FINAL EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 24, 2006
AMONG
TELMAR NETWORK TECHNOLOGY, INC.,
TELMAR ACQUISITION CORP.
AND
▇▇▇▇▇▇ COMMUNICATIONS, INC.
TABLE OF CONTENTS
Page
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ARTICLE I. THE MERGER............................................. 1
Section 1.1 The Merger............................................. 1
Section 1.2 Closing................................................ 1
Section 1.3 Effective Time......................................... 1
Section 1.4 Effects of the Merger.................................. 2
Section 1.5 Certificate of Incorporation and Bylaws of the
Surviving Corporation.................................. 2
Section 1.6 Directors of the Surviving Corporation................. 2
Section 1.7 Officers of the Surviving Corporation.................. 2
ARTICLE II. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES;
COMPANY STOCK OPTIONS.................................. 2
Section 2.1 Effect on Capital Stock................................ 2
Section 2.2 Surrender of Certificates.............................. 3
Section 2.3 Company Stock Options.................................. 5
Section 2.4 Withholding Taxes...................................... 5
Section 2.5 Adjustments............................................ 5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......... 6
Section 3.1 Organization, Standing and Corporate Power............. 6
Section 3.2 Capitalization......................................... 7
Section 3.3 Authority; Noncontravention; Voting Requirements....... 8
Section 3.4 Governmental Approvals................................. 9
Section 3.5 Company SEC Documents; Undisclosed Liabilities......... 10
Section 3.6 Absence of Certain Changes or Events................... 12
Section 3.7 Legal Proceedings...................................... 12
Section 3.8 Compliance With Laws; Permits.......................... 12
Section 3.9 Information in Proxy Statement......................... 13
Section 3.10 Tax Matters............................................ 13
Section 3.11 Employee Benefits and Labor Matters.................... 15
Section 3.12 Environmental Matters.................................. 18
Section 3.13 Contracts.............................................. 20
Section 3.14 Title to Properties.................................... 21
Section 3.15 Intellectual Property.................................. 21
Section 3.16 Insurance.............................................. 22
Section 3.17 Opinion of Financial Advisor........................... 22
Section 3.18 Brokers and Other Advisors............................. 22
Section 3.19 Anti-Takeover Statutes................................. 22
Section 3.20 Customers and Suppliers................................ 23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB.................................................... 23
Section 4.1 Organization, Standing and Corporate Power............. 23
Section 4.2 Authority; Noncontravention............................ 23
Section 4.3 Governmental Approvals................................. 24
Section 4.4 Information Supplied................................... 24
Section 4.5 Ownership and Operations of Merger Sub................. 24
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Section 4.6 Financing.............................................. 24
Section 4.7 Brokers and Other Advisors............................. 24
ARTICLE V. COVENANTS AND AGREEMENTS............................... 24
Section 5.1 Preparation of the Proxy Statement; Stockholder
Meeting................................................ 24
Section 5.2 Conduct of Business of the Company..................... 25
Section 5.3 No Solicitation by the Company; Etc.................... 28
Section 5.4 Further Action; Reasonable Best Efforts................ 30
Section 5.5 Public Announcements................................... 31
Section 5.6 Access to Information; Confidentiality................. 32
Section 5.7 Notification of Certain Matters........................ 32
Section 5.8 Indemnification and Insurance.......................... 33
Section 5.9 Securityholder Litigation.............................. 33
Section 5.10 Fees and Expenses...................................... 33
Section 5.11 Employee Benefits...................................... 34
ARTICLE VI. CONDITIONS PRECEDENT................................... 34
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger................................................. 34
Section 6.2 Conditions to Obligations of Parent and Merger Sub..... 35
Section 6.3 Conditions to Obligation of the Company................ 35
Section 6.4 Frustration of Closing Conditions...................... 36
ARTICLE VII. TERMINATION............................................ 36
Section 7.1 Termination............................................ 36
Section 7.2 Effect of Termination.................................. 37
Section 7.3 Termination Fee and Expenses Reimbursement............. 38
ARTICLE VIII. MISCELLANEOUS.......................................... 39
Section 8.1 Nonsurvival of Representations and Warranties.......... 39
Section 8.2 Amendment or Supplement................................ 39
Section 8.3 Extension of Time, Waiver, Etc......................... 39
Section 8.4 Assignment............................................. 39
Section 8.5 Counterparts; Facsimile; Electronic Transmission....... 40
Section 8.6 Entire Agreement; No Third-Party Beneficiaries......... 40
Section 8.7 Governing Law; Waiver of Jury Trial.................... 40
Section 8.8 Specific Enforcement................................... 40
Section 8.9 Consent to Jurisdiction................................ 40
Section 8.10 Notices................................................ 41
Section 8.11 Severability........................................... 41
Section 8.12 Remedies............................................... 42
Section 8.13 Definitions............................................ 42
Section 8.14 Waiver of Jury Trial................................... 45
Section 8.15 Interpretation......................................... 46
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of June 24, 2006 (this
"Agreement"), is among Telmar Network Technology, Inc., a Delaware corporation
("Parent"), Telmar Acquisition Corp., a Delaware corporation and an indirect
wholly-owned Subsidiary of Parent ("Merger Sub"), and ▇▇▇▇▇▇ Communications,
Inc., a Delaware corporation (the "Company"). Certain terms used in this
Agreement are used as defined in Section 8.12.
WHEREAS, the respective Boards of Directors of the Company and Merger Sub
have adopted, approved and declared advisable, and the Board of Directors of
Parent has approved, this Agreement and the merger of Merger Sub with and into
the Company (the "Merger"), on the terms and subject to the conditions provided
for in this Agreement;
WHEREAS, concurrently with the execution of this Agreement, as a condition
and inducement to Parent's willingness to enter into this Agreement, the
Company, Parent, Merger Sub and certain stockholders of the Company are entering
into a voting agreement, of even date herewith (the "Voting Agreement") pursuant
to which such stockholders have agreed, subject to the terms thereof, to vote
their shares of Company Common Stock (as hereinafter defined) in favor of
adoption of this Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE I.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), at the Effective Time Merger Sub shall be
merged with and into the Company, and the separate corporate existence of Merger
Sub shall thereupon cease, and the Company shall be the surviving corporation in
the Merger (the "Surviving Corporation").
Section 1.2 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. (New York, New York Time) on a date to be specified by the
parties, which date shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VI (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), unless another time
or date, or both, are agreed to in writing by the parties hereto. The date on
which the Closing is held is herein referred to as the "Closing Date". The
Closing will be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another place is agreed to in writing by the
parties hereto.
Section 1.3 Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date the parties shall file a certificate of
merger with the Secretary of State of the State of Delaware, executed in
accordance with the relevant provisions of the DGCL (the "Certificate of
Merger"). The Merger shall become effective upon the filing of the Certificate
of Merger or at such
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later time as is agreed to by the parties hereto and specified in the
Certificate of Merger (the time at which the Merger becomes effective is herein
referred to as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the rights, privileges, immunities, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended in the Merger to be in
the form of Exhibit A hereto and, as so amended, such certificate of
incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided therein or by applicable Law.
(b) At or prior to the Effective Time, the Company shall cause its
bylaws to be amended, as of the Effective Time, to read in their entirety as set
forth in Exhibit B, and, as so amended, such bylaws shall be the bylaws of the
Surviving Corporation until thereafter amended as provided therein or by
applicable Law.
Section 1.6 Directors of the Surviving Corporation. Parent and the Company
shall take all necessary actions to cause the directors of Merger Sub
immediately prior to the Effective Time to be the directors of the Surviving
Corporation immediately following the Effective Time, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.7 Officers of the Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation until their respective successors are duly appointed and
qualified or their earlier death, resignation or removal in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES; COMPANY STOCK OPTIONS
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
common stock, $0.001 par value per share, of the Company ("Company Common
Stock") or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding share of
capital stock of Merger Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Any shares
of Company Common Stock that are owned by the Company as treasury stock, and any
shares of Company Common Stock owned by Parent or Merger Sub, shall be
automatically canceled and shall cease to exist and no consideration shall be
delivered in exchange therefor.
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(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than Dissenting Shares and shares to be
canceled in accordance with Section 2.1(b)) shall be converted into the right to
receive $4.60 in cash, without interest (the "Merger Consideration"). As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a certificate which immediately prior to the Effective Time
represented any such shares of Company Common Stock (each, a "Certificate")
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration to be paid in consideration therefor upon surrender of
such Certificate in accordance with Section 2.2(b), without interest.
Section 2.2 Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate
a bank or trust company to act as agent for payment of the Merger Consideration
upon surrender of the Certificates (the "Paying Agent"). Immediately prior to
the filing of the Certificate of Merger, Parent shall deposit, or cause to be
deposited, with the Paying Agent cash sufficient to pay the aggregate Merger
Consideration payable pursuant to Section 2.1(c) upon surrender of outstanding
shares of Company Common Stock. Parent shall replenish the Payment Fund to the
extent of any investment losses incurred through any investment made pursuant to
Section 2.2(g). Such funds provided to the Paying Agent are referred to herein
as the "Payment Fund."
(b) Payment Procedures. Promptly (but in any event within five (5)
Business Days) after the Effective Time, the Paying Agent shall mail to each
holder of record of a Certificate (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent, and which shall be in such form and shall have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions (and such other customary documents as may reasonably be
required by the Paying Agent), the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which the shares of
Company Common Stock formerly represented by such Certificate shall have been
converted pursuant to Section 2.1(c), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares of
Company Common Stock that is not registered in the transfer records of the
Company, the proper amount of cash may be paid in exchange therefor to a Person
other than the Person in whose name the Certificate so surrendered is registered
if such Certificate shall be properly endorsed or shall otherwise be in proper
form for transfer and the Person requesting such payment shall pay any transfer
and other Taxes required by reason of the payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the
Surviving Corporation that such Tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2(b), each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration. No interest will be paid
or will accrue on the cash payable upon surrender of any Certificate.
(c) Transfer Books; No Further Ownership Rights in Company Stock. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock previously represented
by such Certificates. At the close of business on the day on which the Effective
Time occurs, the stock transfer books of the Company shall be closed and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. Subject to Section 2.2(e),
if, at any
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time after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(d) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond, in such
reasonable amount as Parent may direct, as indemnity against any claim that may
be made against it with respect to such Certificate, the Paying Agent will pay
the Merger Consideration to such Person in exchange for such lost, stolen or
destroyed Certificate.
(e) Termination of Fund. Any portion of the Payment Fund (including
the proceeds of any investments thereof) that remains undistributed to the
holders of the Certificates for 270 days after the Effective Time shall be
delivered by the Paying Agent to the Surviving Corporation upon demand. Any
holders of Certificates who have not theretofore complied with this Article II
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration. Any portion of the Payment Fund remaining unclaimed by
holders of shares of Company Common Stock as of a date which is immediately
prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Authority shall, as of such date and to the extent permitted
by law, become the property of Parent free and clear of any Lien of any Person
previously entitled thereto.
(f) No Liability. Notwithstanding any provision of this Agreement to
the contrary, none of Parent, the Surviving Corporation or the Paying Agent
shall be liable to any Person for any amount properly paid from the Payment Fund
or delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(g) Investment of Payment Fund. The Paying Agent shall invest the
Payment Fund in U.S. government or other investment grade securities, in each
case, maturing in not more than one year, or other investments of comparable
liquidity and credit-worthiness as directed by Parent. Any interest and other
income resulting from such investment shall be the property of, and shall be
paid promptly to, Parent.
(h) Dissenting Shares. Notwithstanding Section 2.1, any shares of
Company Common Stock outstanding immediately prior to the Effective Time and
held by a Person who has not voted in favor of, the Merger or consented thereto
in writing and who has properly complied with all of the relevant provisions of
Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into
the right to receive the Merger Consideration, unless such holder fails to
perfect or withdraws or otherwise loses its rights to appraisal or it is
determined that such holder does not have appraisal rights in accordance with
the DGCL. If, after the Effective Time, such holder fails to perfect or
withdraws or loses its right to appraisal, or if it is determined that such
holder does not have appraisal rights, such shares shall be treated as if they
had been converted as of the Effective Time into the right to receive the Merger
Consideration. Notwithstanding anything to the contrary contained in this
Section 2.2, if the Merger is rescinded or abandoned, then the right of any
stockholder to be paid the fair value of such stockholder's Dissenting Shares
pursuant to Section 262 of the DGCL will cease. The Company shall give Parent
prompt notice of any demands received by the Company for appraisal of shares,
and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands except as required by applicable Law.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands, unless
and to the extent required to do so under applicable Law.
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Section 2.3 Company Stock Options.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any Company Option, each Company Option
outstanding immediately prior to the Effective Time shall be canceled and
terminated and (except to the extent Section 3.2 of the Company Disclosure
Schedule specifies that no payment will be made with respect to a particular
Option) converted into the right to receive a cash amount equal to the Option
Consideration for each share of Company Common Stock then subject to the Company
Option. Prior to the Effective Time, the Company shall make any amendments to
the terms of the Company Stock Plans and give any notices required under the
Company Stock Plans that, in each case, are necessary to give effect to the
transactions contemplated by this Section 2.3. Without limiting the foregoing,
the Company shall take all actions necessary to ensure that the Company will not
at the Effective Time be bound by any Options, stock appreciation rights, or
other agreements which would entitle any Person, other than Parent and its
Subsidiaries, to own any capital stock of the Surviving Corporation or to
receive any payment in respect thereof (other than the payment of Option
Consideration pursuant to this Section 2.3). Prior to the Effective Time, the
Company shall take all actions necessary to terminate all its Company Stock
Plans, such termination to be effective at or before the Effective Time. For
purposes of this Agreement, "Option Consideration" means, with respect to any
share of Company Common Stock issuable under a particular Option, an amount
equal to the excess, if any, of (i) the Merger Consideration per share of
Company Common Stock over (ii) the exercise price payable in respect of such
share of Company Common Stock issuable under such Option.
(b) Prior to the Effective Time, the Company shall take all actions
necessary such that (i) the Company's 1999 Employee Stock Purchase Plan (the
"ESPP") shall be terminated as of the Effective time; (ii) the offering period
underway as of the date hereof shall expire as of the earlier to occur of the
date such period would otherwise expire in accordance with the terms of the ESPP
or the Closing Date; and (iii) no new offering periods under the ESPP shall
commence on or following the date hereof.
(c) Prior to the Effective Time, the Company shall take all actions
necessary to cause the shares of restricted stock held under restricted stock
agreements listed on Section 3.2(a) of the Company Disclosure Schedule to vest
in accordance with the terms of such agreements.
(d) The Company shall take such steps as may be reasonably requested
by any party hereto to cause dispositions of Company equity securities
(including derivative securities) pursuant to the transactions contemplated by
this Agreement by each individual who is a director or officer of the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act in accordance with
that certain No-Action Letter dated January 12, 1999 issued by the Securities
and Exchange Commission (the "SEC") regarding such matters.
Section 2.4 Withholding Taxes. Parent, the Surviving Corporation and the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to a holder of shares of Company Common Stock or Options
pursuant to this Agreement such amounts as may be required to be deducted or
withheld 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
deducted and withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the Person in respect of which such deduction
and withholding was made.
