favorable to the Insured Parties than
those of the Company's present directors' and officers' liability insurance
policy; provided, however, that in no event will Parent or the Surviving
Corporation be required to expend in excess of 250% of the annual premium
currently paid by the Company for such coverage (or such coverage as is
available for such annual premium); provided further, that in lieu of
maintaining such existing insurance as provided above, Parent may cause
coverage to be provided under any policy maintained for the benefit of
Parent or any of its Subsidiaries, so long as the terms are not materially
less advantageous to the intended beneficiaries thereof than such existing
insurance.
Section 5.11 Notification of Certain Matters.
Parent shall use its commercially reasonable efforts to give prompt notice
to the Company, and the Company shall use its commercially reasonable
efforts to give prompt notice to Parent, of: (i) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of which it is
aware and which would be reasonably likely to cause (x) any representation
or warranty contained in this Agreement and made by it to be untrue or
inaccurate in any material respect or (y) any covenant, condition or
agreement contained in this Agreement and made by it not to be complied with
or satisfied in all material respects, (ii) any failure of Parent or the
Company, as the case may be, to comply in a timely manner with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to
have a Material Adverse Effect on Parent or the Company, as the case may be;
provided, however, that the delivery of any notice pursuant to this Section
5.11 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.12 Company 401(k) Plans.
If directed by Parent in writing at least twenty (20) Business Days prior to
the Effective Time, the Company shall terminate all Company Plans that
include an arrangement described in Section 401(k) of the Code effective as
of the day prior to the Closing Date, subject to the receipt of all
regulatory and governmental approvals.
Section 5.13 Employee Benefits.
Parent agrees that all employees of the Company or any of its Subsidiaries
who continue employment with Parent or the Surviving Corporation after the
Effective Time ("Continuing Employees") shall for a period of at least two
(2) years following the Closing Date be eligible to receive retirement,
health, vacation and other non-equity based employee benefits substantially
equivalent in the aggregate to such benefits provided by Parent to similarly
situated employees of Parent and its Subsidiaries. With respect to such
benefits, credit for service accrued by Continuing Employees (and eligible
dependents) for employment with the Company or any of its Subsidiaries prior
to the Effective Time shall be recognized (except to the extent that would
result in duplication of benefits), and, to the extent consistent with the
applicable employee benefit plan and any insurance contracts, any pre-
existing condition limitations (to the extent such limitations did not apply
to a pre-existing condition under a similar or corresponding Company benefit
plan) and eligibility waiting periods applicable to any Continuing Employee
of the Company or any of its Subsidiaries under any group health plan shall
be waived and employees shall be given credit for amounts paid under any
similar or corresponding Company benefit plan during the same period for
purposes of applying deductibles, co-payments and out-of-pocket maximums as
though such amounts had been paid in accordance with the terms and
conditions of the applicable Company benefit plan. Nothing in this Section
5.13 or elsewhere in this Agreement shall be construed to create a right in
any employee of the Company or any of its Subsidiaries to employment with
Parent, the Surviving Corporation, or any other Subsidiary of Parent and,
subject to any other binding written agreement between an employee and
Parent or the Surviving Corporation, the employment of each Continuing
Employee shall be "at will" employment, nor shall this Section 5.13 be
deemed to require the Parent or the Surviving Corporation to provide any
particular employee benefits.
Section 5.14 Section 16 Relief.
The Board of Directors of Parent, or a committee of two or more Non-Employee
Directors thereof (as such term is defined for purposes of Rule 16b-3 under
the Exchange Act), shall adopt resolutions prior to the consummation of the
Merger providing that the receipt by those officers and directors of the
Company who will be subject to the reporting requirements of Section 16(b)
of the Exchange Act with respect to Parent (the "Company Insiders") of the
Parent Common Stock upon conversion of the Company Shares, and of options
for Parent Common Stock upon assumption of the Company Options, in each case
pursuant to the transactions contemplated hereby, are intended to be exempt
from liability pursuant to Section 16(b) under the Exchange Act. Such
resolutions shall comply with the approval conditions of Rule 16b-3 under
the Exchange Act for purposes of such Section 16(b) exemption, including,
but not limited to, specifying the name of the Company Insiders, the number
of securities to be acquired or disposed of for each such person, the
material terms of any derivative securities, and that the approval is
intended to make the receipt of such securities exempt pursuant to Rule 16b-
3(d).
Section 5.15 S-8 Registration Statement.
Within ten (10) Business Days after the Effective Time, Parent shall file a
registration statement on Form S-8 with the SEC covering the issuance of all
shares of Parent Common Stock issuable upon exercise of any Company Option
assumed by Parent in connection with the Merger.
Section 5.16 Acceleration of Unvested Securities.
Effective immediately prior to the Effective Time, the Company shall
accelerate in full the vesting of all outstanding unvested Company Options
and any Company Shares which remain subject to a repurchase option, risk of
forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with the Company. The Company shall use its
commercially reasonable efforts to facilitate the exercise of all vested in-
the-money Company Options prior to the Effective Time.
Section 5.17 Collection and Sales Efforts Post-Closing
After the Closing, Parent shall cause the Company to continue to conduct
collection activities in connection with accounts receivable and sales of
inventory with no less diligence and effort than the Company currently
applies to such matters.
ARTICLE VI
INDEMNITY
Section 6.1 General Survival.
The parties agree that, regardless of any investigation made by the parties,
the representations and warranties of the parties contained in this
Agreement, except for those contained in Section 3.8, shall survive the
execution and delivery of this Agreement for a period beginning on the date
hereof and ending at 5:00 p.m., California time, on that date which is the
same date of the month as the Closing Date in the month which is the
fifteen-month anniversary of the Closing Date. The representations and
warranties of the Company contained in Section 3.8 shall survive the
execution and delivery of this Agreement for a period beginning on the date
hereof and ending at 5:00 p.m., California time, on that date which is the
same date of the month as the Closing Date in the month which is the two (2)
year anniversary of the Closing Date. All of the covenants, agreements and
obligations of the parties contained in this Agreement or any other document,
certificate, schedule or instrument delivered or executed in connection
herewith shall survive (i) until fully performed or fulfilled, unless non-
compliance with such covenants, agreements or obligations is waived in
writing by the party or parties entitled to such performance or (ii) if not
fully performed or fulfilled, until the expiration of the relevant statute
of limitations.
Section 6.2 Indemnification.
(a) Indemnity by Stockholders.
(i) Subject to the limitations set forth in Sections 6.1, 6.2(c) and
6.2(d), from and after the Effective Time, Parent, Acquisition Sub, the
Company and their respective affiliates, officers, directors, employees,
stockholders, representatives and agents (collectively the "Parent
Indemnitees") shall be indemnified and held harmless out of the Escrow Fund
then available pursuant to the Escrow Agreement, from and against and in
respect of any and all Losses (as defined below) incurred or suffered by any
Parent Indemnitee arising out of or in connection with any inaccuracy in or
breach of any of the Company's representations, warranties, covenants or
agreements (in the case of covenants and agreements to be performed by the
Company, to the extent of performance or non-performance prior to the
Closing Date) contained in this Agreement.
(ii) For purposes of this Agreement, the term, "Losses" means any and all
deficiencies, judgments, settlements, assessments, liabilities, losses,
damages, fines, penalties, expenses (including reasonable legal, accounting
and other costs and expenses of professionals) or costs incurred or suffered
by any Indemnitee (as hereinafter defined), in connection with investigating,
defending, settling or satisfying any and all demands, claims, actions,
causes of action, suits, proceedings, assessments, judgments or appeals and
in seeking indemnification therefor, and interest on any of the foregoing
from the date incurred until paid at the prime rate published from time to
time by Citibank, N.A; provided, however, that "Losses" shall not include
any punitive damages. For purposes of this Agreement, the term "Transaction
Documents" means this Agreement.
(b) Indemnity by Parent. Subject to Section 6.1, 6.2(c) and 6.2(d) hereof,
from and after the Effective Time, the Stockholders and their respective
affiliates, officers, directors, stockholders, representatives and agents
(collectively the "Stockholder Indemnitees" and together with the Parent
Indemnitees, collectively, the "Indemnitees") shall be indemnified and held
harmless by each of Parent and the Company from and against and in respect
of any and all Losses incurred by or imposed upon any Stockholder Indemnitee
arising out of or in connection any inaccuracy in or breach of any of the
representations, warranties, covenants or agreements of Parent or the
Company contained in this Agreement. Any payments by Parent or the Company
pursuant to this Section 6.2 shall be made in shares of Parent Common Stock
valued at the Average Parent Share Price on the date of such payment.
(c) Thresholds. No Indemnitee shall be entitled to indemnification
pursuant to Section 6.2(a) or Section 6.2(b) for any Losses until the
aggregate amount of all Losses under all claims of all Parent Indemnitees,
on the one hand, or all Stockholder Indemnitees, on the other, for all such
breaches shall exceed the Threshold (as hereinafter defined), at which time
only Losses incurred in excess of the Threshold shall be subject to
indemnification hereunder. The "Threshold" shall be one hundred thousand
dollars ($100,000). Notwithstanding anything to the contrary contained
herein, all amounts due to Parent pursuant to the Working Capital Adjustment
set forth in Section 1.9 hereof shall not be subject to the provisions of
this Section 6.2(c).
(d) Maximum Liability. Notwithstanding anything to the contrary in this
Agreement, the maximum aggregate amount of Losses recoverable (i) by the
Parent Indemnitees pursuant to Section 6.2(a) and (ii) by the Stockholder
Indemnitees pursuant to Section 6.2(b) shall be eight million dollars
($8,000,000).
Section 6.3 Manner of Indemnification.
(a) Claims of indemnification by any Parent Indemnitee under this Article
VI (an "Indemnification Claim") shall be paid solely and exclusively from
the Escrow Fund withheld and deposited into an escrow pursuant to the Escrow
Agreement in accordance with Section 1.6. The Escrow Fund so deposited
shall be held and distributed in accordance with the Escrow Agreement.
(b) Each Indemnification Claim with respect to the Escrow Fund shall be
made only in accordance with this Article VI and the Escrow Agreement and
all other Indemnification Claims shall be made only in accordance with this
Article VI (as applicable).
Section 6.4 Stockholder Representative.