Section 2.5 Adjustments. If during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
Company Common Stock, or securities convertible or exchangeable into or
exercisable for shares of Company Common Stock, shall occur by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of
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shares of Company Common Stock, or any similar transaction, or any stock
dividend thereon with a record date during such period, the Merger Consideration
shall be appropriately adjusted to reflect such change.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the letter (each section of which qualifies the
correspondingly numbered representation and warranty to the extent expressly
specified therein and such other representations and warranties to the extent a
matter in such section of the disclosure schedule is disclosed in such a way as
to make its relevance to the information called for by such other representation
and warranty readily apparent) dated as of the date hereof and addressed to
Parent from the Company and delivered to Parent simultaneously with the
execution of this Agreement (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Merger Sub that:
Section 3.1 Organization, Standing and Corporate Power.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware and has all requisite
corporate power and authority necessary to own or lease all of its properties
and assets and to carry on its business as it is now being conducted and as
currently proposed by its management to be conducted. Each of the Subsidiaries
is duly organized, validly existing and, to the extent applicable in such
jurisdiction, in good standing under the Laws of the jurisdiction in which it is
incorporated or otherwise organized and has all requisite corporate power and
authority necessary to own or lease all of its properties and assets and to
carry on its business as it is now being conducted and as currently proposed by
its management to be conducted. Each of the Company and its Subsidiaries is duly
licensed or qualified to do business and, to the extent applicable in such
jurisdiction, is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. For purposes of this
Agreement, the term "Company Material Adverse Effect" shall mean any change,
event, occurrence or state of facts which has had or would reasonably be likely
to have, a material adverse effect on the business, properties, assets,
liabilities (contingent or otherwise), results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
provided, however, that none of the following shall be deemed either alone or in
combination to constitute, and none of the following shall be taken into account
in determining whether there has been, or would reasonably be expected to be, a
Company Material Adverse Effect: (1) any change, event, occurrence or state of
facts relating to the global, U.S. or regional economy, financial markets or
political conditions in general or any of the industries in which the Company
operates, including such changes thereto as are caused by terrorist activities,
entry into or material worsening of war or armed hostilities, or other national
or international calamity, except to the extent such changes or developments
have a disproportionate impact on the Company and its Subsidiaries, taken as a
whole, relative to other industry participants; (2) any change, event,
occurrence or state of facts that directly arises out of or results from the
announcement or pendency of this Agreement or any of the Transactions, including
shareholder litigation or disruption or loss of customer business, supplier or
employee relationships; (3) any change, event, occurrence or state of facts
directly arising out of or resulting from any action taken, or failure to take
an action, by the Company or its Subsidiaries with Parent's express written
consent or in accordance with the express written instructions of Parent or as
otherwise expressly required or specifically permitted to be taken by the
Company or its Subsidiaries pursuant to the terms of this Agreement; (4) any
change in the Company's stock price or trading volume or any failure to meet
internal projections or forecasts or
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published revenue or earnings projections of industry analysts (provided that
this clause (4) shall not be construed as providing that the change, event,
occurrence or state of facts giving rise to such change or failure does not
constitute or contribute to a Company Material Adverse Effect); (5) any
stockholder class action litigation arising from allegations of breach of
fiduciary duty relating to the Agreement; (6) the continued depletion of net
current assets as described in Section 3.6(v) of the Company Disclosure
Schedule; and (7) any change, event, occurrence or state of facts arising out of
any change in GAAP or applicable accounting requirements or principles which
occur or become effective after the date of this Agreement.
(b) Section 3.1(b) of the Company Disclosure Schedule lists all
Subsidiaries of the Company together with the jurisdiction of organization of
each such Subsidiary. All the outstanding shares of capital stock of, or other
equity interests in, each Subsidiary of the Company have been duly authorized
and validly issued and are fully paid, nonassessable and were not issued in
violation of any preemptive rights, purchase option, call or right of first
refusal or similar rights. All the outstanding shares of capital stock of, or
other equity interests in, each Subsidiary of the Company are owned directly or
indirectly by the Company and are free and clear of all liens, pledges, charges,
mortgages, encumbrances, adverse rights or claims and security interests of any
kind or nature whatsoever (including any restriction on the right to vote or
transfer the same, except for such transfer restrictions of general
applicability as may be provided under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "Securities Act"), and
the "blue sky" laws of the various States of the United States or any foreign
equivalent of any thereof) (collectively, "Liens"). Except as set forth in
Section 3.1(b) of the Company Disclosure Schedule, the Company does not own,
directly or indirectly, any capital stock, voting securities or equity interests
in any Person.
(c) The Company has made available to Parent complete and correct
copies of its certificate of incorporation and bylaws (the "Company Charter
Documents"), in each case as amended to the date of this Agreement, and all such
Company Charter Documents and the articles of incorporation and bylaws (or
comparable organizational documents) of each of the Company's Subsidiaries (the
"Subsidiary Documents"). The Company Charter Documents and the Subsidiary
Documents are in full force and effect and neither the Company nor any of its
Subsidiaries is in violation of any of their respective provisions. The Company
has made available to Parent and its representatives correct and complete copies
of the minutes (or, in the case of minutes that have not yet been finalized,
drafts thereof) of all meetings of stockholders, the Board of Directors and each
committee of the Board of Directors of the Company held since January 1, 2004.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
20,000,000 shares of preferred stock, par value $.001 per share, of the Company
("Company Preferred Stock"), and (ii) 200,000,000 shares of Company Common
Stock. At the close of business on June 23, 2006 (the "Measurement Date"), (i)
no shares of Company Preferred Stock were issued or outstanding, (ii) 5,030,595
shares of Company Common Stock were issued and outstanding (no shares of Company
Common Stock were held by the Company in its treasury), (iii) 1,372,170 shares
of Company Common Stock were reserved for issuance under the Company Stock Plans
(of which 755,904 shares of Company Common Stock were subject to outstanding
Options granted under the Company Stock Plans), (iv) 7,055 shares of Company
Common Stock were reserved for issuance under outstanding warrants to purchase
Company Common Stock (the "Warrants"), (v) 40,000 shares have been reserved for
restricted stock grants that have been approved by the Board of Directors but
not yet been issued, (vi) 8,500 Options have been approved for newly-hired
employees with an exercise price of $2.06, (vii) 4,100 Options have been
approved for future employees with an exercise price at the closing price as of
the date that such employee begins working for the Company, and (viii) an
unspecified number of shares of Company
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Common Stock was reserved with respect to the current offering period under the
ESPP. Of the issued and outstanding shares of Company Common Stock, 10,062
shares were, as of the Measurement Date, subject to the Company's repurchase
right under the restricted stock agreements listed on Section 3.2(a) of the
Company Disclosure Schedule. All outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights. Included in Section 3.2(a) of the Company Disclosure
Schedule is a correct and complete list, as of the Measurement Date, of (a) all
Options granted under the Company Stock Plans or otherwise, and, for each such
Option, (1) the number of shares of Company Common Stock subject thereto and (2)
the exercise price thereof and (b) all Warrants and, for each such Warrant, (1)
the number of shares of Company Common Stock subject thereto and (2) the
exercise price thereof. Since the Measurement Date, the Company has not issued
any shares of its capital stock, voting securities or equity interests, or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock, voting securities or equity interests, other than pursuant to the
exercise of outstanding Options referred to above in this Section 3.2(a). Except
(A) as set forth above in this Section 3.2(a) or (B) as otherwise expressly
permitted by Section 5.2 hereof, as of the date of this Agreement there are not,
and as of the Effective Time there will not be, any shares of capital stock,
voting securities or equity interests of the Company issued and outstanding or
any subscriptions, options, warrants, calls, convertible or exchangeable
securities, rights, commitments or agreements of any character providing for the
issuance of any shares of capital stock, voting securities or equity interests
of the Company, including any representing the right to purchase or otherwise
receive any Company Common Stock. All of the holders of any Warrants shall have
received written notice of the Merger in accordance with the terms of such
Warrants, and such Warrants shall be exercised or will terminate or expire at or
prior to the Effective Time.
(b) None of the Company or any of its Subsidiaries has issued or is
bound by any outstanding subscriptions, options, warrants, calls, convertible or
exchangeable securities, rights, commitments or agreements of any character
providing for the issuance or disposition of any shares of capital stock, voting
securities or equity interests of any Subsidiary of the Company. There are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock, voting securities or
equity interests (or any options, warrants or other rights to acquire any shares
of capital stock, voting securities or equity interests) of the Company or any
of its Subsidiaries. None of the Company or any of its Subsidiaries is bound to
provide any funds to or make any investment in any Subsidiary of the Company
that is not wholly owned by the Company or any other Person, or register any
securities under the Securities Act.
(c) As of May 28, 2006, the Company had cash, cash equivalents and
short term investments of not less than $13,598,115, and no indebtedness for
borrowed money outstanding.
Section 3.3 Authority; Noncontravention; Voting Requirements.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the Company
Stockholder Approval, to perform its obligations hereunder and to consummate the
Transactions. The execution, delivery and performance by the Company of this
Agreement, and the consummation by it of the Transactions, have been duly
authorized and approved by its Board of Directors, and except for obtaining the
Company Stockholder Approval, no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance by the
Company of this Agreement and the consummation by it of the Transactions. This
Agreement has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws of general
application affecting or relating to the enforcement of
8
creditors' rights generally and (ii) is subject to general principles of equity,
whether considered in a proceeding at law or in equity (collectively, the
"Bankruptcy and Equity Exception").
(b) The Company's Board of Directors, at a meeting duly called and
held, has unanimously (i) approved this Agreement and adopted, approved and
declared advisable the Transactions, including this Agreement and the Merger,
and (ii) resolved to recommend that stockholders of the Company adopt this
Agreement (the "Company Board Recommendation") and directed that such matter be
submitted for consideration of the stockholders of the Company at the Company
Stockholders Meeting.
(c) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the Transactions, nor compliance
by the Company with any of the terms or provisions hereof, will (i) conflict
with or violate any provision of the Company Charter Documents or any of the
Subsidiary Documents or (ii) assuming that the authorizations, consents and
approvals referred to in Section 3.4 and the Company Stockholder Approval are
obtained and the filings referred to in Section 3.4 are made, (x) violate any
Law, judgment, writ or injunction of any Governmental Authority applicable to
the Company or any of its Subsidiaries or any of their respective properties or
assets, or (y) materially violate or conflict with, result in the loss of any
material benefit under, constitute a material default (or an event which, with
notice or lapse of time, or both, would constitute a material default) under,
result in the termination or revocation of or a right of termination or
cancellation under, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of, the
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any loan or credit agreement, debenture, note, bond, mortgage,
indenture, deed of trust, license, lease, contract or other agreement,
instrument or obligation (each, a "Contract") to which the Company or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected that is a Material Contract or any Permit, or
(z) require any consent, approval or other authorization of, or filing with or
notification to any person under, any of the terms, conditions or provisions of
any Contract to which the Company or any of its Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or
affected that is a Material Contract or any Permit.
(d) The affirmative vote (in person or by proxy) of the holders of a
majority of the outstanding shares of Company Common Stock at the Company
Stockholders Meeting or any adjournment or postponement thereof in favor of the
adoption of this Agreement (the "Company Stockholder Approval") is the only vote
or approval of the holders of any class or series of capital stock of the
Company or any of its Subsidiaries which is necessary to adopt this Agreement
and approve the Transactions.
(e) There are no voting trusts, proxies or similar agreements,
arrangements or commitments to which the Company or any of its Subsidiaries is a
party or of which the Company has Knowledge with respect to the voting of any
shares of capital stock of the Company or any of its Subsidiaries, other than
the Voting Agreement. There are no bonds, debentures, notes or other instruments
of indebtedness of the Company or any of its Subsidiaries that have the right to
vote, or that are convertible or exchangeable into or exercisable for securities
or other rights having the right to vote, on any matters on which stockholders
of the Company may vote.
Section 3.4 Governmental Approvals. Except for (i) the filing with the SEC
of a proxy statement relating to the Company Stockholders Meeting (as amended or
supplemented from time to time, the "Proxy Statement"), and other filings
required under, and compliance with other applicable requirements of, the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), and the rules of Nasdaq, (ii) the
filing of the Certificate of
9
Merger with the Secretary of State of the State of Delaware pursuant to the
DGCL, (iii) compliance with and such filings as may be required under applicable
Environmental Laws, which filings are set forth in Section 3.4 of the Company
Disclosure Schedule, and (iv) filings required under, and compliance with other
applicable requirements of, non-U.S. Laws intended to prohibit, restrict or
regulate actions or transactions having the purpose or effect of monopolization,
restraint of trade, harm to competition or effectuating foreign investment
(collectively, "Foreign Antitrust Laws"), no consents or approvals of, or
filings, declarations or registrations with, any Governmental Authority are
necessary for the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the Transactions, other than such
other consents, approvals, filings, declarations or registrations that, if not
obtained, made or given, would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the Company's ability to
perform its obligations under this Agreement or consummate the Transactions.
Section 3.5 Company SEC Documents; Undisclosed Liabilities.
(a) The Company has filed and furnished all required reports,
schedules, forms, prospectuses, and registration, proxy and other statements
with the SEC since January 1, 2004 (collectively, and in each case including all
exhibits, schedules and amendments thereto and documents incorporated by
reference therein, the "Company SEC Documents"). None of the Company's
Subsidiaries is required to file periodic reports with the SEC pursuant to the
Exchange Act. Except to the extent that information contained in any Company SEC
Document has been revised or superseded by a later-filed Company SEC Document
(provided, in the case of Company SEC Documents filed prior to the date hereof,
the later-filed Company SEC Document was filed or furnished and made publicly
available prior to the date hereof) (i) as of their respective effective dates
(in the case of Company SEC Documents that are registration statements filed
pursuant to the requirements of the Securities Act), (ii) as of their respective
SEC filing dates (in the case of all other Company SEC Documents), the Company
SEC Documents complied in all material respects with the requirements of the
Exchange Act and the Securities Act, as the case may be, applicable to such
Company SEC Documents, and (iii) none of the Company SEC Documents as of such
respective dates contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. To the Knowledge of the Company, no investigation by the
SEC with respect to the Company or any of its Subsidiaries is pending or
threatened.
(b) At the time they were filed with the SEC, the consolidated
financial statements of the Company included in the Company 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 as then in effect, had been prepared in accordance with GAAP (except, in
the case of unaudited quarterly statements, as indicated in the notes thereto)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented (including within the
meaning of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002) the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
adjustments, none of which has been or will be, individually or in the
aggregate, material to the Company and its Subsidiaries, taken as a whole). At
the time they are filed with the SEC, the consolidated financial statements of
the Company included in the Company SEC Documents (as the same may have been
amended) to be filed after the date hereof will comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as then in effect, will
have been prepared in accordance with GAAP (except, in the case of unaudited
quarterly statements, as indicated in the notes thereto) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and will fairly present (including within the meaning of
10
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002) the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments, none of which has been or will be, individually or
in the aggregate, material to the Company and its Subsidiaries, taken as a
whole).
(c) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under
the Exchange Act) and internal control over financial reporting (as such term is
defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that are
reasonably designed to ensure that material information relating to the Company,
including its consolidated Subsidiaries, is made known to the principal
executive officer and principal financial officer of the Company by others
within those entities. The principal executive officer and the principal
financial officer of the Company have timely made all certifications required by
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and any rules and regulations promulgated by the
SEC thereunder (the "SOX"). All of the statements contained in such
certifications were complete and correct as of the dates thereof. As of the date
of the Company's most recent Quarterly Report on Form 10-Q, the Company's
principal executive officer and its principal financial officer disclosed, based
on their evaluation at that time of internal control over financial reporting,
to the Company's auditors and the audit committee of the Board of Directors of
the Company (x) all significant deficiencies and material weaknesses (as such
terms are defined in PCAOB Auditing Standard No. 2) in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize and report
financial data and (y) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal control over financial reporting.