By voting to approve the Merger or accepting the Merger Consideration, the
Stockholders shall AUTOMATICALLY BE DEEMED TO HAVE APPOINTED ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇ AS THE REPRESENTATIVE AND ATTORNEY-IN-FACT OF THE STOCKHOLDERS OR
STOCKHOLDER REPRESENTATIVE (the "Stockholder Representative"). The
Stockholder Representative has unlimited authority and power to act on
behalf of each Stockholder with respect to this Agreement and the Escrow
Agreement and the disposition, settlement or other handling of all
Indemnification Claims, rights or obligations arising from and taken
pursuant to this Agreement. The Stockholders will be bound by all actions
taken by the Stockholder Representative in connection with this Agreement or
the Escrow Agreement, and Parent and the Company shall be entitled to rely
on any action or decision of the Stockholder Representative. The
Stockholder Representative will incur no liability with respect to any
action taken or suffered by him in reliance upon any notice, direction,
instruction, consent, statement or other document believed by him to be
genuine and to have been signed by the proper person (and shall have no
responsibility to determine the authenticity thereof), nor for any other
action or inaction, except his own willful misconduct or gross negligence.
In all questions arising under this Agreement or the Escrow Agreement, the
Stockholder Representative may rely on the advice of counsel, and the
Stockholder Representative will not be liable to Stockholders for anything
done, omitted or suffered in good faith by the Stockholder Representative
based on such advice. The Stockholder Representative will not be required
to take any action involving any expense unless the payment of such expense
is made or provided for in a manner satisfactory to him. At any time prior
to the mailing of the Proxy Statement in connection with the Company
Stockholders' Meeting, the Stockholder Representative may be changed by
written notice to Parent from the board of directors of the Company. At any
time during the term of the Escrow Agreement, holders of a majority in
interest of the Escrow Fund can appoint a new Stockholder Representative by
written consent by sending notice and a copy of the written consent
appointing such new Stockholder Representative signed by holders of a
majority in interest of the Escrow Fund to Parent and the Escrow Agent.
Such appointment will be effective upon the later of the date indicated in
the consent or the date such consent is received by Parent or the Company
and the Escrow Agent.
Section 6.5 Third-Party Claims.
(a) If an Indemnitee becomes aware of a third-party claim that the
Indemnitee believes, in good faith, may result in an Indemnification Claim
by it, the Indemnitee shall notify the Stockholder Representative in the
event of claims pursuant to Section 6.2(a), or Parent, in the event of claim
pursuant to Section 6.2(b) (each, an "Indemnitee") of such claim, and the
Indemnitor shall be entitled to participate in any defense at the sole cost
and expense of the Indemnitor. If (i) the claim is primarily for non-
monetary damages (other than penalties payable to a Governmental Entity),
(ii) the claim relates to a dispute with any customer of the Company's
business, (iii) the results of such claim would likely materially interfere
with Parent's business or the Company's business, (iv) the Stockholders are
not solely liable for any damages pursuant to the claim (the claims
described in (i), (ii), (iii), and (iv) are collectively referred to as
"Buyer-Controlled Claims") or (v) the Stockholder Representative declines to
defend such third-party claim pursuant to paragraph (b) hereof, then Parent
or the Company, as applicable, shall conduct and control such defense, but
shall not settle any such claim without the consent of the Stockholder
Representative, such consent not to be unreasonably withheld or delayed;
provided, however, that, if the consent of the Stockholder Representative is
so obtained, such settlement of that portion of any such claim shall alone
be determinative of the amount of the Indemnification Claim and neither the
Stockholder Representative nor any other Stockholder shall have any power or
authority to object under any provision of this Article VI to the amount of
any demand by Parent or the Company for indemnification with respect to such
settlement.
(b) For claims other than Buyer-Controlled Claims, and upon written notice
to the Indemnitee within 10 days of the notice provided for in the first
sentence of paragraph (a) above, the Indemnitor shall have the right to
defend, with counsel reasonably satisfactory to Indemnitee, at the sole cost
and expense of the Indemnitor, such third party claim by all appropriate
proceedings, which proceedings will be vigorously and diligently prosecuted
by the Stockholder Representative to a final conclusion or will be settled
at the discretion of the Indemnitor (but only with the prior written consent
of the Indemnitee, which consent will not be unreasonably withheld or
delayed, but with it being agreed by the parties that the Indemnitor's
inability to pay any portion of any settlement amount is a reasonable factor
for which the Indemnitee may withhold such consent); provided, however, that,
if the consent of the Indemnitee is so obtained, such settlement of that
portion of any such claim shall alone be determinative of the amount of the
Indemnification Claim and the Indemnitor shall not have any power or
authority to object under any provision of this Article VI to the amount of
any demand by the Indemnitee for indemnification with respect to such
settlement. The Indemnitee shall be entitled to participate in (but not
control) the defense of any such action, with its own counsel and at its own
expense, and shall be entitled to any and all information or documentation
relating to such defense.
Section 6.6 Exclusive Remedy.
(a) Notwithstanding any other provision of this Agreement to the contrary,
the Escrow Fund shall be the sole and exclusive remedy of the Parent
Indemnitees from and after the Effective Time for any claims arising under
this Agreement and shall constitute a cap and limitation on Parent
Indemnitees' remedies under this Agreement, including any claims of breach
of any representation, warranty, covenant or agreement in this Agreement.
(b) If the Closing occurs, then the indemnification under this Article VI
shall be the parties' sole and exclusive remedy, each against the other, for
recoveries of monetary damages with respect to misrepresentations and
breaches and failures to comply with or non-fulfillment of the
representations and warranties, covenants and agreements in this Agreement
(except for matters of fraud, and except for any claim by the Stockholders
for a failure of Parent to pay the Merger Consideration).