(d) The Company is in compliance in all material respects with the
provisions of Section 13(b) of the Exchange Act. Neither the Company nor any of
its Subsidiaries nor, to the Company's Knowledge, any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries, has (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Exchange Act or (ii) accepted or received any unlawful
contributions, payments, gifts or expenditures. Except as set forth in Company
SEC Documents filed by the Company and publicly available prior to the date of
this Agreement (the "Filed Company SEC Documents") or for events (or series of
related matters) as to which the amounts involved do not exceed $60,000, since
the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC on
March 7, 2006, no event has occurred that would be required to be reported
pursuant to Item 404 of Regulation S-K promulgated by the SEC if the Company
were to have filed a Schedule 14A with the SEC on the date hereof.
(e) Since January 1, 2004, neither the Company nor any of its
Subsidiaries, nor, to the Company's Knowledge, any of their directors or
officers, or to the Knowledge of the Company, employees, auditors or accountants
has received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company or any of its Subsidiaries or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
the Company or any of its Subsidiaries has engaged in questionable accounting or
auditing practices. Since January 1, 2005, no attorney representing the Company
or any of its Subsidiaries, whether or not employed by the Company or any of its
Subsidiaries, has reported evidence of a material violation of securities Laws,
breach of fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Board of Directors of the
Company or any committee thereof or to any director or officer of the Company.
11
(f) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required, if known, to be reflected or reserved against on a
consolidated balance sheet of the Company prepared in accordance with GAAP or
the notes thereto, except liabilities (i) as and to the extent set forth on the
unaudited balance sheet of the Company and its Subsidiaries as of March 31, 2006
(the "Balance Sheet Date") included in the Company's Quarterly Report on Form
10-Q for the quarter ended as of such date (including the notes thereto) or as
otherwise set forth in the consolidated financial statements of the Company
included in the Filed Company SEC Documents, (ii) incurred after the Balance
Sheet Date in the ordinary course of business consistent with past practice,
(iii) that are not material to the Company and its Subsidiaries taken as a
whole, (iv) arising in the ordinary course of business pursuant to Contracts
disclosed on the Company Disclosure Schedule or that are not required to be
disclosed on the Company Disclosure Schedule pursuant to the terms of this
Agreement or (v) incurred after the date hereof in accordance with Section 5.2.
Section 3.6 Absence of Certain Changes or Events. Between the Balance Sheet
Date and the date hereof, there have not been any events, changes, occurrences
or state of facts that, individually or in the aggregate, have had or would
reasonably be likely to have a Company Material Adverse Effect. Except as set
forth in Section 3.6 of the Company Disclosure Schedule, between the Balance
Sheet Date and the date hereof, (a) the Company and its Subsidiaries have
carried on and operated their respective businesses in all material respects in
the ordinary course of business consistent with past practice and (b) neither
the Company nor any of its Subsidiaries has taken any action described in
Section 5.2 hereof that if taken after the date hereof and prior to the
Effective Time without the prior written consent of Parent would violate such
provision. Without limiting the foregoing, between the Balance Sheet Date and
the date hereof there has not occurred any damage, destruction or loss (whether
or not covered by insurance) of any material asset of the Company or any of its
Subsidiaries which materially affects the use thereof.
Section 3.7 Legal Proceedings. Except as set forth in Section 3.7 of the
Company Disclosure Schedule, as of the date hereof, there is no pending or, to
the Knowledge of the Company, threatened, material legal, administrative,
arbitral or other proceeding, claim, suit or action against the Company or any
of its Subsidiaries, or, to the Knowledge of the Company, Governmental
Investigation, nor is there any injunction, order, judgment, ruling or decree
imposed (or, to the Knowledge of the Company, threatened to be imposed) upon the
Company, any of its Subsidiaries or the assets of the Company or any of its
Subsidiaries, by or before any Governmental Authority that, individually or in
the aggregate, as of the date hereof, (x) has had or is reasonably likely to
result in the payment of money in an aggregate amount in excess of $250,000 or
(y) has had or would reasonably be expected to have a Company Material Adverse
Effect, nor is there any judgment outstanding against the Company or any of its
Subsidiaries that, as of the date hereof, (x) has had or is reasonably likely to
result in the payment of money in an aggregate amount of $250,000 or (y) has had
or would reasonably be expected to have a Company Material Adverse Effect.
Section 3.8 Compliance With Laws; Permits.
(a) The Company and its Subsidiaries are in compliance in all material
respects with all laws (including common law), statutes, rules, codes, executive
orders, ordinances, regulations, requirements, administrative rulings or
judgments of any Governmental Authority or any order, writ, injunction or
decree, whether preliminary or final, entered by any court, arbitrator or other
Governmental Authority (collectively, "Laws") applicable to the Company or any
of its Subsidiaries or any of their properties or other assets or any of their
businesses or operations. Since January 1, 2004, neither the Company nor any of
its Subsidiaries has received written notice to the effect that a Governmental
Authority claimed or alleged that the Company or any of its Subsidiaries was not
in compliance in a
12
material respect with any Law applicable to the Company and any of its
Subsidiaries, any of their material properties or other assets or any of their
business or operations. To the Knowledge of the Company, neither the Company nor
any of its Subsidiaries, nor any officer, director or employee of the Company or
any such Subsidiary, is under investigation by any Governmental Authority
related to the conduct of the Company's or any such Subsidiary's business, the
results of which investigation would or would reasonably be expected to be
materially adverse to the business or assets of the Company and its Subsidiaries
taken as a whole.
(b) The Company and each of its Subsidiaries hold all material
licenses, franchises, permits, certificates, approvals and authorizations from
Governmental Authorities, or required by Governmental Authorities to be
obtained, in each case necessary for the conduct of their respective businesses,
including the manufacture and sale of their respective products (collectively,
"Permits"). The Company and its Subsidiaries are in compliance in all material
respects with the terms of all Permits, and all such Permits are in full force
and effect, except where such suspension or cancellation would not be reasonably
expected to constitute a Company Material Adverse Effect. Since January 1, 2005,
neither the Company nor any of its Subsidiaries has received written notice from
a Governmental Authority that such Governmental Authority was considering the
amendment, termination, revocation or cancellation of any Permit.
(c) No event or condition has occurred or exists which would result in
a violation of, breach, default or loss of a benefit under, or acceleration of
an obligation of the Company or any of its Subsidiaries under, any Permit (in
each case, with or without notice or lapse of time or both), except for
violations, breaches, defaults, losses or accelerations that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. No such suspension, cancellation, violation, breach,
default, loss of a benefit, or acceleration of an obligation will result from
the transactions contemplated by this Agreement, except for violations,
breaches, defaults, losses or accelerations that would not be reasonably be
expected to result in a Company Material Adverse Effect.
Section 3.9 Information in Proxy Statement. The Proxy Statement and any
other document filed with the SEC by the Company in connection with the Merger
(or any amendment thereof or supplement thereto), at the date first mailed to
the stockholders of the Company and at the time of the Company Stockholders
Meeting, as the case may be, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; provided, however, that no
representation is made by the Company with respect to statements made therein
based on information supplied in writing by Parent or Merger Sub relating to
Parent or Merger Sub and specifically for inclusion in such documents. The Proxy
Statement and such other documents filed with the SEC by the Company will comply
in all material respects with the provisions of the Exchange Act.
Section 3.10 Tax Matters.
(a) Except as set forth on Section 3.10 of the Company Disclosure
Schedule, each of the Company and its Subsidiaries has timely filed, or has
caused to be timely filed on its behalf (taking into account an extension of
time within which to file), all income and franchise Tax Returns and all other
material Tax Returns required to be filed by it, and all such Tax Returns are
correct and complete in all material respects. All material Taxes of the Company
and its Subsidiaries due and owing have been timely paid (whether or not shown
to be due on such Tax Returns). For purposes of this Section 3.10(a), "other
material Tax Returns" means any and all Tax Returns (other than income and
franchise Tax Returns) for which Taxes that are due and payable (whether or not
shown due) exceed $25,000.
13
(b) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve for all Taxes payable by the
Company and its Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements. No deficiency with respect to
Taxes has been proposed, asserted or assessed against the Company or any of its
Subsidiaries.
(c) The federal income Tax Returns of the Company and each of its
Subsidiaries have been examined by and settled with the IRS (or the applicable
statute of limitations has expired) for all years through 1999. All assessments
for Taxes due with respect to such completed and settled examinations or any
concluded litigation have been fully paid.
(d) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code since the
effective date of Section 355(e) of the Code.
(e) Except as set forth on Section 3.10(e) of the Company Disclosure
Schedule, no audit or other administrative or court proceedings are pending, or
to the Knowledge of the Company are threatened with any Governmental Authority
with respect to Taxes of the Company or any of its Subsidiaries and no written
notice thereof has been received.
(f) Neither the Company nor any of its Subsidiaries has ever been a
member of an affiliated group of corporations, within the meaning of Section
1504 of the Code, other than the affiliated group of which the Company is the
common parent.
(g) There are no material outstanding agreements extending or waiving
the statutory period of limitations applicable to any claim for, or the period
for the collection, assessment or reassessment of, Taxes due from the Company or
any of its Subsidiaries for any taxable period and, to the Knowledge of the
Company, no request for any such waiver or extension is currently pending.
(h) Neither the Company nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the five-year period ending on the date of this Agreement.
(i) Neither the Company nor any of its Subsidiaries is a party to any
Tax sharing or similar Tax agreement (other than an agreement exclusively
between or among the Company and its Subsidiaries) pursuant to which it will
have any obligation to make any payments after the Closing Date.
(j) Neither the Company nor any of its Subsidiaries has engaged in any
transaction that has given rise to or would reasonably be expected to give rise
to (i) a disclosure obligation with respect to any Person under Section 6111 of
the Code and the regulations promulgated thereunder, (ii) a list maintenance
obligation with respect to any Person under Section 6112 of the Code and the
regulations promulgated thereunder, or (iii) a disclosure obligation as a
"reportable transaction" under Section 6011 of the Code and the regulations
promulgated thereunder.
(k) Neither the Company nor any of its Subsidiaries has made or is
obligated to make any payment that would not be deductible pursuant to Section
162(m) of the Code.
(l) The Company and its Subsidiaries have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third
party, except for such Taxes as to which the failure to pay or withhold is not,
individually or in the aggregate, material to the Company.
14
(m) Neither the Company nor any of its Subsidiaries will be required
to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date, (ii) "closing agreement" as described in
Section 7121 of the Code (or any corresponding or similar provision of state,
local or foreign income Tax Law) executed on or prior to the Closing Date, (iii)
installment sale or open transaction disposition made on or prior to the Closing
Date or (iv) prepaid amount received on or prior to the Closing Date.
(n) The Company has made, or will make within 30 days of the date
hereof, available to Parent complete and correct copies of (i) all income and
franchise Tax Returns and all other material Tax Returns of the Company and its
Subsidiaries for the preceding three taxable years and (ii) any audit report
issued within the last three years (or otherwise with respect to any audit or
proceeding in progress) relating to income and franchise and any other material
Taxes of the Company or any of its Subsidiaries.
(o) For purposes of this Agreement: (i) "Taxes" shall mean (a) all
federal, state, local or foreign taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, (b) all interest,
penalties, fines, additions to tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clauses (a) or (b), and (c)
any amounts in respect of any items described in clauses (a) and/or (b) payable
by reason of contract, assumption, transferee liability, operation of Law,
Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof
of any analogous or similar provision under Law) or otherwise, and (ii) "Tax
Returns" shall mean any return, report, claim for refund, estimate, information
return or statement, tax election or other similar document relating to or
required to be filed with any Governmental Authority with respect to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 3.11 Employee Benefits and Labor Matters.
(a) Section 3.11(a) of the Company Disclosure Schedule sets forth a
complete and correct list, separately with respect to each country in which the
Company or any of its Subsidiaries has employees, of: (i) all "employee benefit
plans" (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and without regard to whether ERISA applies
thereto), and (ii) all other employee benefit plans, agreements, policies or
arrangements, including employment, consulting or other compensation agreements,
collective bargaining agreements and all plans, agreements, policies or
arrangements providing for bonus or other incentive compensation, equity or
equity-based compensation, retirement, deferred compensation, change in control
rights or benefits, termination or severance benefits, stock purchase, sick
leave, vacation pay, salary continuation, hospitalization, medical insurance,
life insurance, fringe benefits or other compensation, or educational
assistance, in each case to which the Company or any of its Subsidiaries has any
obligation or liability (contingent or otherwise) thereunder for current or
former directors or employees of the Company or any of its Subsidiaries (the
"Employees") (collectively, the "Company Plans"). Section 3.11(a) of the Company
Disclosure Schedule separately sets forth each Company Plan which is a
"multiemployer plan", as defined in Section 3(37) of ERISA (a "Multiemployer
Plan"), or is or has been subject to Sections 4063 or 4064 of ERISA.
(b) True, current and complete copies of the following documents, with
respect to each of the Company Plans (other than a Multiemployer Plan), have
been made available to Parent by the Company, to the extent applicable: (i) any
plans, all amendments thereto and related trust documents,
15
insurance contracts or other funding arrangements, and amendments thereto; (ii)
the most recent Forms 5500 and all schedules thereto and the most recent
actuarial report, if any; (iii) the most recent IRS determination letter; (iv)
the most recent summary plan descriptions; and (v) written descriptions of all
non-written material agreements relating to the Company Plans.
(c) The Company Plans have been maintained, in all material respects,
in accordance with their terms and with all applicable provisions of ERISA, the
Code and other applicable Laws, and neither the Company nor any of its
Subsidiaries nor, to the Knowledge of the Company, any "party in interest" or
"disqualified person" with respect to the Company Plans has engaged in a
non-exempt "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA or in a violation of any other applicable Laws
comparable to such provisions of the Code or ERISA. No fiduciary has any
material liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
Company Plan; provided that this sentence is subject to the Knowledge of the
Company to the extent that any Company Plan refers to a Plan fiduciary other
than (i) the Company, (ii) any Subsidiary, or (iii) or any of their respective
officers, employees and directors.
(d) Each Company Plan that is intended to meet the requirements for
country specific tax-favored treatment under Subchapter B of Chapter 1 of
Subtitle A of the Code or other applicable Laws meets such requirements,
including (i) any Company Plans intended to qualify under Section 401 of the
Code are so qualified and (ii) any trusts intended to be exempt from federal
income taxation under Section 501 of the Code are so exempt. Nothing has
occurred with respect to the operation of the Company Plans that could cause the
loss of such tax favored treatment, qualification or exemption, or the
imposition of any material liability, penalty or tax under ERISA, the Code or
other applicable Law.
(e) Neither the Company, any of its Subsidiaries or any other Persons
who are treated as a single employer together with the Company or any of its
Subsidiaries pursuant to Section 414(b), (c), (m) (o) of ERISA ("ERISA
Affiliates") has any unsatisfied liability with respect to any complete or
partial withdrawal from any Multiemployer Plan, or the termination or
reorganization of any Multiemployer Plan. Parent will not have by reason of the
consummation of the Transactions any additional material obligation or liability
(contingent or otherwise) (i) with respect to any Multiemployer Plan or (ii) any
collective bargaining agreement (or any memorandum of understanding or other
modification of any collective bargaining agreement).
(f) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Company Plans (including workers compensation) or by law (without regard to
any waivers granted under Section 412 of the Code) to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof (including any valid extension). As of the date of the most recent
consolidated balance sheet of the Company included in the Filed Company SEC
Documents for the period ending as of the Closing Date and for the three
preceding years, all contributions that are not yet due will have been paid or
sufficient accruals for such contributions and other payments in accordance with
GAAP are duly and fully provided for on such balance sheets. No accumulated
funding deficiencies exist in any of the Company Plans or Title IV Plans subject
to Section 412 of the Code.