Section 6.7 Waiver of Defenses.
To the maximum extent permitted by law, each indemnifying party waives
(a) any claim or defense that the indemnity provided for herein or any other
provision of any Transaction Document does not constitute an enforceable
obligation of the indemnifying party as a matter of Applicable Law, provided
that the foregoing shall not constitute a waiver of any claim or defense
regarding the merits of any particular Indemnification Claim and (b) any
immunity in respect of actions seeking to enforce any Transaction Document
in accordance with its terms that it may now or hereafter be entitled to
claim on grounds of sovereignty or an act of State.
Section 6.8 Treatment of Indemnity Payments.
To the extent permitted by applicable law, all indemnity payments made to
Parent in the form of cash will be treated as a contribution by the
indemnifying Stockholders to the capital of the Company immediately prior to
the consummation of the transactions contemplated hereby, all indemnity
payments made to Parent in the form of Parent Common Stock will be, and will
be treated as, an adjustment to the Merger Consideration, and all indemnity
payments made to Stockholder Indemnitees will be, and will treated as, an
adjustment to the Merger Consideration.
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have been duly
adopted and the Certificate Amendment shall have been duly approved, in each
case, by the requisite vote of stockholders of the Company in accordance
with Applicable Law, the Company Certificate and the Company's Bylaws (the
"Company Stockholder Approval").
(b) Parent Stockholder Approval. The Share Issuance shall have been duly
approved by the requisite vote of stockholders of Parent in accordance with
Applicable Law (including, without limitation, the rules and regulations of
NASDAQ), the Parent Certificate of Incorporation and the Parent Bylaws (the
"Parent Stockholder Approval").
(c) No Order. No court or other Governmental Entity having jurisdiction
over the Company or any of its Subsidiaries, Parent or Acquisition Sub,
shall have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and has the
effect of, directly or indirectly, restraining, prohibiting or restricting
the Merger or any of the transactions contemplated hereby; provided, however,
that the provisions of this Section 7.1(c) shall not be available to any
party whose failure to fulfill its obligations pursuant to Section 5.7 shall
have been the cause of, or shall have resulted in, the enforcement or
entering into of any such law, rule, regulation, executive order, decree,
injunction or other order.
(d) HSR and Other Approvals/Consents or Waivers.
(i) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(ii) All authorizations, consents, orders, declarations or approvals of,
or filings with, or terminations or expirations of waiting periods imposed
by, any Governmental Entity, which the failure to obtain, make or occur
would have the effect of, directly or indirectly, restraining, prohibiting
or restricting the Merger or any of the transactions contemplated hereby or
would have, individually or in the aggregate, a Material Adverse Effect on
Parent (assuming the Merger had taken place), shall have been obtained,
shall have been made or shall have occurred.
(e) Registration Statement. The Registration Statement shall have been
declared and continue to be effective in accordance with the provisions of
the Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose shall have been initiated or, to the knowledge of Parent or
the knowledge of the Company, threatened by the SEC.
(f) Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing (subject to official notice of
issuance) on the NASDAQ.
Section 7.2 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger shall be subject to the
satisfaction or written waiver by the Company at or prior to the Effective
Time of each of the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. (i) Each
of Parent and Acquisition Sub shall have performed in all material respects
each of its agreements and covenants contained in this Agreement required to
be performed on or prior to the Effective Time, (ii) each of the
representations and warranties of Parent and Acquisition Sub contained in
this Agreement shall have been true and correct on and as of the date of
this Agreement and on and as of Effective Time as if made as of such time
(other than representations and warranties which address matters only as of
a certain date other than the date hereof, which shall be true and correct
as of such certain date), except that any inaccuracies in such
representations and warranties will be disregarded if, after aggregating all
inaccuracies of such representations and warranties as of the date of this
Agreement and as of the Effective Time (without duplication), such
inaccuracies do not constitute a Material Adverse Effect on Parent as of the
Effective Time (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other materiality qualifications contained in
such representations and warranties shall be disregarded). The Company
shall have received certificates signed on behalf of each of Parent and
Acquisition Sub by one of its officers to such effect.
(b) Escrow Agreement. Parent and Escrow Agent shall have executed and
delivered the Escrow Agreement.
(c) Registration Rights Agreement. Parent shall have executed and
delivered the Registration Rights Agreement in the form of Exhibit H.
(d) Consent of Parent Lender/Pay-Off of Credit Facility. Parent shall have
obtained any necessary consents or approvals of its lenders under that
certain credit facility with US Bank, National Association, in connection
with the Merger and the transactions contemplated herein or paid in full all
outstanding obligations under such credit facility and terminated such
credit facility in accordance with its terms.
Section 7.3 Conditions to Obligations of Parent and Acquisition Sub.