(g) There is no "amount of unfunded benefit liabilities" as defined in
Section 4001(a)(18) of ERISA in any of the Company Plans subject to Title IV of
ERISA, as determined in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation ("PBGC") to determine the level of funding
required in the event of the termination of such Company Plan.
16
(h) Neither the Company nor any of its Subsidiaries or ERISA
Affiliates has terminated any Title IV Plan in a distress termination, or
incurred any outstanding liability under Section 4062 of ERISA to the PBGC or to
a trustee appointed under Section 4042 of ERISA. All premiums due the PBGC with
respect to the Title IV Plans have been timely paid.
(i) No liability under any Company Plan is funded nor has any such
obligation been satisfied with the purchase of a contract from an insurance
company that is not rated AA by Standard & Poor's Corporation or the equivalent
by a nationally recognized rating agency.
(j) Neither the Company nor any of its Subsidiaries or ERISA
Affiliates, or any organization to which the Company is a successor or parent
corporation within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction within the meaning of Section 4069 or 4212(c) of ERISA as to which
the Company or any of its Subsidiaries has any obligation or liability,
contingent or otherwise.
(k) To the Knowledge of the Company, there are no pending actions or
lawsuits which have been asserted or instituted against the Company Plans, the
assets of any of the trusts under such plans or the sponsor or administrator of
any of the Company Plans, or against any fiduciary of the Company Plans (other
than routine benefit claims), nor does the Company have any Knowledge of facts
that could form the basis for any such action or lawsuit.
(l) All amendments and actions required to bring the Company Plans
into conformity in all material respects with all of the applicable provisions
of the Code, ERISA and other applicable laws have been made or taken, except to
the extent that such amendments or actions are not required by law to be made or
taken until a date after the Closing Date.
(m) None of the Company Plans with respect to current or former
employees within the United States provide for post-employment life or health
insurance, or other welfare benefits coverage for any participant or any
beneficiary of a participant, except (i) as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or
other similar law, (ii) deferred compensation benefits accrued as Liabilities on
the Company Financial Statements and (iii) at the expense of the participant or
the participant's beneficiary. Each of the Company and any ERISA Affiliate which
maintains a "group health plan" within the meaning of Section 5000(b)(1) of the
Code has complied in all material respects with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA.
(n) Neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (i) except as set forth in Sections 2.1
and 2.3 or on Section 3.11(n) of the Company Disclosure Schedule, result in any
payment becoming due to any Employee, (ii) increase any benefits otherwise
payable under any Company Plan or (iii) except as set forth on Section 3.11 of
the Company Disclosure Schedule, result in the acceleration of the time of
payment or vesting of any such benefits under any such plan.
(o) Neither the Company nor any of its Subsidiaries has a contract,
plan or commitment, whether legally binding or not, to create any additional
Company Plan or to modify any existing Company Plan.
(p) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
combination with another event that occurs at or prior to the Effective Time)
result in the payment of any amount that would, individually or in
17
combination with any other such payment, reasonably be expected to constitute an
"excess parachute payment," as defined in Section 280G(b)(1) of the Code.
(q) None of the Employees is represented in his or her capacity as an
employee of the Company or any of its Subsidiaries by any labor organization or
works council or similar representative. Neither the Company nor any of its
Subsidiaries has recognized any labor organization, nor has any labor
organization been elected as the collective bargaining agent of any Employees,
nor has the Company or any of its Subsidiaries entered into any collective
bargaining agreement or union contract recognizing any labor organization as the
bargaining agent of any Employees. The Company and its Subsidiaries are in
compliance with all Laws relating to the employment of labor, including all such
Laws relating to wages, hours, the Worker Adjustment and Retraining Notification
Act and any similar state or local "mass layoff" or "plant closing" law
("WARN"), collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security taxes and any similar tax, except for immaterial
non-compliance.
Section 3.12 Environmental Matters.
(a) Except for those matters that (together with the matters referred
to in Section 3.12(e)) have not resulted and would not reasonably be expected to
result in the Company or any of its Subsidiaries incurring Environmental
Liabilities individually in excess of $25,000 or in the aggregate in excess of
$100,000, (A) each of the Company and its Subsidiaries is, and has been, in
compliance with all applicable Environmental Laws, (B) to the Knowledge of the
Company, there is no investigation, suit, claim, action or proceeding relating
to or arising under Environmental Laws that is pending or threatened against or
affecting the Company or any of its Subsidiaries or any real property currently
or, to the Knowledge of the Company, formerly owned, operated or leased by the
Company or its Subsidiaries; (C) neither the Company nor any of its Subsidiaries
has received any notice of or entered into or assumed by Contract or operation
of Law or otherwise, any obligation, liability, order, settlement, judgment,
injunction or decree relating to or arising under Environmental Laws; (D) to the
Knowledge of the Company, no facts, circumstances or conditions exist with
respect to the Company or any of its Subsidiaries or any property currently or
formerly owned, operated or leased by the Company or any of its Subsidiaries or
any property to or at which the Company or any of its Subsidiaries transported
or arranged for the disposal or treatment of Hazardous Materials that would
reasonably be likely to result in the Company and its Subsidiaries incurring
Environmental Liabilities individually in the excess of $25,000 or in the
aggregate in excess of $100,000.
(b) The Company has made available complete copies of all
environmentally related audits, studies, reports, analyses and results of
investigations in the possession of the Company or any of its Subsidiaries or
any of their respective representatives that have been performed by third
parties since January 1, 2004 with respect to currently or previously owned,
leased or operated properties of the Company or any of its Subsidiaries.
(c) (i) The Company has obtained and currently maintains all Permits
necessary under Environmental Laws for their operations ("Environmental
Permits"), (ii) there is no investigation known to the Company, nor any action
pending or, to the Knowledge of the Company, threatened against or affecting the
Company or any real property owned, operated or leased by the Company to revoke
such Environmental Permits, and (iii) the Company has not received any written
notice from any Governmental Authority to the effect that there is lacking any
Environmental Permit required under Environmental Law for the current use or
operation of any property owned, operated or leased by the Company.
18
(d) The Transactions do not require the consent of or filings with any
Governmental Authority with jurisdiction over the Company or any of its
Subsidiaries on environmental matters.
(e) Except as set forth in the environmental reports listed on Section
3.12(e) of the Company Disclosure Schedule, and for those matters that (together
with the matters referred to in Section 3.12(a)) have not resulted and would not
reasonably be expected to result in the Company and its Subsidiaries incurring
Environmental Liabilities, individually in excess of $25,000 or in the aggregate
in excess of $100,000, there is not now, nor has there been in the past, on, in
or under any real property owned, leased or operated by the Company or any of
its Subsidiaries, (i) any underground storage tanks, above-ground storage tanks,
dikes or impoundments, (ii) any asbestos-containing materials, (iii) any
polychlorinated biphenyls or (iv) any radioactive substances.
(f) Neither the Company nor any of its Subsidiaries has (i)
manufactured or distributed or otherwise incorporated into any product it
manufactured or distributed, or (ii) ever acquired any company or business that
manufactured or distributed or otherwise incorporated into any product it
manufactured or distributed, any asbestos or asbestos-containing materials.
(g) For purposes of this Agreement:
(i) "Environmental Laws" means all Laws relating in any way to
the environment, preservation or reclamation of natural resources, the
presence, management or Release of, or exposure to, Hazardous Materials, or
to human health and safety, including the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. Section 5101 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.), the Safe Drinking Water Act (42
U.S.C. Section 300f et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety and Health
Act (29 U.S.C. Section 651 et seq.), each of their state and local
counterparts or equivalents, each of their foreign and international
equivalents, and any transfer of ownership notification or approval statute
(including the Industrial Site Recovery Act (N.J. Stat. ▇▇▇. Section
13:1K-6 et seq.), as each has been amended and the regulations promulgated
pursuant thereto.
(ii) "Environmental Liabilities" means, with respect to any
Person, all liabilities, obligations, responsibilities, remedial actions,
losses, damages, punitive damages, consequential damages, treble damages,
costs and expenses (including any amounts paid in settlement, all
reasonable fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or
demand by any other Person or in response to any violation of Environmental
Law, whether known or unknown, accrued or contingent, whether based in
contract, tort, implied or express warranty, strict liability, criminal or
civil statute, to the extent based upon, related to, or arising under or
pursuant to any Environmental Law, environmental permit, order or agreement
with any Governmental Authority or other Person, which relates to any
environmental, health or safety condition, violation of Environmental Law
or a Release or threatened Release of Hazardous Materials.
(iii) "Hazardous Materials" means any material, substance or
waste that is regulated, classified, or otherwise characterized under or
pursuant to any Environmental Law as "hazardous", "toxic", a "pollutant", a
"contaminant", "radioactive" or words of similar meaning or effect,
including petroleum and its by-products, asbestos, polychlorinated
biphenyls, radon,
19
mold, urea formaldehyde insulation, chlorofluorocarbons and all other
ozone-depleting substances.
(iv) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing of or migrating into or through the environment.
Section 3.13 Contracts.
(a) Set forth in Section 3.13(a) of the Company Disclosure Schedule is
a list of each Contract that would be required to be filed as an exhibit to a
Registration Statement on Form S-1 under the Securities Act or an Annual Report
on Form 10-K under the Exchange Act if such registration statement or report was
filed by the Company with the SEC on the date hereof and which has not
previously been filed as an exhibit to the Filed Company SEC Documents. Also set
forth in Section 3.13(a) of the Company Disclosure Schedule is a list of each of
the following to which the Company or any of its Subsidiaries is a party which
has not previously been filed as an exhibit to the Filed Company SEC Documents:
(A) Contract that purports to limit, curtail or restrict the ability of the
Company or any of its existing or future Subsidiaries or Affiliates to compete
in any geographic area or line of business or restrict the Persons with whom it
and existing or future Subsidiaries or Affiliates can compete or to whom it or
its existing or future Subsidiaries or Affiliates can sell products or deliver
services, (B) Contract with any director, officer or other Affiliate of the
Company, (C) loan or credit agreement, mortgage, indenture, note or other
Contract or instrument evidencing indebtedness for borrowed money by the Company
or any of its Subsidiaries or any Contract or instrument pursuant to which
indebtedness for borrowed money may be incurred or is guaranteed by the Company
or any of its Subsidiaries, (D) financial derivatives master agreement or
confirmation, or futures account opening agreements and/or brokerage statements,
evidencing financial hedging or similar trading activities, (E) voting
agreement, (F) mortgage, pledge, security agreement, deed of trust or other
Contract granting a Lien on any material property or assets of the Company or
any of its Subsidiaries, (G) Contract that has required payments of
consideration (whether or not measured in cash) in the fiscal year 2005 or that
is reasonably likely to require payment of consideration in fiscal year 2006
(whether or not measured in cash) of greater than $100,000, (H) "standstill" or
similar agreement, (I) agreement pertaining to any material Intellectual
Property Right (except for any licenses for commercial off-the-shelf software),
or (J) commitment or agreement to enter into any of the foregoing (the Contracts
and other documents required to be listed on Section 3.13(a) of the Company
Disclosure Schedule, together with any and all other Contracts of such type
entered into in accordance with Section 5.2 and the Contracts filed as exhibits
to the Filed Company SEC Documents, each a "Material Contract"). The Company has
heretofore made available to Parent complete and correct copies of each Material
Contract in existence as of the date hereof, together with any and all
amendments and supplements thereto and material "side letters" and similar
documentation relating thereto.
(b) Each of the Material Contracts is valid, binding and in full force
and effect and is enforceable in accordance with its terms by the Company and
its Subsidiaries party thereto, subject to the Bankruptcy and Equity Exception.
Except as set forth on Section 3.13(b) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is in material default under any
Material Contract, nor does any condition exist that, with notice or lapse of
time or both, would constitute a material default thereunder by the Company or
its Subsidiaries party thereto. To the Knowledge of the Company, no other party
to any Material Contract is in material default thereunder, nor does any
condition exist that with notice or lapse of time or both would constitute a
material default by any such other party thereunder. Neither the Company nor any
of its Subsidiaries has received any written notice of termination or
cancellation under any Material Contract or received any notice of breach or
default under any Material Contract which breach has not been cured.
20
Section 3.14 Title to Properties.
(a) The Company and its Subsidiaries (i) have good, valid and
marketable title to all properties and other assets which are reflected on the
most recent consolidated balance sheet of the Company included in the Filed
Company SEC Documents as being owned by the Company or one of its Subsidiaries
(or acquired after the date thereof) and which are, individually or in the
aggregate, material to the Company's business or financial condition on a
consolidated basis (except properties sold or otherwise disposed of since the
date thereof in the ordinary course of business consistent with past practice
and not in violation of this Agreement), free and clear of all Liens except (x)
statutory liens securing payments not yet due, (y) security interests, mortgages
and pledges that are disclosed in the Filed Company SEC Documents that secure
indebtedness that is reflected in the most recent consolidated financial
statements of the Company included in the Filed Company SEC Documents and (z)
such other imperfections or irregularities of title or other Liens that,
individually or in the aggregate, do not and would not reasonably be expected to
materially affect the use of the properties or assets subject thereto or
otherwise materially impair business operations as presently conducted or as
currently proposed by the Company's management to be conducted, and (ii) have
good and valid leasehold interests (subject to customary subordination
provisions) in all real property leased or subleased by them as reflected in the
Filed Company SEC Documents (or acquired after the date thereof) which are,
individually or in the aggregate, material to the Company's business or
financial condition on a consolidated basis (other than any such leaseholds
whose scheduled terms have expired subsequent to the date of such Filed Company
SEC Documents).
(b) The tangible assets which are reflected on the most recent
consolidated balance sheet of the Company included in the Filed Company SEC
Documents as being owned by the Company or one of its Subsidiaries (or acquired
after the date hereof) are in good operating condition and repair (except for
normal wear and tear and those defects that are not material) and have been
maintained in accordance with reasonable commercial practices in light of the
Company's financial condition.
Section 3.15 Intellectual Property.
(a) The Company and its Subsidiaries own, or are validly licensed or
otherwise have the valid right to use, all Intellectual Property and other
intellectual property rights and computer programs (collectively, "Intellectual
Property Rights") that are material to the conduct of the business of the
Company and its Subsidiaries taken as a whole. Section 3.15(a) of the Company
Disclosure Schedule sets forth as of the date of this Agreement a description of
all Intellectual Property Rights which are material to the conduct of the
business of the Company and its Subsidiaries taken as a whole. No claims are
pending or, to the Knowledge of the Company, threatened that the Company or any
of its Subsidiaries is infringing or otherwise adversely affecting the rights of
any Person with regard to any Intellectual Property Right. To the Knowledge of
the Company, the conduct of the business of the Company and its Subsidiaries
does not infringe, violate or misappropriate any Intellectual Property Right of
any Person. The Company and its Subsidiaries are the sole and exclusive owner
of, or have a valid right to use, sell and license, as the case may be, all
Intellectual Property Rights used, sold or licensed by the Company and its
Subsidiaries, as applicable, in the business of the Company and its Subsidiaries
as presently conducted. The consummation of the transactions contemplated hereby
will not materially alter or impair the Intellectual Property Rights of the
Company and its Subsidiaries.
(b) To the Knowledge of the Company, no third party is infringing,
violating, misusing or misappropriating any Intellectual Property Rights of the
Company or any of its Subsidiaries, and no such claims have been made against a
third party by the Company or any of its Subsidiaries.