The obligations of Parent and Acquisition Sub to effect the Merger shall be
subject to the satisfaction or written waiver by Parent at or prior to the
Effective Time of each of the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. (i) The
Company shall have performed in all material respects each of its covenants
and agreements contained in this Agreement required to be performed on or
prior to the Effective Time, and (ii) each of the representations and
warranties of the Company contained in this Agreement, as amended by the
Company Disclosure Schedule, shall have been true and correct when made, and
shall be true and correct on and as of the date of this Agreement and on and
as of the Effective Time as if made as of such time (other than
representations and warranties which address matters only as of a certain
date other than the date hereof, which shall be true and correct as of such
certain date), except that any inaccuracies in such representations and
warranties (other than the representations and warranties contained in
Section 3.5(b), which shall be true and correct in all material respects as
of such date) will be disregarded if, after aggregating all inaccuracies of
such representations and warranties as of the date of this Agreement and as
of the Effective Time (without duplication), such inaccuracies do not
constitute a Material Adverse Effect on the Company as of the Effective Time
(it being understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect"
qualifications and other materiality qualifications contained in such
representations and warranties shall be disregarded). Parent shall have
received a certificate signed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer to such effect.
(b) Consents. The Company shall have obtained the consent or approval of
each person or Governmental Entity listed on Schedule 7.3(b), except as to
which the failure to obtain such consents and approvals would not, in the
reasonable opinion of Parent, individually or in the aggregate, have a
Material Adverse Effect on the Company or Acquisition Sub or upon the
consummation of the transactions contemplated in this Agreement.
(c) Escrow Agreement. The Company and Escrow Agent shall have executed and
delivered the Escrow Agreement.
(d) Director and Officer Resignations. All of the directors of the Company
and any officers thereof designated by Parent, shall have tendered their
resignations in form and substance satisfactory to Parent.
(e) Certificate Amendment. The Certificate Amendment shall have been
approved by the Company's stockholders and filed with and accepted by the
Secretary of State of the State of Delaware and the Company shall have
provided Parent with a copy of such filing certified by the office of the
Secretary of State of the State of Delaware.
(f) Director and Officer Loans. Those loans made to directors and/or
officers of the Company as listed in Section 3.23 of the Company Disclosure
Schedules must be paid in full.
(g) Lock-Ups. Each of the Stockholders listed on Exhibit A shall have
executed and delivered lock-up agreements in the form attached hereto as
Exhibit F in connection with the shares of Parent Common Stock being
received by such Stockholders.
(h) Existing Registration Rights Agreement. That certain Registration
Rights Agreement, dated as of April 3, 2003, by and among the Company and
the holders of the Series A Preferred Stock and the Series B Preferred Stock
shall have been terminated pursuant to its terms and be of no further force
or effect or shall have been amended to make its terms expressly not
applicable to any equity securities of Parent or Acquisition Sub.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after any approval of the matters presented in connection
with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party shall have failed to
comply in any material respect with any of its covenants or agreements
contained in this Agreement required to be complied with prior to the date
of such termination, which failure to comply has not been cured within
fifteen (15) Business Days following receipt by such other party of written
notice of such failure to comply;
(c) by Parent if (i) there has been a breach of a representation or
warranty of the Company that gives rise to a failure of the fulfillment of a
condition of Parent's and Acquisition Sub's obligations to effect the Merger
pursuant to Section 7.3(a), which breach has not been cured within fifteen
(15) Business Days following receipt by the breaching party of written
notice of the breach; (ii) the Company's Board of Directors shall have
submitted or recommended to the Stockholders a Superior Proposal; (iii) the
Company's Board of Directors shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of this Agreement or the
Merger; or (iv) the Company shall have willfully and deliberately breached
its obligations under Section 4.2;
(d) by the Company if (i) there has been a breach of a representation or
warranty of Parent or Acquisition Sub that gives rise to a failure of the
fulfillment of a condition of the Company's obligations to effect the Merger
pursuant to Section 7.2(a), which breach has not been cured within fifteen
(15) Business Days following receipt by the breaching party of written
notice of the breach, (ii) the Company receives a Superior Proposal and
resolves to accept a Superior Proposal, but only if the Company has paid all
amounts due to Parent pursuant to Section 8.2(b) or (iii) Parent's Board of
Directors shall have withdrawn or modified in a manner adverse to the
Company its approval or recommendation of the Share Issuance;
(e) by either Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on June 30, 2004; provided,
however, that the right to terminate this Agreement pursuant to this Section
8.1(e) shall not be available to any party whose failure to fulfill any of
its obligations contained in this Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or prior to the
aforesaid date; or (ii) any court or other Governmental Entity having
jurisdiction over a party hereto shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties shall have used their reasonable efforts to resist,
resolve or lift, as applicable, subject to the provisions of Section 5.7)
permanently enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable;
(f) by either Parent or the Company if (i) the Company Stockholders'
Meeting (including any adjournments and postponements thereof) shall have
been held and completed and the Company's stockholders shall have taken a
final vote on a proposal to adopt this Agreement, and (ii) this Agreement
shall not have been adopted at the Company Stockholders' Meeting (and shall
not have been adopted at any adjournment or postponement thereof) by the
vote of the stockholders of the Company required by applicable law; provided,
however, that the right to terminate this Agreement under this Section
8.1(f) shall not be available to the Company where the failure to obtain the
Company stockholder approval shall have been caused by the action or failure
to act of the Company and such or failure to act constitutes a material
breach of this Agreement;
(g) by either Parent or the Company if (i) the Parent stockholders' meeting
(including any adjournments and postponements thereof) shall have been held
and completed and Parent's stockholders shall have taken a final vote on a
proposal to approve the Share Issuance, and (ii) this Share Issuance shall
not have been approved at the Parent stockholders' meeting (and shall not
have been adopted at any adjournment or postponement thereof) by the vote of
the stockholders of Parent required by applicable law; provided, however,
that the right to terminate this Agreement under this Section 8.1(g) shall
not be available to Parent where the failure to obtain the Parent
stockholder approval shall have been caused by the action or failure to act
of Parent and such action or failure to act constitutes a material breach of
this Agreement.