21
(c) No present or former employee, officer or director of the Company
or any of its Subsidiaries, or agent or outside contractor of the Company or any
of its Subsidiaries, holds any right, title or interest, directly or indirectly,
in whole or in part, in or to any Intellectual Property Rights of the Company
and its Subsidiaries. Other than with respect to copyrightable works the Company
hereby represents to be "works made for hire" within the meaning of Section 101
of the Copyright Act of 1976, the Company and each of its Subsidiaries have
obtained from all individuals who participated in any respect in the invention
or authorship of any Intellectual Property Rights owned or purported to be owned
by the Company or one of its Subsidiaries, as consultants, employees of
consultants or otherwise, effective waivers of any and all ownership rights of
such individuals in such Intellectual Property Rights, and written assignments
to the Company or one of its Subsidiaries of all rights with respect thereto.
(d) The Company and its Subsidiaries have taken all commercially
reasonable steps to protect their Intellectual Property Rights. Neither the
Company nor any of its Subsidiaries has disclosed, or is under any obligation to
disclose, its proprietary Software in source code form, except to parties that
have executed written obligations to preserve the confidentiality of such source
code.
Section 3.16 Insurance. All material insurance policies of the Company and
its Subsidiaries (the "Policies") are in full force and effect and are listed on
Schedule 3.16 of the Company Disclosure Schedule. Neither the Company nor any of
its Subsidiaries is in material breach or default, and neither the Company nor
any of its Subsidiaries has taken any action or failed to take any action which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination or modification of any of the Policies. No notice of
cancellation or termination has been received by the Company with respect to any
such Policy. With respect to each of the legal proceedings set forth in the
Company SEC Documents, no carrier of any Policy has asserted any denial of
coverage other than the issuance of customary reservation of rights letters
issued by such carriers in connection with the filing of any claims.
Section 3.17 Opinion of Financial Advisor. The Board of Directors of the
Company has received the written opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ (the
"Financial Advisor") dated as of the date of this Agreement, to the effect that,
as of such date, and subject to the various assumptions and qualifications set
forth therein, the consideration to be received in the Merger by the
stockholders of the Company is fair from a financial point of view to such
stockholders (the "Fairness Opinion"). The Company has furnished to Parent a
correct and complete copy of the Fairness Opinion. The Company has obtained the
authorization of the Financial Advisor to include a copy of the Fairness Opinion
in the Company Proxy Statement.
Section 3.18 Brokers and Other Advisors. Except as set forth in Section
3.18 of the Company Disclosure Schedule, the fees and expenses of which will be
paid by the Company, no broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission, or the reimbursement of expenses, in connection with
the Transactions based upon arrangements made by or on behalf of the Company or
any of its Subsidiaries.
Section 3.19 Anti-Takeover Statutes. The Company has taken all necessary
action to render Section 203 of the DGCL and any other potentially applicable
anti-takeover or similar statute or regulation or provision of the certificate
of incorporation or by-laws, or other organizational or constitutive document or
governing instruments of the Company inapplicable to this Agreement, the Voting
Agreement and the Transactions contemplated by this Agreement.
22
Section 3.20 Customers and Suppliers.
(a) Section 3.20(a) of the Company Disclosure Schedule sets forth a
list of the top twenty (20) suppliers, by dollar amount paid by the Company and
its Subsidiaries (taken together), for the fiscal year of the Company ended
December 31, 2005, from whom the Company or any of its Subsidiaries has
purchased goods and/or services. Except as set forth on Schedule 3.20(a) of the
Company Disclosure Schedule, no such supplier has expressed in writing or, to
the Company's Knowledge, verbally to the Company or any of its Subsidiaries its
intention to cancel or otherwise terminate or materially reduce its relationship
with the Company or any of its Subsidiaries.
(b) Section 3.20(b) of the Company Disclosure Schedule sets forth a
list of the top twenty (20) customers, by revenue derived by the Company and its
Subsidiaries (taken together), for the fiscal year ended December 31, 2005, to
whom the Company or any of its Subsidiaries has sold goods and/or services.
Except as set forth on Schedule 3.20(b) of the Company Disclosure Schedule, no
such customer has expressed in writing or, to the Company's Knowledge, verbally
to the Company or any of its Subsidiaries its intention to cancel or otherwise
terminate or materially reduce its relationship with the Company or any of its
Subsidiaries.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the
Company:
Section 4.1 Organization, Standing and Corporate Power. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction in which it is incorporated.
Section 4.2 Authority; Noncontravention.
(a) Each of Parent and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement and to perform their
respective obligations hereunder and to consummate the Transactions. The
execution, delivery and performance by Parent and Merger Sub of this Agreement,
and the consummation by Parent and Merger Sub of the Transactions, have been
duly authorized and approved by their respective Boards of Directors and no
other corporate action on the part of Parent and Merger Sub is necessary to
authorize the execution, delivery and performance by Parent and Merger Sub of
this Agreement and the consummation by them of the Transactions. This Agreement
has been duly executed and delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery hereof by the Company, constitutes a
legal, valid and binding obligation of each of Parent and Merger Sub,
enforceable against each of them in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
(b) Neither the execution and delivery of this Agreement by Parent and
Merger Sub, nor the consummation by Parent or Merger Sub of the Transactions,
nor compliance by Parent or Merger Sub with any of the terms or provisions
hereof, will (i) conflict with or violate any provision of the certificate of
incorporation or bylaws of Parent or the certificate of incorporation or bylaws
of Merger Sub or (ii) assuming that the authorizations, consents and approvals
referred to in Section 4.3 are obtained and the filings referred to in Section
4.3 are made, (x) violate any Law, judgment, writ or injunction of any
Governmental Authority applicable to Parent or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result in
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the
23
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Lien upon any of the
respective properties or assets of, Parent or Merger Sub or any of their
respective Subsidiaries under, any of the terms, conditions or provisions of any
Contract to which Parent, Merger Sub or any of their respective Subsidiaries is
a party, or by which they or any of their respective properties or assets may be
bound or affected except, in the case of clause (ii), for such violations,
conflicts, losses, defaults, terminations, cancellations, accelerations or Liens
as, individually or in the aggregate, would not reasonably be expected to
prevent or materially impair the ability of Parent or Merger Sub to consummate
the Transactions (a "Parent Material Adverse Effect").
Section 4.3 Governmental Approvals. Except for (i) filings required under,
and compliance with applicable requirements of, the Exchange Act and the rules
of Nasdaq, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware pursuant to the DGCL, (iii) filings required
under, and compliance with other applicable requirements of, Foreign Antitrust
Laws, and (iv) compliance with and such filings as may be required under
applicable Environmental Laws, no consents or approvals of, or filings,
declarations or registrations with, any Governmental Authority are necessary for
the execution and delivery of this Agreement by Parent and Merger Sub or the
consummation by Parent and Merger Sub of the Transactions, other than such other
consents, approvals, filings, declarations or registrations that, if not
obtained, made or given, would not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect.
Section 4.4 Information Supplied. The information furnished in writing to
the Company by Parent and Merger Sub relating to Parent or Merger Sub and
specifically for inclusion in the Proxy Statement will not, at the time the
Proxy Statement is first mailed to the stockholders of the Company, at the time
of such Company Stockholders Meeting and at the time filed with the SEC, contain
any untrue statement of a material fact or omit 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.
Section 4.5 Ownership and Operations of Merger Sub. Parent owns
beneficially and indirectly of record all of the outstanding capital stock of
Merger Sub. Merger Sub was formed solely for the purpose of engaging in the
Transactions, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
Section 4.6 Financing. Parent has, and will have at the Effective Time,
sufficient cash resources available (in each case, through cash on hand or
existing facilities or commitments, copies of which have been provided to the
Company) to pay the aggregate Merger Consideration pursuant to the Merger and
all related fees and expenses.
Section 4.7 Brokers and Other Advisors. No broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or any of
its Subsidiaries.
ARTICLE V.
COVENANTS AND AGREEMENTS
Section 5.1 Preparation of the Proxy Statement; Stockholder Meeting.
(a) As promptly as practicable following the date of this Agreement,
the Company shall prepare and file the Proxy Statement with the SEC. The Company
shall use its reasonable best efforts to (i) respond to any comments on the
Proxy Statement or requests for additional information from
24
the SEC with respect to the Proxy Statement as soon as practicable after receipt
of any such comments or requests and (ii) cause the Proxy Statement to be mailed
to the stockholders of the Company as promptly as practicable following the date
of this Agreement. The Company shall promptly (A) notify Parent upon the receipt
of any such comments or requests and (B) provide Parent with copies of all
correspondence between the Company and its Representatives, on the one hand, and
the SEC and its staff, on the other hand, with respect to the Proxy Statement.
Prior to responding to any such comments or requests or the filing or mailing of
the Proxy Statement, (x) the Company shall provide Parent with a reasonable
opportunity to review and comment on any drafts of the Proxy Statement and
related correspondence and filings, (y) the Company shall include in such
drafts, correspondence and filings all comments reasonably proposed by Parent
and (z) to the extent practicable, the Company and its outside counsel shall
permit Parent and its outside counsel to participate in all communications with
the SEC and its staff (including all meetings and telephone conferences)
relating to the Proxy Statement, this Agreement or any of the Transactions.
Subject to Section 5.3(c), the Proxy Statement shall include the Company Board
Recommendation and, if required, a copy of the written opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ referred to in Section 3.19. If at any time prior to the
Effective Time any event shall occur, or fact or information shall be
discovered, that should be set forth in an amendment of or a supplement to the
Proxy Statement, the Company shall, in accordance with the procedures set forth
in this Section 5.1(a), prepare and file with the SEC such amendment or
supplement as soon thereafter as is reasonably practicable and to the extent
required by applicable Law, cause such amendment or supplement to be distributed
to the stockholders of the Company.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of, convene
and hold a special meeting of its stockholders (the "Company Stockholders
Meeting") solely for the purpose of obtaining the Company Stockholder Approval.
Subject to Section 5.3(c), the Company shall, through its Board of Directors,
make the Company Board Recommendation. The written consent of Parent will be
required to adjourn or postpone the Company Stockholders Meeting; provided,
that, in the event that there is present at such meeting, in person or by proxy,
sufficient favorable voting power to secure the Company Stockholder Approval,
the Company will not adjourn or postpone the Company Stockholders Meeting unless
the Company is advised by counsel that failure to do so could result in a breach
of the U.S. federal securities laws. The Company will (a) use all reasonable
efforts to solicit or cause to be solicited from its stockholders proxies in
favor of adoption of this Agreement and (b) subject to Section 5.3(c), take all
other reasonable action necessary to secure the Company Stockholder Approval.
Notwithstanding anything herein to the contrary, unless this Agreement is
terminated in accordance with Section 7.1, the Company will take all of the
actions contemplated by this Section 5.1 regardless of whether the Company Board
has approved, endorsed or recommended another Takeover Proposal or has
withdrawn, modified or amended the Company Board Recommendation, and will submit
this Agreement for adoption by the stockholders of the Company at such meeting.
Section 5.2 Conduct of Business of the Company. Except as expressly
permitted by this Agreement, as set forth on Section 5.2 of the Company
Disclosure Schedule or as required by applicable Law, during the period from the
date of this Agreement until the Effective Time, unless Parent otherwise agrees
in writing, the Company shall, and shall cause each of its Subsidiaries to, (x)
conduct its business in the ordinary course consistent with past practice, (y)
comply in all material respects with all applicable Laws and the requirements of
all Material Contracts and Permits and make all voluntary disclosures deemed
appropriate to Governmental Authorities and (z) use commercially reasonable
efforts, under the circumstances, to (i) maintain and preserve intact its
business organization and the goodwill of those having significant business
relationships with it, (ii) retain the services of its present officers and key
employees, and (iii) keep in full force and effect all material insurance
policies maintained by the Company and its Subsidiaries, other than changes to
such policies made in the ordinary course of business. Without limiting the
generality of the foregoing, except as expressly permitted by this
25
Agreement, as set forth on Section 5.2 of the Company Disclosure Schedule or as
required by applicable Law, during the period from the date of this Agreement to
the Effective Time, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(a) (i) issue, sell, grant, dispose of, pledge or otherwise encumber
any shares of its capital stock, voting securities or equity interests, or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for any shares of its capital stock, voting
securities or equity interests, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock, voting securities or equity interests or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for, any shares of its capital stock, voting
securities or equity interests, provided that the Company may issue shares of
Company Common Stock upon the exercise of Options that are outstanding on the
date of this Agreement and in accordance with the terms thereof; (ii) redeem,
purchase or otherwise acquire any of its outstanding shares of capital stock,
voting securities or equity interests, or any rights, warrants, options, calls,
commitments or any other agreements of any character to acquire any shares of
its capital stock, voting securities or equity interests; (iii) declare, set
aside for payment or pay any dividend on, or make any other distribution in
respect of, any shares of its capital stock or otherwise make any payments to
its stockholders in their capacity as such (other than dividends by a direct or
indirect wholly owned Subsidiary of the Company to its parent); (iv) split,
combine, subdivide or reclassify any shares of its capital stock; or (v) amend
(including by reducing an exercise price or extending a term) or waive any of
its rights under any provision of the Company Stock Plans, the ESPP or any
agreement evidencing any outstanding stock option or other right to acquire
capital stock of the Company or any restricted stock purchase agreement or any
similar or related contract, except such vesting as required pursuant to
employment agreements in effect on the date of this Agreement, and except that
the Company shall amend the Company Stock Plans, the ESPP or any agreements
evidencing the grant of Options or take such other action to the extent
contemplated by Section 2.3 hereof;
(b) incur or assume any indebtedness for borrowed money or guarantee
any indebtedness for borrowed money (or enter into a "keep well" or similar
agreement) or issue or sell any debt securities or options, warrants, calls or
other rights to acquire any debt securities of the Company or any of its
Subsidiaries, other than borrowings from the Company by a direct or indirect
wholly owned Subsidiary of the Company or borrowings by the Company or a direct
or indirect wholly owned Subsidiary of the Company from a direct or indirect
wholly owned Subsidiary of the Company;
(c) sell, transfer, lease, license, mortgage, encumber, abandon or
otherwise dispose of or voluntarily permit to become subject to any Lien
(including pursuant to a sale-leaseback transaction or an asset securitization
transaction) any of its material properties or assets (including securities of
Subsidiaries) to any Person, except (A) sales of products and licenses in the
ordinary course of business consistent with past practice, (B) pursuant to
Contracts in force at the date of this Agreement and listed on Section 5.2(c) of
the Company Disclosure Schedule, complete and correct copies of which have been
made available to Parent, (C) dispositions of excess equipment or obsolete or
worthless assets or (D) sales of properties or assets (excluding securities of
Subsidiaries) in an amount not in excess of $50,000 in the aggregate;
(d) assign, sell, abandon, exclusively license or otherwise dispose of
any of its material Intellectual Property;
(e) make any capital expenditures, except in the ordinary course of
business consistent with past practice;
26
(f) make any acquisition (by purchase of securities or assets, merger
or consolidation, or otherwise) of any other Person, business or division;
(g) make any investment (by contribution to capital, property
transfers, purchase of securities or otherwise) in, or loan or advance (other
than travel and similar advances to its employees in the ordinary course of
business consistent with past practice) to, any Person other than a direct or
indirect wholly owned Subsidiary of the Company and other than such investments,
loans or advances required by Contracts existing on the date of this Agreement
set forth on Section 5.2(f) of the Company Disclosure Schedule;
(h) other than in the ordinary course of business, enter into,
terminate or amend (other than immaterial amendments) any Material Contract;
(i) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend, modify or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity (or equity-based), pension, retirement, vacation,
severance, deferred compensation or other compensation or benefit plan
(including any plan that would constitute a Company Plan), policy, agreement,
trust, fund or arrangement with, for or in respect of, any stockholder,
director, officer, other employee, consultant or Affiliate, other than (i) as
required pursuant to applicable law, (ii) increases in compensation or benefits
in accordance with the terms of agreements in effect on the date of this
Agreement set forth on Section 5.2(h) of the Company Disclosure Schedule
(complete and correct copies of which have been made delivered to Parent by the
Company), (iii) increases in salaries, wages and benefits of employees (other
than officers) made in the ordinary course of business consistent with past
practice and in amounts and in a manner consistent with past practice, (iv)
taking any such actions in connection with the hiring and termination of
employees (other than officers) in the ordinary course of business consistent
with past practice, and (v) the grant of any awards or bonuses pursuant to the
amended Operating Income Bonus Plan-US up to $250,000 in the aggregate;
provided, however, such limitation shall not apply to or include grants or
commitments made prior to the date hereof;
(j) make, change or revoke any material election concerning Taxes or
Tax Returns, file any amended Tax Return, enter into any closing agreement with
respect to Taxes, settle any material Tax claim or assessment or surrender any
right to claim a refund of Taxes or obtain any Tax ruling;
(k) make any changes (other than immaterial changes made in the
ordinary course of business) in financial or tax accounting methods, principles,
policies or practices (or change an annual accounting period), except insofar as
may be required by GAAP or applicable Law or such changes in practices as may be
made in connection with the Company's efforts to enhance its and its
Subsidiaries' internal controls over financial reporting;
(l) amend the Company Charter Documents or the Subsidiary Documents;
(m) adopt a plan or agreement of complete or partial liquidation,
dissolution, restructuring, recapitalization, merger, consolidation or other
reorganization;
(n) waive, release, assign, settle or compromise any action,
investigation, proceeding or litigation instituted, commenced, pending or
threatened against the Company or any of its Subsidiaries, other than waivers,
releases, assignments, settlements or compromises in the ordinary course of
business consistent with past practice that involve only the payment of monetary
damages not in excess of $25,000 individually or $100,000 in the aggregate, in
any case without the imposition of equitable relief or any
27
restrictions on the business and operations of, on, or the admission of any
wrongdoing by, the Company or any of its Subsidiaries; or
(o) agree, in writing or otherwise, to take any of the foregoing
actions or, subject to Section 5.3, take any action or agree, in writing or
otherwise, to take any action, which would cause any of the conditions to the
Merger set forth in this Agreement not to be satisfied.
Section 5.3 No Solicitation by the Company; Etc.
(a) The Company shall, and shall cause its Subsidiaries and the
Company's and its Subsidiaries' respective directors, officers, employees,
investment bankers, financial advisors, attorneys, accountants, agents and other
representatives (collectively, "Representatives") to, immediately cease and
cause to be terminated any discussions or negotiations with any Person with
respect to a Takeover Proposal. The Company shall not, and shall cause its
Subsidiaries and Representatives not to, directly or indirectly (i) solicit,
initiate or knowingly facilitate or encourage (including by way of furnishing
information) any inquiries or proposals that constitute, or may reasonably be
expected to lead to, any Takeover Proposal, (ii) participate in any discussions
or negotiations with, or furnish or disclose any non-public information relating
to the Company or any of its Subsidiaries to or otherwise cooperate with or
assist, any third party regarding any Takeover Proposal, (iii) approve, endorse
or recommend any Takeover Proposal or (iv) enter into any letter of intent or
agreement related to any Takeover Proposal; provided, however, that if after the
date hereof the Board of Directors of the Company receives an unsolicited, bona
fide written Takeover Proposal made after the date hereof in circumstances not
involving a breach of this Agreement (other than immaterial breaches that have
not directly or indirectly resulted in the making of a Takeover Proposal) and
the Board of Directors of the Company determines in good faith, that such
Takeover Proposal is made by a Person who, in the good faith judgment of such
Board, has made or is reasonably capable of making a Superior Proposal and with
respect to which such Board determines in good faith, after considering
applicable provisions of the DGCL and after receiving the advice of outside
counsel, that the failure to take such action would be inconsistent with its
fiduciary duties to the Company's stockholders under the DGCL, then the Company
may, at any time prior to obtaining the Company Stockholder Approval (but in no
event after obtaining the Company Stockholder Approval) and after providing
Parent not less than 24 hours written notice of its intention to take such
actions, (A) furnish information with respect to the Company and its
Subsidiaries to the Person making such Takeover Proposal, but only after such
Person enters into a customary confidentiality agreement with the Company (which
confidentiality agreement must be no less favorable to the Company in any
material respect (i.e., no less restrictive with respect to the conduct of such
Person) than the then applicable terms of the Confidentiality Agreement),
provided that (1) such confidentiality agreement may not include any provision
calling for an exclusive right to negotiate with the Company and (2) the Company
advises Parent of all such non-public information delivered to such Person
concurrently with its delivery to such Person and concurrently with its delivery
to such Person the Company delivers to Parent all such information not
previously provided to Parent, (B) participate in discussions and negotiations
with such Person regarding such Takeover Proposal (including solicitation of a
revised Takeover Proposal) and (C) enter into the confidentiality agreement
contemplated by clause (A) of this proviso. The Company shall take all action
necessary to enforce, and shall not waive or amend, each confidentiality,
standstill or similar agreement to which the Company or any of its Subsidiaries
is a party or by which any of them is bound (in each case, other than any such
agreement with Parent). Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in this Section 5.3(a) by the
Company, its Subsidiaries or their respective Representatives shall be deemed to
be a breach of this Section 5.3(a) by the Company. The Company shall provide
Parent with a correct and complete copy of any confidentiality agreement entered
into pursuant to this paragraph within 24 hours of the execution thereof.
28
(b) In addition to the other obligations of the Company set forth in
this Section 5.3, the Company shall promptly advise Parent no later than the
later of 48 hours or one business day after receipt by an officer or director of
the Company, if any proposal, offer, inquiry or other contact is initially
received by, any information is initially requested from, or any discussions or
negotiations are sought to be initiated or continued with, the Company in
respect of any Takeover Proposal, and shall notify Parent, indicate the identity
of the Person making such proposal, offer, inquiry or other contact and the
material terms and conditions of any proposals or offers or the nature of any
inquiries or contacts (and shall furnish copies of any written materials
received from or on behalf of such Person relating to such proposal, offer,
inquiry or request), and thereafter shall promptly keep Parent informed of all
material developments affecting the status and terms of any such proposals,
offers, inquiries or requests (and the Company shall provide Parent with copies
of any additional written materials received that relate to such proposals,
offers, inquiries or requests) and of the status of any such discussions or
negotiations.
(c) Except as expressly permitted by this Section 5.3(c), neither the
Board of Directors of the Company nor any committee thereof shall (i)(A)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the Company Board Recommendation or (B) approve or recommend,
or propose publicly to approve or recommend, any Takeover Proposal or (ii)
approve or recommend, or propose publicly to approve or recommend, or cause or
authorize the Company or any of its Subsidiaries to enter into, any letter of
intent, agreement in principle, memorandum of understanding, merger,
acquisition, purchase or joint venture agreement or other agreement related to
any Takeover Proposal (other than a confidentiality agreement in accordance with
Section 5.3(a)) (each, a "Company Acquisition Agreement"). Notwithstanding the
foregoing or any other provision of this Agreement, (x) the Board of Directors
of the Company may withdraw or modify the Company Board Recommendation, or
recommend a Takeover Proposal, if the Board of Directors receives an
unsolicited, bona fide written Takeover Proposal that was made in the
circumstances not involving a breach of this Agreement (other than immaterial
breaches that have not, directly or indirectly, resulted in the making of the
Takeover Proposal) and that the Board of Directors determines in good faith
constitutes a Superior Proposal, and the Board of Directors determines in good
faith, after reviewing applicable provisions of the DGCL and after receiving
advice from outside counsel, that the failure to make such withdrawal,
modification or recommendation would be inconsistent with its fiduciary duties
to the Company's stockholders under the DGCL and (y) if the Board of Directors
of the Company receives an unsolicited, bona fide written Takeover Proposal that
was made in circumstances not involving a breach of this Agreement (other than
immaterial breaches that have not directly or indirectly resulted in the making
of a Takeover Proposal) and that the Board of Directors determines in good faith
constitutes a Superior Proposal, the Board of Directors of the Company may, in
response to such Superior Proposal and within 48 hours after the expiration of
the five (or, if applicable, three) business day period described below, cause
the Company to enter into a definitive agreement with respect to such Superior
Proposal but only if the Company shall have concurrently with entering into such
definitive agreement terminated this Agreement pursuant to Section 7.1(d)(ii)
and prior thereto or concurrently therewith paid the Termination Fee required
pursuant to Section 7.3, but in any event only after the fifth (or, if
applicable, third) business day following Parent's receipt of written notice
(the "Notice") from the Company advising Parent that the Board of Directors of
the Company (or any committee thereof) is prepared to enter into a definitive
agreement with respect to such Superior Proposal and terminate this Agreement
(it being understood that the Company shall be required to deliver a new Notice
in respect of any revised Superior Proposal (other than immaterial revisions)
from such third party or its Affiliates that the Company proposes to accept (in
which event the five business day period shall be reduced to three business
days), attaching the most current version of such agreement to such Notice
(which version shall be updated on a current basis), and only if, during such
five (or, if applicable, three) business day period, the Company and its
Representatives shall have negotiated in good faith with Parent and Parent's
Representatives to make such adjustments in the terms of this Agreement as would
enable Parent to proceed with the Transactions on such adjusted terms and, at
the end of such five (or, if applicable, three) business day period, after
taking
29
into account any such adjusted terms as may have been proposed by Parent in
writing (and not withdrawn) since its receipt of such Notice, the Board of
Directors of the Company has again in good faith made the determination referred
to above in this clause (y).
(d) For purposes of this Agreement:
"Takeover Proposal" means any inquiry, proposal or offer from any
Person or "group" (as defined in Section 13(d) of the Exchange Act), other
than Parent and its Subsidiaries, relating to any (A) direct or indirect
acquisition (whether in a single transaction or a series of related
transactions) of assets of the Company and its Subsidiaries (including
securities of Subsidiaries) equal to 15% or more of the Company's
consolidated assets or to which 15% or more of the Company's consolidated
revenues on a consolidated basis for the then preceding four completed and
publicly reported calendar quarters are attributable, (B) direct or
indirect acquisition (whether in a single transaction or a series of
related transactions) of 15% or more of any class of equity securities of
the Company, (C) tender offer or exchange offer that if consummated would
result in any Person or "group" (as defined in Section 13(d) of the
Exchange Act) beneficially owning 15% or more of any class of equity
securities of the Company or (D) merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries; in each case,
other than the Transactions.
"Superior Proposal" means a Takeover Proposal made by a third
party, which is on terms and conditions which a majority of the Board of
Directors of the Company determines in its good faith judgment (after
receiving the advice of the Financial Advisor or another financial advisor
of national reputation) to be more favorable to the Company's stockholders
from a financial point of view (taking into account all terms and
conditions of the Takeover Proposal, including any break-up fees, expense
reimbursement provisions and financial terms, and the ability of the Person
making such proposal to consummate the transactions contemplated by such
proposal, based upon, among other things, the availability of financing and
the expectation of obtaining required approvals) than the Merger and the
other Transactions, taking into account at the time of determination any
changes to the terms of this Agreement that as of that time had been
proposed by Parent in writing (and not withdrawn), except that the
reference to "15%" in the definition of "Takeover Proposal" shall be deemed
to be a reference to "50%".
(e) Nothing in this Section 5.3 shall prohibit the Board of Directors
of the Company from taking and disclosing to the Company's stockholders a
position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation
M-A promulgated under the Exchange Act if such Board of Directors determines in
good faith, after receiving the advice of outside counsel, that failure to so
disclose such position would be inconsistent with applicable Law; provided,
however, that if such disclosure has the effect of withdrawing or modifying the
Company Board Recommendation in a manner adverse to Parent or the approval of
this Agreement by the Board of Directors of the Company, Parent shall have the
right to terminate this Agreement to the extent set forth in Section 7.1(c)(iii)
of this Agreement.
Section 5.4 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto shall, and shall cause their respective
Affiliates to, use reasonable best efforts to take, or cause to be taken, all
actions necessary, proper and advisable under applicable Laws to consummate the
Transactions as promptly as practicable.
30
(b) In furtherance and not in limitation of the covenants of the
parties contained in Section 5.4(a), but subject to Section 5.4(c), in the event
that any legal, administrative, arbitral or other proceeding, claim, suit or
action is instituted (or threatened to be instituted) by a Governmental
Authority or private party under any Competition Laws challenging any of the
Transactions or in the event that any Governmental Authority shall otherwise
object to any of the Transactions, each of Parent, Merger Sub and the Company
shall cooperate with each other and use its respective reasonable best efforts:
(A) to vigorously defend, contest and resist any such proceeding, claim, suit,
action or challenge; (B) to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Transactions; and (C) to resolve objections.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Parent or any of its Subsidiaries or Affiliates be
obligated to propose or agree to accept any undertaking or condition, enter into
any consent decree, make any divestiture, accept any operational restriction or
take or commit to take any action that would reasonably be expected to limit:
(i) the freedom of action of Parent or its Subsidiaries or Affiliates with
respect to the operation of, or Parent's ability to retain, the Company or any
businesses, product lines or assets of the Company, or (ii) Parent's or its
Subsidiaries' or Affiliates' ability to retain, own or operate any portion of
the businesses, product lines or assets of Parent or any of its Subsidiaries or
Affiliates, or alter or restrict in any way the business or commercial practices
of Parent or its Subsidiaries or Affiliates or the Company or its Subsidiaries
(any such event, a "Burdensome Condition").
(d) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 5.4 shall limit a party's right to terminate
this Agreement pursuant to Section 7.1(b)(i) or (ii) so long as such party has
up to then complied in all material respects with its obligations under this
Section 5.4.
(e) The Company shall not take any action that would result in any
state takeover statute or similar Law becoming applicable to any of the
Transactions. If any state takeover statute or similar Law becomes applicable to
any of the Transactions, Parent, Merger Sub and the Company shall use reasonable
best efforts to take all action necessary to ensure that the Transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise minimize the effect of such Law on the Transactions.
(f) For purposes hereof, "Competition Laws" means the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, the ▇▇▇▇▇▇▇
Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the Federal Trade Commission Act,
as amended, and all other applicable Laws issued by a Governmental Authority
that are designed or intended to prohibit, restrict or regulate actions having
the purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition, including any Foreign Antitrust Laws.
Section 5.5 Public Announcements. The initial press release with respect to
the execution of this Agreement shall be a joint press release to be reasonably
agreed upon by Parent and the Company. Thereafter and prior to the Effective
Time, neither the Company nor Parent shall issue or cause the publication of any
press release or other public announcement (to the extent not previously issued
or made in accordance with this Agreement) with respect to the Merger, this
Agreement or the other Transactions without the prior consent of the other party
(which consent shall not be unreasonably withheld or delayed), except (i) as may
be required by Law (including, without limitation, as permitted by Section
5.3(e)) or by any applicable listing agreement with a national securities
exchange or Nasdaq as determined in the good faith judgment of the party
proposing to make such release (in which case such party shall not issue or
cause the publication of such press release or other public announcement without
31
prior consultation with the other party) or (ii) for press releases or
announcements to be issued with respect to actions taken by the Company or its
Board of Directors as permitted by and in accordance with Section 5.3.
Section 5.6 Access to Information; Confidentiality.