Section 8.2 Effect of Termination.
(a) In the event of termination of this Agreement by either Parent or the
Company, as provided in Section 8.1, this Agreement shall forthwith become
void and there shall be no liability hereunder on the part of the Company,
Parent or Acquisition Sub or their respective stockholders, officers or
directors (except for any provisions in this Agreement that expressly
provide for their survival of the termination of this Agreement, including,
without limitation, the obligations to pay certain damages provided in this
Section 8.2); provided, however, that nothing contained in this Section 8.2
shall relieve any party hereto from any liability for any willful breach of
a representation or warranty contained in this Agreement or the willful
breach of any covenant contained in this Agreement.
(b) If this Agreement is terminated
(A) by Parent pursuant to Section 8.1(c)(ii), 8.1(c)(iii) or 8.1(c)(iv),
(B) by Parent or the Company pursuant to Section 8.1(f), only if at the
time of the Company Stockholders' Meeting, a Third Party Acquisition
proposal has been publicly disclosed and not withdrawn, or
(C) by the Company pursuant to Section 8.1(d)(ii),
then the Company shall pay to Parent by wire transfer in immediately
available funds two million dollars ($2,000,000) as a non-refundable fee
within five (5) Business Days after the occurrence of the event described in
Section 8.1 giving rise to such fee. It is specifically agreed that the
amount to be paid pursuant to this Section 8.2(b) represents liquidated
damages and not a penalty. The Company hereby waives any right to set-off
or counterclaim against such amount.
(c) If (A) this Agreement is terminated and has resulted in a payment by
the Company to Parent pursuant to Section 8.2(b), and (B) within fifteen
(15) months thereafter, the Company consummates a Third Party Acquisition,
then the Company shall pay to Parent by wire transfer in immediately
available funds an additional one million dollars ($1,000,000) as a non-
refundable fee within five (5) Business Days after the occurrence of the
event described in clause (B) above. It is specifically agreed that the
amount to be paid pursuant to this Section 8.2(c) represents liquidated
damages and not a penalty. The Company hereby waives any right to set-off
or counterclaim against such amount.
(d) If this Agreement is terminated by Parent or the Company pursuant to
Section 8.1(f) in circumstances other than those described in Section
8.2(b)(B), then the Company shall pay to Parent by wire transfer in
immediately available funds one million five hundred thousand dollars
($1,500,000) as a non-refundable fee within five (5) Business Days after the
occurrence of the event described in Section 8.1(f) giving rise to such fee.
It is specifically agreed that the amount to be paid pursuant to this
Section 8.2(d) represents liquidated damages and not a penalty. The Company
hereby waives any right to set-off or counterclaim against such amount.
(e) If this Agreement is terminated by Parent or the Company pursuant to
Section 8.1(g), then Parent shall pay to the Company by wire transfer in
immediately available funds one million five hundred thousand dollars
($1,500,000) as a non-refundable fee within five (5) Business Days after the
occurrence of the event described in Section 8.1(g) giving rise to such fee.
It is specifically agreed that the amount to be paid pursuant to this
Section 8.2(e) represents liquidated damages and not a penalty. Parent
hereby waives any right to set-off or counterclaim against such amount.
(f) If this Agreement is terminated by the Company pursuant to Section
8.1(d)(iii), then Parent shall pay to the Company by wire transfer in
immediately available funds one million five hundred thousand dollars
($1,500,000) as a non-refundable fee within five (5) Business Days after the
occurrence of the event described in Section 8.1(d)(iii) giving rise to such
fee. It is specifically agreed that the amount to be paid pursuant to this
Section 8.2(f) represents liquidated damages and not a penalty. Parent
hereby waives any right to set-off or counterclaim against such amount.
(g) If this Agreement is terminated by Parent pursuant to Section 8.1(c)(i)
as the result of a willful and deliberate breach by the Company and if (1)
Parent is not then in material breach of any of its obligations under this
Agreement, (2) the Company has received a Third Party Acquisition proposal
and (3) within fifteen (15) months thereafter, the Company consummates a
Third Party Acquisition, then, the Company shall pay to Parent by wire
transfer in immediately available funds three million dollars ($3,000,000)
as a non-refundable fee within five Business Days after the consummation of
the Third Party Acquisition referred to in clause (3) of the immediately
preceding sentence. It is specifically agreed that the amount to be paid
pursuant to this Section 8.2(g) represents liquidated damages and not a
penalty. The Company hereby waives any right to set-off or counterclaim
against such amount.
(h) Upon the termination of this Agreement under circumstances in which the
payments pursuant to Section 8.2(b), Section 8.2(d), Section 8.2(e), Section
8.2(f) or Section 8.2(g) become payable, in addition to any other remedies
that the parties may have as a result of such termination, the non-
terminating party shall reimburse the terminating party, upon submission of
one or more statements therefore, accompanied by reasonable supporting
documentation, for the amount of all documented costs, fees and expenses
reasonably incurred by or on behalf of the terminating party in connection
with this Agreement, the Merger and the consummation of all transactions
contemplated by this Agreement (including filing fees, and fees payable to
printers, legal counsel, brokers, finders, financial and other service
providers) up to a maximum of four hundred thousand dollars ($400,000).