(a) Subject to applicable Laws relating to the exchange of information
(including applicable Competition Laws) and the Confidentiality Agreement, the
Company shall, and shall cause each of its Subsidiaries to, afford to Parent and
Parent's Representatives reasonable access after providing reasonable prior
written notice, during normal business hours to all of the Company's and its
Subsidiaries' properties, assets, books, Contracts, commitments, electronic and
physical records, correspondence (including electronic correspondence),
officers, employees, accountants, counsel, financial advisors and other
Representatives and the Company shall furnish (or otherwise make available,
including through the SEC ▇▇▇▇▇ system) promptly to Parent (i) a copy of each
report, schedule and other document (A) filed, furnished or received by it or
any of its Subsidiaries pursuant to the requirements of Federal or state
securities Laws or (B) filed or furnished by it or any of its Subsidiaries with
any Governmental Authority with respect to compliance with applicable Laws and
(ii) all other information concerning its and its Subsidiaries' business,
properties and personnel as Parent may reasonably request; provided, however,
that nothing in this Agreement shall require the Company or any of its
Subsidiaries to provide access to any item that contains confidential
information the Company is obligated to any third party to maintain the
confidentiality of.
(b) Except for disclosures permitted by the terms of the
Confidentiality Agreement dated as of November 30, 2005 between Parent and the
Company (as it may be amended from time to time, the "Confidentiality
Agreement"), Parent and Parent's Representatives shall hold information received
from the Company pursuant to this Section 5.6 in confidence in accordance with
the terms of the Confidentiality Agreement.
(c) From the date hereof through the twelve month anniversary of the
date of the termination of this Agreement, Parent shall not, and shall cause its
Subsidiaries and Affiliates not to, without the Company's prior written consent,
solicit for employment or hire any of the employees of the Company or any of its
Subsidiaries in the functional areas set forth on Section 5.6(c) of the Company
Disclosure Schedule.
(d) No investigation by Parent or its representatives or advisors
prior to or after the date of this Agreement shall diminish, obviate or cure any
breach of any representation, warranty, covenant or agreement contained in this
Agreement or otherwise affect Parent's rights under Articles I, VI and VII of
this Agreement.
Section 5.7 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) any
notice or other communication received by such party from any Governmental
Authority in connection with the Transactions or from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions, if the subject matter of such communication or the failure of such
party to obtain such consent could be material to the Company, the Surviving
Corporation or Parent, (ii) any actions, suits, claims, investigations or
proceedings commenced or, to such party's Knowledge, threatened against,
relating to or involving or otherwise affecting such party or any of its
Subsidiaries which relate to the Transactions, (iii) the discovery of any fact
or circumstance that, or the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which, would cause any representation or
warranty made by such party contained in this Agreement to be untrue such that
the conditions set forth in Section 6.2(a) or 6.3(a) would not be satisfied and
(iv) any material failure of such party to comply with or satisfy any covenant
32
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.7 shall not
(x) be considered an admission that any representation or warranty is untrue for
purposes of Article VI or Article VII, (y) cure any breach or non-compliance
with any other provision of this Agreement or (z) limit the remedies available
to the party receiving such notice; provided, further, that the failure to
deliver any notice pursuant to this Section 5.7 shall not be considered in
determining whether the condition set forth in Section 6.2(b) or 6.3(b) has been
satisfied or the related termination right in Article VII is available except to
the extent that a party hereto is actually prejudiced by such failure to give
notice.
Section 5.8 Indemnification and Insurance.
(a) From and after the Effective Time, the Surviving Corporation shall
(and Parent shall use reasonable efforts to cause the Surviving Corporation to)
indemnify the individuals who at or prior to the Effective Time were directors
or officers of the Company (collectively, the "Indemnitees") with respect to all
acts or omissions by them in their capacities as such at any time prior to the
Effective Time, to the fullest extent permitted by (A) the Company Charter
Documents as in effect on the date of this Agreement, (B) any applicable
contract as in effect on the date of this Agreement and (C) applicable Law;
provided, however, that the Surviving Corporation shall not be required to
indemnify any Indemnitee for such Indemnitee's criminal conduct or fraud.
(b) Parent will provide, or cause the Surviving Corporation to
provide, for a period of not less than six years after the Effective Time, the
Indemnitees (as defined to mean those persons currently insured under the
Company's directors' and officers' insurance and indemnification policy) with an
insurance and indemnification policy that provides coverage for events occurring
at or prior to the Effective Time (the "D&O Insurance") that is no less
favorable than the existing policy or, if substantially equivalent insurance
coverage is unavailable, the best available coverage; provided, however, that
Parent and the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of $300,000 for each year of coverage,
provided, further, that if the annual premiums of such insurance coverage exceed
such amount, Parent or the Surviving Corporation shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
(c) The Indemnitees to whom this Section 5.8 applies shall be third
party beneficiaries of this Section 5.8. The provisions of this Section 5.8 are
intended to be for the benefit of each Indemnitee, his or her heirs and his or
her representatives.
(d) In the event that Parent or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers or conveys all or a majority
of its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation shall succeed to the obligations set forth in this Section
5.8.
Section 5.9 Securityholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any securityholder
litigation against the Company and/or its directors relating to the
Transactions, and no such settlement shall be agreed to without Parent's prior
consent.
Section 5.10 Fees and Expenses. Whether or not the Merger is consummated,
and except as otherwise contemplated under Section 7.3(b) of the Agreement, all
fees and expenses incurred in connection with this Agreement, the Merger and the
Transactions shall be paid by the party incurring such fees or expenses.
33
Section 5.11 Employee Benefits.
(a) Without limiting the provisions of Section 5.11(d) hereof, for a
period of time of at least one year following the Closing Date, Parent shall, or
shall cause its Affiliates to, provide each employee who continues employment
with the Surviving Corporation with combined aggregate pay (which shall include
rates of base salary or wages and annual bonus opportunities) and employee
benefits that provide at least a comparable aggregate value to the aggregate pay
and benefits provided to similarly situated employees of Parent, provided that
for such purposes of this covenant, stock options and other equity awards shall
be disregarded.
(b) Employees of the Company and its Subsidiaries as of the Closing
shall also be provided credit for all service with the Company and its
subsidiaries, to the same extent as such service was credited for such purpose
by the Company and its Subsidiaries for such employees, under (i) all employee
benefit plans, programs, policies and fringe benefits arrangements to be
provided to such employees for purposes of eligibility and vesting, (ii)
severance plans, programs and policies to be provided to such employees for
purposes of calculating the amount of each such employee's severance benefits
and (iii) vacation and sick leave plans, programs and policies for purposes of
calculating the amount of each such employee's vacation and sick leave, except,
in each case, as would result in a duplication of benefits. With respect to each
employee benefit plan, program or policy of Parent or its Subsidiaries that is a
"welfare benefit plan" (as defined in Section 3(1) of ERISA) in which current
employees of the Company or its Subsidiaries participate following the Effective
Time, Parent or its Subsidiaries shall cause there to be waived any pre-existing
condition limitations.
(c) Parent shall, or shall cause the Surviving Corporation to, assume
and either shall, or shall cause the Surviving Corporation to, discharge the
obligations under each employment or severance agreement listed in Section
3.11(a) of the Company Disclosure Schedule.
(d) Notwithstanding anything in this Agreement to the contrary,
nothing in this Section 5.11 shall impede or limit Parent, Merger Sub, the
Company, the Surviving Corporation or any of their Affiliates from terminating
any of their employees at any time for any reason or no reason, subject to the
provisions of applicable Law.
ARTICLE VI.
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party hereto to effect the Merger shall be
subject to the satisfaction (or waiver, if permissible under applicable Law) on
or prior to the Closing Date of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval shall have
been obtained in accordance with applicable Law and the Company Charter
Documents;
(b) No Injunctions or Restraints. No Law, injunction, judgment or
ruling enacted, promulgated, issued, entered, amended or enforced by any
Governmental Authority (collectively, "Restraints") shall be in effect
enjoining, restraining, preventing or prohibiting consummation of the Merger or
making the consummation of the Merger illegal; and
(c) Regulatory Approvals. The waiting period applicable to the
consummation of the Merger under any applicable Competition Laws shall have
expired or been terminated and all other approvals or consents required of any
other Governmental Authority shall have been obtained. In the
34
case of the obligation of Parent, the consents, approvals, decisions or waiting
period expirations or terminations shall have occurred or been obtained free of
any Burdensome Condition and any other condition or limitation that would
reasonably be expected to have a Company Material Adverse Effect.
Section 6.2 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction (or waiver, if permissible under applicable Law) on or prior to
the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in Sections 3.2, 3.3(a), 3.3(b) and 3.3(d) shall be
true and correct in all respects (except, in the case of Section 3.2 for such
inaccuracies as are de minimis in the aggregate), in each case both when made
and at and as of the Closing Date, as if made at and as of such time (except to
the extent expressly made as of an earlier date, in which case as of such date)
and (ii) all other representations and warranties of the Company set forth
herein shall be true and correct both when made and at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "Company Material Adverse
Effect" set forth therein, other than Section 3.5(a)(iii) and the first sentence
of Section 3.6) does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, except for those
obligations the failure of which to perform does not have a Company Material
Adverse Effect.
(c) Officer's Certificate. Parent shall have received a certificate,
signed by the chief executive officer or chief financial officer of the Company,
certifying as to the matters set forth in Sections 6.2(a) and 6.2(b).
(d) No Litigation. There shall not be any action, investigation,
proceeding or litigation instituted, commenced, pending or threatened by or
before any Governmental Authority in which a Governmental Authority is a party,
nor shall there be any Restraint in effect, that would or is reasonably likely
to (i) restrain, enjoin, prevent, prohibit or make illegal the acquisition of
some or all of the shares of Company Common Stock by Parent or Merger Sub or the
consummation of the Merger or the other Transactions, (ii) impose limitations on
the ability of Parent or its Affiliates effectively to exercise full rights of
ownership of all shares of the Surviving Corporation in a manner that materially
and adversely affects the value of the Company and its Subsidiaries taken as a
whole, or (iii) result in a Company Material Adverse Effect.
(e) Company Material Adverse Effect. Since the date of this Agreement,
there shall not have been any Company Material Adverse Effect or any event,
circumstance, development, change or effect that would, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 6.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction (or waiver,
if permissible under applicable Law) on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement (without giving effect to
any materiality or Parent Material
35
Adverse Effect qualification) shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on the Closing Date (except
to the extent such representations and warranties expressly relate to an earlier
date, in which case as of such earlier date), except as would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect;
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date; and
(c) Officer's Certificate. The Company shall have received a
certificate, signed by a duly authorized representative of Parent, certifying as
to the matters set forth in Sections 6.3(a) and 6.3(b).
Section 6.4 Frustration of Closing Conditions. None of the Company, Parent
or Merger Sub may rely on the failure of any condition set forth in Section 6.1,
6.2 or 6.3, as the case may be, to be satisfied if such failure was caused by
such party's failure to use its reasonable best efforts to consummate the Merger
and the other Transactions, as required by and subject to Section 5.4.
ARTICLE VII.
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the
Transactions abandoned at any time prior to the Effective Time:
(a) by the mutual written consent of the Company and Parent duly
authorized by each of their respective Boards of Directors; or
(b) by either of the Company or Parent:
(i) if the Merger shall not have been consummated on or before
the six-month anniversary of execution (the "Outside Date"), provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available to a party if the failure of the Merger to
have been consummated on or before the Outside Date was primarily due to
such party's breach or failure to perform any of its representations,
warranties, covenants or agreements set forth in this Agreement;
(ii) if any Restraint having the effect set forth in Section
6.1(b) shall be in effect and shall have become final and nonappealable;
provided, however, that the right to terminate this Agreement under this
Section 7.1(b)(ii) shall not be available to a party if such Restraint was
primarily due to such party's breach or failure to perform any of its
representations, warranties, covenants or agreements set forth in this
Agreement; or
(iii) if the Company Stockholder Approval shall not have been
obtained at the Company Stockholders Meeting duly convened therefor or at
any adjournment or postponement thereof; or
(c) by Parent:
(i) if the Company shall have breached or failed to perform in
any material respect any of its material covenants or agreements set forth
in this Agreement, or if any
36
representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 6.2(a) or (b)
would not be satisfied (a "Terminating Company Breach"); provided, however,
that if such Terminating Company Breach is curable by the Company by the
Outside Date through the exercise of reasonable best efforts and for so
long as the Company continues to exercise such reasonable best efforts,
Parent may not terminate this Agreement under this Section 7.1(c)(i);
(ii) if any Restraint having the effect of granting or
implementing any relief referred to Section 6.2(d) shall be in effect and
shall have become final and nonappealable;
(iii) if (x) the Company enters into a Company Acquisition
Agreement or (y) the Board of Directors of the Company or any committee
thereof (A) shall have withdrawn or modified, in a manner adverse to
Parent, the Company Board Recommendation or its approval of any of the
Transactions, (B) shall have approved or recommended to the stockholders of
the Company a Takeover Proposal or (C) shall not have rejected any bona
fide publicly announced offer for a Takeover Proposal within twenty (20)
days of the making thereof (including, for these purposes, by taking no
position with respect to the acceptance of a tender offer or exchange offer
by its stockholders, which shall constitute a failure to recommend against
acceptance of such tender offer or exchange offer);
(iv) if the Company (i) materially breaches its obligations under
Section 5.3 or Section 5.1, or the Board of Directors of the Company or any
committee thereof shall resolve to do any of the foregoing;
(v) if a Company Material Adverse Effect shall occur and be
continuing and has not been cured by the Company as of the Outside Date
after the Company's receipt of prompt written notice of the occurrence of
such event from Parent; or
(d) by the Company:
(i) if Parent or Merger Sub shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set
forth in this Agreement, or if any representation or warranty of Parent or
Merger Sub shall have become untrue, in either case such that the
conditions set forth in Section 6.3(a) or (b) would not be satisfied (a
"Terminating Parent Breach"); provided, however, that if such Terminating
Parent Breach is curable by Parent or Merger Sub by the Outside Date
through the exercise of reasonable best efforts and for so long as Parent
or Merger Sub continues to exercise such reasonable best efforts, the
Company may not terminate this Agreement under this Section 7.1(d)(i); or
(ii) if (A) the Company has not breached Section 5.3 (other than
immaterial breaches that have not directly or indirectly resulted in the
making of the Takeover Proposal), (B) the Company Stockholder Approval has
not been obtained (other than as a result of the breach of this Agreement
by the Company) and (C) concurrently the Company enters into a definitive
Company Acquisition Agreement providing for a Superior Proposal in
accordance with Section 5.3; provided that prior thereto or concurrently
therewith the Company shall have paid or caused to be paid the Termination
Fee to Parent in accordance with Section 7.3 (and such termination of this
Agreement by the Company shall not take effect unless and until the
Termination Fee shall have been paid to Parent).
Section 7.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 7.1, written notice thereof shall be given to
the other party or parties, specifying the
37
provision hereof pursuant to which such termination is made, and this Agreement
shall forthwith become null and void (other than the provisions of Sections
3.18, 4.7, 5.6(b), 5.6(c), 5.10, 7.2 and 7.3, and Article VIII, all of which
shall survive termination of this Agreement), and there shall be no liability on
the part of Parent, Merger Sub or the Company or their respective directors,
officers and Affiliates, except (i) as provided in Section 7.3, and (ii) nothing
shall relieve any party from liability for fraud or any breach of this Agreement
or willful misrepresentation herein.
Section 7.3 Termination Fee and Expenses Reimbursement.