(i) Solely for purposes of this Section 8.2 "Third Party Acquisition" means
the occurrence of any of the following events: (i) the acquisition of all
equity interest of the Company by merger or otherwise by any person (which
includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) other than Parent, Acquisition Sub or any affiliate thereof (a
"Third Party"); (ii) the acquisition by a Third Party of all or
substantially all of the assets of the Company and its subsidiaries; or
(iii) the acquisition by a Third Party of fifty percent (50%) or more of the
outstanding Shares.
Section 8.3 Amendment.
This Agreement may not be amended other than by an instrument in writing
signed on behalf of each of the parties hereto, which such amendment may be
made at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company.
Section 8.4 Waiver.
At any time prior to the Effective Time, the parties hereto may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein which may legally be waived. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. No delay on the
part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the
part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. Unless otherwise provided, the rights
and remedies herein provided are cumulative and are not exclusive of any
rights or remedies which the parties hereto may otherwise have at law or in
equity. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of
those rights. A party's waiver of a condition to Closing set forth in
Sections 7.2 or 7.3 shall not operate as a waiver of any of such party's
rights to indemnification pursuant to Article VI in connection with the
breach of any representation, warranty, covenant or agreement that resulted
in the failure of such condition.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Notices.
All notices and other communications hereunder shall be in writing and shall
be deemed given when delivered personally, one day after being delivered to
an overnight courier or when telecopied (with a confirmatory copy sent by
overnight courier) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Acquisition Sub, to:
California Amplifier, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
Attn: Chief Executive Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: 213-229-6595
(b) if to the Company, to:
Vytek Corporation
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
(c) if to the Stockholder Representative, to:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given upon receipt, and (iii)
if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is
received by any other Person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information
for the purpose of notices to that party by giving notice specifying such
change to the other party hereto.
Section 9.2 Interpretation.
(a) When a reference is made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(b) "Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other legal entity of which Parent or Company, as
the case may be (either alone or through or together with any other
Subsidiary), owns or controls, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body
of such corporation, partnership, limited liability company, joint venture
or other legal entity.
(c) "Business Day" means any day other than a Saturday, Sunday, Federal
holiday or day on which banks in Los Angeles are required or permitted by
law to be closed.
(d) "Company's knowledge" or "knowledge of the Company" means the actual
knowledge of the individuals set forth on Schedule 9.2(d) of the Company
Disclosure Schedule.
(e) "Parent's knowledge" or "knowledge of Parent" means the actual
knowledge of the individuals set forth on Schedule 9.2(e) of the Parent
Disclosure Schedule.
(f) "Person" means any natural person, corporation, limited liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, union, association or Governmental Entity.
(g) "actual knowledge" means such individual is aware of the facts,
circumstances, events or other matters at issue. Any such individual will
also be deemed to have actual knowledge of any facts, circumstances, events
or other matters that are contained in any books and records of such persons.
Section 9.3 Counterparts.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one
or more counterparts have been signed by each of the parties and delivered
to the other parties.
Section 9.4 Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Confidentiality Agreement constitute the entire
agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
hereof. Except for Section 5.10 and Section 5.13, this Agreement is not
intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
Section 9.5 Governing Law.
Except to the extent that the laws of the State of Delaware are mandatorily
applicable to the Merger, this Agreement and any disputes arising hereunder
or controversies with respect to the transactions contemplated hereby shall
be governed by, and construed in accordance with, the laws of the State of
California, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Section 9.6 Assignment.
Subject to Section 1.1, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors or assigns.
Section 9.7 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
terms, conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic and legal substance of the
transactions contemplated hereby are 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
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 contemplated by this
Agreement may be consummated as originally contemplated to the fullest
extent possible.
Section 9.8 Defined Terms.