(a) In the event that (A) (x) this Agreement is terminated by the
Company or Parent pursuant to Section 7.1(b)(i) (and at the time of such
termination a vote to obtain the Company Stockholder Approval has not been held)
or Section 7.1(b)(iii) or by Parent pursuant to Section 7.1(c)(i), (y) prior to
such termination, any Person or "group" (as defined in Section 13(d) of the
Exchange Act), other than Parent and its Subsidiaries, Affiliates and
Representatives (on behalf of Parent), shall have publicly announced an
intention (whether or not conditional or withdrawn) to make a Takeover Proposal
or such Takeover Proposal has otherwise become publicly known and (z) the
Company enters into a definitive agreement with respect to, or consummates, a
transaction contemplated by any Takeover Proposal (whether or not the announced
or publicly known Takeover Proposal) within twelve (12) months of the date this
Agreement is terminated, (B) this Agreement is terminated by Parent pursuant to
Section 7.1(c)(iii) or (iv) or (C) this Agreement is terminated by the Company
pursuant to Sections 7.1(d)(ii), then in any such event under clause (A), (B) or
(C) of this Section 7.3(a), the Company shall pay to Parent a termination fee of
$940,000 in cash (the "Termination Fee"), less any Expenses Reimbursement
previously paid by the Company pursuant to Section 7.3(b).
(b) In the event the Agreement is terminated by the Company or Parent
pursuant to Section 7.1(b)(i) (and at the time of such termination a vote to
obtain the Company Stockholder Approval has not been held, and so long as the
failure of the Merger to have been consummated on or before such Outside Date
was not primarily due to the Parent's or Merger Sub's breach or failure to
perform any of its representations, warranties, covenants or agreements set
forth in this Agreement) or Section 7.1(b)(iii) or by Parent pursuant to Section
7.1(c)(i), the Company shall reimburse the Parent for its reasonable
out-of-pocket expenses actually incurred in connection with this Agreement, the
Merger and the other Transactions (the "Expenses Reimbursement"); provided,
however, that such Expense Reimbursement shall not exceed, in the aggregate,
$500,000. Such reimbursement shall be paid within two days of the termination of
this Agreement by wire transfer of immediately available funds to an account to
be designated by the Company.
(c) Any payment required to be made pursuant to clause (A) of Section
7.3(a) shall be made to Parent promptly following the earlier of the execution
of a definitive agreement with respect to, or the consummation of, any
transaction contemplated by a Takeover Proposal; any payment required to be made
pursuant to clause (B) of Section 7.3(a) shall be made to Parent promptly
following (and in any event not later than two business days after) termination
of this Agreement by Parent pursuant to such section; and any payment required
to be made pursuant to clause (C) of Section 7.3(a) shall be made to Parent
prior to or simultaneously with (and as a condition to the effectiveness of)
termination of this Agreement by the Company pursuant to Section 7.1 (d)(ii).
All such payments shall be made by wire transfer of immediately available funds
to an account to be designated by Parent.
(d) In the event that the Company shall fail to pay the Termination
Fee or the Expenses Reimbursement when due, such payment amount shall accrue
interest for the period commencing on the date such payment amount became past
due, at a rate equal to the rate of interest publicly announced by Citibank, in
the City of New York from time to time during such period, as such bank's Prime
Lending Rate. In addition, if the Company shall fail to pay such payment amount
when due,
38
the Company shall also pay to the Parent all of the Parent's costs and expenses
(including attorneys' fees) in connection with efforts to collect such payment
amount. Each of the Company and Parent acknowledges that the payment amounts and
the other provisions of this Section 7.3 are an integral part of the
Transactions and that, without these agreements, neither the Company nor Parent
would enter into this Agreement.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties. Except as
otherwise provided in this Agreement, the representations, warranties and
agreements of each party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any other party
hereto, any Person controlling any such party or any of their officers,
directors or Representatives, whether prior to or after the execution of this
Agreement, and no information provided or made available shall be deemed to be
disclosed in this Agreement or in the Company Disclosure Schedule, except to the
extent actually set forth herein or therein. The representations, warranties and
agreements in this Agreement shall terminate at the Effective Time or, except as
otherwise provided in Section 7.2, upon the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article II and Sections 5.8, 5.9, 5.10 and 5.11 and any other agreement
in this Agreement which contemplates performance after the Effective Time shall
survive the Effective Time indefinitely and those set forth in Sections 3.18,
4.7, 5.6(b), 5.10, 7.2 and 7.3 and this Article VIII shall survive termination
indefinitely. Section 5.6(c) shall survive termination in accordance with its
terms. The Confidentiality Agreement shall (i) survive termination of this
Agreement in accordance with its terms and (ii) terminate as of the Effective
Time.
Section 8.2 Amendment or Supplement. At any time prior to the Effective
Time, this Agreement may be amended or supplemented in any and all respects,
whether before or after receipt of the Company Stockholder Approval, by written
agreement of the parties hereto, by action taken by their respective Boards of
Directors; provided, however, that following approval of the Transactions by the
stockholders of the Company, there shall be no amendment or change to the
provisions hereof which by Law would require further approval by the
stockholders of the Company without such approval.
Section 8.3 Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, any party may, subject to applicable Law, (a) waive any
inaccuracies in the representations and warranties of any other party hereto,
(b) extend the time for the performance of any of the obligations or acts of any
other party hereto or (c) waive compliance by the other party with any of the
agreements contained herein or, except as otherwise provided herein, waive any
of such party's conditions. Notwithstanding the foregoing, no failure or delay
by the Company, Parent or Merger Sub in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right hereunder. 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.
Section 8.4 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of Law or otherwise, by any of the parties without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to any direct or indirect wholly owned Subsidiary of Parent, but no
such assignment shall relieve Merger Sub of any of its obligations hereunder.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to
39
the benefit of, and be enforceable by, the parties hereto and their respective
successors and permitted assigns. Any purported assignment not permitted under
this Section shall be null and void.
Section 8.5 Counterparts; Facsimile; Electronic Transmission. This
Agreement may be executed in counterparts (each of which shall be deemed to be
an original but all of which taken together shall constitute 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. The exchange
of copies of this Agreement and of signature pages by facsimile or electronic
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile or electronic
transmission shall be deemed to be their original signatures for all purposes.
Section 8.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
the Company Disclosure Schedule and the Confidentiality Agreement (a) constitute
the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof and (b) except for the
provisions of Section 5.8, are not intended to and shall not confer upon any
Person other than the parties hereto any rights or remedies hereunder.
Section 8.7 Governing Law; Waiver of Jury Trial.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, applicable to contracts executed in and
to be performed entirely within that State, except to the extent the DGCL is
applicable hereto.
(b) Each of the parties hereto hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or related to
this Agreement or the Transactions.
Section 8.8 Specific Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in the Delaware Court of
Chancery or, if subject matter jurisdiction in the such court is not available,
in the United States District Court for the District of Delaware without bond or
other security being required, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 8.9 Consent to Jurisdiction. All actions and proceedings arising
out of or relating to this Agreement or any of the Transactions shall be heard
and determined in the Delaware Court of Chancery or, if subject matter
jurisdiction in the such court is not available, in the United States District
Court for the District of Delaware, and the parties hereto hereby irrevocably
submit to the exclusive jurisdiction of such courts (and, in the case of
appeals, appropriate appellate courts therefrom) in any such action or
proceeding and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding. The consent to jurisdiction set
forth in this paragraph shall not constitute general consent to service of
process in the State of Delaware and shall have no effect for any purpose except
as provided in this paragraph and shall not be deemed to confer rights on any
Person other than the parties hereto. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable law.
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Section 8.10 Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be deemed given if delivered
personally, facsimiled (which is confirmed) or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses:
If to Parent or Merger Sub, to:
Telmar Network Technology, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
▇▇▇▇▇▇ Communications, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify by
like notice to the other parties hereto. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 P.M. in the place of receipt and such day is a
business day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
Section 8.11 Severability. If any term or other provision of this
Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other terms, provisions and conditions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or
41
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law in an
acceptable manner to the end that the Transactions are fulfilled to the extent
possible.
Section 8.12 Remedies. Except as otherwise provided in this Agreement, any
and all remedies expressly conferred upon a party to this Agreement will be
cumulative with, and not exclusive of, any other remedy contained in this
Agreement, at law or in equity. The exercise by a party to this Agreement of any
one remedy will not preclude the exercise by it of any other remedy.
Section 8.13 Definitions.
(a) As used in this Agreement, the following terms have the meanings
ascribed thereto below:
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, controls, or is controlled by, or is under common
control with, such Person. For this purpose, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of management or policies of a Person, whether
through the ownership of securities or partnership or other ownership
interests, by contract or otherwise.
"business day" shall mean a day except a Saturday, a Sunday or other
day on which the SEC or banks in the City of New York or the State of Texas
are authorized or required by Law to be closed.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Company Option" shall mean any Option issued under a Company Stock
Plan.
"Company Stock Plans" shall mean the following plans of the Company:
(i) the 1999 Director Option Plan and (ii) the 1999 Stock Option Plan.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Governmental Authority" means any United States, non-United States or
multi-national government entity, body or authority, including (i) any
United States federal, state or local government (including any town,
village, municipality, district or other similar governmental or
administrative jurisdiction or subdivision thereof, whether incorporated or
unincorporated), (ii) any non-United States or multi-national government or
governmental authority or any political subdivision thereof, (iii) any
United States, non-United States or multi-national regulatory or
administrative entity, authority, instrumentality, jurisdiction, agency,
body or commission, exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power, including any court, tribunal, commission or
arbitrator, (iv) any self-regulatory organization or (v) any official of
any of the foregoing.
"Governmental Investigation" shall mean an investigation by a
Governmental Authority for the purpose of imposing criminal sanctions.
42
"Intellectual Property" of any Person shall mean all intellectual
property rights arising from or in respect of the following, whether
protected, created or arising under any Law, including: (i) all patents and
applications therefor, including continuations, divisionals,
continuations-in-part, or reissues of patent applications and patents
issuing thereon (collectively, "Patents"); (ii) all trademarks, service
marks, trade names, service names, brand names, trade dress rights, logos,
Internet domain names and corporate names, together with the goodwill
associated with any of the foregoing, and all applications, registrations
and renewals thereof, (collectively, "Marks"); (iii) copyrights and
registrations and applications therefor, works of authorship and mask work
rights (collectively, "Copyrights"); (iv) discoveries, concepts, ideas,
research and development, know-how, formulae, inventions, compositions,
manufacturing and production processes and techniques, technical data,
procedures, designs, drawings, specifications, databases and other
proprietary and confidential information, including customer lists,
supplier lists, pricing and cost information, and business and marketing
plans and proposals, in each case excluding any rights in respect of any of
the foregoing that comprise or are protected by Copyrights or Patents
(collectively, "Trade Secrets"); and (v) all Software.
"Knowledge" shall mean, (i) in the case of any Person other than the
Company or its Subsidiaries that is not an individual, with respect to any
matter in question, the actual knowledge after due inquiry of such Person's
executive officers and all other officers and managers having
responsibility relating to the applicable matter and (ii) in the case of
the Company or its Subsidiaries, the actual knowledge, after reasonable
inquiry within the scope of their respective business responsibilities
(which shall not require inquiry of persons other than the persons
hereinafter named in this definition), of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Options" shall mean options, warrants and other rights to acquire
shares of Company Common Stock.
"Person" shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity,
including a Governmental Authority.
"Software" means any and all (i) computer programs, including any and
all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine
readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing,
screens, user interfaces, report formats, firmware, development tools,
templates, menus, buttons and icons, and (iv) documentation including user
manuals and other training documentation related to any of the foregoing.
"Subsidiary" when used with respect to any party, shall mean any
corporation, limited liability company, partnership, association, trust or
other entity the accounts of which would be consolidated with those of such
party in such party's consolidated financial statements if such financial
statements were prepared in accordance with GAAP, as well as any other
corporation, limited liability company, partnership, association, trust or
other entity of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power
(or, in the case of a partnership, more than 50% of the general partnership
interests) are, as of such date, owned by such party or one or more
Subsidiaries of such party or by such party and one or more Subsidiaries of
such party.
"Transactions" refers collectively to this Agreement and the
transactions contemplated hereby or the Voting Agreement, including the
Merger and the transactions contemplated thereby.
43
The following terms are defined on the page of this Agreement set forth
after such term below:
SECTION
------------
Agreement Preamble
Certificate of Merger 1.3
Balance Sheet Date 3.5(f)
Bankruptcy and Equity Exception 3.3(a)
Burdensome Condition 5.4(c)
Certificate 2.1(c)
Closing 1.2
Closing Date 1.2
COBRA 3.11(m)
Company Preamble
Company Acquisition Agreement 5.3(c)
Company Board Recommendation 3.3(b)
Company Charter Documents 3.1(c)
Company Common Stock 2.1
Company Disclosure Schedule Article III
Company Material Adverse Effect 3.1(a)
Company Plans 3.11(a)
Company Preferred Stock 3.2(a)
Company SEC Documents 3.5(a)
Company Stockholder Approval 3.3(d)
Company Stockholders Meeting 5.1(b)
Competition Laws 5.4(f)
Confidentiality Agreement 5.6(b)
Contract 3.3(c)
D&O Insurance 5.8(b)
DGCL 1.1
Dissenting Shares 2.2(h)
Effective Time 1.3
Employees 3.11(a)
Environmental Laws 3.12(g)(i)
Environmental Liabilities 3.12(g)(ii)
Environmental Permits 3.12(c)
ERISA 3.11(a)
ERISA Affiliates 3.11(e)
ESPP 2.3(b)
Exchange Act 3.4
Expenses Reimbursement 7.3(b)
Fairness Opinion 3.17
Filed Company SEC Documents 3.5(d)
Financial Advisor 3.17
Foreign Antitrust Laws 3.4
Hazardous Materials 3.12(g)(iii)
Indemnitees 5.8(a)
Intellectual Property Rights 3.15(a)
Laws 3.8(a)
Liens 3.1(b)
Material Contract 3.13(a)
Measurement Date 3.2(a)
44
SECTION
------------
Merger Preamble
Merger Consideration 2.1(c)
Merger Sub Preamble
Multiemployer Plan 3.11(a)
Notice 5.3(c)
Option Consideration 2.3(a)
Outside Date 7.1(b)(i)
Parent Preamble
Parent Material Adverse Effect 4.2(b)
Paying Agent 2.2(a)
Payment Fund 2.2(a)
PBGC 3.11(g)
Permits 3.8(b)
Policies 3.16
Proceeding 8.14
Proxy Statement 3.4
Release 3.12(g)(iv)
Representatives 5.3(a)
Restraints 6.1(b)
SEC 2.3(c)
Securities Act 3.1(b)
SOX 3.5(c)
Subsidiary Documents 3.1(c)
Superior Proposal 5.3(d)
Surviving Corporation 1.1
Takeover Proposal 5.3(d)
Taxes 3.10(o)
Tax Returns 3.10(o)
Terminating Company Breach 7.1(c)(i)
Terminating Parent Breach 7.1(d)(i)
Termination Fee 7.3(a)
Voting Agreement Preamble
Warrants 3.2(a)
WARN 3.11(q)
Section 8.14 Waiver of Jury Trial. Each party acknowledges and agrees that
any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues and, therefore, each such party irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any legal action, suit or proceeding arising out of or relating to this
Agreement or the Transactions (each, a "Proceeding"). Each party to this
Agreement certifies and acknowledges that (a) no Representative of any other
party has represented, expressly or otherwise, that such other party would not
seek to enforce the foregoing waiver in the event of a Proceeding, (b) such
party has considered the implications of this waiver, (c) such party makes this
waiver voluntarily, and (d) such party has been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 8.14.
45
Section 8.15 Interpretation.
(a) When a reference is made in this Agreement to an Article, a
Section, Exhibit or Schedule, such reference shall be to an Article of, a
Section of, or an Exhibit or Schedule to, 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". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a Person
are also to its permitted successors and assigns.
(b) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
TELMAR NETWORK TECHNOLOGY, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
TELMAR ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
SIGNATURE PAGE
TO
AGREEMENT AND PLAN OF MERGER