Each of the following terms is defined in the Section identified below:
Acquisition Sub Preamble
actual knowledge Section 9.2(g)
Affiliated Person Section 3.23(a)
Agreement Preamble
Applicable Law Section 3.17
Applicable Law Section 2.11
Auditor Section 1.9(c)
Average Parent Share Price Section 1.5(g)
Blue Sky Laws Section 2.4
Business Day Section 9.2(c)
Buyer-Controlled Claims Section 6.5(a)
CAMP Preamble
Certificate Amendment Recitals
Certificate of Merger Section 1.2
Certificates Section 1.6(c)
Closing Section 1.16
Closing Balance Sheet Section 1.9(a)
Closing Date Section 1.16
Code Recitals
Common Stock Exchange Ration Section 1.5(d)(i)
Company Preamble
Company Balance Sheet Section 3.5(a)
Company Balance Sheet Date Section 3.5(a)
Company Capital Stock Section 3.2(a)
Company Certificate Recitals
Company Common Stock Section 1.5
Company Compensation Agreements Section 3.10(a)
Company Disclosure Schedule Article III Preamble
Company Financial Statements Section 3.5(a)
Company Incentive Plans Section 3.2(a)
Company Insiders Section 5.14
Company Intellectual Property Section 3.14(a)
Company Option Section 1.5(e)
Company Permits Section 3.17
Company Plan Section 3.11(c)
Company Preferred Stock Section 3.2(a)
Company Significant Contract(s) Section 3.10(b)
Company Stockholder Approval Section 7.1(a)
Company Stockholders Section 1.5
Company Stockholders' Meeting Section 5.2(a)
Company Warrants Section 1.5(h)
Company's knowledge Section 9.2(d)
Confidentiality Agreement Section 5.4(a)
Constituent Corporations Preamble
Continuing Employees Section 5.13
Copyrights Section 3.14(a)
DGCL Section 1.1
Dispute Period Section 1.9(c)
Dissenting Shares Section 1.15
Dissenting Stockholder Section 1.15
Effective Time Section 1.2
employees Section 3.13(c)
Environmental Law Section 3.20(a)
Environmental Permit Section 3.20(a)
ERISA Affiliate Section 3.11(c)
Escrow Agent Section 1.6(b)
Escrow Agreement Section 1.6(b)
Escrow Fund Section 1.6(b)
Exchange Act Section 2.4
Exchange Agent Section 1.6(a)
Exchange Fund Section 1.6(a)
Fifteen-Month Release Date Section 1.6(b)
Final Working Capital Section 1.9(d)
Fixed Assets Section 3.24
GAAP Section 1.9(a)
Governmental Entity Section 2.3
Hazardous Substances Section 3.20(a)
HSR Act Section 2.4
Indemnification Agreements Section 5.10(a)
Indemnification Claim Section 6.3(a)
Indemnified D&O's Section 5.10(a)
Indemnitee Section 6.5(a)
Indemnitees Section 6.2(b)
independent contractors Section 3.13(c)
Insurance Policies Section 3.22
Insured Parties Section 5.10(d)
Intellectual Property Section 3.14(a)
Joint Proxy Statement Section 5.1
Junior Preferred Stock Section 1.5
knowledge of Company Section 9.2(d)
knowledge of Parent Section 9.2(e)
Liens Section 3.24
Losses Section 6.2(a)(ii)
Marks Section 3.14(a)
Material Adverse Effect on the Company Section 3.1
Material Adverse Effect on the Parent Section 2.1
Merger Recitals
Merger Consideration Section 1.5(d)(ii)
NASDAQ Section 2.4
Notice of Superior Proposal Section 4.2(c)
Parent Preamble
Parent Balance Sheet Date Section 2.7
Parent Capital Stock Section 2.2(a)
Parent Certificate Section 1.6(c)
Parent Common Stock Section 1.5(a)(i)
Parent Disclosure Schedule Article II Preamble
Parent Incentive Plans Section 2.2(a)
Parent Indemnitees Section 6.2(a)(i)
Parent Options Section 2.2(a)
Parent Permits Section 2.11
Parent Preferred Stock Section 2.2(a)
Parent SEC Documents Section 2.12(a)
Parent Stockholder Approval Section 7.1(b)
Parent's knowledge Section 9.2(e)
Patents Section 3.14(a)
Permitted Liens Section 2.4
Person Section 9.2(d)
Pre-Closing Period Section 4.1(a)
Pro Rata Portion Section 1.6(b)
Real Estate Section 3.25
Registrable Resale Shares Section 5.1
Registration Statement Section 2.2
Relevant Date Section 1.5(g)
Review Period Section 1.9(b)
Rule 145 Affiliates Section 5.3(b)
S-3 Amendment Section 5.1
SEC Section 2.3
Securities Act Section 2.3
Series A Exchange Ratio Section 1.5(a)(i)
Series A Preferred Stock Section 1.5(a)(i)
Series A Share Allocation Section 1.5(d)(iii)
Series B Exchange Ratio Section 1.5(a)(ii)
Series B Preferred Stock Section 1.5(a)(ii)
Series B Share Allocation Section 1.5(d)(iv)
Share Issuance Recitals
Shares Section 1.5(d)(v)
Significant Stockholders Section 5.3(a)
SOXA Section 2.12(d)
Specified Assets Section 1.9(a)
Specified Liabilities Section 1.9(a)
State Takeover Approvals Section 2.4
Stockholder Indemnitees Section 6.2(b)
Stockholder Representative Section 6.4
Subsidiary Section 9.2(b)
Superior Proposal Section 4.2(d)
Surviving Corporation Section 1.1
Target Working Capital Section 1.9(d)
Tax Return Section 3.9
Taxes Section 3.9
Third Party Section 4.2(d)
Third Party Acquisition Section 4.2(d)
Total Merger Shares Section 1.5(d)(vi)
Trade Secrets Section 3.14(a)
Transaction Expenses Section 5.6
Two-Year Release Date Section 1.6(b)
Valuation Period Section 1.5(g)
Working Capital Section 1.9(a)
Working Capital Adjustment Section 1.9(d)
Working Capital Statement Section 1.9(a)
IN WITNESS WHEREOF, Parent, Acquisition Sub, the Company and the Stockholder
Representative have caused this Agreement to be signed by their respective
officers thereunto duly authorized all as of the date first written above.
CALIFORNIA AMPLIFIER, INC.
a Delaware Corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & CEO
MOBILE ACQUISITION SUB, INC.,
a Delaware Corporation
By: ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & CEO
VYTEK CORPORATION,
a Delaware Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
solely for purposes of Section 6.4,
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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